Dallas, TX/January 16, 2019
COMERICA REPORTS FOURTH QUARTER 2018 NET INCOME OF $310 MILLION
Earnings Per Share of $1.88 for Fourth Quarter and $7.20 for Full-Year 2018
Increase of 74 Percent for Full-Year 2018 Compared to 2017
Fourth Quarter and Full-Year 2018 Performance Reflects Robust Revenue Growth, Strong Credit Quality, Prudent Expense Control and Active Capital Management
Full-Year 2018 Benefited from Reduction in Tax Rate and Discrete Tax Items
“The fourth quarter and full-year 2018 results demonstrate our ability to carefully manage loan and deposit pricing in a rising-rate environment, produce strong credit quality, successfully execute our GEAR Up initiatives, and meaningfully reduce excess capital. We also benefited from a lower tax rate due to tax reform," said Ralph W. Babb, Jr., chairman and chief executive officer. "All together, these drove a return on equity of over 16 percent for the fourth quarter. We believe we are well positioned to continue to increase our bottom line as we drive revenue growth and positive operating leverage, while achieving favorable credit metrics. In addition, we expect to maintain our robust returns, while properly managing our capital base to support growth and investment in our businesses. In summary, we remain focused on our relationship banking strategy, which we expect will continue to enhance shareholder value."
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| | | | | | | | | | | | | | | |
| (dollar amounts in millions, except per share data) | 4th Qtr '18 |
| 3rd Qtr '18 | | 2018 | | 2017 |
| FINANCIAL RESULTS | | | | | | | |
| Net interest income | $ | 614 |
| | $ | 599 |
| | $ | 2,352 |
| | $ | 2,061 |
|
| Provision for credit losses | 16 |
| | — |
| | (1 | ) | | 74 |
|
| Noninterest income (a) | 250 |
| | 234 |
| | 976 |
| | 1,107 |
|
| Noninterest expenses (a) | 448 |
|
| 452 |
| | 1,794 |
| | 1,860 |
|
| Pre-tax income | 400 |
| | 381 |
| | 1,535 |
| | 1,234 |
|
| Provision for income taxes | 90 |
| | 63 |
| | 300 |
| | 491 |
|
| Net income | $ | 310 |
| | $ | 318 |
| | $ | 1,235 |
| | $ | 743 |
|
| | | | | | | | |
| Diluted earnings per common share | $ | 1.88 |
| | $ | 1.86 |
| | $ | 7.20 |
| | $ | 4.14 |
|
| Efficiency ratio (b) | 51.93 | % | | 52.93 | % | | 53.56 | % | | 58.64 | % |
| Net interest margin | 3.70 |
| | 3.60 |
| | 3.58 |
| | 3.11 |
|
| Common equity Tier 1 capital ratio (c) | 11.12 |
| | 11.68 |
| | 11.12 |
| | 11.68 |
|
| Common equity ratio | 10.60 |
| | 10.90 |
| | 10.60 |
| | 11.13 |
|
| | | | | | | | |
| ADJUSTED FINANCIAL RESULTS (d) | | | | | | | |
| Net interest income | $ | 614 |
| | $ | 599 |
| | $ | 2,352 |
| | $ | 2,061 |
|
| Provision for credit losses | 16 |
| | — |
| | (1 | ) | | 74 |
|
| Noninterest income (a) | 250 |
| | 254 |
| | 996 |
| | 989 |
|
| Noninterest expenses (a) | 434 |
| | 440 |
| | 1,741 |
| | 1,692 |
|
| Pre-tax income | 414 |
| | 413 |
| | 1,608 |
| | 1,284 |
|
| Provision for income taxes | 93 |
| | 94 |
| | 365 |
| | 437 |
|
| Net income | $ | 321 |
| | $ | 319 |
| | $ | 1,243 |
| | $ | 847 |
|
| | | | | | | | |
| Diluted earnings per common share | $ | 1.95 |
| | $ | 1.86 |
| | $ | 7.24 |
| | $ | 4.73 |
|
| Efficiency ratio (b) | 50.70 | % | | 51.59 | % | | 52.58 | % | | 55.41 | % |
(a) Noninterest income included a $7 million loss and $3 million gain for the fourth and third quarter 2018, respectively, as well as a $2 million loss and $8 million gain for full-year 2018 and 2017, respectively, relating to deferred compensation plans. Offsetting amounts included in noninterest expenses for the same periods. (b) Noninterest expenses as a percentage of net interest income and noninterest income excluding net gains (losses) from securities and a derivative contract tied to the conversion rate of Visa Class B shares. (c) December 31, 2018 ratio is estimated. (d) Financial results presented on an adjusted basis to facilitate trend analysis. See Reconciliation of Non-GAAP Financial Measures.
The following table includes items used to arrive at adjusted net income in the Adjusted Financial Results (see Reconciliation of Non-GAAP Financial Measures).
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| | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | 4th Qtr '18 | | 3rd Qtr '18 | | 2018 | | 2017 |
| (in millions, except per share data) | Amount | Per Share | | Amount | Per Share | | Amount | Per Share | | Amount | Per Share |
| Restructuring charges, net of tax | $ | 11 |
| $ | 0.07 |
| | $ | 9 |
| $ | 0.05 |
| | $ | 41 |
| $ | 0.24 |
| | $ | 29 |
| $ | 0.16 |
|
| Securities repositioning, net of tax | — |
| — |
| | 15 |
| 0.09 |
| | 15 |
| 0.09 |
| | — |
| — |
|
| Discrete tax items | — |
| — |
| | (23 | ) | (0.14 | ) | | (48 | ) | (0.29 | ) | | 72 |
| 0.41 |
|
| One-time employee bonus, net of tax | — |
| — |
| | — |
| — |
| | — |
| — |
| | 3 |
| 0.02 |
|
Fourth Quarter 2018 Compared to Third Quarter 2018 Overview
The commentary below discusses noninterest income and noninterest expenses on an adjusted basis, which includes certain adjustments management considers helpful to facilitate trend analysis. See Reconciliation of Non-GAAP Financial Measures.
Average total loans increased $248 million to $48.8 billion.
| |
| • | Primarily reflected increases in National Dealer Services and Energy, partially offset by a decrease in Mortgage Banker Finance. |
| |
| • | The increase in National Dealer Services and decrease in Mortgage Banker Finance were due to typical seasonality factors. |
| |
| • | Loan yields increased 16 basis points, primarily reflecting an increase in short-term rates (+21 basis points), partially offset by a decrease in loan fees (-3 basis points) and the impact of other loan dynamics (-2 basis points). |
Average total deposits decreased $364 million to $55.7 billion.
| |
| • | Primarily reflected decreases in Corporate Banking, Retail Banking and Technology and Life Sciences, partially offset by increases in general Middle Market and Wealth Management. |
| |
| • | Noninterest-bearing deposits decreased $593 million, partially offset by a $229 million increase in interest-bearing deposits reflecting more efficient cash management by customers. |
| |
| • | Interest-bearing deposit costs increased 11 basis points due to continued focus on relationship-based deposit pricing as short-term interest rates increased. |
Net interest income increased $15 million to $614 million.
| |
| • | Included a net benefit from higher interest rates of $18 million from managing loan and deposit pricing in a rising rate environment. |
| |
| • | Net interest margin increased 10 basis points to 3.70 percent mostly due to the increase in interest rates. |
Provision for credit losses was $16 million.
| |
| • | Net credit-related charge-offs decreased to $11 million, or 0.09 percent of average loans in the fourth quarter 2018. |
| |
| • | The allowance for loan losses increased $7 million to $671 million, or 1.34 percent of total loans. |
Adjusted noninterest income decreased $4 million to $250 million.
| |
| • | Reflected a $10 million decrease in deferred compensation asset returns (offset in noninterest expenses), partially offset by a $3 million increase in card fees and smaller increases in other categories. |
| |
| • | A loss related to repositioning of the securities portfolio was $20 million in third quarter 2018. |
Adjusted noninterest expenses decreased $6 million to $434 million.
| |
| • | Due to decreases of $5 million in FDIC insurance expense and $4 million in salaries and benefits expense, partially offset by small increases in other categories. |
| |
| • | The decrease in salaries and benefits expense was primarily due to a $10 million decline in deferred compensation expense (offset in noninterest income), partially offset by an increase in technology-related labor costs. |
| |
| • | Restructuring charges were $14 million and $12 million in fourth and third quarter 2018, respectively. The fourth quarter 2018 charges were the final charges of the GEAR-Up Initiatives. |
Provision for income taxes increased $27 million to $90 million.
| |
| • | Reflected discrete tax benefit items of $23 million in third quarter 2018 and higher pre-tax earnings. |
Capital position remained solid at December 31, 2018.
| |
| • | Returned a total of $599 million to shareholders, including dividends and the repurchase of $500 million of common stock (6.3 million shares) under the equity repurchase program. |
Full-Year 2018 Compared to Full-Year 2017 Overview
Effective January 1, 2018, the Corporation adopted Accounting Standards Codification Topic 606, "Revenue from Contracts with Customers." As a result, revenue from certain products is now presented net of costs. The commentary below discusses noninterest income and noninterest expenses on an adjusted basis to eliminate the variances attributable to the impact of adoption. Adjusted basis also includes other adjustments management considers helpful to facilitate trend analysis. See Reconciliation of Non-GAAP Financial Measures.
