COMERICA REPORTS FOURTH QUARTER 2017 NET INCOME OF $112 MILLION AND ADJUSTED NET INCOME OF $226 MILLION
Full-Year 2017 Pre-tax Income of $1.2 Billion Increased 84 Percent Compared to 2016
Reflects Execution of Growth in Efficiency and Revenue Initiative and Benefits from Rising Rates
DALLAS/January 16, 2018 -- Comerica Incorporated (NYSE: CMA) today reported full-year 2017 net income of $743 million, or $4.14 per diluted share, compared to $477 million, or $2.68 per diluted share for full-year 2016. Fourth quarter 2017 net income was $112 million, or 63 cents per diluted share, compared to $226 million, or $1.26 per diluted share, for the third quarter 2017 and $164 million, or 92 cents per diluted share, for the fourth quarter 2016. Fourth quarter and full-year 2017 results were impacted by a $107 million charge to adjust deferred taxes as a result of the enactment of the Tax Cuts and Jobs Act.
|
| | | | | | | | | |
| (dollar amounts in millions, except per share data) | 4th Qtr '17 | 3rd Qtr '17 | 4th Qtr '16 |
| Net interest income | $ | 545 |
| $ | 546 |
| $ | 455 |
|
| Provision for credit losses | 17 |
| 24 |
| 35 |
|
| Noninterest income | 285 |
| 275 |
| 267 |
|
| Noninterest expenses | 483 |
| 463 |
| 461 |
|
| Pre-tax income | 330 |
| 334 |
| 226 |
|
| Provision for income taxes | 218 |
| 108 |
| 62 |
|
| Net income | $ | 112 |
| $ | 226 |
| $ | 164 |
|
| | | | |
| Net income attributable to common shares | $ | 112 |
| $ | 224 |
| $ | 163 |
|
| Diluted income per common share | 0.63 |
| 1.26 |
| 0.92 |
|
| Net interest margin | 3.28 |
| 3.29 |
| 2.65 |
|
| Efficiency ratio (a) | 58.07 |
| 56.24 |
| 63.58 |
|
| | | | |
| Common equity Tier 1 capital ratio (b) | 11.55 |
| 11.51 |
| 11.09 |
|
| Common equity ratio | 11.13 |
| 11.16 |
| 10.68 |
|
| |
| (a) | Noninterest expenses as a percentage of the sum of net interest income (FTE) and noninterest income excluding net securities gains (losses). |
| |
| (b) | December 31, 2017 ratio is estimated. |
The following table reconciles adjusted earnings per share, net income attributable to common shares and return ratios.
|
| | | | | | | | | | | | | | | |
| (dollar amounts in millions, except per share data) | 4th Qtr '17 | 3rd Qtr '17 | 4th Qtr '16 | FY 2017 | FY 2016 |
| Earnings per share | $ | 0.63 |
| $ | 1.26 |
| $ | 0.92 |
| $ | 4.14 |
| $ | 2.68 |
|
| Restructuring charges, net of tax | 0.04 |
| 0.02 |
| 0.07 |
| 0.16 |
| 0.34 |
|
| Deferred tax adjustment | 0.61 |
| — |
| — |
| 0.60 |
| — |
|
| One-time employee bonus, net of tax | 0.02 |
| — |
| — |
| 0.02 |
| — |
|
| Tax benefits from stock transactions | (0.02 | ) | (0.01 | ) | — |
| (0.19 | ) | — |
|
| Adjusted earnings per share (a) | $ | 1.28 |
| $ | 1.27 |
| $ | 0.99 |
| $ | 4.73 |
| $ | 3.02 |
|
-Table continues on next page-
COMERICA REPORTS FOURTH QUARTER 2017 NET INCOME OF $112 MILLION - 2
|
| | | | | | | | | | | | | | | |
| (dollar amounts in millions, except per share data) | 4th Qtr '17 | 3rd Qtr '17 | 4th Qtr '16 | FY 2017 | FY 2016 |
| Net income attributable to common shareholders | $ | 112 |
| $ | 224 |
| $ | 163 |
| $ | 738 |
| $ | 473 |
|
| Restructuring charges, net of tax | 8 |
| 4 |
| 13 |
| 29 |
| 59 |
|
| Deferred tax adjustment | 107 |
| — |
| — |
| 107 |
| — |
|
| One-time employee bonus, net of tax | 3 |
| — |
| — |
| 3 |
| — |
|
| Tax benefits from employee stock transactions | (4 | ) | (2 | ) | — |
| (35 | ) | — |
|
| Adjusted net income attributable to common shareholders (a) | $ | 226 |
| $ | 226 |
| $ | 176 |
| $ | 842 |
| $ | 532 |
|
| | | | | | |
| Return on Average Assets (ROA) | 0.62 | % | 1.25 | % | 0.88 | % | 1.04 | % | 0.67 | % |
| Adjusted ROA (a) | 1.26 |
| 1.27 |
| 0.95 |
| 1.19 |
| 0.75 |
|
| Return on Average Common Shareholders' Equity (ROE) | 5.58 |
| 11.17 |
| 8.43 |
| 9.34 |
| 6.22 |
|
| Adjusted ROE (a) | 11.24 |
| 11.28 |
| 9.11 |
| 10.65 |
| 6.99 |
|
| |
| (a) | See Reconciliation of Non-GAAP Financial Measures. |
"Comerica made significant forward progress in 2017," said Ralph W. Babb, Jr., chairman and chief executive officer. “Revenue grew 11 percent, including a 15 percent increase in net interest income, which benefited from higher interest rates as we prudently managed loan and deposit pricing. In addition, successful execution of our GEAR Up initiative helped increase fee income 5 percent and lowered expenses 4 percent. We continued to adeptly navigate the energy cycle, and credit quality remained strong. Altogether, this drove an 84 percent increase in pre-tax income.
"Our fourth quarter pre-tax income was stable compared to the previous quarter," said Babb. "Relative to the third quarter, the benefit from higher interest rates and loan growth was offset by a decline in interest recoveries, which were significantly elevated in the third quarter. Credit metrics were strong, with 13 basis points of net charge-offs. Fee income grew 4 percent with increases in almost every category. In conjunction with revenue growth, expenses were up, yet remained well controlled. Finally, we are distributing some of the benefits from the tax reform act to our hardworking team. We granted approximately 4,500 colleagues a one-time bonus of $1,000 and raised our minimum wage to $15 per hour, which impacts over 700 employees.
"As we look forward to the year ahead, we remain focused on further enhancing shareholder value by growing relationships, continued implementation of our GEAR Up initiatives and returning excess capital to our investors. The full-year impact of the 2017 rate increases should help drive further revenue growth. Also, we expect to benefit from the lower tax rate, and we are well positioned to take advantage of additional interest rate increases, favorable changes in regulation and economic growth."
Fourth Quarter 2017 Compared to Third Quarter 2017 Overview
Average total loans increased $270 million, or 1 percent, to $48.9 billion.
| |
| • | Primarily reflected increases in National Dealer Services, Corporate Banking and Technology and Life Sciences, partially offset by decreases in general Middle Market, Energy and Mortgage Banker Finance. |
Average total deposits increased $1.1 billion, or 2 percent, to $57.6 billion.
| |
| • | Noninterest-bearing deposits increased $723 million and interest-bearing deposits increased $425 million in line with typical seasonality. |
| |
| • | Primarily reflected increases in Corporate Banking and Retail Bank. |
Net interest income relatively stable at $545 million. Excluding interest recoveries of $13 million, which were significantly elevated in the third quarter 2017, net interest income increased $12 million.
| |
| • | Primarily reflected the benefit from increases in short-term rates, as well as an increase in average loans. |
COMERICA REPORTS FOURTH QUARTER 2017 NET INCOME OF $112 MILLION - 3
Provision for credit losses decreased $7 million to $17 million.
| |
| • | Net credit-related charge-offs were $16 million, or 0.13 percent of average loans, compared to $25 million, or 0.21 percent, in the third quarter 2017, remaining below historical levels. |
| |
| • | The allowance for loan losses remained $712 million, or 1.45 percent of total loans. |
Noninterest income increased $10 million to $285 million.
| |
| • | Primarily reflected a $6 million increase in card fees, a $2 million increase in fiduciary income and smaller increases in almost all other categories, partially offset by a $2 million decrease in service charges on deposit accounts primarily due to fewer business days in the fourth quarter. |
Noninterest expenses increased $20 million to $483 million.
| |
| • | Primarily reflected increases of $10 million in salaries and benefits, $7 million in outside processing fees tied to revenue-generating activities and $6 million in restructuring charges. |
| |
| • | The increase in salaries and benefits expense primarily reflected a one-time bonus of $1,000 to approximately 4,500 employees as well as an increase in performance-related compensation. |
Provision for income taxes increased $110 million to $218 million.
| |
| • | Primarily due to the $107 million charge to adjust deferred taxes resulting from the Tax Cuts and Jobs Act. |
Capital position remained solid at December 31, 2017.
| |
| • | Returned a total of $200 million to shareholders, including dividends and the repurchase of $148 million of common stock (1.9 million shares) under the equity repurchase program. |
Full-Year 2017 Compared to Full-Year 2016 Overview
Full-year 2017 pre-tax income, excluding restructuring charges, included GEAR Up benefits of approximately $180 million compared to $25 million in full-year 2016.
Average total loans decreased $438 million, or 1 percent, to $48.6 billion.
| |
| • | Excluding cyclical declines of $696 million in Energy and $412 million in Mortgage Banker Finance, average loans increased $670 million, or 1 percent, primarily reflecting an increase in National Dealer Services. |
Average total deposits decreased $483 million, or 1 percent, to $57.3 billion.
| |
| • | Noninterest-bearing deposits increased $1.3 billion, or 4 percent, to record levels. |
| |
| • | Interest-bearing deposits decreased $1.7 billion, or 6 percent, primarily due to customers using their excess liquidity for working capital needs and acquisitions, our deliberate approach to relationship pricing, as well as strategic actions we made in early 2017 in light of the new Liquidity Coverage Ratio rules. |
| |
| • | Average total deposits reflected decreases in Corporate Banking and Technology and Life Sciences, partially offset by increases in Commercial Real Estate and Retail Bank. |
Net interest income increased $264 million, or 15 percent, to $2.1 billion.
| |
| • | Primarily reflected the benefit from higher short-term rates by prudently managing loan and deposit pricing. |
Provision for credit losses decreased $174 million to $74 million.
| |
| • | Primarily reflected the improvement in credit quality in Energy. |
| |
| • | Net credit-related charge-offs were $92 million, or 0.19 percent of average loans, in 2017, compared to $157 million, or 0.32 percent of average loans, for 2016. The $65 million decrease in net charge-offs primarily reflected lower Energy charge-offs. |
Noninterest income increased $56 million, or 5 percent, to $1.1 billion, in part due to GEAR Up initiatives.
| |
| • | Primarily reflected increases in card fees of $30 million, fiduciary income of $8 million, service charges on deposit accounts of $8 million and smaller increases in several other categories, partially offset by decreases of $5 million in letter of credit fees and $4 million in commercial lending fees. |
Noninterest expenses decreased $70 million, or 4 percent, to $1.9 billion.
| |
| • | Primarily reflected decreases of $49 million in salaries and benefits, largely driven by the GEAR Up initiative, and $48 million in restructuring charges, partially offset by a $30 million increase in outside processing fees primarily tied to revenue-generating activities. |
COMERICA REPORTS FOURTH QUARTER 2017 NET INCOME OF $112 MILLION - 4
Provision for income taxes increased $298 million to $491 million.
| |
| • | Primarily reflected the increase in pretax income and the $107 million charge to adjust deferred taxes, resulting from the Tax Cuts and Jobs Act, partially offset by a $35 million tax benefit from employee stock transactions in 2017 due to new accounting guidance for stock compensation effective January 1, 2017. |
Continued execution of the capital plan returned $724 million to shareholders, an increase of $266 million, or 58 percent, compared to 2016.
