Filed by Comerica Incorporated

Pursuant to Rule 425 under the Securities Act of 1933
and deemed filed pursuant to Rule 14a-12
of the Securities Exchange Act of 1934

 

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 (“Comerica”) dated April 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,” “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. 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 WILL 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.”

 

Comerica and Sterling and certain of their directors and executive officers may be deemed to be participants in the solicitation of proxies from the shareholders of Sterling in connection with the proposed merger. Information about the directors and executive officers of Comerica is set forth in the proxy statement for Comerica’s 2011 annual meeting of shareholders, as filed with the SEC on a Schedule 14A on March 18, 2011. Information about the directors and executive officers of Sterling is set forth in Sterling’s Form 10-K/A filed with the SEC on April 8, 2011. Additional information regarding the interests of those participants and other persons who may be deemed participants in the transaction may be obtained by reading the above-referenced definitive Proxy Statement/Prospectus and other relevant materials filed with the SEC. Free copies of these documents may be obtained as described in the preceding paragraph.

 



 

 

COMERICA REPORTS FIRST QUARTER 2011 NET INCOME OF $103 MILLION,

UP EIGHT PERCENT FROM FOURTH QUARTER 2010

 

Loan Growth in Global Corporate Banking, Energy and Middle Market

 

Loan Growth Accelerates in Texas

 

Pending Acquisition of Sterling Bancshares on Track

 

DALLAS/April 19, 2011 -- Comerica Incorporated (NYSE: CMA) today reported first quarter 2011 net income of $103 million, an increase of $7 million compared to $96 million for the fourth quarter 2010.

 

(dollar amounts in millions, except per share data)

 

1st Qtr ‘11

 

4th Qtr ‘10

 

1st Qtr ‘10

 

Net interest income

 

$

395

 

$

405

 

$

415

 

Provision for loan losses

 

49

 

57

 

175

 

Noninterest income

 

207

 

215

 

194

 

Noninterest expenses

 

415

 

437

 

404

 

 

 

 

 

 

 

 

 

Income from continuing operations, net of tax

 

103

 

96

 

35

 

Income from discontinued operations, net of tax

 

 

 

17

 

Net income

 

103

 

96

 

52

 

 

 

 

 

 

 

 

 

Net income (loss) attributable to common shares

 

102

 

95

 

(71

)(a)

 

 

 

 

 

 

 

 

Diluted income (loss) per common share

 

0.57

 

0.53

 

(0.46

)

 

 

 

 

 

 

 

 

Tier 1 capital ratio

 

10.37

% (b)

10.13

%

10.38

%

Tangible common equity ratio (c)

 

10.43

 

10.54

 

9.68

 

 

 

 

 

 

 

 

 

Net interest margin

 

3.25

 

3.29

 

3.18

 

 


(a) After preferred stock dividends to U.S. Treasury of $123 million.

(b) March 31, 2011 ratio is estimated.

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

 

“We had an eight percent increase in net income in the first quarter of 2011, when compared to the fourth quarter of 2010, which was primarily driven by reduced credit costs and good control of expenses,” said Ralph W. Babb Jr., chairman and chief executive officer.  “Among the many positive and encouraging signs we saw in the first quarter were loan growth in the Global Corporate Banking, Energy and Middle Market lines of business, and an acceleration of loan growth in Texas.  These were more than offset by the continued and planned reductions in Commercial Real Estate, and a decrease in Mortgage Banker Finance.  First quarter revenue was down three percent from the fourth quarter, primarily driven by lower total average loans.

 

“Key credit metrics continued to move in the right direction in the first quarter.  In addition, deposit growth remained strong and our solid capital continued to position us well for future growth. We believe we are in the right markets with the right people and products to build upon this momentum going forward.

 

“We continue to be on track to close our pending acquisition of Sterling Bancshares in the second quarter, subject to customary closing conditions, including regulatory and Sterling shareholder approvals.  Preparations for the integration of Sterling are moving forward, as planned. We expect to complete the systems conversions in the fourth quarter, and anticipate a smooth and seamless transition. Sterling also reported first quarter 2011 earnings today, and they were consistent with our expectations. The more work we do and the better we get to know Sterling, the more confident we are in the fit of our two organizations.”

 

- more -

 



 

First Quarter 2011 Highlights Compared to Fourth Quarter 2010

 

·                  Net income of $103 million, or $0.57 per fully diluted share, increased eight percent compared to the fourth quarter 2010.

·                  Average loans increased in the Global Corporate Banking business line ($276 million; six percent), in Energy Lending in the Specialty Businesses business line ($154 million; 12 percent) and in the Middle Market business line ($94 million; one percent).  These increases were more than offset by decreases in Mortgage Banker Finance in the Specialty Businesses business line ($535 million; 49 percent) and in the Commercial Real Estate business line ($324 million; seven percent), resulting in a decrease in average total loans of $448 million, or one percent.

·                  Average loans in the Texas market increased $389 million, or six percent, with increases in all major business lines other than Commercial Real Estate.

·                  Average core deposits increased $290 million in the first quarter 2011.

·                  The net interest margin of 3.25 percent decreased four basis points, primarily resulting from an increase in excess liquidity, represented by average balances deposited with the Federal Reserve Bank, and the maturity of interest rate swaps at positive spreads.

·                  Average earning assets increased $245 million in the first quarter 2011.

·                  Credit quality improvement continued in the first quarter 2011.  Net credit-related charge-offs decreased $12 million to $101 million. Internal watch list loans declined $376 million to $5.2 billion and nonaccrual loans decreased $84 million.  As a result, the provision for loan losses decreased $8 million to $49 million.

·                  Noninterest expenses totaled $415 million in the first quarter 2011, a decrease of $22 million from the fourth quarter 2010, primarily the result of a decrease in salaries expense of $17 million.

·                  The estimated Tier 1 ratio increased 24 basis points, to 10.37 percent at March 31, 2011, from December 31, 2010.

 

Net Interest Income and Net Interest Margin

 

(dollar amounts in millions)

 

1st Qtr ‘11

 

4th Qtr ‘10

 

1st Qtr ‘10

 

Net interest income

 

$

395

 

$

405

 

$

415

 

 

 

 

 

 

 

 

 

Net interest margin

 

3.25

%

3.29

%

3.18

%

 

 

 

 

 

 

 

 

Selected average balances:

 

 

 

 

 

 

 

Total earning assets

 

$

49,347

 

$

49,102

 

$

52,941

 

Total investment securities

 

7,311

 

7,112

 

7,382

 

Federal Reserve Bank deposits (excess liquidity) (a)

 

2,297

 

1,793

 

4,092

 

Total loans

 

39,551

 

39,999

 

41,313

 

 

 

 

 

 

 

 

 

Total core deposits (b)

 

40,186

 

39,896

 

37,236

 

Total noninterest-bearing deposits

 

15,459

 

15,607

 

14,624

 

 


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

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

 

2



 

·                  The $10 million decrease in net interest income in the first quarter 2011, when compared to the fourth quarter 2010, resulted primarily from two less days in the quarter and the maturity of interest rate swaps at positive spreads.

·                  The net interest margin of 3.25 percent declined four basis points compared to the fourth quarter 2010.  The decline in the net interest margin reflected the impact of an increase in excess liquidity and the maturity of interest rate swaps at positive spreads.

·                  Average earning assets increased $245 million, primarily due to increases of $504 million in Federal Reserve Bank deposits (excess liquidity) and $199 million in average investment securities available-for-sale, partially offset by a $448 million decrease in average loans.

·                  First quarter 2011 average core deposits increased $290 million compared to fourth quarter 2010, primarily reflecting increases in money market and NOW deposits ($495 million), partially offset by decreases in noninterest-bearing deposits ($148 million) and customer certificates of deposit ($93 million).

 

Noninterest Income

 

Noninterest income was $207 million for the first quarter 2011, compared to $215 million for the fourth quarter 2010.  The $8 million decline reflected increases in net income from principal investing and warrants ($4 million) and service charges on deposit accounts ($3 million), which were more than offset by decreases in commercial lending fees ($8 million) and bank-owned life insurance ($6 million).

 

Noninterest Expenses

 

Noninterest expenses totaled $415 million in the first quarter 2011, a decrease of $22 million from the fourth quarter 2010. The $22 million decrease in noninterest expenses was primarily due to a decrease in salaries expense ($17 million) and a one-time charge recognized in the fourth quarter 2010 related to the redemption of subordinated notes ($5 million), partially offset by an increase in employee benefits expense ($7 million).  The decrease in salaries expense primarily reflected a decrease in executive and business unit incentive expense ($8 million), a reduction in severance expense ($6 million) and the impact of two less days in the first quarter ($3 million), partially offset by an increase in share-based compensation expense ($5 million), resulting from annual share-based grants for retirement-eligible employees in the first quarter.

 

Credit Quality

 

“Overall, the first quarter results displayed a continuation of the steady improvement we have seen in our credit metrics over the last six quarters,” Babb said.  “First quarter net credit-related charge-offs decreased $12 million, with a significant decline in Commercial Real Estate, partially offset by an increase in Middle Market net charge-offs. The increase in Middle Market net charge-offs was primarily the result of several previously identified problem loans that are working their way through the collection process.  Based on our analysis of Middle Market default rates, risk rating migration patterns as well as the watch list and nonaccruals, which were stable, we believe that the increase in charge-offs this quarter is not a trend. Our credit culture has served us well.  It is one of our key strengths and has resulted in some of the best credit metrics among our peers.”

 

3



 

·                  Net credit-related charge-offs decreased $12 million to $101 million in the first quarter 2011, from $113 million in the fourth quarter 2010. The decrease in net credit-related charge-offs primarily reflected decreases of $29 million in the Commercial Real Estate business line, $13 million in the Private Banking business line and $7 million in the Specialty Businesses business line, partially offset by an increase of $36 million in the Middle Market business line.

·                  Internal watch list loans declined $376 million to $5.2 billion from December 31, 2010 to March 31, 2011.

·                  During the first quarter 2011, $166 million of loan relationships greater than $2 million were transferred to nonaccrual status, a decrease of $14 million from the fourth quarter 2010, primarily due to a $35 million decrease in transfers from the Commercial Real Estate business line and a $10 million decrease in transfers from the Private Banking business line, partially offset by a $30 million increase in transfers from the Middle Market business line.  Of the transfers of loan relationships greater than $2 million to nonaccrual in the first quarter 2011, $101 million were from the Middle Market business line, primarily in the Midwest and Other markets, and $37 million were from the Commercial Real Estate business line in the Midwest market.