Average total loans increased $208 million to $48.8 billion.
| |
| • | Primarily reflected increases in Technology and Life Sciences as well as National Dealer Services, partially offset by decreases in Corporate Banking and Energy. |
Average total deposits decreased $1.3 billion to $55.9 billion.
| |
| • | With the largest decrease in general Middle Market driven by a $925 million decline in Municipalities. |
| |
| • | Noninterest-bearing deposits decreased $1.8 billion, partially offset by a $449 million increase in interest-bearing deposits. |
Net interest income increased $291 million to $2.4 billion.
| |
| • | Driven by the net benefit from higher short-term rates. |
Provision for credit losses decreased $75 million to a $1 million benefit.
| |
| • | Reflected a decline in total criticized loans of $683 million. |
| |
| • | Net credit-related charge-offs improved to 0.11 percent of average loans, compared to 0.19 percent in 2017. |
Adjusted noninterest income increased $7 million.
| |
| • | Primarily reflected increases of $24 million in card fees (adjusted basis) and $8 million in fiduciary income, partially offset by decreases of $11 million in service charges on deposit accounts (adjusted basis) and $10 million in deferred compensation asset returns (offset in noninterest expenses). |
| |
| • | The decrease in service charges on deposit accounts (adjusted basis) included higher earnings credit allowances provided to customers due to the increase in short-term interest rates. |
| |
| • | The loss related to repositioning of the securities portfolio was $20 million in 2018. |
Adjusted noninterest expenses increased $49 million.
| |
| • | Reflected increases of $48 million in salaries and benefits expense and $7 million in outside processing fee expense (adjusted basis), partially offset by a $9 million decrease in FDIC insurance expense. |
| |
| • | The increase in salaries and benefits expense was driven by higher share-based and incentive compensation tied to financial performance as well as merit increases and technology-related labor costs, partially offset by decreases in workforce and deferred compensation expense (offset in noninterest income). |
Provision for income taxes decreased $191 million to $300 million.
| |
| • | Reflected a decrease in the impact of discrete tax items from a $72 million net charge in 2017 to a benefit of $48 million in 2018. The $72 million net charge in 2017 included a $107 million adjustment to deferred tax assets due to the change in the statutory tax rate. |
| |
| • | Also included the impact of the decrease in the statutory tax rate in 2018, partially offset by an increase in pre-tax income. |
Returned $1.6 billion to shareholders, an increase of $903 million compared to 2017.
| |
| • | Repurchased $1.3 billion, or approximately 14.8 million shares, of common stock during 2018 under the equity repurchase program. |
| |
| • | Increased the dividend 69 percent to $1.84 per share. |
Net Interest Income
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| | | | | | | | | | | | | | | |
| (dollar amounts in millions) | 4th Qtr '18 | | 3rd Qtr '18 | | 2018 | | 2017 |
| Net interest income | $ | 614 |
| | $ | 599 |
| | $ | 2,352 |
| | $ | 2,061 |
|
| | | | | | | | |
| Net interest margin | 3.70 | % | | 3.60 | % | | 3.58 | % | | 3.11 | % |
| | | | | | | | |
| Selected average balances: | | | | | | | |
| Total earning assets | $ | 65,661 |
| | $ | 65,842 |
| | $ | 65,410 |
| | $ | 66,300 |
|
| Total loans | 48,832 |
| | 48,584 |
| | 48,766 |
| | 48,558 |
|
| Total investment securities | 11,773 |
| | 11,761 |
| | 11,810 |
| | 12,207 |
|
| Federal Reserve Bank deposits | 4,754 |
| | 5,180 |
| | 4,495 |
| | 5,233 |
|
| | | | | | | | |
| | | | | | | | |
| Total deposits | 55,729 |
| | 56,093 |
| | 55,935 |
| | 57,258 |
|
| Total noninterest-bearing deposits | 28,600 |
| | 29,193 |
| | 29,241 |
| | 31,013 |
|
| Medium- and long-term debt | 6,420 |
| | 6,153 |
| | 5,842 |
| | 4,969 |
|
Net interest income increased $15 million to $614 million in the fourth quarter 2018, compared to the third quarter 2018.
| |
| • | The net increase from higher rates was $18 million, reflecting interest benefits to loans (+$25 million), short-term investments (+$3 million) and securities (+$1 million), partially offset by higher costs on deposits (-$7 million) and debt (-$4 million). |
| |
| • | Net interest income was also impacted by an increase in interest on investment securities due to the repositioning of the portfolio (+$4 million), higher average loan balances (+$3 million), a decrease in loan fees (-$3 million), lower average short-term investment balances (-$2 million), higher average debt balances (-$2 million), the impact of other loan dynamics (-$2 million) and higher average interest-bearing deposits (-$1 million). |
The net interest margin increased 10 basis points to 3.70 percent in the fourth quarter 2018, compared to the third quarter 2018.
| |
| • | The net benefit of 11 basis points from higher rates reflected higher yields on loans (+15 basis points), short-term investments (+2 basis points) and securities (+1 basis point), partially offset by higher costs on deposits (-4 basis points) and debt (-3 basis points). |
| |
| • | The net benefit from rates (+11 basis points) and the securities repositioning benefit (+2 basis points) were partially offset by a decrease in loan fees (-2 basis points) and the impact of other balance sheet dynamics (-1 basis point). |
Credit Quality
“Credit quality was strong for the fourth quarter and full year of 2018 with net charge-offs of 9 basis points and 11 basis points, respectively," said Babb. "Nonperforming loans continue to decline and are at an exceptionally low level. Our allowance remains very healthy at a reserve ratio of 1.34 percent. As we closely monitor the portfolio, we are not seeing any concerning trends. We expect our portfolio to continue to perform well, yet begin to migrate towards a more normal credit environment in the latter half of 2019."
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| | | | | | | | | | | |
| (dollar amounts in millions) | 4th Qtr '18 | | 3rd Qtr '18 | | 4th Qtr '17 |
| Credit-related charge-offs | $ | 21 |
| | $ | 25 |
| | $ | 29 |
|
| Recoveries | 10 |
| | 10 |
| | 13 |
|
| Net credit-related charge-offs | 11 |
| | 15 |
| | 16 |
|
| Net credit-related charge-offs/Average total loans | 0.09 | % | | 0.13 | % | | 0.13 | % |
| | | | | | |
| Provision for credit losses | $ | 16 |
| | $ | — |
| | $ | 17 |
|
| | | | | | |
| Nonperforming loans | 229 |
| | 239 |
| | 410 |
|
| Nonperforming assets (NPAs) | 230 |
| | 240 |
| | 415 |
|
| NPAs/Total loans and foreclosed property | 0.46 | % | | 0.49 | % | | 0.84 | % |
| | | | | | |
| Loans past due 90 days or more and still accruing | $ | 16 |
| | $ | 28 |
| | $ | 35 |
|
| | | | | | |
| Allowance for loan losses | 671 |
| | 664 |
| | 712 |
|
| Allowance for credit losses on lending-related commitments (a) | 30 |
| | 33 |
| | 42 |
|
| Total allowance for credit losses | 701 |
| | 697 |
| | 754 |
|
| | | | | | |
| Allowance for loan losses/Period-end total loans | 1.34 | % | | 1.35 | % | | 1.45 | % |
| Allowance for loan losses/Nonperforming loans | 2.9x |
| | 2.8x |
| | 1.7x |
|
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| (a) | Included in "Accrued expenses and other liabilities" on the consolidated balance sheets. |
| |
| • | The allowance for loan losses increased $7 million to $671 million at December 31, 2018, or 1.34 percent of total loans, reflecting continued improvement in credit migration and an increase in loans. |
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| • | Criticized loans decreased $122 million to $1.5 billion, including a $64 million decrease in Energy. Criticized loans as a percentage of total loans were 3.1 percent at December 31, 2018, compared to 3.4 percent at September 30, 2018. Criticized loans are generally consistent with the Special Mention, Substandard and Doubtful categories defined by regulatory authorities. |
| |
| • | Nonperforming loans decreased $10 million to $229 million at December 31, 2018. Nonperforming loans as a percentage of total loans decreased to 0.46 percent at December 31, 2018, compared to 0.49 percent at September 30, 2018. |
Full-Year 2019 Outlook
For full-year 2019 compared to full-year 2018 reported results, management expects the following, assuming a continuation of the current economic and rate environment:
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| • | Growth in average loans of 2 percent to 4 percent, reflecting increases in most lines of business. |
| |
| • | Decline in average deposits of 1 percent to 2 percent from a decrease in noninterest-bearing deposits. |
| |
| • | Growth in net interest income of 4 percent to 5 percent from the full-year net benefit of higher interest rates ($130 million to $150 million), growth in average loans and repositioning the securities portfolio, partially offset by higher average debt and lower interest recoveries. |
| |
| • | Provision for credit losses of 15 basis points to 25 basis points and net charge-offs to remain low. |
| |
| • | Noninterest income higher by 2 percent to 3 percent, benefiting from growth in card fees and fiduciary income, partially offset by lower service charges on deposit accounts and lower derivative income. |
| |
| • | Noninterest expenses lower by 3 percent, reflecting the end of restructuring charges from the GEAR Up initiatives ($53 million in full-year 2018), FDIC insurance expense lower by $16 million from the discontinuance of the surcharge, lower compensation and pension expense, partially offset by higher outside processing expenses in line with growing revenue, technology expenditures and typical inflationary pressures. |
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| ◦ | Lower compensation driven by incentive compensation, partially offset by merit increases. |
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| • | Income tax expense to be approximately 23 percent of pre-tax income, excluding any tax impact from employee stock transactions. |
| |
| ◦ | Full-year 2018 included discrete tax benefits of $48 million. |
| |
| • | Common equity Tier 1 capital ratio target of 9.5 percent to 10 percent through continued return of excess capital. |
Business Segments
Comerica's operations are strategically aligned into three major business segments: the Business Bank, the Retail Bank and Wealth Management. The Finance Division is also reported as a segment. Comerica also provides market segment results for three primary geographic markets: Michigan, California and Texas. In addition to the three primary geographic markets, Other Markets is also reported as a market segment. Other Markets includes Florida, Arizona, the International Finance division and businesses that have a significant presence outside of the three primary geographic markets. 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. From time to time, the Corporation may make reclassifications among the segments to reflect management's current view of the segments, and methodologies may be modified as the management accounting system is enhanced and changes occur in the organizational structure and/or product lines. During the third quarter 2018, the Small Business component was reclassified from Retail Bank to Business Bank. The financial results provided are based on the internal business unit and geographic market structures of Comerica and methodologies in effect at December 31, 2018. A discussion of business segment and geographic market year-to-date results will be included in Comerica's 2018 Form 10-K.
Conference Call and Webcast
Comerica will host a conference call to review fourth quarter 2018 financial results at 10 a.m. CT Wednesday January 16, 2019. Interested parties may access the conference call by calling (800) 309-2262 or (706) 679-5261 (Event ID No. 5976458). The call and supplemental financial information can also be accessed via Comerica's "Investor Relations" page at www.comerica.com. A replay of the Webcast can be accessed via Comerica's “Investor Relations” page at www.comerica.com.
Comerica Incorporated is a financial services company headquartered in Dallas, Texas, and strategically aligned by three major business segments: The Business Bank, The Retail Bank and Wealth Management. Comerica focuses on relationships and helping people and businesses be successful. In addition to Texas, Comerica Bank locations can be found in Arizona, California, Florida and Michigan, with select businesses operating in several other states, as well as in Canada and Mexico.
This press release contains both financial measures based on accounting principles generally accepted in the United States (GAAP) and non-GAAP based financial measures, which are used where management believes it to be helpful in understanding Comerica's results of operations or financial position. Where non-GAAP financial measures are used, the comparable GAAP financial measure, as well as a reconciliation to the comparable GAAP financial measure, can be found in this press release. These disclosures should not be viewed as a substitute for operating results determined in accordance with GAAP, nor are they necessarily comparable to non-GAAP performance measures that may be presented by other companies.