| |
| • | Repurchased $531 million, or approximately 7.3 million shares, of common stock during 2017 under the equity repurchase program. |
| |
| • | Increased the dividend 22 percent to $1.09 per share. |
Net Interest Income
|
| | | | | | | | | | | |
| (dollar amounts in millions) | 4th Qtr '17 | | 3rd Qtr '17 | | 4th Qtr '16 |
| Net interest income | $ | 545 |
| | $ | 546 |
| | $ | 455 |
|
| | | | | | |
| Net interest margin | 3.28 | % | | 3.29 | % | | 2.65 | % |
| | | | | | |
| Selected average balances: | | | | | |
| Total earning assets | $ | 66,167 |
| | $ | 66,084 |
| | $ | 68,774 |
|
| Total loans | 48,933 |
| | 48,663 |
| | 48,915 |
|
| Total investment securities | 12,155 |
| | 12,244 |
| | 12,329 |
|
| Federal Reserve Bank deposits | 4,771 |
| | 4,889 |
| | 7,245 |
|
| | | | | | |
| | | | | | |
| Total deposits | 57,641 |
| | 56,493 |
| | 59,645 |
|
| Total noninterest-bearing deposits | 31,780 |
| | 31,057 |
| | 32,091 |
|
| Short-term borrowings | 116 |
| | 815 |
| | 13 |
|
| Medium- and long-term debt | 4,631 |
| | 4,936 |
| | 5,578 |
|
Net interest income was relatively stable at $545 million in the fourth quarter 2017, compared to the third quarter 2017.
| |
| ◦ | Interest on loans decreased $2 million, primarily reflecting the impact of significant interest recoveries in the third quarter 2017 that were not repeated (-$13 million), the benefit from higher short-term rates (+$6 million), an increase in average loan balances (+$3 million) and other dynamics, primarily elevated loan fees (+$2 million). |
| |
| ◦ | Interest on investment securities increased $1 million, primarily reflecting an increase in yields. |
| |
| ◦ | Interest expense on deposits increased $2 million, primarily reflecting higher rates on larger money market accounts. |
| |
| ◦ | Interest expense on debt decreased $2 million, primarily due to a decrease in average borrowings. |
The net interest margin remained relatively stable at 3.28 percent compared to the third quarter 2017. Excluding interest recoveries, which were significantly elevated in the third quarter 2017 (-8 basis points), net interest margin increased 7 basis points. This reflected the net benefit from higher rates (+4 basis points), other dynamics (+1 bps) and lower wholesale funding costs (+2 bps).
COMERICA REPORTS FOURTH QUARTER 2017 NET INCOME OF $112 MILLION - 5
Credit Quality
“Our credit quality remained strong in the fourth quarter,” said Babb. “We continue to see positive trends, particularly in the Energy portfolio. Total criticized loans, nonaccrual loans, and charge-offs decreased. We have maintained a conservative stance regarding economic and market conditions.”
|
| | | | | | | | | | | |
| (dollar amounts in millions) | 4th Qtr '17 | | 3rd Qtr '17 | | 4th Qtr '16 |
| Credit-related charge-offs | $ | 29 |
| | $ | 37 |
| | $ | 48 |
|
| Recoveries | 13 |
| | 12 |
| | 12 |
|
| Net credit-related charge-offs | 16 |
| | 25 |
| | 36 |
|
| Net credit-related charge-offs/Average total loans | 0.13 | % | | 0.21 | % | | 0.29 | % |
| | | | | | |
| Provision for credit losses | $ | 17 |
| | $ | 24 |
| | $ | 35 |
|
| | | | | | |
| Nonperforming loans | 410 |
| | 452 |
| | 590 |
|
| Nonperforming assets (NPAs) | 415 |
| | 458 |
| | 607 |
|
| NPAs/Total loans and foreclosed property | 0.84 | % | | 0.93 | % | | 1.24 | % |
| | | | | | |
| Loans past due 90 days or more and still accruing | $ | 35 |
| | $ | 12 |
| | $ | 19 |
|
| | | | | | |
| Allowance for loan losses | 712 |
| | 712 |
| | 730 |
|
| Allowance for credit losses on lending-related commitments (a) | 42 |
| | 41 |
| | 41 |
|
| Total allowance for credit losses | 754 |
| | 753 |
| | 771 |
|
| | | | | | |
| Allowance for loan losses/Period-end total loans | 1.45 | % | | 1.45 | % | | 1.49 | % |
| Allowance for loan losses/Nonperforming loans | 173 |
| | 157 |
| | 124 |
|
| |
| (a) | Included in "Accrued expenses and other liabilities" on the consolidated balance sheets. |
| |
| • | Energy business line loans were $1.8 billion at December 31, 2017, or 4 percent of total loans, compared to $2.1 billion at September 30, 2017. |
| |
| ◦ | Criticized Energy loans decreased $119 million, to $508 million. |
| |
| ◦ | Energy net charge-offs were $1 million, compared to $9 million in the third quarter 2017. |
| |
| • | Criticized loans decreased $203 million to $2.2 billion at December 31, 2017, compared to $2.4 billion at September 30, 2017. Criticized loans are generally consistent with the Special Mention, Substandard and Doubtful categories defined by regulatory authorities. |
COMERICA REPORTS FOURTH QUARTER 2017 NET INCOME OF $112 MILLION - 6
Full-Year 2018 Outlook
For full-year 2018 compared to full-year 2017, management expects the following, assuming a continuation of the current economic and low rate environment as well as approximately $270 million of benefits from the GEAR Up initiative:
| |
| • | Average loans higher in line with Gross Domestic Product, reflecting increases in most lines of business while remaining stable in Energy and Corporate Banking. |
| |
| • | Net interest income higher, reflecting full-year benefits from the 2017 rate increases and loan growth. |
| |
| ◦ | Full-year benefit from 2017 rate increases expected to be $110 million to $125 million, assuming a 20 percent to 40 percent deposit beta for the December rate increase. |
| |
| ◦ | Elevated interest recoveries of $28 million in 2017 not expected to repeat in 2018. |
| |
| • | Provision for credit losses of 15 basis points to 25 basis points and net charge-offs to remain low, with continued solid performance of the overall portfolio. |
| |
| • | Excluding deferred compensation of $8 million in 2017, noninterest income higher by 4 percent1, benefiting from the continued execution of GEAR Up opportunities helping to drive growth in treasury management income, card fees, brokerage fees and fiduciary income. |
| |
| • | Noninterest expenses higher by 1 percent1, reflecting $47 million to $57 million in restructuring charges and an additional $50 million benefit from the GEAR Up initiatives. Additionally, headwinds include higher technology expenditures and typical inflationary pressures, as well as outside processing expenses to increase in line with growing revenue. |
| |
| • | Income tax expense to approximate 23 percent of pre-tax income with the passage of the Tax Cuts and Jobs Acts, assuming no tax impact from employee stock transactions. |
1 Beginning January 1, 2018, as a result of adopting a new accounting standard, card fee revenue from certain card products will be presented net of network costs in noninterest income, as opposed to the current presentation of associated network costs in noninterest expenses. Other smaller revenue streams will be similarly impacted. These changes in presentation will not impact net income and are not reflected in this outlook. Management expects the efficiency ratio to improve 150 basis points to 200 basis points as a result of these changes. Costs impacted by Accounting Standards Codification Topic 606 were approximately $120 million for the year ended December 31, 2017.
COMERICA REPORTS FOURTH QUARTER 2017 NET INCOME OF $112 MILLION - 7
Business Segments
For a summary of business segment and geographic market quarterly results, see the Business Segment Financial Results and Market Segment Financial Results tables included later in this report. The financial results provided are based on the internal business unit and geographic market structures of Comerica and methodologies in effect at December 31, 2017. A discussion of business segment and geographic market year-to-date results will be included in Comerica's 2017 Form 10-K.
Conference Call and Webcast
Comerica will host a conference call to review fourth quarter 2017 financial results at 7 a.m. CT Tuesday January 16, 2018. Interested parties may access the conference call by calling (800) 309-2262 or (706) 679-5261 (event ID No. 22791267). The call and supplemental financial information can also be accessed via Comerica's "Investor Relations" page at www.comerica.com. A replay of the Webcast can be accessed via Comerica's “Investor Relations” page at www.comerica.com.
Comerica Incorporated is a financial services company headquartered in Dallas, Texas, and strategically aligned by three major business segments: The Business Bank, The Retail Bank and Wealth Management. Comerica focuses on relationships and helping people and businesses be successful. In addition to Texas, Comerica Bank locations can be found in Arizona, California, Florida and Michigan, with select businesses operating in several other states, as well as in Canada and Mexico.
This press release contains both financial measures based on accounting principles generally accepted in the United States (GAAP) and non-GAAP based financial measures, which are used where management believes it to be helpful in understanding Comerica's results of operations or financial position. Where non-GAAP financial measures are used, the comparable GAAP financial measure, as well as a reconciliation to the comparable GAAP financial measure, can be found in this press release. These disclosures should not be viewed as a substitute for operating results determined in accordance with GAAP, nor are they necessarily comparable to non-GAAP performance measures that may be presented by other companies.
COMERICA REPORTS FOURTH QUARTER 2017 NET INCOME OF $112 MILLION - 8
Forward-looking Statements
Any statements in this news release that are not historical facts are forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. Words such as “anticipates,” “believes,” “contemplates,” “feels,” “expects,” “estimates,” “seeks,” “strives,” “plans,” “intends,” “outlook,” “forecast,” “position,” “target,” “mission,” “assume,” “achievable,” “potential,” “strategy,” “goal,” “aspiration,” “opportunity,” “initiative,” “outcome,” “continue,” “remain,” “maintain,” “on track,” “trend,” “objective,” “looks forward,” “projects,” “models” and variations of such words and similar expressions, or future or conditional verbs such as “will,” “would,” “should,” “could,” “might,” “can,” “may” or similar expressions, as they relate to Comerica or its management, are intended to identify forward-looking statements. These forward-looking statements are predicated on the beliefs and assumptions of Comerica's management based on information known to Comerica's management as of the date of this news release and do not purport to speak as of any other date. Forward-looking statements may include descriptions of plans and objectives of Comerica's management for future or past operations, products or services, including the GEAR Up initiative, and forecasts of Comerica's revenue, earnings or other measures of economic performance, including statements of profitability, business segments and subsidiaries as well as estimates of the economic benefits of the GEAR Up initiative, estimates of credit trends and global stability. Such statements reflect the view of Comerica's management as of this date with respect to future events and are subject to risks and uncertainties. Should one or more of these risks materialize or should underlying beliefs or assumptions prove incorrect, Comerica's actual results could differ materially from those discussed. Factors that could cause or contribute to such differences are changes in general economic, political or industry conditions; changes in monetary and fiscal policies, including changes in interest rates; whether Comerica may achieve opportunities for revenue enhancements and efficiency improvements under the GEAR Up initiative, or changes in the scope or assumptions underlying the GEAR Up initiative; Comerica's ability to maintain adequate sources of funding and liquidity; the effects of more stringent capital or liquidity requirements; declines or other changes in the businesses or industries of Comerica's customers, in particular the energy industry; unfavorable developments concerning credit quality; operational difficulties, failure of technology infrastructure or information security incidents; changes in regulation or oversight; reliance on other companies to provide certain key components of business infrastructure; changes in the financial markets, including fluctuations in interest rates and their impact on deposit pricing; reductions in Comerica's credit rating; the interdependence of financial service companies; the implementation of Comerica's strategies and business initiatives; damage to Comerica's reputation; Comerica's ability to utilize technology to efficiently and effectively develop, market and deliver new products and services; competitive product and pricing pressures among financial institutions within Comerica's markets; changes in customer behavior; any future strategic acquisitions or divestitures; management's ability to maintain and expand customer relationships; management's ability to retain key officers and employees; the impact of legal and regulatory proceedings or determinations; the effectiveness of methods of reducing risk exposures; the effects of terrorist activities and other hostilities; the effects of catastrophic events including, but not limited to, hurricanes, tornadoes, earthquakes, fires, droughts and floods; potential legislative, administrative or judicial changes or interpretations related to the tax treatment of corporations; changes in accounting standards and the critical nature of Comerica's accounting policies. Comerica cautions that the foregoing list of factors is not all-inclusive. For discussion of factors that may cause actual results to differ from expectations, please refer to our filings with the Securities and Exchange Commission. In particular, please refer to “Item 1A. Risk Factors” beginning on page 12 of Comerica's Annual Report on Form 10-K for the year ended December 31, 2016. Forward-looking statements speak only as of the date they are made. Comerica does not undertake to update forward-looking statements to reflect facts, circumstances, assumptions or events that occur after the date the forward-looking statements are made. For any forward-looking statements made in this news release or in any documents, Comerica claims the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995.