·                  Nonperforming assets decreased $131 million to $1.1 billion, or 2.81 percent of total loans and foreclosed property, at March 31, 2011.

·                  Nonaccrual loans were charged down 46 percent at March 31, 2011.

·                  Foreclosed property decreased $38 million to $74 million at March 31, 2011, from $112 million at December 31, 2010.

·                  Loans past due 90 days or more and still accruing were $72 million at March 31, 2011, an increase of $10 million compared to December 31, 2010.

·                  The provision for loan losses decreased $8 million, primarily due to reductions in the Commercial Real Estate, Global Corporate Banking, Private Banking and Specialty Businesses business lines, partially offset by an increase in the Middle Market business line.

·                  The allowance for loan losses to total loans ratio was 2.17 percent and 2.24 percent at March 31, 2011 and December 31, 2010, respectively.

 

(dollar amounts in millions)

 

1st Qtr ‘11

 

4th Qtr ‘10

 

1st Qtr ‘10

 

Net credit-related charge-offs

 

$

101

 

$

113

 

$

173

 

Net credit-related charge-offs/Average total loans

 

1.03

%

1.13

%

1.68

%

 

 

 

 

 

 

 

 

Provision for loan losses

 

$

49

 

$

57

 

$

175

 

Provision for credit losses on lending-related commitments

 

(3

)

(3

)

7

 

Total provision for credit losses

 

46

 

54

 

182

 

 

 

 

 

 

 

 

 

Nonperforming loans

 

1,030

 

1,123

 

1,162

 

Nonperforming assets (NPAs)

 

1,104

 

1,235

 

1,251

 

NPAs/Total loans and foreclosed property

 

2.81

%

3.06

%

3.06

%

 

 

 

 

 

 

 

 

Loans past due 90 days or more and still accruing

 

$

72

 

$

62

 

$

83

 

 

 

 

 

 

 

 

 

Allowance for loan losses

 

849

 

901

 

987

 

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

 

32

 

35

 

44

 

Total allowance for credit losses

 

881

 

936

 

1,031

 

 

 

 

 

 

 

 

 

Allowance for loan losses/Total loans

 

2.17

%

2.24

%

2.42

%

Allowance for loan losses/Nonperforming loans

 

82

 

80

 

85

 

 


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

 

4



 

Balance Sheet and Capital Management

 

Total assets and common shareholders’ equity were $55.0 billion and $5.9 billion, respectively, at March 31, 2011, compared to $53.7 billion and $5.8 billion, respectively, at December 31, 2010. There were approximately 177 million common shares outstanding at March 31, 2011.  Comerica repurchased 400,000 shares of common stock in the open market in the first quarter 2011 under the share repurchase program.

 

Comerica’s tangible common equity ratio was 10.43 percent at March 31, 2011, a decrease of 11 basis points from December 31, 2010. The estimated Tier 1 ratio increased 24 basis points, to 10.37 percent at March 31, 2011, from December 31, 2010.

 

Full-Year 2011 Outlook Compared to Full-Year 2010

 

For full-year 2011, management expects the following, compared to full-year 2010, based on a continuation of modest growth in the economy.  This outlook does not include any impact from the pending acquisition of Sterling Bancshares, Inc.

 

·                  A low single-digit decrease in average loans. Excluding the Commercial Real Estate business line, a low single-digit increase in average loans.

·                  Average earning assets of approximately $48.5 billion, reflecting lower excess liquidity in addition to a decrease in average loans.

·                  An average net interest margin of 3.25 percent to 3.30 percent, based on no increase in the Federal Funds rate.

·                  Net credit-related charge-offs between $350 million and $400 million for full-year 2011. The provision for credit losses is expected to be between $150 million and $200 million for full-year 2011.

·                  A low single-digit decline in noninterest income compared to 2010, primarily due to the impact of regulatory changes.

·                  A low single-digit increase in noninterest expenses compared to 2010, primarily due to an increase in employee benefits expense.

·                  Income tax expense to approximate 36 percent of income before income taxes less approximately $60 million of permanent differences related to low-income housing and bank-owned life insurance.

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

 

5



 

Business Segments

 

Comerica’s continuing operations are strategically aligned into three major business segments: the Business Bank, the Retail Bank, and Wealth & Institutional Management.  The Finance Division also is included as a segment. The financial results below are based on the internal business unit structure of the Corporation and methodologies in effect at March 31, 2011 and are presented on a fully taxable equivalent (FTE) basis. The accompanying narrative addresses first quarter 2011 results compared to fourth quarter 2010.

 

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

 

(dollar amounts in millions)

 

1st Qtr ‘11

 

4th Qtr ‘10

 

1st Qtr ‘10

 

Business Bank

 

$

167

 

93

%

$

174

 

117

%

$

89

 

96

%

Retail Bank

 

(2

)

(1

)

(14

)

(10

)

(7

)

(8

)

Wealth & Institutional Management

 

14

 

8

 

(10

)

(7

)

11

 

12

 

 

 

179

 

100

%

150

 

100

%

93

 

100

%

Finance

 

(76

)

 

 

(60

)

 

 

(59

)

 

 

Other (a)

 

 

 

 

6

 

 

 

18

 

 

 

Total

 

$

103

 

 

 

$

96

 

 

 

$

52

 

 

 

 


(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)

 

1st Qtr ‘11

 

4th Qtr ‘10

 

1st Qtr ‘10

 

Net interest income (FTE)

 

$

341

 

$

341

 

$

341

 

Provision for loan losses

 

18

 

8

 

137

 

Noninterest income

 

77

 

81

 

76

 

Noninterest expenses

 

160

 

158

 

162

 

Net income

 

167

 

174

 

89

 

 

 

 

 

 

 

 

 

Net credit-related charge-offs

 

73

 

73

 

137

 

 

 

 

 

 

 

 

 

Selected average balances:

 

 

 

 

 

 

 

Assets

 

30,091

 

30,489

 

31,293

 

Loans

 

29,609

 

29,947

 

30,918

 

Deposits

 

20,084

 

19,892

 

17,750

 

 

 

 

 

 

 

 

 

Net interest margin

 

4.66

%

4.51

%

4.48

%

 

·                  Average loans decreased $338 million, reflecting increases in Global Corporate Banking, Energy Lending and Middle Market more than offset by decreases in Mortgage Banker Finance and Commercial Real Estate.

·                  Average deposits increased $192 million, primarily due to increases in Global Corporate Banking, Technology and Life Sciences and Mortgage Banker Finance partially offset by decreases in Middle Market, the Financial Services Division and Commercial Real Estate.

·                  The net interest margin of 4.66 percent increased 15 basis points, primarily due to an increase in deposit spreads and deposit balances.

·                  The provision for loan losses increased $10 million, primarily due to an increase in Middle Market, partially offset by decreases in Commercial Real Estate and Global Corporate Banking.

·                  Noninterest income decreased $4 million, primarily due to a decrease in commercial lending fees, partially offset by an increase in service charges on deposit accounts.

·                  Noninterest expenses increased $2 million, primarily due to an increase in other real estate expenses, partially offset by a decrease in corporate overhead expenses.

 

6



 

Retail Bank

 

(dollar amounts in millions)

 

1st Qtr ‘11

 

4th Qtr ‘10

 

1st Qtr ‘10

 

Net interest income (FTE)

 

$

139

 

$

134

 

$

130

 

Provision for loan losses

 

23

 

29

 

31

 

Noninterest income

 

42

 

43

 

44

 

Noninterest expenses

 

162

 

169

 

154

 

Net loss

 

(2

)

(14

)

(7

)

 

 

 

 

 

 

 

 

Net credit-related charge-offs

 

23

 

22

 

26

 

 

 

 

 

 

 

 

 

Selected average balances:

 

 

 

 

 

 

 

Assets

 

5,558

 

5,647

 

6,106

 

Loans

 

5,106

 

5,192

 

5,599

 

Deposits

 

17,360

 

17,271

 

16,718

 

 

 

 

 

 

 

 

 

Net interest margin

 

3.25

%

3.07

%

3.18

%

 

·                  Average loans decreased $86 million, primarily reflecting declines in all business lines in the Midwest market.

·                  Average deposits increased $89 million, primarily due to increases in transaction and money market deposits, partially offset by a decline in customer certificates of deposit.

·                  The net interest margin of 3.25 percent increased 18 basis points, primarily due to increases in deposit spreads, partially offset by a decrease in loan balances.

·                  The provision for loan losses decreased $6 million, primarily reflecting decreases in all business lines in the Midwest and Texas markets, partially offset by increases in all business lines in the Western market.

·                  Noninterest expenses decreased $7 million, primarily due to a decrease in corporate overhead and nominal decreases in other expense categories.

 

Wealth and Institutional Management

 

(dollar amounts in millions)

 

1st Qtr ‘11

 

4th Qtr ‘10

 

1st Qtr ‘10

 

Net interest income (FTE)

 

$

44

 

$

42

 

$

42

 

Provision for loan losses

 

8

 

23

 

12

 

Noninterest income

 

64

 

59

 

60

 

Noninterest expenses

 

78

 

93

 

73

 

Net income (loss)

 

14

 

(10

)

11

 

 

 

 

 

 

 

 

 

Net credit-related charge-offs

 

5

 

18

 

10

 

 

 

 

 

 

 

 

 

Selected average balances:

 

 

 

 

 

 

 

Assets

 

4,809

 

4,834

 

4,862

 

Loans

 

4,807

 

4,820

 

4,789

 

Deposits

 

2,800

 

2,730

 

2,791

 

 

 

 

 

 

 

 

 

Net interest margin

 

3.76

%

3.43

%

3.53

%

 

·                  Average loans decreased $13 million.

·                  Average deposits increased $70 million, primarily due to increases in transaction and money market deposits.

·                  The net interest margin of 3.76 percent increased 33 basis points, primarily due to an increase in deposit spreads, partially offset by a decrease in loan balances.

·                  The provision for loan losses decreased $15 million, primarily reflecting decreases in the Western and Midwest markets.

·                  Noninterest income increased $5 million, primarily due to increases in gains on the redemption of auction-rate securities and investment banking fees.

·                  Noninterest expenses decreased $15 million, primarily due to decreases in salaries expense, outside processing fees and corporate overhead expenses.

 

7



 

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 March 31, 2011 and are presented on a fully taxable equivalent (FTE) basis. The accompanying narrative addresses first quarter 2011 results compared to fourth quarter 2010.