Forward-looking Statements
Any statements in this news release that are not historical facts are forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. Words such as “anticipates,” “believes,” “contemplates,” “feels,” “expects,” “estimates,” “seeks,” “strives,” “plans,” “intends,” “outlook,” “forecast,” “position,” “target,” “mission,” “assume,” “achievable,” “potential,” “strategy,” “goal,” “aspiration,” “opportunity,” “initiative,” “outcome,” “continue,” “remain,” “maintain,” “on 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; 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; operational difficulties, failure of technology infrastructure or information security incidents; reliance on other companies to provide certain key components of business infrastructure; 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; unfavorable developments concerning credit quality; changes in regulation or oversight; changes in the financial markets, including fluctuations in interest rates and their impact on deposit pricing; transitions away from LIBOR towards new interest rate benchmarks; reductions in Comerica's credit rating; 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; the interdependence of financial service companies; the implementation of Comerica's strategies and business initiatives; changes in customer behavior; management's ability to maintain and expand customer relationships; the effectiveness of methods of reducing risk exposures; the effects of catastrophic events including, but not limited to, hurricanes, tornadoes, earthquakes, fires, droughts and floods; the effects of recent tax reform and potential legislative, administrative or judicial changes or interpretations related to these and other tax regulations; any future strategic acquisitions or divestitures; management's ability to retain key officers and employees; the impact of legal and regulatory proceedings or determinations; the effects of terrorist activities and other hostilities; changes in accounting standards; the critical nature of Comerica's accounting policies and the volatility of Comerica’s stock price. 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 11 of Comerica's Annual Report on Form 10-K for the year ended December 31, 2017 and "Item 1A. Risk Factors" beginning on page 59 of Comerica's Quarterly Report on Form 10-Q for the quarter ended June 30, 2018. 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.
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| |
| Media Contact: | Investor Contacts: |
| Yolanda Y. Walker | Darlene P. Persons |
| (214) 462-4443 | (214) 462-6831 |
| | |
| | Chelsea R. Smith |
| | (214) 462-6834 |
|
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| 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) | 2018 | 2018 | 2017 | | 2018 | 2017 |
| PER COMMON SHARE AND COMMON STOCK DATA | | | | | | |
| Diluted net income | $ | 1.88 |
| $ | 1.86 |
| $ | 0.63 |
| | $ | 7.20 |
| $ | 4.14 |
|
| Cash dividends declared | 0.60 |
| 0.60 |
| 0.30 |
| | 1.84 |
| 1.09 |
|
| | | | | | | |
| Average diluted shares (in thousands) | 163,501 |
| 170,057 |
| 175,818 |
| | 170,500 |
| 178,125 |
|
| PERFORMANCE RATIOS | | | | | | |
| Return on average common shareholders' equity | 16.36 | % | 16.15 | % | 5.58 | % | | 15.82 | % | 9.34 | % |
| Return on average assets | 1.74 |
| 1.77 |
| 0.62 |
| | 1.75 |
| 1.04 |
|
| Efficiency ratio (a) | 51.93 |
| 52.93 |
| 58.14 |
| | 53.56 |
| 58.64 |
|
| CAPITAL | | | | | | |
| Common equity tier 1 capital (b) | $ | 7,470 |
| $ | 7,750 |
| $ | 7,773 |
| | | |
| Risk-weighted assets (b) | 67,168 |
| 66,344 |
| 66,575 |
| | | |
| Common shareholders' equity per share of common stock | 46.89 |
| 46.92 |
| 46.07 |
| | | |
| Tangible common equity per share of common stock | 42.89 |
| 43.05 |
| 42.34 |
| | | |
| Common equity tier 1 and tier 1 risk-based capital ratio (b) | 11.12 | % | 11.68 | % | 11.68 | % | | | |
| Total risk-based capital ratio (b) | 13.18 |
| 13.76 |
| 13.84 |
| | | |
| Leverage ratio (b) | 10.51 |
| 10.85 |
| 10.89 |
| | | |
| Common equity ratio | 10.60 |
| 10.90 |
| 11.13 |
| | | |
| Tangible common equity ratio (c) | 9.78 |
| 10.09 |
| 10.32 |
| | | |
| AVERAGE BALANCES | | | | | | |
| Commercial loans | $ | 30,651 |
| $ | 30,371 |
| $ | 30,719 |
| | $ | 30,534 |
| $ | 30,415 |
|
| Real estate construction loans | 3,164 |
| 3,198 |
| 3,031 |
| | 3,155 |
| 2,958 |
|
| Commercial mortgage loans | 9,051 |
| 9,084 |
| 9,054 |
| | 9,131 |
| 9,005 |
|
| Lease financing | 495 |
| 464 |
| 470 |
| | 470 |
| 509 |
|
| International loans | 1,035 |
| 1,072 |
| 1,122 |
| | 1,021 |
| 1,157 |
|
| Residential mortgage loans | 1,968 |
| 1,962 |
| 2,014 |
| | 1,983 |
| 1,989 |
|
| Consumer loans | 2,468 |
| 2,433 |
| 2,523 |
| | 2,472 |
| 2,525 |
|
| Total loans | 48,832 |
| 48,584 |
| 48,933 |
| | 48,766 |
| 48,558 |
|
| | | | | | | |
| Earning assets | 65,661 |
| 65,842 |
| 66,167 |
| | 65,410 |
| 66,300 |
|
| Total assets | 70,830 |
| 71,210 |
| 71,398 |
| | 70,724 |
| 71,452 |
|
| | | | | | | |
| Noninterest-bearing deposits | 28,600 |
| 29,193 |
| 31,780 |
| | 29,241 |
| 31,013 |
|
| Interest-bearing deposits | 27,129 |
| 26,900 |
| 25,861 |
| | 26,694 |
| 26,245 |
|
| Total deposits | 55,729 |
| 56,093 |
| 57,641 |
| | 55,935 |
| 57,258 |
|
| | | | | | | |
| Common shareholders' equity | 7,519 |
| 7,817 |
| 7,987 |
| | 7,809 |
| 7,952 |
|
| NET INTEREST INCOME | | | | | | |
| Net interest income | $ | 614 |
| $ | 599 |
| $ | 545 |
| | $ | 2,352 |
| $ | 2,061 |
|
| Net interest margin | 3.70 | % | 3.60 | % | 3.27 | % | | 3.58 | % | 3.11 | % |
| CREDIT QUALITY | | | | | | |
| Total nonperforming assets | $ | 230 |
| $ | 240 |
| $ | 415 |
| | | |
| | | | | | | |
| Loans past due 90 days or more and still accruing | 16 |
| 28 |
| 35 |
| | | |
| | | | | | | |
| Net credit-related charge-offs | 11 |
| 15 |
| 16 |
| | $ | 51 |
| $ | 92 |
|
| | | | | | | |
| Allowance for loan losses | 671 |
| 664 |
| 712 |
| | | |
| Allowance for credit losses on lending-related commitments | 30 |
| 33 |
| 42 |
| | | |
| Total allowance for credit losses | 701 |
| 697 |
| 754 |
| | | |
| | | | | | | |
| Allowance for loan losses as a percentage of total loans | 1.34 | % | 1.35 | % | 1.45 | % | | | |
| Net credit-related charge-offs as a percentage of average total loans | 0.09 |
| 0.13 |
| 0.13 |
| | 0.11 | % | 0.19 | % |
| Nonperforming assets as a percentage of total loans and foreclosed property | 0.46 |
| 0.49 |
| 0.84 |
| | | |
| Allowance for loan losses as a multiple of total nonperforming loans | 2.9x |
| 2.8x |
| 1.7x |
| | | |
| OTHER KEY INFORMATION | | | | | | |
| Number of banking centers | 436 |
| 435 |
| 438 |
| | | |
| Number of employees - full time equivalent | 7,865 |
| 7,834 |
| 7,999 |
| | | |
| |
| (a) | Noninterest expenses as a percentage of the sum of net interest income and noninterest income excluding net gains (losses) from securities and a derivative contract tied to the conversion rate of Visa Class B shares. |
| |
| (b) | December 31, 2018 ratios are estimated. |
| |
| (c) | 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) | 2018 | 2018 | 2017 |
| | (unaudited) | (unaudited) | |
| ASSETS | | | |
| Cash and due from banks | $ | 1,390 |
| $ | 945 |
| $ | 1,438 |
|
| | | | |
| Interest-bearing deposits with banks | 3,171 |
| 4,894 |
| 4,407 |
|
| Other short-term investments | 134 |
| 136 |
| 96 |
|
| | | | |
| Investment securities available-for-sale | 12,045 |
| 11,862 |
| 10,938 |
|
| Investment securities held-to-maturity | — |
| — |
| 1,266 |
|
| | | | |
| Commercial loans | 31,976 |
| 30,889 |
| 31,060 |
|
| Real estate construction loans | 3,077 |
| 3,158 |
| 2,961 |
|
| Commercial mortgage loans | 9,106 |
| 9,019 |
| 9,159 |
|
| Lease financing | 507 |
| 471 |
| 468 |
|
| International loans | 1,013 |
| 1,090 |
| 983 |
|