|
| |
| Media Contact: | Investor Contacts: |
| Yolanda Y. Walker | Darlene P. Persons |
| (214) 462-4443 | (214) 462-6831 |
| | |
| | Chelsea R. Smith |
| | (214) 462-6834 |
|
| | | | | | | | | | | | | | | | |
| CONSOLIDATED FINANCIAL HIGHLIGHTS (unaudited) | | | |
| Comerica Incorporated and Subsidiaries | | | | | | |
| | | | | | | |
| | Three Months Ended | | Years Ended |
| | December 31, | September 30, | December 31, | | December 31, |
| (in millions, except per share data) | 2017 | 2017 | 2016 | | 2017 | 2016 |
| PER COMMON SHARE AND COMMON STOCK DATA | | | | | | |
| Diluted net income | $ | 0.63 |
| $ | 1.26 |
| $ | 0.92 |
| | $ | 4.14 |
| $ | 2.68 |
|
| Cash dividends declared | 0.30 |
| 0.30 |
| 0.23 |
| | 1.09 |
| 0.89 |
|
| | | | | | | |
| Average diluted shares (in thousands) | 175,818 |
| 177,411 |
| 177,457 |
| | 178,125 |
| 176,730 |
|
| KEY RATIOS | | | | | | |
| Return on average common shareholders' equity | 5.58 | % | 11.17 | % | 8.43 | % | | 9.34 | % | 6.22 | % |
| Return on average assets | 0.62 |
| 1.25 |
| 0.88 |
| | 1.04 |
| 0.67 |
|
| Common equity tier 1 and tier 1 risk-based capital ratio (a) | 11.55 |
| 11.51 |
| 11.09 |
| | | |
| Total risk-based capital ratio (a) | 13.71 |
| 13.65 |
| 13.27 |
| | | |
| Leverage ratio (a) | 10.75 |
| 10.87 |
| 10.18 |
| | | |
| Common equity ratio | 11.13 |
| 11.16 |
| 10.68 |
| | | |
| Tangible common equity ratio (b) | 10.32 |
| 10.35 |
| 9.89 |
| | | |
| AVERAGE BALANCES | | | | | | |
| Commercial loans | 30,719 |
| 30,603 |
| 30,792 |
| | 30,415 |
| 31,062 |
|
| Real estate construction loans | 3,031 |
| 2,933 |
| 2,837 |
| | 2,958 |
| 2,508 |
|
| Commercial mortgage loans | 9,054 |
| 8,977 |
| 8,918 |
| | 9,005 |
| 8,981 |
|
| Lease financing | 470 |
| 470 |
| 619 |
| | 509 |
| 684 |
|
| International loans | 1,122 |
| 1,156 |
| 1,303 |
| | 1,157 |
| 1,367 |
|
| Residential mortgage loans | 2,014 |
| 2,005 |
| 1,923 |
| | 1,989 |
| 1,894 |
|
| Consumer loans | 2,523 |
| 2,519 |
| 2,523 |
| | 2,525 |
| 2,500 |
|
| Total loans | 48,933 |
| 48,663 |
| 48,915 |
| | 48,558 |
| 48,996 |
|
| | | | | | | |
| Earning assets | 66,167 |
| 66,084 |
| 68,774 |
| | 66,300 |
| 66,545 |
|
| Total assets | 71,398 |
| 71,251 |
| 74,126 |
| | 71,452 |
| 71,743 |
|
| | | | | | | |
| Noninterest-bearing deposits | 31,780 |
| 31,057 |
| 32,091 |
| | 31,013 |
| 29,751 |
|
| Interest-bearing deposits | 25,861 |
| 25,436 |
| 27,554 |
| | 26,245 |
| 27,990 |
|
| Total deposits | 57,641 |
| 56,493 |
| 59,645 |
| | 57,258 |
| 57,741 |
|
| | | | | | | |
| Common shareholders' equity | 7,987 |
| 8,008 |
| 7,734 |
| | 7,952 |
| 7,674 |
|
| NET INTEREST INCOME | | | | | | |
| Net interest income | $ | 545 |
| $ | 546 |
| $ | 455 |
| | $ | 2,061 |
| $ | 1,797 |
|
| Net interest margin (fully taxable equivalent) | 3.28 | % | 3.29 | % | 2.65 | % | | 3.12 | % | 2.71 | % |
| CREDIT QUALITY | | | | | | |
| Total nonperforming assets | $ | 415 |
| $ | 458 |
| $ | 607 |
| | | |
| | | | | | | |
| Loans past due 90 days or more and still accruing | 35 |
| 12 |
| 19 |
| | | |
| | | | | | | |
| Net credit-related charge-offs | 16 |
| 25 |
| 36 |
| | $ | 92 |
| $ | 157 |
|
| | | | | | | |
| Allowance for loan losses | 712 |
| 712 |
| 730 |
| | | |
| Allowance for credit losses on lending-related commitments | 42 |
| 41 |
| 41 |
| | | |
| Total allowance for credit losses | 754 |
| 753 |
| 771 |
| | | |
| | | | | | | |
| Allowance for loan losses as a percentage of total loans | 1.45 | % | 1.45 | % | 1.49 | % | | | |
| Net credit-related charge-offs as a percentage of average total loans | 0.13 |
| 0.21 |
| 0.29 |
| | 0.19 | % | 0.32 | % |
| Nonperforming assets as a percentage of total loans and foreclosed property | 0.84 |
| 0.93 |
| 1.24 |
| | | |
| Allowance for loan losses as a percentage of total nonperforming loans | 173 |
| 157 |
| 124 |
| | | |
| |
| (a) | December 31, 2017 ratios are estimated. |
| |
| (b) | See Reconciliation of Non-GAAP Financial Measures. |
|
| | | | | | | | | |
| CONSOLIDATED BALANCE SHEETS |
| Comerica Incorporated and Subsidiaries | | | |
| | | | |
| | December 31, | September 30, | December 31, |
| (in millions, except share data) | 2017 | 2017 | 2016 |
| | (unaudited) | (unaudited) | |
| ASSETS | | | |
| Cash and due from banks | $ | 1,438 |
| $ | 1,351 |
| $ | 1,249 |
|
| | | | |
| Interest-bearing deposits with banks | 4,407 |
| 4,853 |
| 5,969 |
|
| Other short-term investments | 96 |
| 92 |
| 92 |
|
| | | | |
| Investment securities available-for-sale | 10,938 |
| 10,998 |
| 10,787 |
|
| Investment securities held-to-maturity | 1,266 |
| 1,344 |
| 1,582 |
|
| | | | |
| Commercial loans | 31,060 |
| 31,062 |
| 30,994 |
|
| Real estate construction loans | 2,961 |
| 3,018 |
| 2,869 |
|
| Commercial mortgage loans | 9,159 |
| 8,985 |
| 8,931 |
|
| Lease financing | 468 |
| 475 |
| 572 |
|
| International loans | 983 |
| 1,159 |
| 1,258 |
|
| Residential mortgage loans | 1,988 |
| 1,999 |
| 1,942 |
|
| Consumer loans | 2,554 |
| 2,511 |
| 2,522 |
|
| Total loans | 49,173 |
| 49,209 |
| 49,088 |
|
| Less allowance for loan losses | (712 | ) | (712 | ) | (730 | ) |
| Net loans | 48,461 |
| 48,497 |
| 48,358 |
|
| | | | |
| Premises and equipment | 466 |
| 467 |
| 501 |
|
| Accrued income and other assets | 4,495 |
| 4,415 |
| 4,440 |
|
| Total assets | $ | 71,567 |
| $ | 72,017 |
| $ | 72,978 |
|
| | | | |
| LIABILITIES AND SHAREHOLDERS' EQUITY | | | |
| Noninterest-bearing deposits | $ | 32,071 |
| $ | 32,391 |
| $ | 31,540 |
|
| | | | |
| Money market and interest-bearing checking deposits | 21,500 |
| 20,869 |
| 22,556 |
|
| Savings deposits | 2,152 |
| 2,147 |
| 2,064 |
|
| Customer certificates of deposit | 2,165 |
| 2,342 |
| 2,806 |
|
| Foreign office time deposits | 15 |
| 70 |
| 19 |
|
| Total interest-bearing deposits | 25,832 |
| 25,428 |
| 27,445 |
|
| Total deposits | 57,903 |
| 57,819 |
| 58,985 |
|
| | | | |
| Short-term borrowings | 10 |
| 509 |
| 25 |
|
| Accrued expenses and other liabilities | 1,069 |
| 1,018 |
| 1,012 |
|
| Medium- and long-term debt | 4,622 |
| 4,637 |
| 5,160 |
|
| Total liabilities | 63,604 |
| 63,983 |
| 65,182 |
|
| | | | |
| Common stock - $5 par value: | | | |
| Authorized - 325,000,000 shares | | | |
| Issued - 228,164,824 shares | 1,141 |
| 1,141 |
| 1,141 |
|
| Capital surplus | 2,122 |
| 2,112 |
| 2,135 |
|
| Accumulated other comprehensive loss | (364 | ) | (359 | ) | (383 | ) |
| Retained earnings | 7,800 |
| 7,746 |
| 7,331 |
|
| Less cost of common stock in treasury - 55,306,483 shares at 12/31/17; 53,835,135 shares at 9/30/17 and 52,851,156 shares at 12/31/16 | (2,736 | ) | (2,606 | ) | (2,428 | ) |
| Total shareholders' equity | 7,963 |
| 8,034 |
| 7,796 |
|
| Total liabilities and shareholders' equity | $ | 71,567 |
| $ | 72,017 |
| $ | 72,978 |
|
|
| | | | | | | | | | | | | |
| CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (unaudited) |
| Comerica Incorporated and Subsidiaries | | | | | |
| | | | | | |
| | Three Months Ended | | Years Ended |
| | December 31, | | December 31, |
| (in millions, except per share data) | 2017 | 2016 | | 2017 | 2016 |
| INTEREST INCOME | | | | | |
| Interest and fees on loans | $ | 498 |
| $ | 412 |
| | $ | 1,872 |
| $ | 1,635 |
|
| Interest on investment securities | 64 |
| 62 |
| | 250 |
| 247 |
|
| Interest on short-term investments | 16 |
| 10 |
| | 60 |
| 27 |
|
| Total interest income | 578 |
| 484 |
| | 2,182 |
| 1,909 |
|
| INTEREST EXPENSE | | | | | |
| Interest on deposits | 13 |
| 10 |
| | 42 |
| 40 |
|
| Interest on short-term borrowings | — |
| — |
| | 3 |
| — |
|
| Interest on medium- and long-term debt | 20 |
| 19 |
| | 76 |
| 72 |
|
| Total interest expense | 33 |
| 29 |
| | 121 |
| 112 |
|
| Net interest income | 545 |
| 455 |
| | 2,061 |
| 1,797 |
|
| Provision for credit losses | 17 |
| 35 |
| | 74 |
| 248 |
|
| Net interest income after provision for credit losses | 528 |
| 420 |
| | 1,987 |
| 1,549 |
|
| NONINTEREST INCOME | | | | | |
| Card fees | 91 |
| 79 |
| | 333 |