 

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

 

(dollar amounts in millions)

 

1st Qtr ‘11

 

4th Qtr ‘10

 

1st Qtr ‘10

 

Midwest

 

$

53

 

30

%

$

35

 

23

%

$

26

 

28

%

Western

 

51

 

28

 

41

 

28

 

22

 

23

 

Texas

 

29

 

16

 

16

 

11

 

14

 

16

 

Florida

 

(4

)

(2

)

1

 

 

1

 

1

 

Other Markets

 

38

 

21

 

48

 

32

 

16

 

17

 

International

 

12

 

7

 

9

 

6

 

14

 

15

 

 

 

179

 

100

%

150

 

100

%

93

 

100

%

Finance & Other Businesses (a)

 

(76

)

 

 

(54

)

 

 

(41

)

 

 

Total

 

$

103

 

 

 

$

96

 

 

 

$

52

 

 

 

 


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

 

Midwest Market

 

(dollar amounts in millions)

 

1st Qtr ‘11

 

4th Qtr ‘10

 

1st Qtr ‘10

 

Net interest income (FTE)

 

$

203

 

$

202

 

$

204

 

Provision for loan losses

 

34

 

46

 

80

 

Noninterest income

 

100

 

99

 

102

 

Noninterest expenses

 

188

 

201

 

186

 

Net income

 

53

 

35

 

26

 

 

 

 

 

 

 

 

 

Net credit-related charge-offs

 

46

 

52

 

55

 

 

 

 

 

 

 

 

 

Selected average balances:

 

 

 

 

 

 

 

Assets

 

14,307

 

14,506

 

15,208

 

Loans

 

14,104

 

14,219

 

14,964

 

Deposits

 

18,230

 

17,959

 

17,056

 

 

 

 

 

 

 

 

 

Net interest margin

 

4.49

%

4.45

%

4.84

%

 

·                  Average loans decreased $115 million, with declines in most business lines, partially offset by increases in National Dealer Services, Global Corporate Banking and Middle Market.

·                  Average deposits increased $271 million, primarily due to increases in Global Corporate Banking, Personal Banking, the Financial Services Division and Private Banking, partially offset by decreases in Middle Market and Small Business Banking.

·                 The net interest margin of 4.49 percent increased four basis points, primarily due to increases in deposit spreads and deposit balances, partially offset by a decrease in loan balances and loan spreads.

·                  The provision for loan losses decreased $12 million, primarily due to decreases in Global Corporate Banking, Commercial Real Estate, Private Banking and Small Business Banking, partially offset by an increase in Middle Market.

·                  Noninterest expenses decreased $13 million, primarily due to decreases in corporate overhead expense, litigation and operational losses and outside processing fees, partially offset by an increase in other real estate expenses.

 

8



 

Western Market

 

(dollar amounts in millions)

 

1st Qtr ‘11

 

4th Qtr ‘10

 

1st Qtr ‘10

 

Net interest income (FTE)

 

$

164

 

$

158

 

$

161

 

Provision for loan losses

 

11

 

11

 

59

 

Noninterest income

 

37

 

35

 

36

 

Noninterest expenses

 

109

 

109

 

105

 

Net income

 

51

 

41

 

22

 

 

 

 

 

 

 

 

 

Net credit-related charge-offs

 

26

 

43

 

64

 

 

 

 

 

 

 

 

 

Selected average balances:

 

 

 

 

 

 

 

Assets

 

12,590

 

12,698

 

13,175

 

Loans

 

12,383

 

12,497

 

12,980

 

Deposits

 

12,235

 

12,448

 

11,927

 

 

 

 

 

 

 

 

 

Net interest margin

 

5.37

%

5.01

%

5.04

%

 

·                  Average loans decreased $114 million, primarily due to decreases in Commercial Real Estate and National Dealer Services, partially offset by increases in Middle Market and Global Corporate Banking.

·                  Average deposits decreased $213 million, primarily due to decreases in the Financial Services Division, Middle Market and Commercial Real Estate, partially offset by increases in Technology and Life Sciences and Global Corporate Banking.

·                  The net interest margin of 5.37 percent increased 36 basis points, primarily due to increases in loan and deposit spreads, partially offset by a decrease in deposit balances.

·                  Noninterest income increased $2 million, primarily due to an increase in warrant income.

 

Texas Market

 

(dollar amounts in millions)

 

1st Qtr ‘11

 

4th Qtr ‘10

 

1st Qtr ‘10

 

Net interest income (FTE)

 

$

87

 

$

80

 

$

79

 

Provision for loan losses

 

4

 

15

 

17

 

Noninterest income

 

23

 

27

 

20

 

Noninterest expenses

 

61

 

67

 

60

 

Net income

 

29

 

16

 

14

 

 

 

 

 

 

 

 

 

Total net credit-related charge-offs

 

8

 

9

 

25

 

 

 

 

 

 

 

 

 

Selected average balances:

 

 

 

 

 

 

 

Assets

 

7,031

 

6,653

 

6,892

 

Loans

 

6,824

 

6,435

 

6,704

 

Deposits

 

5,786

 

5,557

 

4,957

 

 

 

 

 

 

 

 

 

Net interest margin

 

5.17

%

4.91

%

4.79

%

 

·                  Average loans increased $389 million, primarily due to increases in Energy Lending, Middle Market and Global Corporate Banking, partially offset by a decrease in Commercial Real Estate.

·                  Average deposits increased $229 million, primarily due to increases in Global Corporate Banking, Technology and Life Sciences and Energy Lending, partially offset by a decrease in Middle Market.

·                  The net interest margin of 5.17 percent increased 26 basis points, primarily due to increases in loan and deposit spreads and deposit balances.

·                  The provision for loan losses decreased $11 million, with decreases across all lines of business.

·                  Noninterest income decreased $4 million, primarily due to decreases in commercial lending fees and warrant income.

·                  Noninterest expenses decreased $6 million, primarily due to decreases in salaries expense and other real estate expenses.

 

9



 

Florida Market

 

(dollar amounts in millions)

 

1st Qtr ‘11

 

4th Qtr ‘10

 

1st Qtr ‘10

 

Net interest income (FTE)

 

$

11

 

$

11

 

$

10

 

Provision for loan losses

 

8

 

4

 

3

 

Noninterest income

 

4

 

3

 

3

 

Noninterest expenses

 

12

 

9

 

9

 

Net income (loss)

 

(4

)

1

 

1

 

 

 

 

 

 

 

 

 

Net credit-related charge-offs

 

8

 

7

 

10

 

 

 

 

 

 

 

 

 

Selected average balances:

 

 

 

 

 

 

 

Assets

 

1,553

 

1,587

 

1,576

 

Loans

 

1,580

 

1,612

 

1,576

 

Deposits

 

367

 

375

 

361

 

 

 

 

 

 

 

 

 

Net interest margin

 

2.82

%

2.64

%

2.54

%

 

·                  Average loans decreased $32 million, primarily due to decreases in Commercial Real Estate and Global Corporate Banking.

·                  Average deposits decreased $8 million, primarily due to a decrease in Global Corporate Banking.

·                  The net interest margin of 2.82 percent increased 18 basis points, primarily due to an increase in loan and deposit spreads.

·                  The provision for loan losses increased $4 million, primarily due to increases in Middle Market and Private Banking.

·                  Noninterest expenses increased $3 million, primarily due to an increase in other real estate expenses.

 

Conference Call and Webcast

 

Comerica will host a conference call to review first quarter 2011 financial results at 7 a.m. CT Tuesday, April 19, 2011. Interested parties may access the conference call by calling (800) 309-2262 or (706) 679-5261 (event ID No. 51888978). 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 April 30, 2011. The conference call replay can be accessed by calling (800) 642-1687 or (706) 645-9291 (event ID No. 51888978). A replay of the Webcast can also be accessed via Comerica’s “Investor Relations” page at www.comerica.com.

 

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

 

10



 

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,” “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. 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.

 

11



 

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 WILL 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.”

 

Comerica and Sterling and certain of their directors and executive officers may be deemed to be participants in the solicitation of proxies from the shareholders of Sterling in connection with the proposed merger. Information about the directors and executive officers of Comerica is set forth in the proxy statement for Comerica’s 2011 annual meeting of shareholders, as filed with the SEC on a Schedule 14A on March 18, 2011. Information about the directors and executive officers of Sterling is set forth in Sterling’s Form 10-K/A filed with the SEC on April 8, 2011. Additional information regarding the interests of those participants and other persons who may be deemed participants in the transaction may be obtained by reading the above-referenced definitive Proxy Statement/Prospectus and other relevant materials filed with the SEC. Free copies of these documents may be obtained as described in the preceding paragraph.

 

Media Contact:

Investor Contacts:

Wayne J. Mielke

Darlene P. Persons

(214) 462-4463

(214) 462-6831

 

 

 

Tracy Fralick

 

(214) 462-6834

 

12



 

CONSOLIDATED FINANCIAL HIGHLIGHTS (unaudited)

Comerica Incorporated and Subsidiaries

 

 

 

Three Months Ended

 

 

 

March 31,

 

December 31,

 

March 31,

 

(in millions, except per share data)

 

2011

 

2010

 

2010

 

PER COMMON SHARE AND COMMON STOCK DATA

 

 

 

 

 

 

 

Diluted net income (loss)

 

$

0.57

 

$

0.53

 

$

(0.46

)

Cash dividends declared

 

0.10

 

0.10

 

0.05

 

Common shareholders’ equity (at period end)

 

33.25

 

32.82

 

32.15

 

 

 

 

 

 

 

 

 

Average diluted shares (in thousands)

 

178,425

 

178,266

 

155,155

 

KEY RATIOS

 

 

 

 

 

 

 

Return on average common shareholders’ equity

 

7.08

%

6.53

%

(5.61

)%

Return on average assets

 

0.77

 

0.71

 

0.36

 

Tier 1 common capital ratio (a) (b)

 

10.37

 

10.13

 

9.57

 

Tier 1 risk-based capital ratio (b)

 

10.37

 

10.13

 

10.38

 

Total risk-based capital ratio (b)

 

14.83

 

14.54

 

14.91

 

Leverage ratio (b)

 

11.37

 

11.26

 

11.00

 

Tangible common equity ratio (a)

 

10.43

 

10.54

 

9.68

 

AVERAGE BALANCES

 

 

 

 

 

 

 

Commercial loans

 

$

21,496

 

$

21,464

 

$

21,015

 

Real estate construction loans:

 

 

 

 

 

 

 

Commercial Real Estate business line (c)

 

1,754

 

1,944

 

2,931

 

Other business lines (d)

 

425

 

427

 

455

 

Commercial mortgage loans:

 

 

 

 

 

 

 

Commercial Real Estate business line (c)

 

1,978

 

2,016

 

1,908

 

Other business lines (d)

 

7,812

 

7,949

 

8,479

 

Residential mortgage loans

 

1,599

 

1,600

 

1,632

 

Consumer loans

 

2,281

 

2,367

 

2,481

 

Lease financing

 

987

 

1,044

 

1,130

 

International loans

 

1,219

 

1,188

 

1,282

 

Total loans

 

39,551

 

39,999

 

41,313

 

 

 

 

 

 

 

 

 

Earning assets

 

49,347

 

49,102

 

52,941

 

Total assets

 

53,775

 

53,756

 

57,519

 

Noninterest-bearing deposits

 

15,459

 

15,607

 

14,624

 

Interest-bearing core deposits

 

24,727

 

24,289

 

22,612

 

Total core deposits

 

40,186

 

39,896

 

37,236

 

Common shareholders’ equity

 

5,835

 

5,870

 

5,070

 

Total shareholders’ equity

 

5,835

 

5,870

 

6,864

 

NET INTEREST INCOME

 

 

 

 

 

 

 

Net interest income (fully taxable equivalent basis)

 

$

396

 

$

406

 

$

416

 

Fully taxable equivalent adjustment

 

1

 

1

 

1

 

Net interest margin (fully taxable equivalent basis)

 

3.25

%

3.29

%

3.18

%

CREDIT QUALITY

 

 

 

 

 

 

 

Nonaccrual loans

 

$

996

 

$

1,080

 

$

1,145

 

Reduced-rate loans

 

34

 

43

 

17

 

Total nonperforming loans

 

1,030

 

1,123

 

1,162

 

Foreclosed property

 

74

 

112

 

89

 

Total nonperforming assets

 

1,104

 

1,235

 

1,251

 

 

 

 

 

 

 

 

 

Loans past due 90 days or more and still accruing

 

72

 

62

 

83

 

 

 

 

 

 

 

 

 

Gross loan charge-offs

 

123

 

140

 

184

 

Loan recoveries

 

22

 

27

 

11

 

Net loan charge-offs

 

101

 

113

 

173

 

Lending-related commitment charge-offs

 

 

 

 

Total net credit-related charge-offs

 

101

 

113

 

173

 

 

 

 

 

 

 

 

 

Allowance for loan losses

 

849

 

901

 

987

 

Allowance for credit losses on lending-related commitments

 

32

 

35

 

44

 

Total allowance for credit losses

 

881

 

936

 

1,031

 

 

 

 

 

 

 

 

 

Allowance for loan losses as a percentage of total loans

 

2.17

%

2.24

%

2.42

%

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

 

1.03

 

1.13

 

1.68

 

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

 

1.03

 

1.13

 

1.68

 

Nonperforming assets as a percentage of total loans and foreclosed property

 

2.81

 

3.06

 

3.06

 

Allowance for loan losses as a percentage of total nonperforming loans

 

82

 

80

 

85

 

 


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

(b) March 31, 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

 

 

 

March 31,

 

December 31,

 

March 31,

 

(in millions, except share data)

 

2011

 

2010

 

2010

 

 

 

(unaudited)

 

 

 

(unaudited)

 

ASSETS

 

 

 

 

 

 

 

Cash and due from banks

 

$

875

 

$

668

 

$

769

 

 

 

 

 

 

 

 

 

Interest-bearing deposits with banks

 

3,570

 

1,415

 

3,860

 

Other short-term investments

 

154

 

141

 

165

 

 

 

 

 

 

 

 

 

Investment securities available-for-sale

 

7,406

 

7,560

 

7,346

 

 

 

 

 

 

 

 

 

Commercial loans

 

21,360

 

22,145

 

20,756

 

Real estate construction loans

 

2,023

 

2,253

 

3,202

 

Commercial mortgage loans

 

9,697

 

9,767

 

10,358

 

Residential mortgage loans

 

1,550

 

1,619

 

1,631

 

Consumer loans

 

2,262

 

2,311

 

2,472

 

Lease financing

 

958

 

1,009

 

1,120

 

International loans

 

1,326

 

1,132

 

1,306

 

Total loans

 

39,176

 

40,236

 

40,845

 

Less allowance for loan losses

 

(849

)

(901

)

(987

)

Net loans

 

38,327

 

39,335

 

39,858

 

 

 

 

 

 

 

 

 

Premises and equipment

 

637

 

630

 

637

 

Customers’ liability on acceptances outstanding

 

14

 

9

 

21

 

Accrued income and other assets

 

4,034

 

3,909

 

4,450

 

Total assets

 

$

55,017

 

$

53,667

 

$

57,106

 

 

 

 

 

 

 

 

 

LIABILITIES AND SHAREHOLDERS’ EQUITY

 

 

 

 

 

 

 

Noninterest-bearing deposits

 

$

16,357

 

$

15,538

 

$

15,290

 

 

 

 

 

 

 

 

 

Money market and NOW deposits

 

17,888

 

17,622

 

16,009

 

Savings deposits

 

1,457

 

1,397

 

1,462

 

Customer certificates of deposit

 

5,672

 

5,482

 

5,979

 

Other time deposits

 

 

 

814

 

Foreign office time deposits

 

499

 

432

 

412

 

Total interest-bearing deposits

 

25,516

 

24,933

 

24,676

 

Total deposits

 

41,873

 

40,471

 

39,966

 

 

 

 

 

 

 

 

 

Short-term borrowings

 

61

 

130

 

489

 

Acceptances outstanding

 

14

 

9

 

21

 

Accrued expenses and other liabilities

 

1,076

 

1,126

 

1,047

 

Medium- and long-term debt

 

6,116

 

6,138

 

9,915

 

Total liabilities

 

49,140

 

47,874

 

51,438

 

 

 

 

 

 

 

 

 

Common stock - $5 par value:

 

 

 

 

 

 

 

Authorized - 325,000,000 shares

 

 

 

 

 

 

 

Issued - 203,878,110 shares

 

1,019

 

1,019

 

1,019

 

Capital surplus

 

1,464

 

1,481

 

1,468

 

Accumulated other comprehensive loss

 

(382

)

(389

)

(303

)

Retained earnings

 

5,317

 

5,247

 

5,064

 

Less cost of common stock in treasury - 27,103,941 shares at 3/31/11, 27,342,518 shares at 12/31/10, and 27,575,283 shares at 3/31/10

 

(1,541

)

(1,565

)

(1,580

)

Total shareholders’ equity

 

5,877

 

5,793

 

5,668

 

Total liabilities and shareholders’ equity

 

$

55,017

 

$

53,667

 

$

57,106

 

 

14



 

CONSOLIDATED STATEMENTS OF INCOME (unaudited)

Comerica Incorporated and Subsidiaries

 

 

 

Three Months Ended

 

 

 

March 31,

 

(in millions, except per share data)

 

2011

 

2010

 

 

 

 

 

 

 

INTEREST INCOME

 

 

 

 

 

Interest and fees on loans

 

$

375

 

$

412

 

Interest on investment securities

 

57

 

61

 

Interest on short-term investments

 

2

 

3

 

Total interest income

 

434

 

476

 

 

 

 

 

 

 

INTEREST EXPENSE

 

 

 

 

 

Interest on deposits

 

22

 

35

 

Interest on short-term borrowings

 

 

 

Interest on medium- and long-term debt

 

17

 

26

 

Total interest expense

 

39

 

61

 

Net interest income

 

395

 

415

 

Provision for loan losses

 

49

 

175

 

Net interest income after provision for loan losses

 

346

 

240

 

 

 

 

 

 

 

NONINTEREST INCOME

 

 

 

 

 

Service charges on deposit accounts

 

52

 

56

 

Fiduciary income

 

39

 

39

 

Commercial lending fees

 

21

 

22

 

Letter of credit fees

 

18

 

18

 

Card fees

 

15

 

13

 

Foreign exchange income

 

9

 

10

 

Bank-owned life insurance

 

8

 

8

 

Brokerage fees

 

6

 

6

 

Net securities gains

 

2

 

2

 

Other noninterest income

 

37

 

20

 

Total noninterest income

 

207

 

194

 

 

 

 

 

 

 

NONINTEREST EXPENSES

 

 

 

 

 

Salaries

 

188

 

169

 

Employee benefits

 

50

 

44

 

Total salaries and employee benefits

 

238

 

213

 

Net occupancy expense

 

40

 

41

 

Equipment expense

 

15

 

17

 

Outside processing fee expense

 

24

 

23

 

Software expense

 

23

 

22

 

FDIC insurance expense

 

15

 

17

 

Legal fees

 

9

 

8

 

Advertising expense

 

7

 

8

 

Other real estate expense

 

8

 

12

 

Litigation and operational losses

 

3

 

1

 

Provision for credit losses on lending-related commitments

 

(3

)

7

 

Other noninterest expenses

 

36

 

35

 

Total noninterest expenses

 

415

 

404

 

Income from continuing operations before income taxes

 

138

 

30

 

Provision (benefit) for income taxes

 

35

 

(5

)

Income from continuing operations

 

103

 

35

 

Income from discontinued operations, net of tax

 

 

17

 

NET INCOME

 

103

 

52

 

Less:

 

 

 

 

 

Preferred stock dividends

 

 

123

 

Income allocated to participating securities

 

1

 

 

Net income (loss) attributable to common shares

 

$

102

 

$

(71

)

 

 

 

 

 

 

Basic earnings per common share:

 

 

 

 

 

Income (loss) from continuing operations

 

$

0.58

 

$

(0.57

)

Net income (loss)

 

0.58

 

(0.46

)

 

 

 

 

 

 

Diluted earnings per common share:

 

 

 

 

 

Income (loss) from continuing operations

 

0.57

 

(0.57

)

Net income (loss)

 

0.57

 

(0.46

)

 

 

 

 

 

 

Cash dividends declared on common stock

 

18

 

9

 

Cash dividends declared per common share

 

0.10

 

0.05

 

 

15



 

CONSOLIDATED QUARTERLY STATEMENTS OF INCOME (unaudited)

Comerica Incorporated and Subsidiaries

 

 

 

First

 

Fourth

 

Third

 

Second

 

First

 

First Quarter 2011 Compared To:

 