| Residential mortgage loans | 1,970 |
| 1,947 |
| 1,988 |
|
| Consumer loans | 2,514 |
| 2,436 |
| 2,554 |
|
| Total loans | 50,163 |
| 49,010 |
| 49,173 |
|
| Less allowance for loan losses | (671 | ) | (664 | ) | (712 | ) |
| Net loans | 49,492 |
| 48,346 |
| 48,461 |
|
| | | | |
| Premises and equipment | 475 |
| 472 |
| 466 |
|
| Accrued income and other assets | 4,111 |
| 4,793 |
| 4,495 |
|
| Total assets | $ | 70,818 |
| $ | 71,448 |
| $ | 71,567 |
|
| | | | |
| LIABILITIES AND SHAREHOLDERS' EQUITY | | | |
| Noninterest-bearing deposits | $ | 28,690 |
| $ | 29,301 |
| $ | 32,071 |
|
| | | | |
| Money market and interest-bearing checking deposits | 22,560 |
| 22,449 |
| 21,500 |
|
| Savings deposits | 2,172 |
| 2,192 |
| 2,152 |
|
| Customer certificates of deposit | 2,131 |
| 2,051 |
| 2,165 |
|
| Foreign office time deposits | 8 |
| 13 |
| 15 |
|
| Total interest-bearing deposits | 26,871 |
| 26,705 |
| 25,832 |
|
| Total deposits | 55,561 |
| 56,006 |
| 57,903 |
|
| | | | |
| Short-term borrowings | 44 |
| 84 |
| 10 |
|
| Accrued expenses and other liabilities | 1,243 |
| 1,154 |
| 1,069 |
|
| Medium- and long-term debt | 6,463 |
| 6,418 |
| 4,622 |
|
| Total liabilities | 63,311 |
| 63,662 |
| 63,604 |
|
| | | | |
| Common stock - $5 par value: | | | |
| Authorized - 325,000,000 shares | | | |
| Issued - 228,164,824 shares | 1,141 |
| 1,141 |
| 1,141 |
|
| Capital surplus | 2,148 |
| 2,144 |
| 2,122 |
|
| Accumulated other comprehensive loss | (609 | ) | (611 | ) | (451 | ) |
| Retained earnings | 8,781 |
| 8,587 |
| 7,887 |
|
| Less cost of common stock in treasury - 68,081,176 shares at 12/31/18; 62,224,198 shares at 9/30/18 and 55,306,483 shares at 12/31/17 | (3,954 | ) | (3,475 | ) | (2,736 | ) |
| Total shareholders' equity | 7,507 |
| 7,786 |
| 7,963 |
|
| Total liabilities and shareholders' equity | $ | 70,818 |
| $ | 71,448 |
| $ | 71,567 |
|
|
| | | | | | | | | | | | | |
| 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) | 2018 | 2017 | | 2018 | 2017 |
| INTEREST INCOME | | | | | |
| Interest and fees on loans | $ | 604 |
| $ | 498 |
| | $ | 2,262 |
| $ | 1,872 |
|
| Interest on investment securities | 71 |
| 64 |
| | 265 |
| 250 |
|
| Interest on short-term investments | 29 |
| 16 |
| | 92 |
| 60 |
|
| Total interest income | 704 |
| 578 |
| | 2,619 |
| 2,182 |
|
| INTEREST EXPENSE | | | | | |
| Interest on deposits | 43 |
| 13 |
| | 122 |
| 42 |
|
| Interest on short-term borrowings | — |
| — |
| | 1 |
| 3 |
|
| Interest on medium- and long-term debt | 47 |
| 20 |
| | 144 |
| 76 |
|
| Total interest expense | 90 |
| 33 |
| | 267 |
| 121 |
|
| Net interest income | 614 |
| 545 |
| | 2,352 |
| 2,061 |
|
| Provision for credit losses | 16 |
| 17 |
| | (1 | ) | 74 |
|
| Net interest income after provision for credit losses | 598 |
| 528 |
| | 2,353 |
| 1,987 |
|
| NONINTEREST INCOME | | | | | |
| Card fees | 64 |
| 91 |
| | 244 |
| 333 |
|
| Service charges on deposit accounts | 51 |
| 55 |
| | 211 |
| 227 |
|
| Fiduciary income | 51 |
| 50 |
| | 206 |
| 198 |
|
| Commercial lending fees | 23 |
| 22 |
| | 85 |
| 85 |
|
| Letter of credit fees | 10 |
| 11 |
| | 40 |
| 45 |
|
| Bank-owned life insurance | 10 |
| 12 |
| | 39 |
| 43 |
|
| Foreign exchange income | 11 |
| 12 |
| | 47 |
| 45 |
|
| Brokerage fees | 7 |
| 6 |
| | 27 |
| 23 |
|
| Net securities losses | — |
| — |
| | (19 | ) | — |
|
| Other noninterest income | 23 |
| 26 |
| | 96 |
| 108 |
|
| Total noninterest income | 250 |
| 285 |
| | 976 |
| 1,107 |
|
| NONINTEREST EXPENSES | | | | | |
| Salaries and benefits expense | 250 |
| 248 |
| | 1,009 |
| 961 |
|
| Outside processing fee expense | 65 |
| 99 |
| | 255 |
| 366 |
|
| Net occupancy expense | 39 |
| 40 |
| | 152 |
| 154 |
|
| Equipment expense | 14 |
| 11 |
| | 48 |
| 45 |
|
| Restructuring charges | 14 |
| 13 |
| | 53 |
| 45 |
|
| Software expense | 30 |
| 31 |
| | 125 |
| 126 |
|
| FDIC insurance expense | 6 |
| 13 |
| | 42 |
| 51 |
|
| Advertising expense | 8 |
| 9 |
| | 30 |
| 28 |
|
| Litigation-related expense | 1 |
| — |
| | 1 |
| (2 | ) |
| Other noninterest expenses | 21 |
| 19 |
| | 79 |
| 86 |
|
| Total noninterest expenses | 448 |
| 483 |
| | 1,794 |
| 1,860 |
|
| Income before income taxes | 400 |
| 330 |
| | 1,535 |
| 1,234 |
|
| Provision for income taxes | 90 |
| 218 |
| | 300 |
| 491 |
|
| NET INCOME | 310 |
| 112 |
| | 1,235 |
| 743 |
|
| Less income allocated to participating securities | 2 |
| — |
| | 8 |
| 5 |
|
| Net income attributable to common shares | $ | 308 |
| $ | 112 |
| | $ | 1,227 |
| $ | 738 |
|
| Earnings per common share: | | | | | |
| Basic | $ | 1.91 |
| $ | 0.65 |
| | $ | 7.31 |
| $ | 4.23 |
|
| Diluted | 1.88 |
| 0.63 |
| | 7.20 |
| 4.14 |
|
| | | | | | |
| Comprehensive income | 312 |
| 107 |
| | 1,076 |
| 762 |
|
| | | | | | |
| Cash dividends declared on common stock | 99 |
| 52 |
| | 309 |
| 193 |
|
| Cash dividends declared per common share | 0.60 |
| 0.30 |
| | 1.84 |
| 1.09 |
|
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
| CONSOLIDATED QUARTERLY STATEMENTS OF COMPREHENSIVE INCOME (unaudited) |
| Comerica Incorporated and Subsidiaries | | | | | | | | | | |
| | | | | | | | | | | | |
| | Fourth | Third | Second | First | Fourth | | Fourth Quarter 2018 Compared To: |
| | Quarter | Quarter | Quarter | Quarter | Quarter | | Third Quarter 2018 | | Fourth Quarter 2017 |
| (in millions, except per share data) | 2018 | 2018 | 2018 | 2018 | 2017 | | Amount | Percent | | Amount | Percent |
| INTEREST INCOME | | | | | | | | | | | |
| Interest and fees on loans | $ | 604 |
| $ | 581 |
| $ | 568 |
| $ | 509 |
| $ | 498 |
| | $ | 23 |
| 4 | % | | $ | 106 |
| 21 | % |
| Interest on investment securities | 71 |
| 66 |
| 64 |
| 64 |
| 64 |
| | 5 |
| 8 |
| | 7 |
| 12 |
|
| Interest on short-term investments | 29 |
| 28 |
| 18 |
| 17 |
| 16 |
| | 1 |
| 3 |
| | 13 |
| 73 |
|
| Total interest income | 704 |
| 675 |
| 650 |
| 590 |
| 578 |
| | 29 |
| 4 |
| | 126 |
| 22 |
|
| INTEREST EXPENSE | | | | | | | | | | | |
| Interest on deposits | 43 |
| 35 |
| 28 |
| 16 |
| 13 |
| | 8 |
| 22 |
| | 30 |
| N/M |
|
| Interest on short-term borrowings | — |
| 1 |
| — |
| — |
| — |
| | (1 | ) | N/M |
| | — |
| — |
|
| Interest on medium- and long-term debt | 47 |
| 40 |
| 32 |
| 25 |
| 20 |
| | 7 |
| 15 |
| | 27 |
| N/M |
|
| Total interest expense | 90 |
| 76 |
| 60 |
| 41 |
| 33 |
| | 14 |
| 18 |
| | 57 |
| N/M |
|
| Net interest income | 614 |
| 599 |
| 590 |
| 549 |
| 545 |
| | 15 |
| 3 |
| | 69 |
| 13 |
|
| Provision for credit losses | 16 |
| — |
| (29 | ) | 12 |
| 17 |
| | 16 |
| N/M |
| | (1 | ) | (7 | ) |
Net interest income after provision for credit losses | 598 |
| 599 |
| 619 |
| 537 |
| 528 |
| | (1 | ) | — |
| | 70 |
| 13 |
|
| NONINTEREST INCOME | | | | | | | | | | | |
| Card fees | 64 |
| 61 |
| 60 |
| 59 |
| 91 |
| | 3 |
| 6 |
| | (27 | ) | (30 | ) |
| Service charges on deposit accounts | 51 |
| 53 |
| 53 |
| 54 |
| 55 |
| | (2 | ) | (4 | ) | | (4 | ) | (9 | ) |
| Fiduciary income | 51 |
| 51 |
| 52 |
| 52 |
| 50 |
| | — |
| — |
| | 1 |
| 2 |
|
| Commercial lending fees | 23 |
| 21 |
| 23 |
| 18 |
| 22 |
| | 2 |
| 5 |
| | 1 |
| 3 |
|
| Letter of credit fees | 10 |
| 9 |
| 11 |
| 10 |
| 11 |
| | 1 |
| 6 |
| | (1 | ) | (5 | ) |
| Bank-owned life insurance | 10 |
| 11 |
| 9 |
| 9 |
| 12 |
| | (1 | ) | (8 | ) | | (2 | ) | (12 | ) |
| Foreign exchange income | 11 |
| 12 |
| 12 |
| 12 |
| 12 |
| | (1 | ) | (1 | ) | | (1 | ) | (2 | ) |
| Brokerage fees | 7 |
| 7 |
| 6 |
| 7 |
| 6 |
| | — |
| — |
| | 1 |
| 7 |
|
| Net securities (losses) gains | — |
| (20 | ) | — |
| 1 |
| — |
| | 20 |
| N/M |
| | — |
| — |
|
| Other noninterest income | 23 |
| 29 |
| 22 |
| 22 |
| 26 |
| | (6 | ) | (20 | ) | | (3 | ) | (12 | ) |
| Total noninterest income | 250 |
| 234 |
| 248 |
| 244 |
| 285 |
| | 16 |
| 7 |
| | (35 | ) | (13 | ) |