| 303 |
|
| Service charges on deposit accounts | 55 |
| 54 |
| | 227 |
| 219 |
|
| Fiduciary income | 50 |
| 48 |
| | 198 |
| 190 |
|
| Commercial lending fees | 22 |
| 21 |
| | 85 |
| 89 |
|
| Letter of credit fees | 11 |
| 12 |
| | 45 |
| 50 |
|
| Bank-owned life insurance | 12 |
| 12 |
| | 43 |
| 42 |
|
| Foreign exchange income | 12 |
| 11 |
| | 45 |
| 42 |
|
| Brokerage fees | 6 |
| 5 |
| | 23 |
| 19 |
|
| Net securities losses | — |
| (2 | ) | | (3 | ) | (5 | ) |
| Other noninterest income | 26 |
| 27 |
| | 111 |
| 102 |
|
| Total noninterest income | 285 |
| 267 |
| | 1,107 |
| 1,051 |
|
| NONINTEREST EXPENSES | | | | | |
| Salaries and benefits expense | 235 |
| 219 |
| | 912 |
| 961 |
|
| Outside processing fee expense | 99 |
| 89 |
| | 366 |
| 336 |
|
| Net occupancy expense | 40 |
| 40 |
| | 154 |
| 157 |
|
| Equipment expense | 11 |
| 13 |
| | 45 |
| 53 |
|
| Restructuring charges | 13 |
| 20 |
| | 45 |
| 93 |
|
| Software expense | 31 |
| 29 |
| | 126 |
| 119 |
|
| FDIC insurance expense | 13 |
| 15 |
| | 51 |
| 54 |
|
| Advertising expense | 9 |
| 6 |
| | 28 |
| 21 |
|
| Litigation-related expense | — |
| 1 |
| | (2 | ) | 1 |
|
| Other noninterest expenses | 32 |
| 29 |
| | 135 |
| 135 |
|
| Total noninterest expenses | 483 |
| 461 |
| | 1,860 |
| 1,930 |
|
| Income before income taxes | 330 |
| 226 |
| | 1,234 |
| 670 |
|
| Provision for income taxes | 218 |
| 62 |
| | 491 |
| 193 |
|
| NET INCOME | 112 |
| 164 |
| | 743 |
| 477 |
|
| Less income allocated to participating securities | — |
| 1 |
| | 5 |
| 4 |
|
| Net income attributable to common shares | $ | 112 |
| $ | 163 |
| | $ | 738 |
| $ | 473 |
|
| Earnings per common share: | | | | | |
| Basic | $ | 0.65 |
| $ | 0.95 |
| | $ | 4.23 |
| $ | 2.74 |
|
| Diluted | 0.63 |
| 0.92 |
| | 4.14 |
| 2.68 |
|
| | | | | | |
| Comprehensive income | 107 |
| 73 |
| | 762 |
| 523 |
|
| | | | | | |
| Cash dividends declared on common stock | 52 |
| 40 |
| | 193 |
| 154 |
|
| Cash dividends declared per common share | 0.30 |
| 0.23 |
| | 1.09 |
| 0.89 |
|
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
| CONSOLIDATED QUARTERLY STATEMENTS OF COMPREHENSIVE INCOME (unaudited) |
| Comerica Incorporated and Subsidiaries | | | | | | | | | | |
| | | | | | | | | | | | |
| | Fourth | Third | Second | First | Fourth | | Fourth Quarter 2017 Compared To: |
| | Quarter | Quarter | Quarter | Quarter | Quarter | | Third Quarter 2017 | | Fourth Quarter 2016 |
| (in millions, except per share data) | 2017 | 2017 | 2017 | 2017 | 2016 | | Amount | Percent | | Amount | Percent |
| INTEREST INCOME | | | | | | | | | | | |
| Interest and fees on loans | $ | 498 |
| $ | 500 |
| $ | 453 |
| $ | 421 |
| $ | 412 |
| | $ | (2 | ) | — | % | | $ | 86 |
| 21 | % |
| Interest on investment securities | 64 |
| 63 |
| 62 |
| 61 |
| 62 |
| | 1 |
| 1 |
| | 2 |
| 3 |
|
| Interest on short-term investments | 16 |
| 16 |
| 14 |
| 14 |
| 10 |
| | — |
| — |
| | 6 |
| 67 |
|
| Total interest income | 578 |
| 579 |
| 529 |
| 496 |
| 484 |
| | (1 | ) | — |
| | 94 |
| 19 |
|
| INTEREST EXPENSE | | | | | | | | | | | |
| Interest on deposits | 13 |
| 11 |
| 9 |
| 9 |
| 10 |
| | 2 |
| 19 |
| | 3 |
| 29 |
|
| Interest on short-term borrowings | — |
| 3 |
| — |
| — |
| — |
| | (3 | ) | n/m |
| | — |
| — |
|
| Interest on medium- and long-term debt | 20 |
| 19 |
| 20 |
| 17 |
| 19 |
| | 1 |
| 2 |
| | 1 |
| 8 |
|
| Total interest expense | 33 |
| 33 |
| 29 |
| 26 |
| 29 |
| | — |
| — |
| | 4 |
| 16 |
|
| Net interest income | 545 |
| 546 |
| 500 |
| 470 |
| 455 |
| | (1 | ) | — |
| | 90 |
| 20 |
|
| Provision for credit losses | 17 |
| 24 |
| 17 |
| 16 |
| 35 |
| | (7 | ) | (31 | ) | | (18 | ) | (52 | ) |
Net interest income after provision for credit losses | 528 |
| 522 |
| 483 |
| 454 |
| 420 |
| | 6 |
| 1 |
| | 108 |
| 26 |
|
| NONINTEREST INCOME | | | | | | | | | | | |
| Card fees | 91 |
| 85 |
| 80 |
| 77 |
| 79 |
| | 6 |
| 8 |
| | 12 |
| 16 |
|
| Service charges on deposit accounts | 55 |
| 57 |
| 57 |
| 58 |
| 54 |
| | (2 | ) | (2 | ) | | 1 |
| 4 |
|
| Fiduciary income | 50 |
| 48 |
| 51 |
| 49 |
| 48 |
| | 2 |
| 3 |
| | 2 |
| 5 |
|
| Commercial lending fees | 22 |
| 21 |
| 22 |
| 20 |
| 21 |
| | 1 |
| 3 |
| | 1 |
| 2 |
|
| Letter of credit fees | 11 |
| 11 |
| 11 |
| 12 |
| 12 |
| | — |
| — |
| | (1 | ) | (12 | ) |
| Bank-owned life insurance | 12 |
| 12 |
| 9 |
| 10 |
| 12 |
| | — |
| — |
| | — |
| — |
|
| Foreign exchange income | 12 |
| 11 |
| 11 |
| 11 |
| 11 |
| | 1 |
| 6 |
| | 1 |
| 6 |
|
| Brokerage fees | 6 |
| 6 |
| 6 |
| 5 |
| 5 |
| | — |
| — |
| | 1 |
| 12 |
|
| Net securities losses | — |
| (1 | ) | (2 | ) | — |
| (2 | ) | | 1 |
| 7 |
| | 2 |
| n/m |
|
| Other noninterest income | 26 |
| 25 |
| 31 |
| 29 |
| 27 |
| | 1 |
| 10 |
| | (1 | ) | — |
|
| Total noninterest income | 285 |
| 275 |
| 276 |
| 271 |
| 267 |
| | 10 |
| 4 |
| | 18 |
| 7 |
|
| NONINTEREST EXPENSES | | | | | | | | | | | |
| Salaries and benefits expense | 235 |
| 225 |
| 219 |
| 233 |
| 219 |
| | 10 |
| 5 |
| | 16 |
| 8 |
|
| Outside processing fee expense | 99 |
| 92 |
| 88 |
| 87 |
| 89 |
| | 7 |
| 8 |
| | 10 |
| 12 |
|
| Net occupancy expense | 40 |
| 38 |
| 38 |
| 38 |
| 40 |
| | 2 |
| 6 |
| | — |
| — |
|
| Equipment expense | 11 |
| 12 |
| 11 |
| 11 |
| 13 |
| | (1 | ) | — |
| | (2 | ) | (13 | ) |
| Restructuring charges | 13 |
| 7 |
| 14 |
| 11 |
| 20 |
| | 6 |
| 63 |
| | (7 | ) | (41 | ) |
| Software expense | 31 |
| 35 |
| 31 |
| 29 |
| 29 |
| | (4 | ) | (13 | ) | | 2 |
| 5 |
|
| FDIC insurance expense | 13 |
| 13 |
| 12 |
| 13 |
| 15 |
| | — |
| — |
| | (2 | ) | (14 | ) |
| Advertising expense | 9 |
| 8 |
| 7 |
| 4 |
| 6 |
| | 1 |
| 11 |
| | 3 |
| 54 |
|
| Litigation-related expense | — |
| — |
| — |
| (2 | ) | 1 |
| | — |
| — |
| | (1 | ) | n/m |
|
| Other noninterest expenses | 32 |
| 33 |
| 37 |
| 33 |
| 29 |
| | (1 | ) | (3 | ) | | 3 |
| 13 |
|
| Total noninterest expenses | 483 |
| 463 |
| 457 |
| 457 |
| 461 |
| | 20 |
| 4 |
| | 22 |
| 5 |
|
| Income before income taxes | 330 |
| 334 |
| 302 |
| 268 |
| 226 |
| | (4 | ) | (1 | ) | | 104 |
| 46 |
|
| Provision for income taxes | 218 |
| 108 |
| 99 |
| 66 |
| 62 |
| | 110 |
| n/m |
| | 156 |
| n/m |
|
| NET INCOME | 112 |
| 226 |
| 203 |
| 202 |
| 164 |
| | (114 | ) | (50 | ) | | (52 | ) | (32 | ) |
| Less income allocated to participating securities | — |
| 2 |
| 1 |
| 2 |
| 1 |
| | (2 | ) | (50 | ) | | (1 | ) | (45 | ) |
| Net income attributable to common shares | $ | 112 |
| $ | 224 |
| $ | 202 |
| $ | 200 |
| $ | 163 |
| | $ | (112 | ) | (50 | )% | | $ | (51 | ) | (32 | )% |
| Earnings per common share: | | | | | | | | | | | |
| Basic | $ | 0.65 |
| $ | 1.29 |
| $ | 1.15 |
| $ | 1.15 |
| $ | 0.95 |
| | $ | (0.64 | ) | (50 | )% | | $ | (0.30 | ) | (32 | )% |
| Diluted | 0.63 |
| 1.26 |
| 1.13 |
| 1.11 |
| 0.92 |
| | (0.63 | ) | (50 | ) | | (0.29 | ) | (32 | ) |
| | | | | | | |
| | | | |
| Comprehensive income | 107 |
| 228 |
| 221 |
| 206 |
| 73 |
| | (121 | ) | (53 | ) | | 34 |
| 48 |
|
| | | | | | | | | | | | |
| Cash dividends declared on common stock | 52 |
| 53 |
| 46 |
| 42 |
| 40 |
| | (1 | ) | (1 | ) | | 12 |
| 29 |
|
| Cash dividends declared per common share | 0.30 |
| 0.30 |
| 0.26 |
| 0.23 |
| 0.23 |
| | — |
| — |
| | 0.07 |
| 30 |
|
n/m - not meaningful
|
| | | | | | | | | | | | | | | | |
| ANALYSIS OF THE ALLOWANCE FOR LOAN LOSSES (unaudited) |
| Comerica Incorporated and Subsidiaries | | | | | | |
| | | | | | | |
| | 2017 | | 2016 |
| (in millions) | 4th Qtr | 3rd Qtr | 2nd Qtr | 1st Qtr | | 4th Qtr |
| | | | | | | |
| Balance at beginning of period | $ | 712 |
| $ | 705 |
| $ | 708 |
| $ | 730 |
| | $ | 727 |
|
| | | | | | | |
| Loan charge-offs: | | | | | | |
| Commercial | 26 |
| 35 |
| 34 |
| 38 |
| | 37 |
|
| Commercial mortgage | 1 |
| — |
| 1 |
| 1 |
| | 1 |
|
| Lease financing | — |
| 1 |
| — |
| — |
| | — |
|
| International | 1 |
| — |
| 2 |
| 3 |
| | 8 |
|
| Consumer | 1 |
| 1 |
| 2 |
| 2 |
| | 2 |
|
| Total loan charge-offs | 29 |
| 37 |