 

 

Quarter

 

Quarter

 

Quarter

 

Quarter

 

Quarter

 

Fourth Quarter 2010

 

First Quarter 2010

 

(in millions, except per share data)

 

2011

 

2010

 

2010

 

2010

 

2010

 

Amount

 

Percent

 

Amount

 

Percent

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

INTEREST INCOME

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest and fees on loans

 

$

375

 

$

394

 

$

399

 

$

412

 

$

412

 

$

(19

)

(5

)%

$

(37

)

(9

)%

Interest on investment securities

 

57

 

49

 

55

 

61

 

61

 

8

 

16

 

(4

)

(7

)

Interest on short-term investments

 

2

 

2

 

2

 

3

 

3

 

 

44

 

(1

)

(25

)

Total interest income

 

434

 

445

 

456

 

476

 

476

 

(11

)

(2

)

(42

)

(9

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

INTEREST EXPENSE

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest on deposits

 

22

 

24

 

27

 

29

 

35

 

(2

)

(8

)

(13

)

(36

)

Interest on short-term borrowings

 

 

1

 

 

 

 

(1

)

(39

)

 

8

 

Interest on medium- and long-term debt

 

17

 

15

 

25

 

25

 

26

 

2

 

5

 

(9

)

(35

)

Total interest expense

 

39

 

40

 

52

 

54

 

61

 

(1

)

(3

)

(22

)

(35

)

Net interest income

 

395

 

405

 

404

 

422

 

415

 

(10

)

(2

)

(20

)

(5

)

Provision for loan losses

 

49

 

57

 

122

 

126

 

175

 

(8

)

(14

)

(126

)

(72

)

Net interest income after provision for loan losses

 

346

 

348

 

282

 

296

 

240

 

(2

)

 

106

 

44

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NONINTEREST INCOME

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Service charges on deposit accounts

 

52

 

49

 

51

 

52

 

56

 

3

 

6

 

(4

)

(7

)

Fiduciary income

 

39

 

39

 

38

 

38

 

39

 

 

 

 

 

Commercial lending fees

 

21

 

29

 

22

 

22

 

22

 

(8

)

(29

)

(1

)

(3

)

Letter of credit fees

 

18

 

20

 

19

 

19

 

18

 

(2

)

(6

)

 

1

 

Card fees

 

15

 

15

 

15

 

15

 

13

 

 

(5

)

2

 

10

 

Foreign exchange income

 

9

 

11

 

8

 

10

 

10

 

(2

)

(16

)

(1

)

(7

)

Bank-owned life insurance

 

8

 

14

 

9

 

9

 

8

 

(6

)

(41

)

 

1

 

Brokerage fees

 

6

 

7

 

6

 

6

 

6

 

(1

)

(8

)

 

7

 

Net securities gains

 

2

 

 

 

1

 

2

 

2

 

N/M

 

 

14

 

Other noninterest income

 

37

 

31

 

18

 

22

 

20

 

6

 

18

 

17

 

82

 

Total noninterest income

 

207

 

215

 

186

 

194

 

194

 

(8

)

(4

)

13

 

7

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NONINTEREST EXPENSES

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Salaries

 

188

 

205

 

187

 

179

 

169

 

(17

)

(8

)

19

 

11

 

Employee benefits

 

50

 

43

 

47

 

45

 

44

 

7

 

16

 

6

 

15

 

Total salaries and employee benefits

 

238

 

248

 

234

 

224

 

213

 

(10

)

(4

)

25

 

12

 

Net occupancy expense

 

40

 

42

 

40

 

39

 

41

 

(2

)

(3

)

(1

)

(5

)

Equipment expense

 

15

 

16

 

15

 

15

 

17

 

(1

)

(4

)

(2

)

(6

)

Outside processing fee expense

 

24

 

27

 

23

 

23

 

23

 

(3

)

(13

)

1

 

4

 

Software expense

 

23

 

23

 

22

 

22

 

22

 

 

(7

)

1

 

2

 

FDIC insurance expense

 

15

 

15

 

14

 

16

 

17

 

 

3

 

(2

)

(11

)

Legal fees

 

9

 

9

 

9

 

9

 

8

 

 

(1

)

1

 

 

Advertising expense

 

7

 

8

 

7

 

7

 

8

 

(1

)

(8

)

(1

)

(5

)

Other real estate expense

 

8

 

5

 

7

 

5

 

12

 

3

 

91

 

(4

)

(28

)

Litigation and operational losses

 

3

 

6

 

2

 

2

 

1

 

(3

)

(51

)

2

 

N/M

 

Provision for credit losses on lending-related commitments

 

(3

)

(3

)

(6

)

 

7

 

 

34

 

(10

)

N/M

 

Other noninterest expenses

 

36

 

41

 

35

 

35

 

35

 

(5

)

(14

)

1

 

1

 

Total noninterest expenses

 

415

 

437

 

402

 

397

 

404

 

(22

)

(5

)

11

 

3

 

Income from continuing operations before income taxes

 

138

 

126

 

66

 

93

 

30

 

12

 

10

 

108

 

N/M

 

Provision (benefit) for income taxes

 

35

 

30

 

7

 

23

 

(5

)

5

 

17

 

40

 

N/M

 

Income from continuing operations

 

103

 

96

 

59

 

70

 

35

 

7

 

8

 

68

 

N/M

 

Income from discontinued operations, net of tax

 

 

 

 

 

17

 

 

 

(17

)

N/M

 

NET INCOME

 

103

 

96

 

59

 

70

 

52

 

7

 

8

 

51

 

99

 

Less:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Preferred stock dividends

 

 

 

 

 

123

 

 

 

(123

)

N/M

 

Income allocated to participating securities

 

1

 

1

 

 

1

 

 

 

25

 

1

 

N/M

 

Net income (loss) attributable to common shares

 

$

102

 

$

95

 

$

59

 

$

69

 

$

(71

)

$

7

 

8

%

$

173

 

N/M

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic earnings per common share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income (loss) from continuing operations

 

$

0.58

 

$

0.54

 

$

0.34

 

$

0.40

 

$

(0.57

)

$

0.04

 

7

%

$

1.15

 

N/M

%

Net income (loss)

 

0.58

 

0.54

 

0.34

 

0.40

 

(0.46

)

0.04

 

7

 

1.04

 

N/M

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted earnings per common share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income (loss) from continuing operations

 

0.57

 

0.53

 

0.33

 

0.39

 

(0.57

)

0.04

 

8

 

1.14

 

N/M

 

Net income (loss)

 

0.57

 

0.53

 

0.33

 

0.39

 

(0.46

)

0.04

 

8

 

1.03

 

N/M

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash dividends declared on common stock

 

18

 

18

 

9

 

8

 

9

 

 

 

9

 

N/M

 

Cash dividends declared per common share

 

0.10

 

0.10

 

0.05

 

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)

 

1st Qtr

 

4th Qtr

 

3rd Qtr

 

2nd Qtr

 

1st Qtr

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at beginning of period

 

$

901

 

$

957

 

$

967

 

$

987

 

$

985

 

 

 

 

 

 

 

 

 

 

 

 

 

Loan charge-offs:

 

 

 

 

 

 

 

 

 

 

 

Commercial

 

65

 

43

 

38

 

65

 

49

 

Real estate construction:

 

 

 

 

 

 

 

 

 

 

 

Commercial Real Estate business line (a)

 

8

 

34

 

40

 

30

 

71

 

Other business lines (b)

 

1

 

 

1

 

 

3

 

Total real estate construction

 

9

 

34

 

41

 

30

 

74

 

Commercial mortgage:

 

 

 

 

 

 

 

 

 

 

 

Commercial Real Estate business line (a)

 

9

 

9

 

16

 

12

 

16

 

Other business lines (b)

 

25

 

34

 

40

 

36

 

28

 

Total commercial mortgage

 

34

 

43

 

56

 

48

 

44

 

Residential mortgage

 

2

 

5

 

2

 

5

 

2

 

Consumer

 

8

 

15

 

7

 

9

 

8

 

Lease financing

 

 

 

 

1

 

 

International

 

5

 

 

1

 

 

7

 

Total loan charge-offs

 

123

 

140

 

145

 

158

 

184

 

 

 

 

 

 

 

 

 

 

 

 

 

Recoveries on loans previously charged-off:

 

 

 

 

 

 

 

 

 

 

 

Commercial

 

4

 

7

 

7

 

4

 

7

 

Real estate construction

 

2

 

3

 

1

 

6

 

1

 

Commercial mortgage

 

9

 

10

 

2

 

1

 

3

 

Residential mortgage

 

 

1

 

 

 

 

Consumer

 

1

 

2

 

1

 

1

 

 

Lease financing

 

5

 

4

 

1

 

 

 

International

 

1

 

 

1

 

 

 

Total recoveries

 

22

 

27

 

13

 

12

 

11

 

Net loan charge-offs

 

101

 

113

 

132

 

146

 

173

 

Provision for loan losses

 

49

 

57

 

122

 

126

 

175

 

Balance at end of period

 

$

849

 

$

901

 

$

957

 

$

967

 

$

987

 

 

 

 

 

 

 

 

 

 

 

 

 

Allowance for loan losses as a percentage of total loans

 

2.17

%

2.24

%

2.38

%

2.38

%

2.42

%

 

 

 

 

 

 

 

 

 

 

 

 

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

 

1.03

 

1.13

 

1.32

 

1.44

 

1.68

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

1.03

 

1.13

 

1.32

 

1.44

 

1.68

 

 


(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)

 

1st Qtr

 

4th Qtr

 

3rd Qtr

 

2nd Qtr

 

1st Qtr

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at beginning of period

 

$

35

 

$

38

 

$

44

 

$

44

 

$

37

 

Add: Provision for credit losses on lending-related commitments

 

(3

)

(3

)

(6

)

 

7

 

Balance at end of period

 

$

32

 

$

35

 

$

38

 

$

44

 

$

44

 

 

 

 

 

 

 

 

 

 

 

 

 

Unfunded lending-related commitments sold

 

$

2

 

$

 

$

 

$

2

 

$

 

 

17



 

NONPERFORMING ASSETS (unaudited)

Comerica Incorporated and Subsidiaries

 

 

 

2011

 

2010

 

(in millions)

 

1st Qtr

 

4th Qtr

 

3rd Qtr

 

2nd Qtr

 

1st Qtr

 

 

 

 

 

 

 

 

 

 

 

 

 

SUMMARY OF NONPERFORMING ASSETS AND PAST DUE LOANS

 