| NONINTEREST EXPENSES | | | | | | | | | | | |
| Salaries and benefits expense | 250 |
| 254 |
| 250 |
| 255 |
| 248 |
| | (4 | ) | (2 | ) | | 2 |
| 1 |
|
| Outside processing fee expense | 65 |
| 65 |
| 64 |
| 61 |
| 99 |
| | — |
| — |
| | (34 | ) | (34 | ) |
| Net occupancy expense | 39 |
| 38 |
| 37 |
| 38 |
| 40 |
| | 1 |
| 1 |
| | (1 | ) | (4 | ) |
| Equipment expense | 14 |
| 12 |
| 11 |
| 11 |
| 11 |
| | 2 |
| 11 |
| | 3 |
| 20 |
|
| Restructuring charges | 14 |
| 12 |
| 11 |
| 16 |
| 13 |
| | 2 |
| 24 |
| | 1 |
| 17 |
|
| Software expense | 30 |
| 32 |
| 32 |
| 31 |
| 31 |
| | (2 | ) | (5 | ) | | (1 | ) | (3 | ) |
| FDIC insurance expense | 6 |
| 11 |
| 12 |
| 13 |
| 13 |
| | (5 | ) | (50 | ) | | (7 | ) | (56 | ) |
| Advertising expense | 8 |
| 8 |
| 8 |
| 6 |
| 9 |
| | — |
| — |
| | (1 | ) | (11 | ) |
| Litigation-related expense | 1 |
| — |
| — |
| — |
| — |
| | 1 |
| N/M |
| | 1 |
| N/M |
|
| Other noninterest expenses | 21 |
| 20 |
| 23 |
| 15 |
| 19 |
| | 1 |
| 5 |
| | 2 |
| 11 |
|
| Total noninterest expenses | 448 |
| 452 |
| 448 |
| 446 |
| 483 |
| | (4 | ) | (1 | ) | | (35 | ) | (7 | ) |
| Income before income taxes | 400 |
| 381 |
| 419 |
| 335 |
| 330 |
| | 19 |
| 5 |
| | 70 |
| 21 |
|
| Provision for income taxes | 90 |
| 63 |
| 93 |
| 54 |
| 218 |
| | 27 |
| 42 |
| | (128 | ) | (59 | ) |
| NET INCOME | 310 |
| 318 |
| 326 |
| 281 |
| 112 |
| | (8 | ) | (3 | ) | | 198 |
| N/M |
|
| Less income allocated to participating securities | 2 |
| 2 |
| 2 |
| 2 |
| — |
| | — |
| — |
| | 2 |
| N/M |
|
| Net income attributable to common shares | $ | 308 |
| $ | 316 |
| $ | 324 |
| $ | 279 |
| $ | 112 |
| | $ | (8 | ) | (3 | )% | | $ | 196 |
| N/M |
|
| Earnings per common share: | | | | | | | | | | | |
| Basic | $ | 1.91 |
| $ | 1.89 |
| $ | 1.90 |
| $ | 1.62 |
| $ | 0.65 |
| | $ | 0.02 |
| 1 | % | | $ | 1.26 |
| N/M |
|
| Diluted | 1.88 |
| 1.86 |
| 1.87 |
| 1.59 |
| 0.63 |
| | 0.02 |
| 1 |
| | 1.25 |
| N/M |
|
| | | | | | | |
| | | | |
| Comprehensive income | 312 |
| 296 |
| 290 |
| 178 |
| 107 |
| | 16 |
| 5 |
| | 205 |
| N/M |
|
| | | | | | | | | | | | |
| Cash dividends declared on common stock | 99 |
| 100 |
| 58 |
| 52 |
| 52 |
| | (1 | ) | (3 | ) | | 47 |
| 90 |
|
| Cash dividends declared per common share | 0.60 |
| 0.60 |
| 0.34 |
| 0.30 |
| 0.30 |
| | — |
| — |
| | 0.30 |
| N/M |
|
N/M - not meaningful
|
| | | | | | | | | | | | | | | | |
| ANALYSIS OF THE ALLOWANCE FOR LOAN LOSSES (unaudited) |
| Comerica Incorporated and Subsidiaries | | | | | | |
| | | | | | | |
| | 2018 | | 2017 |
| (in millions) | 4th Qtr | 3rd Qtr | 2nd Qtr | 1st Qtr | | 4th Qtr |
| | | | | | | |
| Balance at beginning of period | $ | 664 |
| $ | 677 |
| $ | 698 |
| $ | 712 |
| | $ | 712 |
|
| | | | | | | |
| Loan charge-offs: | | | | | | |
| Commercial | 19 |
| 23 |
| 17 |
| 36 |
| | 26 |
|
| Commercial mortgage | 2 |
| — |
| 1 |
| — |
| | 1 |
|
| International | — |
| 1 |
| — |
| — |
| | 1 |
|
| Consumer | — |
| 1 |
| 2 |
| 1 |
| | 1 |
|
| Total loan charge-offs | 21 |
| 25 |
| 20 |
| 37 |
| | 29 |
|
| | | | | | | |
| Recoveries on loans previously charged-off: | | | | | | |
| Commercial | 8 |
| 8 |
| 20 |
| 8 |
| | 7 |
|
| Commercial mortgage | — |
| 1 |
| 1 |
| — |
| | 2 |
|
| International | — |
| — |
| 1 |
| — |
| | 2 |
|
| Residential mortgage | 1 |
| — |
| — |
| — |
| | 1 |
|
| Consumer | 1 |
| 1 |
| 1 |
| 1 |
| | 1 |
|
| Total recoveries | 10 |
| 10 |
| 23 |
| 9 |
| | 13 |
|
| Net loan charge-offs (recoveries) | 11 |
| 15 |
| (3 | ) | 28 |
| | 16 |
|
| Provision for loan losses | 19 |
| 1 |
| (23 | ) | 14 |
| | 16 |
|
| Foreign currency translation adjustment | (1 | ) | 1 |
| (1 | ) | — |
| | — |
|
| Balance at end of period | $ | 671 |
| $ | 664 |
| $ | 677 |
| $ | 698 |
| | $ | 712 |
|
| | | | | | | |
| Allowance for loan losses as a percentage of total loans | 1.34 | % | 1.35 | % | 1.36 | % | 1.42 | % | | 1.45 | % |
| | | | | | | |
| Net loan charge-offs (recoveries) as a percentage of average total loans | 0.09 |
| 0.13 |
| (0.02 | ) | 0.23 |
| | 0.13 |
|
|
| | | | | | | | | | | | | | | | |
| ANALYSIS OF THE ALLOWANCE FOR CREDIT LOSSES ON LENDING-RELATED COMMITMENTS (unaudited) |
| Comerica Incorporated and Subsidiaries | | | | | | |
| | | | | | | |
| | 2018 | | 2017 |
| (in millions) | 4th Qtr | 3rd Qtr | 2nd Qtr | 1st Qtr | | 4th Qtr |
| | | | | | | |
| Balance at beginning of period | $ | 33 |
| $ | 34 |
| $ | 40 |
| $ | 42 |
| | $ | 41 |
|
| Add: Provision for credit losses on lending-related commitments | (3 | ) | (1 | ) | (6 | ) | (2 | ) | | 1 |
|
| Balance at end of period | $ | 30 |
| $ | 33 |
| $ | 34 |
| $ | 40 |
|
| $ | 42 |
|
|
| | | | | | | | | | | | | | | | |
| NONPERFORMING ASSETS (unaudited) | | | | | | |
| Comerica Incorporated and Subsidiaries | | | | | | |
| | | | | | | |
| | 2018 | | 2017 |
| (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 | $ | 141 |
| $ | 149 |
| $ | 171 |
| $ | 242 |
| | $ | 309 |
|
| Commercial mortgage | 20 |
| 22 |
| 29 |
| 29 |
| | 31 |
|
| Lease financing | 2 |
| 2 |
| 2 |
| 3 |
| | 4 |
|
| International | 3 |
| 4 |
| 4 |
| 4 |
| | 6 |
|
| Total nonaccrual business loans | 166 |
| 177 |
| 206 |
| 278 |
| | 350 |
|
| Retail loans: | | | | | | |
| Residential mortgage | 36 |
| 34 |
| 29 |
| 29 |
| | 31 |
|
| Consumer: | | | | | | |
| Home equity | 19 |
| 19 |
| 19 |
| 19 |
| | 21 |
|
| Total nonaccrual retail loans | 55 |
| 53 |
| 48 |
| 48 |
| | 52 |
|
| Total nonaccrual loans | 221 |
| 230 |
| 254 |
| 326 |
| | 402 |
|
| Reduced-rate loans | 8 |
| 9 |
| 8 |
| 8 |
| | 8 |
|
| Total nonperforming loans | 229 |
| 239 |
| 262 |
| 334 |
| | 410 |
|
| Foreclosed property | 1 |
| 1 |
| 2 |
| 5 |
| | 5 |
|
| Total nonperforming assets | $ | 230 |
| $ | 240 |
| $ | 264 |
| $ | 339 |
| | $ | 415 |
|
| | | | | | | |
| Nonperforming loans as a percentage of total loans | 0.46 | % | 0.49 | % | 0.53 | % | 0.68 | % | | 0.83 | % |
| Nonperforming assets as a percentage of total loans and foreclosed property | 0.46 |
| 0.49 |
| 0.53 |
| 0.69 |
| | 0.84 |
|
| Allowance for loan losses as a multiple of total nonperforming loans | 2.9x |
| 2.8x |
| 2.6x |
| 2.1x |
| | 1.7x |
|
| Loans past due 90 days or more and still accruing | $ | 16 |
| $ | 28 |
| $ | 20 |
| $ | 36 |
| | $ | 35 |
|
| | | | | | | |
| ANALYSIS OF NONACCRUAL LOANS | | | | | | |
| Nonaccrual loans at beginning of period | $ | 230 |
| $ | 254 |
| $ | 326 |
| $ | 402 |
| | $ | 444 |
|
| Loans transferred to nonaccrual (a) | 42 |
| 35 |
| 49 |
| 71 |
| | 73 |
|
| Nonaccrual loan gross charge-offs | (21 | ) | (25 | ) | (20 | ) | (37 | ) | | (29 | ) |
| Loans transferred to accrual status (a) | (3 | ) | — |
| — |
| (3 | ) | | — |
|
| Nonaccrual loans sold | (5 | ) | (9 | ) | (15 | ) | (10 | ) | | (22 | ) |
| Payments/Other (b) | (22 | ) | (25 | ) | (86 | ) | (97 | ) | | (64 | ) |
| Nonaccrual loans at end of period | $ | 221 |
| $ | 230 |
| $ | 254 |
| $ | 326 |
| | $ | 402 |
|
| (a) Based on an analysis of nonaccrual loans with book balances greater than $2 million. |
| (b) 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. |
|
| | | | | | | | | | | | | | | | | |
| ANALYSIS OF NET INTEREST INCOME (unaudited) |
| Comerica Incorporated and Subsidiaries | | | | | | | |
| | | | | | | | |
| | Years Ended |
| | December 31, 2018 | | December 31, 2017 |
| | Average Balance | | Average Rate | | Average Balance | | Average Rate |
| (dollar amounts in millions) | Interest | | Interest |
| | | | | | | | |
| Commercial loans | $ | 30,534 |
| $ | 1,416 |
| 4.64 | % | | $ | 30,415 |
| $ | 1,162 |
| 3.82 | % |
| Real estate construction loans | 3,155 |
| 164 |
| 5.21 |
| | 2,958 |
| 124 |
| 4.18 |
|
| Commercial mortgage loans | 9,131 |
| 429 |
| 4.69 |
| | 9,005 |
| 358 |
| 3.97 |
|
| Lease financing | 470 |
| 18 |
| 3.82 |
| | 509 |
| 13 |
| 2.63 |
|
| International loans | 1,021 |
| 51 |
| 4.97 |
| | 1,157 |
| 47 |
| 4.07 |
|