| 39 |
| 44 |
| | 48 |
|
| | | | | | | |
| Recoveries on loans previously charged-off: | | | | | | |
| Commercial | 7 |
| 6 |
| 17 |
| 7 |
| | 7 |
|
| Real estate construction | — |
| 1 |
| — |
| — |
| | — |
|
| Commercial mortgage | 2 |
| 2 |
| 3 |
| 2 |
| | 3 |
|
| International | 2 |
| 1 |
| — |
| — |
| | — |
|
| Residential mortgage | 1 |
| — |
| — |
| — |
| | 1 |
|
| Consumer | 1 |
| 2 |
| 1 |
| 2 |
| | 1 |
|
| Total recoveries | 13 |
| 12 |
| 21 |
| 11 |
| | 12 |
|
| Net loan charge-offs | 16 |
| 25 |
| 18 |
| 33 |
| | 36 |
|
| Provision for loan losses | 16 |
| 31 |
| 15 |
| 11 |
| | 39 |
|
| Foreign currency translation adjustment | — |
| 1 |
| — |
| — |
| | — |
|
| Balance at end of period | $ | 712 |
| $ | 712 |
| $ | 705 |
| $ | 708 |
| | $ | 730 |
|
| | | | | | | |
| Allowance for loan losses as a percentage of total loans | 1.45 | % | 1.45 | % | 1.43 | % | 1.47 | % | | 1.49 | % |
| | | | | | | |
| Net loan charge-offs as a percentage of average total loans | 0.13 |
| 0.21 |
| 0.15 |
| 0.28 |
| | 0.29 |
|
|
| | | | | | | | | | | | | | | | |
| ANALYSIS OF THE ALLOWANCE FOR CREDIT LOSSES ON LENDING-RELATED COMMITMENTS (unaudited) |
| Comerica Incorporated and Subsidiaries | | | | | | |
| | | | | | | |
| | 2017 | | 2016 |
| (in millions) | 4th Qtr | 3rd Qtr | 2nd Qtr | 1st Qtr | | 4th Qtr |
| | | | | | | |
| Balance at beginning of period | $ | 41 |
| $ | 48 |
| $ | 46 |
| $ | 41 |
| | $ | 45 |
|
| Add: Provision for credit losses on lending-related commitments | 1 |
| (7 | ) | 2 |
| 5 |
| | (4 | ) |
| Balance at end of period | $ | 42 |
| $ | 41 |
| $ | 48 |
| $ | 46 |
|
| $ | 41 |
|
|
| | | | | | | | | | | | | | | | |
| NONPERFORMING ASSETS (unaudited) | | | | | | |
| Comerica Incorporated and Subsidiaries | | | | | | |
| | | | | | | |
| | 2017 | | 2016 |
| (in millions) | 4th Qtr | 3rd Qtr | 2nd Qtr | 1st Qtr | | 4th Qtr |
| | | | | | | |
| SUMMARY OF NONPERFORMING ASSETS AND PAST DUE LOANS | | | |
| Nonaccrual loans: | | | | | | |
| Business loans: | | | | | | |
| Commercial | $ | 309 |
| $ | 345 |
| $ | 379 |
| $ | 400 |
| | $ | 445 |
|
| Commercial mortgage | 31 |
| 35 |
| 41 |
| 41 |
| | 46 |
|
| Lease financing | 4 |
| 8 |
| 8 |
| 6 |
| | 6 |
|
| International | 6 |
| 6 |
| 6 |
| 8 |
| | 14 |
|
| Total nonaccrual business loans | 350 |
| 394 |
| 434 |
| 455 |
| | 511 |
|
| Retail loans: | | | | | | |
| Residential mortgage | 31 |
| 28 |
| 36 |
| 39 |
| | 39 |
|
| Consumer: | | | | | | |
| Home equity | 21 |
| 22 |
| 23 |
| 26 |
| | 28 |
|
| Other consumer | — |
| — |
| — |
| 1 |
| | 4 |
|
| Total consumer | 21 |
| 22 |
| 23 |
| 27 |
| | 32 |
|
| Total nonaccrual retail loans | 52 |
| 50 |
| 59 |
| 66 |
| | 71 |
|
| Total nonaccrual loans | 402 |
| 444 |
| 493 |
| 521 |
| | 582 |
|
| Reduced-rate loans | 8 |
| 8 |
| 8 |
| 8 |
| | 8 |
|
| Total nonperforming loans | 410 |
| 452 |
| 501 |
| 529 |
| | 590 |
|
| Foreclosed property | 5 |
| 6 |
| 18 |
| 16 |
| | 17 |
|
| Total nonperforming assets | $ | 415 |
| $ | 458 |
| $ | 519 |
| $ | 545 |
| | $ | 607 |
|
| | | | | | | |
| Nonperforming loans as a percentage of total loans | 0.83 | % | 0.92 | % | 1.01 | % | 1.10 | % | | 1.20 | % |
Nonperforming assets as a percentage of total loans and foreclosed property | 0.84 |
| 0.93 |
| 1.05 |
| 1.13 |
| | 1.24 |
|
Allowance for loan losses as a percentage of total nonperforming loans | 173 |
| 157 |
| 141 |
| 134 |
| | 124 |
|
| Loans past due 90 days or more and still accruing | $ | 35 |
| $ | 12 |
| $ | 30 |
| $ | 26 |
| | $ | 19 |
|
| | | | | | | |
| ANALYSIS OF NONACCRUAL LOANS | | | | | | |
| Nonaccrual loans at beginning of period | $ | 444 |
| $ | 493 |
| $ | 521 |
| $ | 582 |
| | $ | 631 |
|
| Loans transferred to nonaccrual (a) | 73 |
| 66 |
| 54 |
| 104 |
| | 60 |
|
| Nonaccrual business loan gross charge-offs (b) | (28 | ) | (36 | ) | (37 | ) | (42 | ) | | (46 | ) |
| Nonaccrual business loans sold (c) | (22 | ) | (10 | ) | — |
| (8 | ) | | (10 | ) |
| Payments/Other (d) | (65 | ) | (69 | ) | (45 | ) | (115 | ) | | (53 | ) |
| Nonaccrual loans at end of period | $ | 402 |
| $ | 444 |
| $ | 493 |
| $ | 521 |
| | $ | 582 |
|
| (a) Based on an analysis of nonaccrual loans with book balances greater than $2 million. |
| (b) Analysis of gross loan charge-offs: | | | | | | |
| Nonaccrual business loans | $ | 28 |
| $ | 36 |
| $ | 37 |
| $ | 42 |
| | $ | 46 |
|
| Consumer and residential mortgage loans | 1 |
| 1 |
| 2 |
| 2 |
| | 2 |
|
| Total gross loan charge-offs | $ | 29 |
| $ | 37 |
| $ | 39 |
| $ | 44 |
| | $ | 48 |
|
| (c) Analysis of loans sold: | | | | | | |
| Nonaccrual business loans | $ | 22 |
| $ | 10 |
| $ | — |
| $ | 8 |
| | $ | 10 |
|
| Performing criticized loans | 12 |
| — |
| — |
| — |
| | — |
|
| Total criticized loans sold | $ | 34 |
| $ | 10 |
| $ | — |
| $ | 8 |
| | $ | 10 |
|
| (d) Includes net changes related to nonaccrual loans with balances less than $2 million, payments on nonaccrual loans with book balances greater than $2 million and transfers of nonaccrual loans to foreclosed property. Excludes business loan gross charge-offs and business nonaccrual loans sold. |
|
| | | | | | | | | | | | | | | | | |
| ANALYSIS OF NET INTEREST INCOME (unaudited) |
| Comerica Incorporated and Subsidiaries | | | | | | | |
| | | | | | | | |
| | Years Ended |
| | December 31, 2017 | | December 31, 2016 |
| | Average Balance | | Average Rate (a) | | Average Balance | | Average Rate (a) |
| (dollar amounts in millions) | Interest | | Interest |
| | | | | | | | |
| Commercial loans | $ | 30,415 |
| $ | 1,162 |
| 3.83 | % | | $ | 31,062 |
| $ | 1,008 |
| 3.26 | % |
| Real estate construction loans | 2,958 |
| 124 |
| 4.18 |
| | 2,508 |
| 91 |
| 3.63 |
|
| Commercial mortgage loans | 9,005 |
| 358 |
| 3.97 |
| | 8,981 |
| 314 |
| 3.49 |
|
| Lease financing | 509 |
| 13 |
| 2.64 |
| | 684 |
| 18 |
| 2.65 |
|
| International loans | 1,157 |
| 47 |
| 4.07 |
| | 1,367 |
| 50 |
| 3.63 |
|
| Residential mortgage loans | 1,989 |
| 74 |
| 3.70 |
| | 1,894 |
| 71 |
| 3.76 |
|
| Consumer loans | 2,525 |
| 94 |
| 3.70 |
| | 2,500 |
| 83 |
| 3.32 |
|
| Total loans | 48,558 |
| 1,872 |
| 3.86 |
| | 48,996 |
| 1,635 |
| 3.34 |
|
| | | | | | | | |
| Mortgage-backed securities (b) | 9,330 |
| 202 |
| 2.17 |
| | 9,356 |
| 203 |
| 2.19 |
|
| Other investment securities | 2,877 |
| 48 |
| 1.67 |
| | 2,992 |
| 44 |
| 1.51 |
|
| Total investment securities (b) | 12,207 |
| 250 |
| 2.05 |
| | 12,348 |
| 247 |
| 2.02 |
|
| | | | | | | | |
| Interest-bearing deposits with banks | 5,443 |
| 60 |
| 1.09 |
| | 5,099 |
| 26 |
| 0.51 |
|
| Other short-term investments | 92 |
| — |
| 0.64 |
| | 102 |
| 1 |
| 0.61 |
|
| Total earning assets | 66,300 |
| 2,182 |
| 3.30 |
| | 66,545 |
| 1,909 |
| 2.88 |
|
| | | | | | | | |
| Cash and due from banks | 1,209 |
| | | | 1,146 |
| | |
| Allowance for loan losses | (728 | ) | | | | (730 | ) | | |
| Accrued income and other assets | 4,671 |
| | | | 4,782 |
| | |
| Total assets | $ | 71,452 |
| | | | $ | 71,743 |
| | |
| | | | | | | | |
| Money market and interest-bearing checking deposits | $ | 21,585 |
| 33 |
| 0.15 |
| | $ | 22,744 |
| 27 |
| 0.11 |
|
| Savings deposits | 2,133 |
| — |
| 0.02 |
| | 2,013 |
| — |
| 0.02 |
|
| Customer certificates of deposit | 2,471 |
| 9 |
| 0.36 |
| | 3,200 |
| 13 |
| 0.40 |
|
| Foreign office time deposits | 56 |
| — |
| 0.64 |
| | 33 |
| — |
| 0.35 |
|
| Total interest-bearing deposits | 26,245 |
| 42 |
| 0.16 |
| | 27,990 |
| 40 |
| 0.14 |
|
| | | | | | | | |
| Short-term borrowings | 277 |
| 3 |
| 1.14 |
| | 138 |
| — |
| 0.45 |
|
| Medium- and long-term debt | 4,969 |
| 76 |
| 1.51 |
| | 4,917 |
| 72 |
| 1.45 |
|
| Total interest-bearing sources | 31,491 |
| 121 |
| 0.38 |
| | 33,045 |
| 112 |
| 0.34 |
|
| | | | | | | | |
| Noninterest-bearing deposits | 31,013 |
| | | | 29,751 |
| | |
| Accrued expenses and other liabilities | 996 |
| | | | 1,273 |
| | |
| Total shareholders' equity | 7,952 |
| | | | 7,674 |
| | |
| Total liabilities and shareholders' equity | $ | 71,452 |