 

 

 

 

 

 

Nonaccrual loans:

 

 

 

 

 

 

 

 

 

 

 

Business loans:

 

 

 

 

 

 

 

 

 

 

 

Commercial

 

$

226

 

$

252

 

$

258

 

$

239

 

$

209

 

Real estate construction:

 

 

 

 

 

 

 

 

 

 

 

Commercial Real Estate business line (a)

 

195

 

259

 

362

 

385

 

516

 

Other business lines (b)

 

3

 

4

 

4

 

4

 

3

 

Total real estate construction

 

198

 

263

 

366

 

389

 

519

 

Commercial mortgage:

 

 

 

 

 

 

 

 

 

 

 

Commercial Real Estate business line (a)

 

197

 

181

 

153

 

135

 

105

 

Other business lines (b)

 

293

 

302

 

304

 

257

 

226

 

Total commercial mortgage

 

490

 

483

 

457

 

392

 

331

 

Lease financing

 

7

 

7

 

10

 

11

 

11

 

International

 

4

 

2

 

2

 

3

 

4

 

Total nonaccrual business loans

 

925

 

1,007

 

1,093

 

1,034

 

1,074

 

Retail loans:

 

 

 

 

 

 

 

 

 

 

 

Residential mortgage

 

58

 

55

 

59

 

53

 

58

 

Consumer:

 

 

 

 

 

 

 

 

 

 

 

Home equity

 

6

 

5

 

5

 

7

 

8

 

Other consumer

 

7

 

13

 

6

 

4

 

5

 

Total consumer

 

13

 

18

 

11

 

11

 

13

 

Total nonaccrual retail loans

 

71

 

73

 

70

 

64

 

71

 

Total nonaccrual loans

 

996

 

1,080

 

1,163

 

1,098

 

1,145

 

Reduced-rate loans

 

34

 

43

 

28

 

23

 

17

 

Total nonperforming loans

 

1,030

 

1,123

 

1,191

 

1,121

 

1,162

 

Foreclosed property

 

74

 

112

 

120

 

93

 

89

 

Total nonperforming assets

 

$

1,104

 

$

1,235

 

$

1,311

 

$

1,214

 

$

1,251

 

 

 

 

 

 

 

 

 

 

 

 

 

Nonperforming loans as a percentage of total loans

 

2.63

%

2.79

%

2.96

%

2.76

%

2.85

%

Nonperforming assets as a percentage of total loans and foreclosed property

 

2.81

 

3.06

 

3.24

 

2.98

 

3.06

 

Allowance for loan losses as a percentage of total nonperforming loans

 

82

 

80

 

80

 

86

 

85

 

Loans past due 90 days or more and still accruing

 

$

72

 

$

62

 

$

104

 

$

115

 

$

83

 

 

 

 

 

 

 

 

 

 

 

 

 

ANALYSIS OF NONACCRUAL LOANS

 

 

 

 

 

 

 

 

 

 

 

Nonaccrual loans at beginning of period

 

$

1,080

 

$

1,163

 

$

1,098

 

$

1,145

 

$

1,165

 

Loans transferred to nonaccrual (c)

 

166

 

180

 

294

 

199

 

245

 

Nonaccrual business loan gross charge-offs (d)

 

(111

)

(120

)

(136

)

(143

)

(174

)

Loans transferred to accrual status (c)

 

(4

)

(4

)

(10

)

 

 

Nonaccrual business loans sold (e)

 

(60

)

(41

)

(12

)

(47

)

(44

)

Payments/Other (f)

 

(75

)

(98

)

(71

)

(56

)

(47

)

Nonaccrual loans at end of period

 

$

996

 

$

1,080

 

$

1,163

 

$

1,098

 

$

1,145

 

 


(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

 

$

111

 

$

120

 

$

136

 

$

143

 

$

174

 

Performing watch list loans

 

2

 

 

 

1

 

 

Consumer and residential mortgage loans

 

10

 

20

 

9

 

14

 

10

 

Total gross loan charge-offs

 

$

123

 

$

140

 

$

145

 

$

158

 

$

184

 

 

 

 

 

 

 

 

 

 

 

 

 

(e) Analysis of loans sold:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Nonaccrual business loans

 

$

60

 

$

41

 

$

12

 

$

47

 

$

44

 

Performing watch list loans

 

35

 

29

 

7

 

15

 

12

 

Total loans sold

 

$

95

 

$

70

 

$

19

 

$

62

 

$

56

 

 

(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

 

 

 

Three Months Ended

 

 

 

March 31, 2011

 

December 31, 2010

 

March 31, 2010

 

 

 

Average

 

 

 

Average

 

Average

 

 

 

Average

 

Average

 

 

 

Average

 

(dollar amounts in millions)

 

Balance

 

Interest

 

Rate

 

Balance

 

Interest

 

Rate

 

Balance

 

Interest

 

Rate

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial loans

 

$

21,496

 

$

200

 

3.76

%

$

21,464

 

$

206

 

3.80

%

$

21,015

 

$

205

 

3.96

%

Real estate construction loans

 

2,179

 

19

 

3.51

 

2,371

 

21

 

3.50

 

3,386

 

25

 

2.95

 

Commercial mortgage loans

 

9,790

 

95

 

3.95

 

9,965

 

100

 

3.97

 

10,387

 

107

 

4.18

 

Residential mortgage loans

 

1,599

 

21

 

5.24

 

1,600

 

20

 

5.11

 

1,632

 

22

 

5.41

 

Consumer loans

 

2,281

 

19

 

3.42

 

2,367

 

21

 

3.50

 

2,481

 

22

 

3.58

 

Lease financing

 

987

 

9

 

3.62

 

1,044

 

11

 

4.36

 

1,130

 

11

 

3.75

 

International loans

 

1,219

 

12

 

3.87

 

1,188

 

11

 

3.86

 

1,282

 

12

 

3.93

 

Business loan swap income

 

 

1

 

 

 

4

 

 

 

8

 

 

Total loans

 

39,551

 

376

 

3.85

 

39,999

 

394

 

3.92

 

41,313

 

412

 

4.04

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Auction-rate securities available-for-sale

 

554

 

1

 

0.88

 

617

 

2

 

0.92

 

879

 

2

 

0.93

 

Other investment securities available-for-sale

 

6,757

 

56

 

3.37

 

6,495

 

48

 

3.07

 

6,503

 

60

 

3.72

 

Total investment securities available-for-sale

 

7,311

 

57

 

3.17

 

7,112

 

50

 

2.87

 

7,382

 

62

 

3.38

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Federal funds sold and securities purchased under agreements to resell

 

3

 

 

0.32

 

8

 

 

0.32

 

 

 

 

Interest-bearing deposits with banks (a)

 

2,354

 

1

 

0.26

 

1,856

 

1

 

0.25

 

4,122

 

2

 

0.25

 

Other short-term investments

 

128

 

1

 

2.68

 

127

 

1

 

1.40

 

124

 

1

 

1.75

 

Total earning assets

 

49,347

 

435

 

3.57

 

49,102

 

446

 

3.62

 

52,941

 

477

 

3.65

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash and due from banks

 

884

 

 

 

 

 

871

 

 

 

 

 

788

 

 

 

 

 

Allowance for loan losses

 

(908

)

 

 

 

 

(979

)

 

 

 

 

(1,058

)

 

 

 

 

Accrued income and other assets

 

4,452

 

 

 

 

 

4,762

 

 

 

 

 

4,848

 

 

 

 

 

Total assets

 

$

53,775

 

 

 

 

 

$

53,756

 

 

 

 

 

$

57,519

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Money market and NOW deposits

 

$

17,797

 

12

 

0.26

 

$

17,302

 

13

 

0.29

 

$

15,055

 

12

 

0.32

 

Savings deposits

 

1,421

 

 

0.09

 

1,385

 

 

0.09

 

1,384

 

 

0.07

 

Customer certificates of deposit

 

5,509

 

10

 

0.76

 

5,602

 

11

 

0.80

 

6,173

 

15

 

1.02

 

Total interest-bearing core deposits

 

24,727

 

22

 

0.36

 

24,289

 

24

 

0.39

 

22,612

 

27

 

0.50

 

Other time deposits

 

 

 

 

 

 

 

877

 

8

 

3.53

 

Foreign office time deposits

 

412

 

 

0.49

 

460

 

 

0.45

 

458

 

 

0.21

 

Total interest-bearing deposits

 

25,139

 

22

 

0.37

 

24,749

 

24

 

0.40

 

23,947

 

35

 

0.60

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Short-term borrowings

 

94

 

 

0.31

 

174

 

1

 

0.27

 

234

 

 

0.11

 

Medium- and long-term debt

 

6,128

 

17

 

1.10

 

6,201

 

15

 

1.02

 

10,775

 

26

 

0.95

 

Total interest-bearing sources

 

31,361

 

39

 

0.51

 

31,124

 

40

 

0.52

 

34,956

 

61

 

0.71

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest-bearing deposits

 

15,459

 

 

 

 

 

15,607

 

 

 

 

 

14,624

 

 

 

 

 

Accrued expenses and other liabilities

 

1,120

 

 

 

 

 

1,155

 

 

 

 

 

1,075

 

 

 

 

 

Total shareholders’ equity

 

5,835

 

 

 

 

 

5,870

 

 

 

 

 

6,864

 

 

 

 

 

Total liabilities and shareholders’ equity

 

$

53,775

 

 

 

 

 

$

53,756

 

 

 

 

 

$

57,519

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest income/rate spread (FTE)

 

 

 

$

396

 

3.06

 

 

 

$

406

 

3.10

 

 

 

$

416

 

2.94

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

FTE adjustment

 

 

 

$

1

 

 

 

 

 

$

1

 

 

 

 

 

$

1

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Impact of net noninterest-bearing sources of funds

 

 

 

 

 

0.19

 

 

 

 

 

0.19

 

 

 

 

 

0.24

 

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

 

 

 

 

 

3.25

%

 

 

 

 

3.29

%

 

 

 

 

3.18

%

 


(a)          Excess liquidity, represented by average balances deposited with the Federal Reserve Bank, reduced the net interest margin by 14 basis points in the first quarter of 2011, and by 12 points and 24 basis points in the fourth and first quarters of 2010, respectively.  Excluding excess liquidity, the net interest margin would have been 3.39%, 3.41% and 3.42% in each respective period.  See Reconciliation of Non-GAAP Financial Measures.