| Residential mortgage loans | 1,983 |
| 75 |
| 3.77 |
| | 1,989 |
| 74 |
| 3.70 |
|
| Consumer loans | 2,472 |
| 109 |
| 4.41 |
| | 2,525 |
| 94 |
| 3.70 |
|
| Total loans | 48,766 |
| 2,262 |
| 4.64 |
| | 48,558 |
| 1,872 |
| 3.85 |
|
| | | | | | | | |
| Mortgage-backed securities | 9,099 |
| 214 |
| 2.28 |
| | 9,330 |
| 202 |
| 2.17 |
|
| Other investment securities | 2,711 |
| 51 |
| 1.86 |
| | 2,877 |
| 48 |
| 1.66 |
|
| Total investment securities | 11,810 |
| 265 |
| 2.19 |
| | 12,207 |
| 250 |
| 2.05 |
|
| | | | | | | | |
| Interest-bearing deposits with banks | 4,700 |
| 91 |
| 1.94 |
| | 5,443 |
| 60 |
| 1.09 |
|
| Other short-term investments | 134 |
| 1 |
| 0.96 |
| | 92 |
| — |
| 0.64 |
|
| Total earning assets | 65,410 |
| 2,619 |
| 3.99 |
| | 66,300 |
| 2,182 |
| 3.29 |
|
| | | | | | | | |
| Cash and due from banks | 1,135 |
| | | | 1,209 |
| | |
| Allowance for loan losses | (695 | ) | | | | (728 | ) | | |
| Accrued income and other assets | 4,874 |
| | | | 4,671 |
| | |
| Total assets | $ | 70,724 |
| | | | $ | 71,452 |
| | |
| | | | | | | | |
| Money market and interest-bearing checking deposits | $ | 22,378 |
| 111 |
| 0.50 |
| | $ | 21,585 |
| 33 |
| 0.15 |
|
| Savings deposits | 2,199 |
| 1 |
| 0.04 |
| | 2,133 |
| — |
| 0.02 |
|
| Customer certificates of deposit | 2,092 |
| 10 |
| 0.46 |
| | 2,471 |
| 9 |
| 0.36 |
|
| Foreign office time deposits | 25 |
| — |
| 1.19 |
| | 56 |
| — |
| 0.64 |
|
| Total interest-bearing deposits | 26,694 |
| 122 |
| 0.46 |
| | 26,245 |
| 42 |
| 0.16 |
|
| | | | | | | | |
| Short-term borrowings | 62 |
| 1 |
| 1.90 |
| | 277 |
| 3 |
| 1.14 |
|
| Medium- and long-term debt | 5,842 |
| 144 |
| 2.42 |
| | 4,969 |
| 76 |
| 1.51 |
|
| Total interest-bearing sources | 32,598 |
| 267 |
| 0.82 |
| | 31,491 |
| 121 |
| 0.38 |
|
| | | | | | | | |
| Noninterest-bearing deposits | 29,241 |
| | | | 31,013 |
| | |
| Accrued expenses and other liabilities | 1,076 |
| | | | 996 |
| | |
| Total shareholders' equity | 7,809 |
| | | | 7,952 |
| | |
| Total liabilities and shareholders' equity | $ | 70,724 |
| | | | $ | 71,452 |
| | |
| | | | | | | | |
| Net interest income/rate spread | | $ | 2,352 |
| 3.17 |
| | | $ | 2,061 |
| 2.91 |
|
| | | | | | | | |
| Impact of net noninterest-bearing sources of funds | | | 0.41 |
| | | | 0.20 |
|
| Net interest margin (as a percentage of average earning assets) | | | 3.58 | % | | | | 3.11 | % |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| ANALYSIS OF NET INTEREST INCOME (unaudited) |
| Comerica Incorporated and Subsidiaries | | | | | | | | | | | |
| | | | | | | | | | | | |
| | Three Months Ended |
| | December 31, 2018 | | September 30, 2018 | | December 31, 2017 |
| | Average Balance | | Average Rate | | Average Balance | | Average Rate | | Average Balance | | Average Rate |
| (dollar amounts in millions) | Interest | | Interest | | Interest |
| | | | | | | | | | | | |
| Commercial loans | $ | 30,651 |
| $ | 379 |
| 4.91 | % | | $ | 30,371 |
| $ | 365 |
| 4.74 | % | | $ | 30,719 |
| $ | 311 |
| 4.02 | % |
| Real estate construction loans | 3,164 |
| 44 |
| 5.57 |
| | 3,198 |
| 43 |
| 5.38 |
| | 3,031 |
| 34 |
| 4.44 |
|
| Commercial mortgage loans | 9,051 |
| 114 |
| 4.96 |
| | 9,084 |
| 110 |
| 4.84 |
| | 9,054 |
| 93 |
| 4.08 |
|
| Lease financing | 495 |
| 5 |
| 3.74 |
| | 464 |
| 4 |
| 3.69 |
| | 470 |
| 4 |
| 3.38 |
|
| International loans | 1,035 |
| 14 |
| 5.25 |
| | 1,072 |
| 13 |
| 4.99 |
| | 1,122 |
| 12 |
| 4.41 |
|
| Residential mortgage loans | 1,968 |
| 19 |
| 3.81 |
| | 1,962 |
| 18 |
| 3.71 |
| | 2,014 |
| 19 |
| 3.66 |
|
| Consumer loans | 2,468 |
| 29 |
| 4.67 |
| | 2,433 |
| 28 |
| 4.49 |
| | 2,523 |
| 25 |
| 3.92 |
|
| Total loans | 48,832 |
| 604 |
| 4.90 |
| | 48,584 |
| 581 |
| 4.74 |
| | 48,933 |
| 498 |
| 4.04 |
|
| | | | | | | | | | | | |
| Mortgage-backed securities | 9,069 |
| 56 |
| 2.37 |
| | 9,063 |
| 54 |
| 2.30 |
| | 9,315 |
| 52 |
| 2.19 |
|
| Other investment securities | 2,704 |
| 15 |
| 2.30 |
| | 2,698 |
| 12 |
| 1.72 |
| | 2,840 |
| 12 |
| 1.69 |
|
| Total investment securities | 11,773 |
| 71 |
| 2.35 |
| | 11,761 |
| 66 |
| 2.17 |
| | 12,155 |
| 64 |
| 2.07 |
|
| | | | | | | | | | | | |
| Interest-bearing deposits with banks | 4,920 |
| 28 |
| 2.28 |
| | 5,362 |
| 28 |
| 2.03 |
| | 4,987 |
| 16 |
| 1.30 |
|
| Other short-term investments | 136 |
| 1 |
| 1.12 |
| | 135 |
| — |
| 1.04 |
| | 92 |
| — |
| 0.58 |
|
| Total earning assets | 65,661 |
| 704 |
| 4.23 |
| | 65,842 |
| 675 |
| 4.05 |
| | 66,167 |
| 578 |
| 3.46 |
|
| | | | | | | | | | | | |
| Cash and due from banks | 940 |
| | | | 1,107 |
| | | | 1,274 |
| | |
| Allowance for loan losses | (673 | ) | | | | (681 | ) | | | | (726 | ) | | |
| Accrued income and other assets | 4,902 |
| | | | 4,942 |
| | | | 4,683 |
| | |
| Total assets | $ | 70,830 |
| | | | $ | 71,210 |
| | | | $ | 71,398 |
| | |
| | | | | | | | | | | | |
| Money market and interest-bearing checking deposits | $ | 22,849 |
| 39 |
| 0.67 |
| | $ | 22,573 |
| 32 |
| 0.56 |
| | $ | 21,402 |
| 10 |
| 0.19 |
|
| Savings deposits | 2,181 |
| — |
| 0.05 |
| | 2,208 |
| 1 |
| 0.05 |
| | 2,152 |
| — |
| 0.02 |
|
| Customer certificates of deposit | 2,090 |
| 4 |
| 0.62 |
| | 2,094 |
| 2 |
| 0.48 |
| | 2,259 |
| 3 |
| 0.35 |
|
| Foreign office time deposits | 9 |
| — |
| 1.37 |
| | 25 |
| — |
| 1.25 |
| | 48 |
| — |
| 0.76 |
|
| Total interest-bearing deposits | 27,129 |
| 43 |
| 0.62 |
| | 26,900 |
| 35 |
| 0.51 |
| | 25,861 |
| 13 |
| 0.19 |
|
| | | | | | | | | | | | |
| Short-term borrowings | 72 |
| — |
| 2.18 |
| | 85 |
| 1 |
| 1.95 |
| | 116 |
| — |
| 1.16 |
|
| Medium- and long-term debt | 6,420 |
| 47 |
| 2.81 |
| | 6,153 |
| 40 |
| 2.55 |
| | 4,631 |
| 20 |
| 1.69 |
|
| Total interest-bearing sources | 33,621 |
| 90 |
| 1.04 |
| | 33,138 |
| 76 |
| 0.90 |
| | 30,608 |
| 33 |
| 0.42 |
|
| | | | | | | | | | | | |
| Noninterest-bearing deposits | 28,600 |
| | | | 29,193 |
| | | | 31,780 |
| | |
| Accrued expenses and other liabilities | 1,090 |
| | | | 1,062 |
| | | | 1,023 |
| | |
| Total shareholders' equity | 7,519 |
| | | | 7,817 |
| | | | 7,987 |
| | |
| Total liabilities and shareholders' equity | $ | 70,830 |
| | | | $ | 71,210 |
| | | | $ | 71,398 |
| | |
| | | | | | | | | | | | |
| Net interest income/rate spread | | $ | 614 |
| 3.19 |
| | | $ | 599 |
| 3.15 |
| | | $ | 545 |
| 3.04 |
|
| | | | | | | | | | | | |
| Impact of net noninterest-bearing sources of funds | | | 0.51 |
| | | | 0.45 |
| | | | 0.23 |
|
| Net interest margin (as a percentage of average earning assets) | | | 3.70 | % | | | | 3.60 | % | | | | 3.27 | % |
|
| | | | | | | | | | | | | | | | | | | | |
| 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, 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 |
| — |
| (24 | ) | — |
| (26 | ) | 152 |
| 102 |
|
| Net issuance of common stock for warrants | 1.8 |
| — |
| (30 | ) | — |
| (53 | ) | 83 |
| — |
|
| Share-based compensation | — |
| — |
| 39 |
| — |
| — |
| — |
| 39 |
|
| Reclassification of certain deferred tax effects | — |
| — |
| — |
| (87 | ) | 87 |
| — |
| — |
|
| Other | — |
| — |
| (1 | ) | — |
| — |
| 1 |
| — |
|
| BALANCE AT DECEMBER 31, 2017 | 172.9 |
| 1,141 |
| 2,122 |
| (451 | ) | 7,887 |
| (2,736 | ) | 7,963 |
|
| Cumulative effect of change in accounting principles | — |
| — |
| — |
| 1 |
| 14 |
| — |
| 15 |
|
| Net income | — |
| — |
| — |
| — |
| 1,235 |
| — |
| 1,235 |
|
| Other comprehensive loss, net of tax | — |
| — |
| — |
| (159 | ) | — |
| — |
| (159 | ) |
| Cash dividends declared on common stock ($1.84 per share) | — |
| — |
| — |
| — |
| (309 | ) | — |
| (309 | ) |
| Purchase of common stock | (14.9 | ) | — |
| (3 | ) | — |
| — |
| (1,326 | ) | (1,329 | ) |
| Net issuance of common stock under employee stock plans | 1.5 |
| — |
| (9 | ) | — |
| (23 | ) | 75 |
| 43 |
|
| Net issuance of common stock for warrants | 0.6 |