| | | | $ | 71,743 |
| | |
| | | | | | | | |
| Net interest income/rate spread | | $ | 2,061 |
| 2.92 |
| | | $ | 1,797 |
| 2.54 |
|
| | | | | | | | |
| Impact of net noninterest-bearing sources of funds | | | 0.20 |
| | | | 0.17 |
|
| Net interest margin (as a percentage of average earning assets) | | | 3.12 | % | | | | 2.71 | % |
| |
| (a) | Fully taxable equivalent. |
| |
| (b) | Includes investment securities available-for-sale and investment securities held-to-maturity. |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| ANALYSIS OF NET INTEREST INCOME (unaudited) |
| Comerica Incorporated and Subsidiaries | | | | | | | | | | | |
| | | | | | | | | | | | |
| | Three Months Ended |
| | December 31, 2017 | | September 30, 2017 | | December 31, 2016 |
| | Average Balance | | Average Rate (a) | | Average Balance | | Average Rate (a) | | Average Balance | | Average Rate (a) |
| (dollar amounts in millions) | Interest | | Interest | | Interest |
| | | | | | | | | | | | |
| Commercial loans | $ | 30,719 |
| $ | 311 |
| 4.03 | % | | $ | 30,603 |
| $ | 312 |
| 4.07 | % | | $ | 30,792 |
| $ | 255 |
| 3.30 | % |
| Real estate construction loans | 3,031 |
| 34 |
| 4.44 |
| | 2,933 |
| 33 |
| 4.36 |
| | 2,837 |
| 26 |
| 3.65 |
|
| Commercial mortgage loans | 9,054 |
| 93 |
| 4.08 |
| | 8,977 |
| 95 |
| 4.20 |
| | 8,918 |
| 78 |
| 3.49 |
|
| Lease financing | 470 |
| 4 |
| 3.39 |
| | 470 |
| 3 |
| 3.36 |
| | 619 |
| 3 |
| 1.95 |
|
| International loans | 1,122 |
| 12 |
| 4.41 |
| | 1,156 |
| 12 |
| 4.13 |
| | 1,303 |
| 12 |
| 3.70 |
|
| Residential mortgage loans | 2,014 |
| 19 |
| 3.66 |
| | 2,005 |
| 20 |
| 3.95 |
| | 1,923 |
| 17 |
| 3.60 |
|
| Consumer loans | 2,523 |
| 25 |
| 3.92 |
| | 2,519 |
| 25 |
| 3.84 |
| | 2,523 |
| 21 |
| 3.28 |
|
| Total loans | 48,933 |
| 498 |
| 4.04 |
| | 48,663 |
| 500 |
| 4.09 |
| | 48,915 |
| 412 |
| 3.36 |
|
| | | | | | | | | | | | |
| Mortgage-backed securities (b) | 9,315 |
| 52 |
| 2.19 |
| | 9,361 |
| 51 |
| 2.17 |
| | 9,386 |
| 51 |
| 2.16 |
|
| Other investment securities | 2,840 |
| 12 |
| 1.71 |
| | 2,883 |
| 12 |
| 1.69 |
| | 2,943 |
| 11 |
| 1.54 |
|
| Total investment securities (b) | 12,155 |
| 64 |
| 2.08 |
| | 12,244 |
| 63 |
| 2.06 |
| | 12,329 |
| 62 |
| 2.01 |
|
| | | | | | | | | | | | |
| Interest-bearing deposits with banks | 4,987 |
| 16 |
| 1.30 |
| | 5,086 |
| 16 |
| 1.26 |
| | 7,438 |
| 10 |
| 0.52 |
|
| Other short-term investments | 92 |
| — |
| 0.58 |
| | 91 |
| — |
| 0.72 |
| | 92 |
| — |
| 0.47 |
|
| Total earning assets | 66,167 |
| 578 |
| 3.47 |
| | 66,084 |
| 579 |
| 3.49 |
| | 68,774 |
| 484 |
| 2.81 |
|
| | | | | | | | | | | | |
| Cash and due from banks | 1,274 |
| | | | 1,234 |
| | | | 1,290 |
| | |
| Allowance for loan losses | (726 | ) | | | | (718 | ) | | | | (740 | ) | | |
| Accrued income and other assets | 4,683 |
| | | | 4,651 |
| | | | 4,802 |
| | |
| Total assets | $ | 71,398 |
| | | | $ | 71,251 |
| | | | $ | 74,126 |
| | |
| | | | | | | | | | | | |
| Money market and interest-bearing checking deposits | $ | 21,402 |
| 10 |
| 0.19 |
| | $ | 20,819 |
| 9 |
| 0.15 |
| | $ | 22,585 |
| 7 |
| 0.12 |
|
| Savings deposits | 2,152 |
| — |
| 0.02 |
| | 2,152 |
| — |
| 0.02 |
| | 2,064 |
| — |
| 0.02 |
|
| Customer certificates of deposit | 2,259 |
| 3 |
| 0.35 |
| | 2,390 |
| 2 |
| 0.36 |
| | 2,878 |
| 3 |
| 0.39 |
|
| Foreign office time deposits | 48 |
| — |
| 0.76 |
| | 75 |
| — |
| 0.66 |
| | 27 |
| — |
| 0.36 |
|
| Total interest-bearing deposits | 25,861 |
| 13 |
| 0.19 |
| | 25,436 |
| 11 |
| 0.16 |
| | 27,554 |
| 10 |
| 0.14 |
|
| | | | | | | | | | | | |
| Short-term borrowings | 116 |
| — |
| 1.16 |
| | 815 |
| 3 |
| 1.15 |
| | 13 |
| — |
| 0.50 |
|
| Medium- and long-term debt | 4,631 |
| 20 |
| 1.69 |
| | 4,936 |
| 19 |
| 1.61 |
| | 5,578 |
| 19 |
| 1.30 |
|
| Total interest-bearing sources | 30,608 |
| 33 |
| 0.42 |
| | 31,187 |
| 33 |
| 0.42 |
| | 33,145 |
| 29 |
| 0.33 |
|
| | | | | | | | | | | | |
| Noninterest-bearing deposits | 31,780 |
| | | | 31,057 |
| | | | 32,091 |
| | |
| Accrued expenses and other liabilities | 1,023 |
| | | | 999 |
| | | | 1,156 |
| | |
| Total shareholders' equity | 7,987 |
| | | | 8,008 |
| | | | 7,734 |
| | |
| Total liabilities and shareholders' equity | $ | 71,398 |
| | | | $ | 71,251 |
| | | | $ | 74,126 |
| | |
| | | | | | | | | | | | |
| Net interest income/rate spread | | $ | 545 |
| 3.05 |
| | | $ | 546 |
| 3.07 |
| | | $ | 455 |
| 2.48 |
|
| | | | | | | | | | | | |
| Impact of net noninterest-bearing sources of funds | | | 0.23 |
| | | | 0.22 |
| | | | 0.17 |
|
| Net interest margin (as a percentage of average earning assets) | | | 3.28 | % | | | | 3.29 | % | | | | 2.65 | % |
| |
| (a) | Fully taxable equivalent. |
| |
| (b) | Includes investment securities available-for-sale and investment securities held-to-maturity. |
|
| | | | | | | | | | | | | | | |
| CONSOLIDATED STATISTICAL DATA (unaudited) |
| Comerica Incorporated and Subsidiaries | | | | | |
| | | | | | |
| | December 31, | September 30, | June 30, | March 31, | December 31, |
| (in millions, except per share data) | 2017 | 2017 | 2017 | 2017 | 2016 |
| | | | | | |
| Commercial loans: | | | | | |
| Floor plan | $ | 4,359 |
| $ | 3,960 |
| $ | 4,346 |
| $ | 4,191 |
| $ | 4,269 |
|
| Other | 26,701 |
| 27,102 |
| 27,103 |
| 26,024 |
| 26,725 |
|
| Total commercial loans | 31,060 |
| 31,062 |
| 31,449 |
| 30,215 |
| 30,994 |
|
| Real estate construction loans | 2,961 |
| 3,018 |
| 2,857 |
| 2,930 |
| 2,869 |
|
| Commercial mortgage loans | 9,159 |
| 8,985 |
| 8,974 |
| 9,021 |
| 8,931 |
|
| Lease financing | 468 |
| 475 |
| 472 |
| 550 |
| 572 |
|
| International loans | 983 |
| 1,159 |
| 1,145 |
| 1,106 |
| 1,258 |
|
| Residential mortgage loans | 1,988 |
| 1,999 |
| 1,976 |
| 1,944 |
| 1,942 |
|
| Consumer loans: | | | | | |
| Home equity | 1,816 |
| 1,790 |
| 1,796 |
| 1,790 |
| 1,800 |
|
| Other consumer | 738 |
| 721 |
| 739 |
| 747 |
| 722 |
|
| Total consumer loans | 2,554 |
| 2,511 |
| 2,535 |
| 2,537 |
| 2,522 |
|
| Total loans | $ | 49,173 |
| $ | 49,209 |
| $ | 49,408 |
| $ | 48,303 |
| $ | 49,088 |
|
| | | | | | |
| Goodwill | $ | 635 |
| $ | 635 |
| $ | 635 |
| $ | 635 |
| $ | 635 |
|
| Core deposit intangible | 6 |
| 6 |
| 7 |
| 7 |
| 7 |
|
| Other intangibles | 2 |
| 2 |
| 2 |
| 3 |
| 3 |
|
| | | | | | |
| Common equity tier 1 capital (a) | 7,686 |
| 7,752 |
| 7,705 |
| 7,667 |
| 7,540 |
|
| Risk-weighted assets (a) | 66,573 |
| 67,341 |
| 66,928 |
| 66,355 |
| 67,966 |
|
| | | | | | |
| Common equity tier 1 and tier 1 risk-based capital ratio (a) | 11.55 | % | 11.51 | % | 11.51 | % | 11.55 | % | 11.09 | % |
| Total risk-based capital ratio (a) | 13.71 |
| 13.65 |
| 13.66 |
| 13.72 |
| 13.27 |
|
| Leverage ratio (a) | 10.75 |
| 10.87 |
| 10.80 |
| 10.67 |
| 10.18 |
|
| Common equity ratio | 11.13 |
| 11.16 |
| 11.18 |
| 10.87 |
| 10.68 |
|
| Tangible common equity ratio (b) | 10.32 |
| 10.35 |
| 10.37 |
| 10.07 |
| 9.89 |
|
| | | | | | |
| Common shareholders' equity per share of common stock | $ | 46.07 |
| $ | 46.09 |
| $ | 45.39 |
| $ | 44.69 |
| $ | 44.47 |
|
| Tangible common equity per share of common stock (b) | 42.34 |
| 42.39 |
| 41.73 |
| 41.05 |
| 40.79 |
|
| Market value per share for the quarter: | | | | | |
| High | 88.22 |
| 76.76 |
| 75.30 |
| 75.00 |
| 70.44 |
|
| Low | 74.16 |
| 64.04 |
| 64.75 |
| 64.27 |
| 46.75 |
|
| Close | 86.81 |
| 76.26 |
| 73.24 |
| 68.58 |
| 68.11 |
|
| | | | | | |
| Quarterly ratios: | | | | | |
| Return on average common shareholders' equity | 5.58 | % | 11.17 | % | 10.26 | % | 10.42 | % | 8.43 | % |
| Return on average assets | 0.62 |
| 1.25 |
| 1.14 |
| 1.14 |
| 0.88 |
|
| Efficiency ratio (c) | 58.07 |
| 56.24 |
| 58.63 |
| 61.63 |
| 63.58 |
|
| | | | | | |
| Number of banking centers | 438 |
| 439 |
| 439 |
| 458 |
| 458 |
|
| | | | | | |
| Number of employees - full time equivalent | 7,999 |
| 7,974 |
| 8,017 |
| 8,044 |
| 7,960 |
|
(a) December 31, 2017 amounts and ratios are estimated.