 

19



 

CONSOLIDATED STATISTICAL DATA (unaudited)

Comerica Incorporated and Subsidiaries

 

 

 

March 31,

 

December 31,

 

September 30,

 

June 30,

 

March 31,

 

(in millions, except per share data)

 

2011

 

2010

 

2010

 

2010

 

2010

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial loans:

 

 

 

 

 

 

 

 

 

 

 

Floor plan

 

$

1,893

 

$

2,017

 

$

1,693

 

$

1,586

 

$

1,351

 

Other

 

19,467

 

20,128

 

19,739

 

19,565

 

19,405

 

Total commercial loans

 

21,360

 

22,145

 

21,432

 

21,151

 

20,756

 

Real estate construction loans:

 

 

 

 

 

 

 

 

 

 

 

Commercial Real Estate business line (a)

 

1,606

 

1,826

 

2,023

 

2,345

 

2,754

 

Other business lines (b)

 

417

 

427

 

421

 

429

 

448

 

Total real estate construction loans

 

2,023

 

2,253

 

2,444

 

2,774

 

3,202

 

Commercial mortgage loans:

 

 

 

 

 

 

 

 

 

 

 

Commercial Real Estate business line (a)

 

1,918

 

1,937

 

2,091

 

2,035

 

1,944

 

Other business lines (b)

 

7,779

 

7,830

 

8,089

 

8,283

 

8,414

 

Total commercial mortgage loans

 

9,697

 

9,767

 

10,180

 

10,318

 

10,358

 

Residential mortgage loans

 

1,550

 

1,619

 

1,586

 

1,606

 

1,631

 

Consumer loans:

 

 

 

 

 

 

 

 

 

 

 

Home equity

 

1,661

 

1,704

 

1,736

 

1,761

 

1,782

 

Other consumer

 

601

 

607

 

667

 

682

 

690

 

Total consumer loans

 

2,262

 

2,311

 

2,403

 

2,443

 

2,472

 

Lease financing

 

958

 

1,009

 

1,053

 

1,084

 

1,120

 

International loans

 

1,326

 

1,132

 

1,182

 

1,226

 

1,306

 

Total loans

 

$

39,176

 

$

40,236

 

$

40,280

 

$

40,602

 

$

40,845

 

 

 

 

 

 

 

 

 

 

 

 

 

Goodwill

 

$

150

 

$

150

 

$

150

 

$

150

 

$

150

 

Loan servicing rights

 

4

 

5

 

5

 

6

 

6

 

 

 

 

 

 

 

 

 

 

 

 

 

Tier 1 common capital ratio (c) (d)

 

10.37

%

10.13

%

9.96

%

9.81

%

9.57

%

Tier 1 risk-based capital ratio (d)

 

10.37

 

10.13

 

9.96

 

10.64

 

10.38

 

Total risk-based capital ratio (d)

 

14.83

 

14.54

 

14.37

 

15.03

 

14.91

 

Leverage ratio (d)

 

11.37

 

11.26

 

10.91

 

11.36

 

11.00

 

Tangible common equity ratio (c)

 

10.43

 

10.54

 

10.39

 

10.11

 

9.68

 

 

 

 

 

 

 

 

 

 

 

 

 

Book value per common share

 

$

33.25

 

$

32.82

 

$

33.19

 

$

32.85

 

$

32.15

 

Market value per share for the quarter:

 

 

 

 

 

 

 

 

 

 

 

High

 

43.53

 

43.44

 

40.21

 

45.85

 

39.36

 

Low

 

36.20

 

34.43

 

33.11

 

35.44

 

29.68

 

Close

 

36.72

 

42.24

 

37.15

 

36.83

 

38.04

 

 

 

 

 

 

 

 

 

 

 

 

 

Quarterly ratios:

 

 

 

 

 

 

 

 

 

 

 

Return on average common shareholders’ equity

 

7.08

%

6.53

%

4.07

%

4.89

%

(5.61

)%

Return on average assets

 

0.77

 

0.71

 

0.43

 

0.50

 

0.36

 

Efficiency ratio

 

69.05

 

70.38

 

67.88

 

64.47

 

66.45

 

 

 

 

 

 

 

 

 

 

 

 

 

Number of banking centers

 

445

 

444

 

441

 

437

 

449

 

 

 

 

 

 

 

 

 

 

 

 

 

Number of employees - full time equivalent

 

8,955

 

9,001

 

9,075

 

9,107

 

9,215

 

 


(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)         March 31, 2011 ratios are estimated.

 

20



 

PARENT COMPANY ONLY BALANCE SHEETS (unaudited)

Comerica Incorporated

 

 

 

March 31,

 

December 31,

 

March 31,

 

(in millions, except share data)

 

2011

 

2010

 

2010

 

 

 

 

 

 

 

 

 

ASSETS

 

 

 

 

 

 

 

Cash and due from subsidiary bank

 

$

7

 

$

 

$

14

 

Short-term investments with subsidiary bank

 

334

 

327

 

651

 

Other short-term investments

 

90

 

86

 

86

 

Investment in subsidiaries, principally banks

 

6,033

 

5,957

 

5,818

 

Premises and equipment

 

3

 

4

 

4

 

Other assets

 

174

 

181

 

206

 

Total assets

 

$

6,641

 

$

6,555

 

$

6,779

 

 

 

 

 

 

 

 

 

LIABILITIES AND SHAREHOLDERS’ EQUITY

 

 

 

 

 

 

 

Medium- and long-term debt

 

$

631

 

$

635

 

$

989

 

Other liabilities

 

133

 

127

 

122

 

Total liabilities

 

764

 

762

 

1,111

 

 

 

 

 

 

 

 

 

Common stock - $5 par value:

 

 

 

 

 

 

 

Authorized - 325,000,000 shares

 

 

 

 

 

 

 

Issued - 203,878,110 shares

 

1,019

 

1,019

 

1,019

 

Capital surplus

 

1,464

 

1,481

 

1,468

 

Accumulated other comprehensive loss

 

(382

)

(389

)

(303

)

Retained earnings

 

5,317

 

5,247

 

5,064

 

Less cost of common stock in treasury - 27,103,941 shares at 3/31/11, 27,342,518 shares at 12/31/10, and 27,575,283 shares at 3/31/10

 

(1,541

)

(1,565

)

(1,580

)

Total shareholders’ equity

 

5,877

 

5,793

 

5,668

 

Total liabilities and shareholders’ equity

 

$

6,641

 

$

6,555

 

$

6,779

 

 

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

 

 

 

 

 

 

52

 

 

52

 

Other comprehensive income, net of tax

 

 

 

 

 

33

 

 

 

33

 

Total comprehensive income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

85

 

Cash dividends declared on preferred stock

 

 

 

 

 

 

(38

)

 

(38

)

Cash dividends declared on common stock ($0.05 per share)

 

 

 

 

 

 

(9

)

 

(9

)

Purchase of common stock

 

 

 

 

 

 

 

(2

)

(2

)

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

 

 

 

 

 

 

(3

)

3

 

 

Share-based compensation

 

 

 

 

4

 

 

 

 

4

 

BALANCE AT MARCH 31, 2010

 

$

 

176.3

 

$

1,019

 

$

1,468

 

$

(303

)

$

5,064

 

$

(1,580

)

$

5,668

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

BALANCE AT DECEMBER 31, 2010

 

$

 

176.5

 

$

1,019

 

$

1,481

 

$

(389

)

$

5,247

 

$

(1,565

)

$

5,793

 

Net income

 

 

 

 

 

 

103

 

 

103

 

Other comprehensive income, net of tax

 

 

 

 

 

7

 

 

 

7

 

Total comprehensive income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

110

 

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

 

 

 

 

 

 

(18

)

 

(18

)

Purchase of common stock

 

 

(0.5

)

 

 

 

 

(21

)

(21

)

Net issuance of common stock under employee stock plans

 

 

0.8

 

 

(30

)

 

(15

)

45

 

 

Share-based compensation

 

 

 

 

13

 

 

 

 

13

 

BALANCE AT MARCH 31, 2011

 

$

 

176.8

 

$

1,019

 

$

1,464

 

$

(382

)

$

5,317

 

$

(1,541

)

$

5,877

 

 

21



 

BUSINESS SEGMENT FINANCIAL RESULTS (unaudited)

Comerica Incorporated and Subsidiaries

 

 

 

 

 

 

 

Wealth &

 

 

 

 

 

 

 

(dollar amounts in millions)

 

Business

 

Retail

 

Institutional

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

 

Wealth &

 

 

 

 

 

 

 

 

 

Business

 

Retail

 

Institutional

 

 

 

 

 

 

 

Three Months Ended December 31, 2010

 

Bank

 

Bank

 

Management

 

Finance

 

Other

 

Total

 

Earnings summary:

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest income (expense) (FTE)

 

$

341

 

$

134

 

$

42

 

$

(111

)

$

 

$

406

 

Provision for loan losses

 

8

 

29

 

23

 

 

(3

)

57

 

Noninterest income

 

81

 

43

 

59

 

23

 

9

 

215

 

Noninterest expenses

 

158

 

169

 

93

 

12

 

5

 

437

 

Provision (benefit) for income taxes (FTE)

 

82

 

(7

)

(5

)

(40

)

1

 

31

 

Net income (loss)

 

$

174

 

$

(14

)

$

(10

)

$

(60

)

$

6

 

$

96

 

Net credit-related charge-offs

 

$

73

 

$

22

 

$

18

 

$

 

$

 

$

113

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Selected average balances:

 

 

 

 

 

 

 

 

 

 

 

 

 

Assets

 

$

30,489

 

$

5,647

 

$

4,834

 

$

9,228

 

$

3,558

 

$

53,756

 

Loans

 

29,947

 

5,192

 

4,820

 

28

 

12

 

39,999

 

Deposits

 

19,892

 

17,271

 

2,730

 

310

 

153

 

40,356

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Statistical data:

 

 

 

 

 

 

 

 

 

 

 

 

 

Return on average assets (a)

 

2.29

%

(0.32

)%

(0.82

)%

N/M

 

N/M

 

0.71

%

Net interest margin (b)

 

4.51

 

3.07

 

3.43

 

N/M

 

N/M

 

3.29

 

Efficiency ratio

 

37.25

 

95.17

 

92.86

 

N/M

 

N/M

 

70.38

 

 

 

 

 

 

 

 

Wealth &

 

 

 

 

 

 

 

 

 

Business

 

Retail

 

Institutional

 

 

 

 

 

 

 