| — |
| (10 | ) | — |
| (23 | ) | 33 |
| — |
|
| Share-based compensation | — |
| — |
| 48 |
| — |
| — |
| — |
| 48 |
|
| BALANCE AT DECEMBER 31, 2018 | 160.1 |
| $ | 1,141 |
| $ | 2,148 |
| $ | (609 | ) | $ | 8,781 |
| $ | (3,954 | ) | $ | 7,507 |
|
|
| | | | | | | | | | | | | | | | | | | | | | | |
| BUSINESS SEGMENT FINANCIAL RESULTS (unaudited) |
| Comerica Incorporated and Subsidiaries | | | | | | | | | | | |
| | | | | | | | | | | | |
| | | | | | | | | | | | |
| (dollar amounts in millions) | Business | | Retail | | Wealth | | | | | | |
| Three Months Ended December 31, 2018 | Bank | | Bank | | Management | | Finance | | Other | | Total |
| Earnings summary: | | | | | | | | | | | |
| Net interest income (expense) | $ | 414 |
| | $ | 146 |
| | $ | 48 |
| | $ | (9 | ) | | $ | 15 |
| | $ | 614 |
|
| Provision for credit losses | 15 |
| | — |
| | (1 | ) | | — |
| | 2 |
| | 16 |
|
| Noninterest income | 143 |
| | 36 |
| | 66 |
| | 11 |
| | (6 | ) | | 250 |
|
| Noninterest expenses | 212 |
| | 153 |
| | 75 |
| | (1 | ) | | 9 |
| | 448 |
|
| Provision (benefit) for income taxes | 61 |
| | 6 |
| | 8 |
| | (2 | ) | | 17 |
| | 90 |
|
| Net income (loss) | $ | 269 |
| | $ | 23 |
| | $ | 32 |
| | $ | 5 |
| | $ | (19 | ) | | $ | 310 |
|
| Net credit-related charge-offs (recoveries) | $ | 12 |
| | $ | — |
| | $ | (1 | ) | | $ | — |
| | $ | — |
| | $ | 11 |
|
| | | | | | | | | | | | |
| Selected average balances: | | | | | | | | | | | |
| Assets | $ | 43,211 |
| | $ | 2,647 |
| | $ | 5,156 |
| | $ | 13,613 |
| | $ | 6,203 |
| | $ | 70,830 |
|
| Loans | 41,731 |
| | 2,080 |
| | 5,021 |
| | — |
| | — |
| | 48,832 |
|
| Deposits | 29,961 |
| | 20,588 |
| | 4,126 |
| | 916 |
| | 138 |
| | 55,729 |
|
| | | | | | | | | | | | |
| Statistical data: | | | | | | | | | | | |
| Return on average assets (a) | 2.47 | % | | 0.44 | % | | 2.49 | % | | N/M |
| | N/M |
| | 1.74 | % |
| Efficiency ratio (b) | 38.14 |
| | 83.77 |
| | 65.85 |
| | N/M |
| | N/M |
| | 51.93 |
|
| | | | | | | | | | | | |
| | Business | | Retail | | Wealth | | | | | | |
| Three Months Ended September 30, 2018 | Bank | | Bank | | Management | | Finance | | Other | | Total |
| Earnings summary: | | | | | | | | | | | |
| Net interest income (expense) | $ | 413 |
| | $ | 141 |
| | $ | 46 |
| | $ | (16 | ) | | $ | 15 |
| | $ | 599 |
|
| Provision for credit losses | (1 | ) | | 1 |
| | 2 |
| | — |
| | (2 | ) | | — |
|
| Noninterest income | 137 |
| | 35 |
| | 66 |
| | (7 | ) | | 3 |
| | 234 |
|
| Noninterest expenses | 210 |
| | 153 |
| | 72 |
| | (1 | ) | | 18 |
| | 452 |
|
| Provision (benefit) for income taxes | 77 |
| | 5 |
| | 9 |
| | (8 | ) | | (20 | ) | (c) | 63 |
|
| Net income (loss) | $ | 264 |
| | $ | 17 |
| | $ | 29 |
| | $ | (14 | ) | | $ | 22 |
| | $ | 318 |
|
| Net credit-related charge-offs | $ | 14 |
| | $ | — |
| | $ | 1 |
| | $ | — |
| | $ | — |
| | $ | 15 |
|
| | | | | | | | | | | | |
| Selected average balances: | | | | | | | | | | | |
| Assets | $ | 43,165 |
| | $ | 2,621 |
| | $ | 5,068 |
| | $ | 13,696 |
| | $ | 6,660 |
| | $ | 71,210 |
|
| Loans | 41,591 |
| | 2,057 |
| | 4,936 |
| | — |
| | — |
| | 48,584 |
|
| Deposits | 30,286 |
| | 20,765 |
| | 3,988 |
| | 929 |
| | 125 |
| | 56,093 |
|
| | | | | | | | | | | | |
| Statistical data: | | | | | | | | | | | |
| Return on average assets (a) | 2.43 | % | | 0.31 | % | | 2.28 | % | | N/M |
| | N/M |
| | 1.77 | % |
| Efficiency ratio (b) | 38.24 |
| | 86.81 |
| | 63.93 |
| | N/M |
| | N/M |
| | 52.93 |
|
| | | | | | | | | | | | |
| | Business | | Retail | | Wealth | | | | | | |
| Three Months Ended December 31, 2017 | Bank | | Bank | | Management | | Finance | | Other | | Total |
| Earnings summary: | | | | | | | | | | | |
| Net interest income (expense) | $ | 394 |
| | $ | 123 |
| | $ | 43 |
| | $ | (25 | ) | | $ | 10 |
| | $ | 545 |
|
| Provision for credit losses | 17 |
| | (1 | ) | | (5 | ) | | — |
| | 6 |
| | 17 |
|
| Noninterest income | 166 |
| | 39 |
| | 64 |
| | 14 |
| | 2 |
| | 285 |
|
| Noninterest expenses | 239 |
| | 160 |
| | 73 |
| | (1 | ) | | 12 |
| | 483 |
|
| Provision (benefit) for income taxes | 110 |
| | 1 |
| | 15 |
| | (8 | ) | | 100 |
| (c) | 218 |
|
| Net income (loss) | $ | 194 |
| | $ | 2 |
| | $ | 24 |
| | $ | (2 | ) | | $ | (106 | ) | | $ | 112 |
|
| Net credit-related charge-offs (recoveries) | $ | 17 |
| | $ | — |
| | $ | (1 | ) | | $ | — |
| | $ | — |
| | $ | 16 |
|
| | | | | | | | | | | | |
| Selected average balances: | | | | | | | | | | | |
| Assets | $ | 43,116 |
| | $ | 2,629 |
| | $ | 5,352 |
| | $ | 13,940 |
| | $ | 6,361 |
| | $ | 71,398 |
|
| Loans | 41,633 |
| | 2,075 |
| | 5,225 |
| | — |
| | — |
| | 48,933 |
|
| Deposits | 32,011 |
| | 20,938 |
| | 4,184 |
| | 394 |
| | 114 |
| | 57,641 |
|
| | | | | | | | | | | | |
| Statistical data: | | | | | | | | | | | |
| Return on average assets (a) | 1.79 | % | | 0.04 | % | | 1.82 | % | | (0.06 | )% | | N/M |
| | 0.62 | % |
| Efficiency ratio (b) | 42.71 |
| | 98.24 |
| | 67.91 |
| | 9.23 |
| | N/M |
| | 58.14 |
|
| |
| (a) | Return on average assets is calculated based on the greater of average assets or average liabilities and attributed equity. |
| |
| (b) | Noninterest expenses as a percentage of the sum of net interest income and noninterest income excluding net gains (losses) from securities and a derivative contract tied to the conversion rate of Visa Class B shares. |
| |
| (c) | Included discrete tax items of $23 million benefit and $103 million provision for the third quarter 2018 and fourth quarter 2017, respectively. |
N/M - Not Meaningful
|
| | | | | | | | | | | | | | | | | | | | | | | |
| MARKET SEGMENT FINANCIAL RESULTS (unaudited) |
| Comerica Incorporated and Subsidiaries | | | | | | | | | | |
| | | | | | | | | | | | |
| | | | | | | | | | | | |
| (dollar amounts in millions) | | | | | | | Other | | Finance | | |
| Three Months Ended December 31, 2018 | Michigan | | California | | Texas | | Markets | | & Other | | Total |
| Earnings summary: | | | | | | | | | | | |
| Net interest income | $ | 188 |
| | $ | 207 |
| | $ | 121 |
| | $ | 92 |
| | $ | 6 |
| | $ | 614 |
|
| Provision for credit losses | (7 | ) | | 36 |
| | (16 | ) | | 2 |
| | 1 |
| | 16 |
|
| Noninterest income | 74 |
| | 40 |
| | 36 |
| | 96 |
| | 4 |
| | 250 |
|
| Noninterest expenses | 145 |
| | 108 |
| | 92 |
| | 95 |
| | 8 |
| | 448 |
|
| Provision for income taxes | 23 |
| | 22 |
| | 16 |
| | 14 |
| | 15 |
| | 90 |
|
| Net income (loss) | $ | 101 |
| | $ | 81 |
| | $ | 65 |
| | $ | 77 |
| | $ | (14 | ) | | $ | 310 |
|
| Net credit-related charge-offs | $ | — |
| | $ | 9 |
| | $ | 1 |
| | $ | 1 |
| | $ | — |
| | $ | 11 |
|
| | | | | | | | | | | | |
| Selected average balances: | | | | | | | | | | | |
| Assets | $ | 12,958 |
| | $ | 18,537 |
| | $ | 10,472 |
| | $ | 9,047 |
| | $ | 19,816 |
| | $ | 70,830 |
|
| Loans | 12,457 |
| | 18,279 |
| | 9,889 |
| | 8,207 |
| | — |
| | 48,832 |
|
| Deposits | 20,245 |
| | 17,230 |
| | 8,919 |
| | 8,281 |
| | 1,054 |
| | 55,729 |
|
| | | | | | | | | | | | |
| Statistical data: | | | | | | | | | | | |
| Return on average assets (a) | 1.92 | % | | 1.73 | % | | 2.48 | % | | 3.37 | % | | N/M |
| | 1.74 | % |
| Efficiency ratio (b) | 55.42 |
| | 44.05 |
| | 58.52 |
| | 50.26 |
| | N/M |
| | 51.93 |
|
| | | | | | | | | | | | |
| | | | | | | | Other | | Finance | | |
| Three Months Ended September 30, 2018 | Michigan | | California | | Texas | | Markets | | & Other | | Total |
| Earnings summary: | | | | | | | | | | | |
| Net interest income (expense) | $ | 185 |
| | $ | 199 |
| | $ | 121 |
| | $ | 95 |
| | $ | (1 | ) | | $ | 599 |
|
| Provision for credit losses | 4 |
| | 3 |
| | (9 | ) | | 4 |
| | (2 | ) | | — |
|
| Noninterest income | 75 |
| | 43 |
| | 33 |
| | 86 |
| | (3 | ) | | 234 |
|
| Noninterest expenses | 143 |
| | 104 |
| | 90 |
| | 98 |
| | 17 |
| | 452 |
|