| |
| (b) | See Reconciliation of Non-GAAP Financial Measures. |
| |
| (c) | Noninterest expenses as a percentage of the sum of net interest income (FTE) and noninterest income excluding net securities gains (losses). |
|
| | | | | | | | | |
| PARENT COMPANY ONLY BALANCE SHEETS (unaudited) |
| Comerica Incorporated | | | |
| | | | |
| | December 31, | September 30, | December 31, |
| (in millions, except share data) | 2017 | 2017 | 2016 |
| | | | |
| ASSETS | | | |
| Cash and due from subsidiary bank | $ | 1,059 |
| $ | 974 |
| $ | 761 |
|
| Other short-term investments | 92 |
| 89 |
| 87 |
|
| Investment in subsidiaries, principally banks | 7,467 |
| 7,639 |
| 7,561 |
|
| Premises and equipment | 2 |
| 2 |
| 2 |
|
| Other assets | 127 |
| 114 |
| 150 |
|
| Total assets | $ | 8,747 |
| $ | 8,818 |
| $ | 8,561 |
|
| | | | |
| LIABILITIES AND SHAREHOLDERS' EQUITY | | | |
| Medium- and long-term debt | $ | 602 |
| $ | 606 |
| $ | 604 |
|
| Other liabilities | 182 |
| 178 |
| 161 |
|
| Total liabilities | 784 |
| 784 |
| 765 |
|
| | | | |
| Common stock - $5 par value: | | | |
| Authorized - 325,000,000 shares | | | |
| Issued - 228,164,824 shares | 1,141 |
| 1,141 |
| 1,141 |
|
| Capital surplus | 2,122 |
| 2,112 |
| 2,135 |
|
| Accumulated other comprehensive loss | (364 | ) | (359 | ) | (383 | ) |
| Retained earnings | 7,800 |
| 7,746 |
| 7,331 |
|
| Less cost of common stock in treasury - 55,306,483 shares at 12/31/17; 53,835,135 shares at 9/30/17 and 52,851,156 shares at 12/31/16 | (2,736 | ) | (2,606 | ) | (2,428 | ) |
| Total shareholders' equity | 7,963 |
| 8,034 |
| 7,796 |
|
| Total liabilities and shareholders' equity | $ | 8,747 |
| $ | 8,818 |
| $ | 8,561 |
|
|
| | | | | | | | | | | | | | | | | | | | |
| CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (unaudited) |
| Comerica Incorporated and Subsidiaries | | | | | |
| | | | | | | | |
| | | | | Accumulated | | | |
| | Common Stock | | Other | | | Total |
| | Shares | | Capital | Comprehensive | Retained | Treasury | Shareholders' |
| (in millions, except per share data) | Outstanding | Amount | Surplus | Loss | Earnings | Stock | Equity |
| | | | | | | | |
| BALANCE AT DECEMBER 31, 2015 | 175.7 |
| $ | 1,141 |
| $ | 2,173 |
| $ | (429 | ) | $ | 7,084 |
| $ | (2,409 | ) | $ | 7,560 |
|
| Net income | — |
| — |
| — |
| — |
| 477 |
| — |
| 477 |
|
| Other comprehensive loss, net of tax | — |
| — |
| — |
| 46 |
| — |
| — |
| 46 |
|
| Cash dividends declared on common stock ($0.89 per share) | — |
| — |
| — |
| — |
| (154 | ) | — |
| (154 | ) |
| Purchase of common stock | (6.8 | ) | — |
| — |
| — |
| — |
| (310 | ) | (310 | ) |
| Net issuance of common stock under employee stock plans | 4.1 |
| — |
| (15 | ) | — |
| (27 | ) | 185 |
| 143 |
|
| Net issuance of common stock for warrants | 2.3 |
| — |
| (57 | ) | — |
| (49 | ) | 106 |
| — |
|
| Share-based compensation | — |
| — |
| 34 |
| — |
| — |
| — |
| 34 |
|
| BALANCE AT DECEMBER 31, 2016 | 175.3 |
| 1,141 |
| 2,135 |
| (383 | ) | 7,331 |
| (2,428 | ) | 7,796 |
|
| Cumulative effect of change in accounting principle | — |
| — |
| 3 |
| — |
| (2 | ) | — |
| 1 |
|
| Net income | — |
| — |
| — |
| — |
| 743 |
| — |
| 743 |
|
| Other comprehensive income, net of tax | — |
| — |
| — |
| 19 |
| — |
| — |
| 19 |
|
| Cash dividends declared on common stock ($1.09 per share) | — |
| — |
| — |
| — |
| (193 | ) | — |
| (193 | ) |
| Purchase of common stock | (7.5 | ) | — |
| — |
| — |
| — |
| (544 | ) | (544 | ) |
| Net issuance of common stock under employee stock plans | 3.3 |
| — |
| (26 | ) | — |
| (26 | ) | 151 |
| 99 |
|
| Net issuance of common stock for warrants | 1.8 |
| — |
| (28 | ) | — |
| (53 | ) | 84 |
| 3 |
|
| Share-based compensation | — |
| — |
| 39 |
| — |
| — |
| — |
| 39 |
|
| Other | — |
| — |
| (1 | ) | — |
| — |
| 1 |
| — |
|
| BALANCE AT DECEMBER 31, 2017 | 172.9 |
| $ | 1,141 |
| $ | 2,122 |
| $ | (364 | ) | $ | 7,800 |
| $ | (2,736 | ) | $ | 7,963 |
|
|
| | | | | | | | | | | | | | | | | | | | | | | |
| BUSINESS SEGMENT FINANCIAL RESULTS (unaudited) |
| Comerica Incorporated and Subsidiaries | | | | | | | | | | | |
| | | | | | | | | | | | |
| | | | | | | | | | | | |
| (dollar amounts in millions) | Business | | Retail | | Wealth | | | | | | |
| Three Months Ended December 31, 2017 | Bank | | Bank | | Management | | Finance | | Other | | Total |
| Earnings summary: | | | | | | | | | | | |
| Net interest income (expense) | $ | 348 |
| | $ | 170 |
| | $ | 43 |
| | $ | (25 | ) | | $ | 9 |
| | $ | 545 |
|
| Provision for credit losses | 20 |
| | (3 | ) | | (5 | ) | | — |
| | 5 |
| | 17 |
|
| Noninterest income | 156 |
| | 49 |
| | 64 |
| | 14 |
| | 2 |
| | 285 |
|
| Noninterest expenses | 210 |
| | 189 |
| | 73 |
| | (1 | ) | | 12 |
| | 483 |
|
| Provision (benefit) for income taxes | 98 |
| | 12 |
| | 15 |
| | (8 | ) | | 101 |
| (a) | 218 |
|
| Net income (loss) | $ | 176 |
| | $ | 21 |
| | $ | 24 |
| | $ | (2 | ) | | $ | (107 | ) | | $ | 112 |
|
| Net credit-related charge-offs (recoveries) | $ | 14 |
| | $ | 3 |
| | $ | (1 | ) | | $ | — |
| | $ | — |
| | $ | 16 |
|
| | | | | | | | | | | | |
| Selected average balances: | | | | | | | | | | | |
| Assets | $ | 39,300 |
| | $ | 6,445 |
| | $ | 5,352 |
| | $ | 13,940 |
| | $ | 6,361 |
| | $ | 71,398 |
|
| Loans | 37,873 |
| | 5,835 |
| | 5,225 |
| | — |
| | — |
| | 48,933 |
|
| Deposits | 28,717 |
| | 24,232 |
| | 4,184 |
| | 394 |
| | 114 |
| | 57,641 |
|
| | | | | | | | | | | | |
| Statistical data: | | | | | | | | | | | |
| Return on average assets (b) | 1.78 | % | | 0.34 | % | | 1.78 | % | | N/M |
| | N/M |
| | 0.62 | % |
| Efficiency ratio (c) | 41.65 |
| | 85.85 |
| | 68.50 |
| | N/M |
| | N/M |
| | 58.07 |
|
| | | | | | | | | | | | |
| | Business | | Retail | | Wealth | | | | | | |
| Three Months Ended September 30, 2017 | Bank | | Bank | | Management | | Finance | | Other | | Total |
| Earnings summary: | | | | | | | | | | | |
| Net interest income (expense) | $ | 356 |
| | $ | 165 |
| | $ | 45 |
| | $ | (30 | ) | | $ | 10 |
| | $ | 546 |
|
| Provision for credit losses | 16 |
| | (1 | ) | | 10 |
| | — |
| | (1 | ) | | 24 |
|
| Noninterest income | 148 |
| | 49 |
| | 63 |
| | 13 |
| | 2 |
| | 275 |
|
| Noninterest expenses | 199 |
| | 184 |
| | 70 |
| | (1 | ) | | 11 |
| | 463 |
|
| Provision (benefit) for income taxes | 99 |
| | 10 |
| | 10 |
| | (10 | ) | | (1 | ) | | 108 |
|
| Net income (loss) | $ | 190 |
| | $ | 21 |
| | $ | 18 |
| | $ | (6 | ) | | $ | 3 |
| | $ | 226 |
|
| Net credit-related charge-offs (recoveries) | $ | 28 |
| | $ | (1 | ) | | $ | (2 | ) | | $ | — |
| | $ | — |
| | $ | 25 |
|
| | | | | | | | | | | | |
| Selected average balances: | | | | | | | | | | | |
| Assets | $ | 38,917 |
| | $ | 6,455 |
| | $ | 5,416 |
| | $ | 13,996 |
| | $ | 6,467 |
| | $ | 71,251 |
|
| Loans | 37,559 |
| | 5,834 |
| | 5,270 |
| | — |
| | — |
| | 48,663 |
|
| Deposits | 28,115 |
| | 23,918 |
| | 4,054 |
| | 270 |
| | 136 |
| | 56,493 |
|
| | | | | | | | | | | | |
| Statistical data: | | | | | | | | | | | |
| Return on average assets (b) | 1.94 | % | | 0.33 | % | | 1.28 | % | | N/M |
| | N/M |
| | 1.25 | % |
| Efficiency ratio (c) | 39.32 |
| | 85.51 |
| | 65.23 |
| | N/M |
| | N/M |
| | 56.24 |
|
| | | | | | | | | | | | |
| | Business | | Retail | | Wealth | | | | | | |
| Three Months Ended December 31, 2016 | Bank | | Bank | | Management | | Finance | | Other | | Total |
| Earnings summary: | | | | | | | | | | | |
| Net interest income (expense) | $ | 354 |
| | $ | 155 |
| | $ | 41 |
| | $ | (101 | ) | | 6 |
| | $ | 455 |
|
| Provision for credit losses | 17 |
| | 22 |
| | (1 | ) | | — |
| | (3 | ) | | 35 |
|
| Noninterest income | 146 |
| | 48 |
| | 62 |
| | 10 |
| | 1 |
| | 267 |
|
| Noninterest expenses | 196 |
| | 188 |
| | 72 |
| | (1 | ) | | 6 |
| | 461 |
|
| Provision (benefit) for income taxes | 82 |
| | (3 | ) | | 10 |
| | (30 | ) | | 3 |
| | 62 |
|
| Net income (loss) | $ | 205 |
| | $ | (4 | ) | | $ | 22 |
| | $ | (60 | ) | | $ | 1 |
| | $ | 164 |
|
| Net credit-related charge-offs (recoveries) | $ | 33 |
| | $ | 5 |
| | $ | (2 | ) | | $ | — |
| | $ | — |
| | $ | 36 |
|
| | | | | | | | | | | | |
| Selected average balances: | | | | | | | | | | | |
| Assets | $ | 39,220 |
| | $ | 6,559 |
| | $ | 5,268 |
| | $ | 14,109 |
| | $ | 8,970 |
| | $ | 74,126 |
|
| Loans | 37,893 |
| | 5,906 |
| | 5,116 |
| | — |
| | — |
| | 48,915 |
|
| Deposits | 31,221 |
| | 23,915 |
| | 4,092 |
| | 107 |
| | 310 |
| | 59,645 |
|
| | | | | | | | | | | | |
| Statistical data: | | | | | | | | | | | |
| Return on average assets (b) | 2.09 | % | | (0.07 | )% | | 1.68 | % | | N/M |
| | N/M |
| | 0.88 | % |
| Efficiency ratio (c) | 39.15 |
| | 91.54 |
| | 70.03 |
| | N/M |
| | N/M |
| | 63.58 |
|
| |
| (a) | Included $107 million charge to adjust deferred taxes as a result of the enactment of the Tax Cut and Jobs Act. |
| |
| (b) | Return on average assets is calculated based on the greater of average assets or average liabilities and attributed equity. |
| |
| (c) | Noninterest expenses as a percentage of the sum of net interest income (fully taxable equivalent basis) and noninterest income excluding net securities gains (losses). |
N/M - Not Meaningful
|
| | | | | | | | | | | | | | | | | | | | | | | |
| MARKET SEGMENT FINANCIAL RESULTS (unaudited) |
| Comerica Incorporated and Subsidiaries | | | | | | | | | | |
| | | | | | | | | | | | |
| | | | | | | | | | | | |
| (dollar amounts in millions) | | | | | | | Other | | Finance | | |
| Three Months Ended December 31, 2017 | Michigan | | California | | Texas | | Markets | | & Other | | Total |
| Earnings summary: | | | | | | | | | | | |
| Net interest income (expense) | $ | 175 |
| | $ | 188 |
| | $ | 115 |
| | $ | 83 |
| | $ | (16 | ) | | $ | 545 |
|