Three Months Ended March 31, 2010

 

Bank

 

Bank

 

Management

 

Finance

 

Other

 

Total

 

Earnings summary:

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest income (expense) (FTE)

 

$

341

 

$

130

 

$

42

 

$

(105

)

$

8

 

$

416

 

Provision for loan losses

 

137

 

31

 

12

 

 

(5

)

175

 

Noninterest income

 

76

 

44

 

60

 

12

 

2

 

194

 

Noninterest expenses

 

162

 

154

 

73

 

2

 

13

 

404

 

Provision (benefit) for income taxes (FTE)

 

29

 

(4

)

6

 

(36

)

1

 

(4

)

Income from discontinued operations, net of tax

 

 

 

 

 

17

 

17

 

Net income (loss)

 

$

89

 

$

(7

)

$

11

 

$

(59

)

$

18

 

$

52

 

Net credit-related charge-offs

 

$

137

 

$

26

 

$

10

 

$

 

$

 

$

173

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Selected average balances:

 

 

 

 

 

 

 

 

 

 

 

 

 

Assets

 

$

31,293

 

$

6,106

 

$

4,862

 

$

9,416

 

$

5,842

 

$

57,519

 

Loans

 

30,918

 

5,599

 

4,789

 

9

 

(2

)

41,313

 

Deposits

 

17,750

 

16,718

 

2,791

 

1,218

 

94

 

38,571

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Statistical data:

 

 

 

 

 

 

 

 

 

 

 

 

 

Return on average assets (a)

 

1.13

%

(0.17

)%

0.92

%

N/M

 

N/M

 

0.36

%

Net interest margin (b)

 

4.48

 

3.18

 

3.53

 

N/M

 

N/M

 

3.18

 

Efficiency ratio

 

38.78

 

88.44

 

73.18

 

N/M

 

N/M

 

66.45

 

 


(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

 

22



 

MARKET SEGMENT FINANCIAL RESULTS (unaudited)

Comerica Incorporated and Subsidiaries

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Finance

 

 

 

(dollar amounts in millions)

 

 

 

 

 

 

 

 

 

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 December 31, 2010

 

Midwest

 

Western

 

Texas

 

Florida

 

Markets

 

International

 

Businesses

 

Total

 

Earnings summary:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest income (expense) (FTE)

 

$

202

 

$

158

 

$

80

 

$

11

 

$

48

 

$

18

 

$

(111

)

$

406

 

Provision for loan losses

 

46

 

11

 

15

 

4

 

(19

)

3

 

(3

)

57

 

Noninterest income

 

99

 

35

 

27

 

3

 

10

 

9

 

32

 

215

 

Noninterest expenses

 

201

 

109

 

67

 

9

 

24

 

10

 

17

 

437

 

Provision (benefit) for income taxes (FTE)

 

19

 

32

 

9

 

 

5

 

5

 

(39

)

31

 

Net income (loss)

 

$

35

 

$

41

 

$

16

 

$

1

 

$

48

 

$

9

 

$

(54

)

$

96

 

Net credit-related charge-offs

 

$

52

 

$

43

 

$

9

 

$

7

 

$

2

 

$

 

$

 

$

113

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Selected average balances:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Assets

 

$

14,506

 

$

12,698

 

$

6,653

 

$

1,587

 

$

3,911

 

$

1,615

 

$

12,786

 

$

53,756

 

Loans

 

14,219

 

12,497

 

6,435

 

1,612

 

3,651

 

1,545

 

40

 

39,999

 

Deposits

 

17,959

 

12,448

 

5,557

 

375

 

2,242

 

1,312

 

463

 

40,356

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Statistical data:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Return on average assets (a)

 

0.72

%

1.21

%

0.96

%

0.13

%

4.93

%

2.24

%

N/M

 

0.71

%

Net interest margin (b)

 

4.45

 

5.01

 

4.91

 

2.64

 

5.32

 

4.38

 

N/M

 

3.29

 

Efficiency ratio

 

66.63

 

56.47

 

62.62

 

68.68

 

40.06

 

36.08

 

N/M

 

70.38

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Finance

 

 

 

 

 

 

 

 

 

 

 

 

 

Other

 

 

 

& Other

 

 

 

Three Months Ended March 31, 2010

 

Midwest

 

Western

 

Texas

 

Florida

 

Markets

 

International

 

Businesses

 

Total

 

Earnings summary:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest income (expense) (FTE)

 

$

204

 

$

161

 

$

79

 

$

10

 

$

41

 

$

18

 

$

(97

)

$

416

 

Provision for loan losses

 

80

 

59

 

17

 

3

 

24

 

(3

)

(5

)

175

 

Noninterest income

 

102

 

36

 

20

 

3

 

10

 

9

 

14

 

194

 

Noninterest expenses

 

186

 

105

 

60

 

9

 

21

 

8

 

15

 

404

 

Provision (benefit) for income taxes (FTE)

 

14

 

11

 

8

 

 

(10

)

8

 

(35

)

(4

)

Income from discontinued operations, net of tax

 

 

 

 

 

 

 

17

 

17

 

Net income (loss)

 

$

26

 

$

22

 

$

14

 

$

1

 

$

16

 

$

14

 

$

(41

)

$

52

 

Net credit-related charge-offs

 

$

55

 

$

64

 

$

25

 

$

10

 

$

14

 

$

5

 

$

 

$

173

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Selected average balances:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Assets

 

$

15,208

 

$

13,175

 

$

6,892

 

$

1,576

 

$

3,782

 

$

1,628

 

$

15,258

 

$

57,519

 

Loans

 

14,964

 

12,980

 

6,704

 

1,576

 

3,494

 

1,588

 

7

 

41,313

 

Deposits

 

17,056

 

11,927

 

4,957

 

361

 

1,985

 

973

 

1,312

 

38,571

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Statistical data:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Return on average assets (a)

 

0.57

%

0.65

%

0.84

%

0.17

%

1.63

%

3.50

%

N/M

 

0.36

%

Net interest margin (b)

 

4.84

 

5.04

 

4.79

 

2.54

 

4.84

 

4.64

 

N/M

 

3.18

 

Efficiency ratio

 

60.60

 

53.32

 

60.46

 

72.04

 

43.95

 

29.12

 

N/M

 

66.45

 

 


(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



 

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES (unaudited)

Comerica Incorporated and Subsidiaries

 

 

 

2011

 

2010

 

 

 

1st Qtr

 

4th Qtr

 

3rd Qtr

 

2nd Qtr

 

1st Qtr

 

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

 

 

 

 

 

 

 

 

 

 

 

Net interest income (FTE)

 

$

396

 

$

406

 

$

405

 

$

424

 

$

416

 

Less:

 

 

 

 

 

 

 

 

 

 

 

Interest earned on excess liquidity (a)

 

1

 

1

 

2

 

2

 

3

 

Net interest income (FTE), excluding excess liquidity

 

$

395

 

$

405

 

$

403

 

$

422

 

$

413

 

 

 

 

 

 

 

 

 

 

 

 

 

Average earning assets

 

$

49,347

 

$

49,102

 

$

50,189

 

$

51,835

 

$

52,941

 

Less:

 

 

 

 

 

 

 

 

 

 

 

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

 

22

 

139

 

180

 

80

 

62

 

Average earning assets for net interest margin (FTE)

 

49,325

 

48,963

 

50,009

 

51,755

 

52,879

 

Less:

 

 

 

 

 

 

 

 

 

 

 

Excess liquidity (a)

 

2,297

 

1,793

 

2,983

 

3,719

 

4,092

 

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

 

$

47,028

 

$

47,170

 

$

47,026

 

$

48,036

 

$

48,787

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest margin (FTE)

 

3.25

%

3.29

%

3.23

%

3.28

%

3.18

%

Net interest margin (FTE), excluding excess liquidity

 

3.39

 

3.41

 

3.42

 

3.51

 

3.42

 

 

 

 

 

 

 

 

 

 

 

 

 

Impact of excess liquidity on net interest margin (FTE)

 

(0.14

)

(0.12

)

(0.19

)

(0.23

)

(0.24

)

 

 

 

March 31,

 

December 31,

 

September 30,

 

June 30,

 

March 31,

 

 

 

2011

 

2010

 

2010

 

2010

 

2010

 

Tier 1 Common Capital Ratio:

 

 

 

 

 

 

 

 

 

 

 

Tier 1 capital (b) (c)

 

$

6,105

 

$

6,027

 

$

5,940

 

$

6,371

 

$

6,311

 

Less:

 

 

 

 

 

 

 

 

 

 

 

Trust preferred securities

 

 

 

 

495

 

495

 

Tier 1 common capital (c)

 

$

6,105

 

$

6,027

 

$

5,940

 

$

5,876

 

$

5,816

 

Risk-weighted assets (b) (c)

 

$

58,849

 

$

59,506

 

$

59,608

 

$

59,877

 

$

60,792

 

Tier 1 capital ratio (c)

 

10.37

%

10.13

%

9.96

%

10.64

%

10.38

%

Tier 1 common capital ratio (c)

 

10.37

 

10.13

 

9.96

 

9.81

 

9.57

 

 

 

 

 

 

 

 

 

 

 

 

 

Tangible Common Equity Ratio:

 

 

 

 

 

 

 

 

 

 

 

Total common shareholders’ equity

 

$

5,877

 

$

5,793

 

$

5,857

 

$

5,792

 

$

5,668

 

Less:

 

 

 

 

 

 

 

 

 

 

 

Goodwill

 

150

 

150

 

150

 

150

 

150

 

Other intangible assets

 

5

 

6

 

6

 

6

 

7

 

Tangible common equity

 

$

5,722

 

$

5,637

 

$

5,701

 

$

5,636

 

$

5,511

 

Total assets

 

$

55,017

 

$

53,667

 

$

55,004

 

$

55,885

 

$

57,106

 

Less:

 

 

 

 

 

 

 

 

 

 

 

Goodwill

 

150

 

150

 

150

 

150

 

150

 

Other intangible assets

 

5

 

6

 

6

 

6

 

7

 

Tangible assets

 

$

54,862

 

$

53,511

 

$

54,848

 

$

55,729

 

$

56,949

 

Common equity ratio

 

10.68

%

10.80

%

10.65

%

10.36

%

9.93

%

Tangible common equity ratio

 

10.43

 

10.54

 

10.39

 

10.11

 

9.68

 

 


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

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

(c) March 31, 2011 Tier 1 capital and risk-weighted assets are estimated.

 

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.

 

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.

 

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