| Provision (benefit) for income taxes | 25 |
| | 34 |
| | 16 |
| | 15 |
| | (27 | ) | (c) | 63 |
|
| Net income | $ | 88 |
| | $ | 101 |
| | $ | 57 |
| | $ | 64 |
| | $ | 8 |
| | $ | 318 |
|
| Net credit-related charge-offs (recoveries) | $ | 8 |
| | $ | 5 |
| | $ | 4 |
| | $ | (2 | ) | | $ | — |
| | $ | 15 |
|
| | | | | | | | | | | | |
| Selected average balances: | | | | | | | | | | | |
| Assets | $ | 13,055 |
| | $ | 18,336 |
| | $ | 10,271 |
| | $ | 9,193 |
| | $ | 20,355 |
| | $ | 71,210 |
|
| Loans | 12,424 |
| | 18,074 |
| | 9,702 |
| | 8,384 |
| | — |
| | 48,584 |
|
| Deposits | 20,721 |
| | 16,894 |
| | 8,904 |
| | 8,520 |
| | 1,054 |
| | 56,093 |
|
| | | | | | | | | | | | |
| Statistical data: | | | | | | | | | | | |
| Return on average assets (a) | 1.63 | % | | 2.18 | % | | 2.18 | % | | 2.75 | % | | N/M |
| | 1.77 | % |
| Efficiency ratio (b) | 54.90 |
| | 43.12 |
| | 58.05 |
| | 53.97 |
| | N/M |
| | 52.93 |
|
| | | | | | | | | | | | |
| | | | | | | | Other | | Finance | | |
| Three Months Ended December 31, 2017 | Michigan | | California | | Texas | | Markets | | & Other | | Total |
| Earnings summary: | | | | | | | | | | | |
| Net interest income (expense) | $ | 175 |
| | $ | 190 |
| | $ | 114 |
| | $ | 82 |
| | $ | (16 | ) | | $ | 545 |
|
| Provision for credit losses | 6 |
| | 33 |
| | (27 | ) | | — |
| | 5 |
| | 17 |
|
| Noninterest income | 81 |
| | 43 |
| | 34 |
| | 111 |
| | 16 |
| | 285 |
|
| Noninterest expenses | 150 |
| | 107 |
| | 95 |
| | 120 |
| | 11 |
| | 483 |
|
| Provision for income taxes | 36 |
| | 36 |
| | 31 |
| | 22 |
| | 93 |
| (c) | 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 |
| | $ | 18,461 |
| | $ | 10,305 |
| | $ | 8,748 |
| | $ | 20,301 |
| | $ | 71,398 |
|
| Loans | 12,798 |
| | 18,236 |
| | 9,795 |
| | 8,104 |
| | — |
| | 48,933 |
|
| Deposits | 21,806 |
| | 18,222 |
| | 9,366 |
| | 7,738 |
| | 509 |
| | 57,641 |
|
| | | | | | | | | | | | |
| Statistical data: | | | | | | | | | | | |
| Return on average assets (b) | 1.13 | % | | 1.17 | % | | 1.84 | % | | 2.29 | % | | N/M |
| | 0.62 | % |
| Efficiency ratio (c) | 58.55 |
| | 45.93 |
| | 63.88 |
| | 62.40 |
| | N/M |
| | 58.14 |
|
| |
| (a) | Return on average assets is calculated based on the greater of average assets or average liabilities and attributed equity. |
| |
| (b) | Noninterest expenses as a percentage of the sum of net interest income and noninterest income excluding net gains (losses) from securities and a derivative contract tied to the conversion rate of Visa Class B shares. |
| |
| (c) | Included discrete tax items of $23 million benefit and $103 million provision for the third quarter 2018 and fourth quarter 2017, respectively. |
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 the adjusted financial results provide a greater understanding of ongoing operations and enhance 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.
|
| | | | | | | | | | | | | |
| ADJUSTED FINANCIAL RESULTS | Three Months Ended | | Years Ended |
| | December 31, | September 30, | | December 31, |
| (dollar amounts in millions, except per share data) | 2018 | 2018 | | 2018 | 2017 |
| Noninterest Income: | | | | | |
| Noninterest income | $ | 250 |
| $ | 234 |
| | $ | 976 |
| $ | 1,107 |
|
| Securities repositioning | — |
| 20 |
| | 20 |
| — |
|
| Proforma effect of adoption of accounting standard | — |
| — |
| | — |
| (118 | ) |
| Adjusted noninterest income | $ | 250 |
| $ | 254 |
| | $ | 996 |
| $ | 989 |
|
| Noninterest Expenses: | | | | | |
| Noninterest expenses | $ | 448 |
| $ | 452 |
| | $ | 1,794 |
| $ | 1,860 |
|
| Restructuring charges | (14 | ) | (12 | ) | | (53 | ) | (45 | ) |
| One-time employee bonus | — |
| — |
| | — |
| (5 | ) |
| Proforma effect of adoption of accounting standard | — |
| — |
| | — |
| (118 | ) |
| Adjusted noninterest expenses | $ | 434 |
| $ | 440 |
| | $ | 1,741 |
| $ | 1,692 |
|
| Pre-tax Income: | | | | | |
| Pre-tax income | $ | 400 |
| $ | 381 |
| | $ | 1,535 |
| $ | 1,234 |
|
| Securities repositioning | — |
| 20 |
| | 20 |
| — |
|
| Restructuring charges | 14 |
| 12 |
| | 53 |
| 45 |
|
| One-time employee bonus | — |
| — |
| | — |
| 5 |
|
| Adjusted pre-tax income | $ | 414 |
| $ | 413 |
| | $ | 1,608 |
| $ | 1,284 |
|
| Provision for Income Taxes: | | | | | |
| Provision for income taxes | $ | 90 |
| $ | 63 |
| | $ | 300 |
| $ | 491 |
|
| Tax on securities repositioning | — |
| 5 |
| | 5 |
| — |
|
| Tax on restructuring charges | 3 |
| 3 |
| | 12 |
| 16 |
|
| Tax on one-time employee bonus | — |
| — |
| | — |
| 2 |
|
| Discrete tax items | — |
| 23 |
| | 48 |
| (72 | ) |
| Adjusted provision for income taxes | $ | 93 |
| $ | 94 |
| | $ | 365 |
| $ | 437 |
|
| Net Income: | | | | | |
| Net Income | $ | 310 |
| $ | 318 |
| | $ | 1,235 |
| $ | 743 |
|
| Securities repositioning, net of tax | — |
| 15 |
| | 15 |
| — |
|
| Restructuring charges, net of tax | 11 |
| 9 |
| | 41 |
| 29 |
|
| One-time employee bonus, net of tax | — |
| — |
| | — |
| 3 |
|
| Discrete tax items | — |
| (23 | ) | | (48 | ) | 72 |
|
| Adjusted net income | $ | 321 |
| $ | 319 |
| | $ | 1,243 |
| $ | 847 |
|
| | | | | | |
| Diluted Earnings per Common Share: | | | | | |
| Diluted earnings per common share | $ | 1.88 |
| $ | 1.86 |
| | $ | 7.20 |
| $ | 4.14 |
|
| Securities repositioning, net of tax | — |
| 0.09 |
| | 0.09 |
| — |
|
| Restructuring charges, net of tax | 0.07 |
| 0.05 |
| | 0.24 |
| 0.16 |
|
| One-time employee bonus, net of tax | — |
| — |
| | — |
| 0.02 |
|
| Discrete tax items | — |
| (0.14 | ) | | (0.29 | ) | 0.41 |
|
| Adjusted diluted earnings per common share | $ | 1.95 |
| $ | 1.86 |
| | $ | 7.24 |
| $ | 4.73 |
|
| | | | | | |
| Efficiency Ratio: | | | | | |
| Reported | 51.93 | % | 52.93 | % | | 53.56 | % | 58.64 | % |
| Adjusted | 50.70 |
| 51.59 |
| | 52.58 |
| 55.41 |
|
Securities repositioning refers to losses incurred on the sale of $1.3 billion of treasury securities that were replaced by higher-yielding treasuries with a similar duration of 3 years. Proforma effect of the adoption of accounting standard relates to the proforma 2017 impact of the new revenue recognition standard that became effective January 1, 2018 that is not reflected in 2017 results. Discrete tax items primarily include the charge to adjust deferred taxes resulting from the Tax Cuts and Jobs Act, tax benefits from the review of tax capitalization and recovery positions on fixed assets and software on the 2017 tax return as well as from employee stock transactions.
|
| | | | | | | | | | |
| | December 31, | September 30, | | December 31, |
| (dollar amounts in millions) | 2018 | 2018 | | 2017 |
| Tangible Common Equity Ratio: | | | | |
| Common shareholders' equity | $ | 7,507 |
| $ | 7,786 |
| | $ | 7,963 |
|
| Less: | | | | |
| Goodwill | 635 |
| 635 |
| | 635 |
|
| Other intangible assets | 6 |
| 6 |
| | 8 |
|
| Tangible common equity | $ | 6,866 |
| $ | 7,145 |
| | $ | 7,320 |
|
| | | | | |
| Total assets | $ | 70,818 |
| $ | 71,448 |
| | $ | 71,567 |
|
| Less: | | | | |
| Goodwill | 635 |
| 635 |
| | 635 |
|
| Other intangible assets | 6 |
| 6 |
| | 8 |
|
| Tangible assets | $ | 70,177 |
| $ | 70,807 |
| | $ | 70,924 |
|
| | | | | |
| Common equity ratio | 10.60 | % | 10.90 | % | | 11.13 | % |
| Tangible common equity ratio | 9.78 |
| 10.09 |
| | 10.32 |
|
| | | | | |
| Tangible Common Equity per Share of Common Stock: | | | | |
| Common shareholders' equity | $ | 7,507 |
| $ | 7,786 |
| | $ | 7,963 |
|
| Tangible common equity | 6,866 |
| 7,145 |
| | 7,320 |
|
| | | | | |
| Shares of common stock outstanding (in millions) | 160 |
| 166 |
| | 173 |
|
| | | | | |
| Common shareholders' equity per share of common stock | $ | 46.89 |
| $ | 46.92 |
| | $ | 46.07 |
|
| Tangible common equity per share of common stock | 42.89 |
| 43.05 |
| | 42.34 |
|
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.