| Provision for credit losses | 6 |
| | 31 |
| | (27 | ) | | 2 |
| | 5 |
| | 17 |
|
| Noninterest income | 81 |
| | 43 |
| | 34 |
| | 111 |
| | 16 |
| | 285 |
|
| Noninterest expenses | 150 |
| | 107 |
| | 95 |
| | 120 |
| | 11 |
| | 483 |
|
| Provision for income taxes | 36 |
| | 36 |
| | 32 |
| | 21 |
| | 93 |
| (a) | 218 |
|
| Net income (loss) | $ | 64 |
| | $ | 57 |
| | $ | 49 |
| | $ | 51 |
| | $ | (109 | ) | | $ | 112 |
|
| Net credit-related charge-offs | $ | 1 |
| | $ | 5 |
| | $ | 10 |
| | $ | — |
| | $ | — |
| | $ | 16 |
|
| | | | | | | | | | | | |
| Selected average balances: | | | | | | | | | | | |
| Assets | $ | 13,583 |
| | $ | 18,470 |
| | $ | 10,305 |
| | $ | 8,739 |
| | $ | 20,301 |
| | $ | 71,398 |
|
| Loans | 12,798 |
| | 18,236 |
| | 9,795 |
| | 8,104 |
| | — |
| | 48,933 |
|
| Deposits | 21,807 |
| | 18,222 |
| | 9,366 |
| | 7,738 |
| | 508 |
| | 57,641 |
|
| | | | | | | | | | | | |
| Statistical data: | | | | | | | | | | | |
| Return on average assets (b) | 1.13 | % | | 1.17 | % | | 1.85 | % | | 2.30 | % | | N/M |
| | 0.62 | % |
| Efficiency ratio (c) | 58.54 |
| | 46.35 |
| | 63.57 |
| | 61.68 |
| | N/M |
| | 58.07 |
|
| | | | | | | | | | | | |
| | | | | | | | Other | | Finance | | |
| Three Months Ended September 30, 2017 | Michigan | | California | | Texas | | Markets | | & Other | | Total |
| Earnings summary: | | | | | | | | | | | |
| Net interest income (expense) | $ | 172 |
| | $ | 184 |
| | $ | 123 |
| | $ | 87 |
| | $ | (20 | ) | | $ | 546 |
|
| Provision for credit losses | 8 |
| | 24 |
| | (22 | ) | | 15 |
| | (1 | ) | | 24 |
|
| Noninterest income | 79 |
| | 41 |
| | 33 |
| | 107 |
| | 15 |
| | 275 |
|
| Noninterest expenses | 144 |
| | 103 |
| | 92 |
| | 114 |
| | 10 |
| | 463 |
|
| Provision (benefit) for income taxes | 34 |
| | 37 |
| | 31 |
| | 17 |
| | (11 | ) | | 108 |
|
| Net income (loss) | $ | 65 |
| | $ | 61 |
| | $ | 55 |
| | $ | 48 |
| | $ | (3 | ) | | $ | 226 |
|
| Net credit-related charge-offs | $ | 2 |
| | $ | 10 |
| | $ | 9 |
| | $ | 4 |
| | $ | — |
| | $ | 25 |
|
| | | | | | | | | | | | |
| Selected average balances: | | | | | | | | | | | |
| Assets | $ | 13,367 |
| | $ | 18,170 |
| | $ | 10,435 |
| | $ | 8,816 |
| | $ | 20,463 |
| | $ | 71,251 |
|
| Loans | 12,612 |
| | 17,916 |
| | 9,959 |
| | 8,176 |
| | — |
| | 48,663 |
|
| Deposits | 21,641 |
| | 17,316 |
| | 9,400 |
| | 7,730 |
| | 406 |
| | 56,493 |
|
| | | | | | | | | | | | |
| Statistical data: | | | | | | | | | | | |
| Return on average assets (b) | 1.14 | % | | 1.32 | % | | 2.05 | % | | 2.15 | % | | N/M |
| | 1.25 | % |
| Efficiency ratio (c) | 57.15 |
| | 45.59 |
| | 58.74 |
| | 58.79 |
| | N/M |
| | 56.24 |
|
| | | | | | | | | | | | |
| | | | | | | | Other | | Finance | | |
| Three Months Ended December 31, 2016 | Michigan | | California | | Texas | | Markets | | & Other | | Total |
| Earnings summary: | | | | | | | | | �� | | |
| Net interest income (expense) | $ | 166 |
| | $ | 181 |
| | $ | 115 |
| | $ | 88 |
| | $ | (95 | ) | | $ | 455 |
|
| Provision for credit losses | — |
| | 12 |
| | 26 |
| | — |
| | (3 | ) | | 35 |
|
| Noninterest income | 81 |
| | 41 |
| | 34 |
| | 100 |
| | 11 |
| | 267 |
|
| Noninterest expenses | 149 |
| | 101 |
| | 92 |
| | 114 |
| | 5 |
| | 461 |
|
| Provision (benefit) for income taxes | 29 |
| | 35 |
| | 9 |
| | 16 |
| | (27 | ) | | 62 |
|
| Net income (loss) | $ | 69 |
| | $ | 74 |
| | $ | 22 |
| | $ | 58 |
| | $ | (59 | ) | | $ | 164 |
|
| Net credit-related charge-offs | $ | 3 |
| | $ | 1 |
| | $ | 30 |
| | $ | 2 |
| | $ | — |
| | $ | 36 |
|
| | | | | | | | | | | | |
| Selected average balances: | | | | | | | | | | | |
| Assets | $ | 13,015 |
| | $ | 18,106 |
| | $ | 10,810 |
| | $ | 9,116 |
| | $ | 23,079 |
| | $ | 74,126 |
|
| Loans | 12,377 |
| | 17,827 |
| | 10,381 |
| | 8,330 |
| | — |
| | 48,915 |
|
| Deposits | 22,007 |
| | 18,382 |
| | 10,386 |
| | 8,453 |
| | 417 |
| | 59,645 |
|
| | | | | | | | | | | | |
| Statistical data: | | | | | | | | | | | |
| Return on average assets (b) | 1.22 | % | | 1.52 | % | | 0.73 | % | | 2.49 | % | | N/M |
| | 0.88 | % |
| Efficiency ratio (c) | 60.04 |
| | 45.26 |
| | 61.71 |
| | 60.35 |
| | N/M |
| | 63.58 |
|
| |
| (a) | Includes $107 million charge to adjust deferred taxes as a result of the enactment of the Tax Cut and Jobs Act. |
| |
| (b) | Return on average assets is calculated based on the greater of average assets or average liabilities and attributed equity. |
| |
| (c) | Noninterest expenses as a percentage of the sum of net interest income (fully taxable equivalent basis) and noninterest income excluding net securities gains (losses). |
N/M - Not Meaningful
|
| | | | | |
| RECONCILIATION OF NON-GAAP FINANCIAL MEASURES (unaudited) |
| Comerica Incorporated and Subsidiaries | | | | | |
| | | | | | |
Comerica believes non-GAAP measures are meaningful because they reflect adjustments commonly made by management, investors, regulators and analysts to evaluate the adequacy of common equity and performance trends. Comerica believes adjusted net income, earnings per share, ROA and ROE provide a greater understanding of ongoing operations and enhances comparability of results with prior periods. Tangible common equity is used by Comerica to measure the quality of capital and the return relative to balance sheet risk.
|
| | | | | | | | | | | | | | | | |
| | Three Months Ended | | Years Ended December 31, |
| | December 31, | September 30, | December 31, | |
| (dollar amounts in millions, except per share data) | 2017 | 2017 | 2016 | | 2017 | 2016 |
| Adjusted Earnings per Common Share: | | | | | | |
| Net income attributable to common shareholders | $ | 112 |
| $ | 224 |
| $ | 163 |
| | $ | 738 |
| $ | 473 |
|
| Restructuring charges, net of tax | 8 |
| 4 |
| 13 |
| | 29 |
| 59 |
|
| Deferred tax adjustment | 107 |
| — |
| — |
| | 107 |
| — |
|
| One-time employee bonus, net of tax | 3 |
| — |
| — |
| | 3 |
| — |
|
| Tax benefits from employee stock transactions | (4 | ) | (2 | ) | — |
| | (35 | ) | — |
|
| Adjusted net income attributable to common shareholders | $ | 226 |
| $ | 226 |
| $ | 176 |
| | $ | 842 |
| $ | 532 |
|
| | | | | | | |
| Diluted average common shares (in millions) | 176 |
| 177 |
| 177 |
| | 178 |
| 177 |
|
| Diluted earnings per common share: | | | | | | |
| Reported | $ | 0.63 |
| $ | 1.26 |
| $ | 0.92 |
| | $ | 4.14 |
| $ | 2.68 |
|
| Adjusted | 1.28 |
| 1.27 |
| 0.99 |
| | 4.73 |
| 3.02 |
|
| | | | | | | |
| Adjusted Net Income, ROA and ROE: | | | | | | |
| Net income | $ | 112 |
| $ | 226 |
| $ | 164 |
| | $ | 743 |
| $ | 477 |
|
| Restructuring charges, net of tax | 8 |
| 4 |
| 13 |
| | 29 |
| 59 |
|
| Deferred tax adjustment | 107 |
| — |
| — |
| | 107 |
| — |
|
| One-time employee bonus, net of tax | 3 |
| — |
| — |
| | 3 |
| — |
|
| Tax benefits from employee stock transactions | (4 | ) | (2 | ) | — |
| | (35 | ) | — |
|
| Adjusted net income | $ | 226 |
| $ | 228 |
| $ | 177 |
| | $ | 847 |
| $ | 536 |
|
| | | | | | | |
| Average assets | $ | 71,398 |
| $ | 71,251 |
| $ | 74,126 |
| | $ | 71,452 |
| $ | 71,743 |
|
| ROA: | | | | | | |
| Reported | 0.62 | % | 1.25 | % | 0.88 | % | | 1.04 | % | 0.67 | % |
| Adjusted | 1.26 |
| 1.27 |
| 0.95 |
| | 1.19 |
| 0.75 |
|
| | | | | | | |
| Average common shareholder's equity | $ | 7,987 |
| $ | 8,008 |
| $ | 7,734 |
| | $ | 7,952 |
| $ | 7,674 |
|
| ROE: | | | | | | |
| Reported | 5.58 | % | 11.17 | % | 8.43 | % | | 9.34 | % | 6.22 | % |
| Adjusted | 11.24 |
| 11.28 |
| 9.11 |
| | 10.65 |
| 6.99 |
|
Adjusted net income, earnings per share, ROA and ROE remove the after tax effect of restructuring charges and one-time employee bonuses, the charge to adjust deferred taxes resulting from the Tax Cuts and Jobs Act and tax benefits from employee stock transactions from net income and net income available to common shareholders.
|
| | | | | | | | | | | | | | | |
| | December 31, | September 30, | June 30, | March 31, | December 31, |
| (dollar amounts in millions) | 2017 | 2017 | 2017 | 2017 | 2016 |
| Tangible Common Equity Ratio: | | | | | |
| Common shareholders' equity | $ | 7,963 |
| $ | 8,034 |
| $ | 7,985 |
| $ | 7,930 |
| $ | 7,796 |
|
| Less: | | | | | |
| Goodwill | 635 |
| 635 |
| 635 |
| 635 |
| 635 |
|
| Other intangible assets | 8 |
| 8 |
| 9 |
| 10 |
| 10 |
|
| Tangible common equity | $ | 7,320 |
| $ | 7,391 |
| $ | 7,341 |
| $ | 7,285 |
| $ | 7,151 |
|
| | | | | | |
| Total assets | $ | 71,567 |
| $ | 72,017 |
| $ | 71,447 |
| $ | 72,976 |
| $ | 72,978 |
|
| Less: | | | | | |
| Goodwill | 635 |
| 635 |
| 635 |
| 635 |
| 635 |
|
| Other intangible assets | 8 |
| 8 |
| 9 |
| 10 |
| 10 |
|
| Tangible assets | $ | 70,924 |
| $ | 71,374 |
| $ | 70,803 |
| $ | 72,331 |
| $ | 72,333 |
|
| | | | | | |
| Common equity ratio | 11.13 | % | 11.16 | % | 11.18 | % | 10.87 | % | 10.68 | % |
| Tangible common equity ratio | 10.32 |
| 10.35 |
| 10.37 |
| 10.07 |
| 9.89 |
|
| | | | | | |
| Tangible Common Equity per Share of Common Stock: | | | | | |
| Common shareholders' equity | $ | 7,963 |
| $ | 8,034 |
| $ | 7,985 |
| $ | 7,930 |
| $ | 7,796 |
|
| Tangible common equity | 7,320 |
| 7,391 |
| 7,341 |
| 7,285 |
| 7,151 |
|
| | | | | | |
| Shares of common stock outstanding (in millions) | 173 |
| 174 |
| 176 |
| 177 |
| 175 |
|
| | | | | | |
| Common shareholders' equity per share of common stock | $ | 46.07 |
| $ | 46.09 |
| $ | 45.39 |
| $ | 44.69 |
| $ | 44.47 |
|
| Tangible common equity per share of common stock | 42.34 |
| 42.39 |
| 41.73 |
| 41.05 |
| 40.79 |
|
The tangible common equity ratio removes the effect of intangible assets from capital and total assets. Tangible common equity per share of common stock removes the effect of intangible assets from common shareholders equity per share of common stock.
