Dallas, TX/October 20, 2020
THIRD QUARTER 2020 NET INCOME OF $211 MILLION, $1.44 PER SHARE
Earnings per Share Increased 80 percent Compared to Second Quarter
Net Income Increased $98 Million, or 87%
Deposit Growth Continued As Customers Conserved Cash
Average Noninterest-Bearing Deposits Increased $3.2 Billion
Credit Quality Remained Strong
Net Charge-offs of 26 Basis Points and Nonperforming Assets Below Historic Levels
“Our third quarter earnings of $211 million, or $1.44 per share, reflected the resiliency of our relationship-focused business model,” said Curt C. Farmer, Comerica Chairman, President and Chief Executive Officer. “Our customers are acting prudently by conserving cash and adjusting their operations, which resulted in a reduction in loans and continued deposit growth. The allowance for credit losses remained near 2 percent of total loans, resulting in a provision of $5 million, and reflected lower loan balances, along with our portfolio’s stable performance and an improving, yet uncertain, economic path. The impact from lower interest rates on net interest income waned, card fees remained robust and other fee income categories began to recover. Expenses were well-controlled and included a $4 million increase in charitable contributions. Our book value per share grew to $53.78, the seventh consecutive quarterly increase, and we remain focused on continuing to enhance shareholder value.
“The unwavering dedication of our team to provide a high-level of customer service as well as support each other and our communities during this unprecedented time continues to be a source of pride. As previously announced, we have significantly increased our commitment to help small businesses and communities that have been impacted by the pandemic. Since early March, Comerica, together with the Comerica Charitable Foundation, has distributed over $9 million to over 150 non-profit and other community service organizations. With strong liquidity and capital levels, together with our experience and deep expertise, we are well-positioned to assist our customers and communities, as we continue to build and solidify enduring relationships.”
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| (dollar amounts in millions, except per share data) | 3rd Qtr '20 | | 2nd Qtr '20 | | 3rd Qtr '19 | |
| FINANCIAL RESULTS | | | | | | |
| Net interest income | $ | 458 | | | $ | 471 | | | $ | 586 | | |
| Provision for credit losses | 5 | | | 138 | | | 35 | | |
| Noninterest income | 252 | | | 247 | | | 256 | | |
| Noninterest expenses | 446 | | | 440 | | | 435 | | |
| Pre-tax income | 259 | | | 140 | | | 372 | | |
| Provision for income taxes | 48 | | | 27 | | | 80 | | |
| Net income | $ | 211 | | | $ | 113 | | | $ | 292 | | |
| Diluted earnings per common share | $ | 1.44 | | | $ | 0.80 | | | $ | 1.96 | | |
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| Average loans | 52,013 | | | 53,498 | | | 50,887 | | |
| Average deposits | 68,763 | | | 64,282 | | | 55,716 | | |
| Return on average assets | 0.99 | % | | 0.55 | % | | 1.61 | % | |
| Return on average common shareholders' equity | 10.84 | | | 6.09 | | | 15.97 | | |
| Net interest margin | 2.33 | | | 2.50 | | | 3.52 | | |
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| Common equity Tier 1 capital ratio (a) | 10.26 | | | 9.99 | | | 9.96 | | |
| Tier 1 capital ratio (a) | 10.86 | | | 10.58 | | | 9.96 | | |
| Common equity ratio | 8.94 | | | 8.78 | | | 9.88 | | |
| Common shareholders' equity per share of common stock | $ | 53.78 | | | $ | 53.28 | | | $ | 49.96 | | |
| Tangible common equity per share of common stock (b) | 49.20 | | | 48.69 | | | 45.52 | | |
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(a)Estimated for September 30, 2020; reflects deferral of CECL model impact as calculated per regulatory guidance.
(b)See Reconciliations of Non-GAAP Financial Measures and Regulatory Ratios.
Third Quarter 2020 Compared to Second Quarter 2020 Overview
Balance sheet items discussed in terms of average balances.
Loans decreased $1.5 billion, or 3 percent, to $52.0 billion.
•Increase of $307 million in Mortgage Banker Finance primarily due to elevated activity was more than offset by decreases of $910 million in National Dealer Services due to an imbalance in supply and demand resulting in lower inventory, $476 million in Corporate Banking as customers reduced liquidity safeguards and $384 million in General Middle Market related to lower working capital and capital expenditure needs.
◦The average balance of Paycheck Protection Program (PPP) loans increased $1.2 billion to $3.8 billion, reflecting the full impact of the prior quarter's origination activity.
•Average yield on loans decreased 13 basis points to 3.13 percent, reflecting lower interest rates.
Securities increased $1.2 billion, or 10 percent, to $13.9 billion.
•Invested a portion of excess liquidity in $1.8 billion of U.S. Treasury bonds and $500 million of mortgage-backed securities, and reinvested $1.0 billion in securities repayments during the third quarter.
•Average yield on securities decreased 28 basis points to 2.13 percent, reflecting lower interest rates and the increase in lower-yielding U.S. Treasury securities.
Deposits increased $4.5 billion, or 7 percent, to $68.8 billion.
•Growth in nearly every business line, including an increase of $3.2 billion in noninterest-bearing deposits as customers conserve cash in an uncertain economy.
•The average cost of interest-bearing deposits decreased 9 basis points to 17 basis points, reflecting prudent management of relationship pricing in a lower rate environment.
Net interest income decreased $13 million to $458 million.
•The benefit from lower wholesale funding and deposit costs, as well as higher loan fees and one additional day in the quarter, was more than offset by the impact from loans due to the decline in interest rates and reduced balances.
Provision for credit losses decreased $133 million to $5 million.
•The allowance for credit losses decreased $28 million to $1.0 billion, primarily reflecting a decline in period-end loan balances. As a percentage of total loans, the allowance for credit losses was relatively stable at 1.98 percent as the uncertainty of the COVID-19 pandemic impact remained unchanged. Excluding PPP loans, allowance for credit losses totaled 2.14 percent of total loans.
•Net loan charge-offs decreased $17 million to $33 million, or 0.26 percent of average loans.
Noninterest income increased $5 million to $252 million.
•Increases of $5 million in service charges on deposit accounts and $3 million in card fees, as well as smaller increases in other categories, partially offset by decreases of $10 million in customer derivative income and $2 million each in securities trading and investment banking fees.
•Additionally, included increases of $6 million from deferred compensation asset returns (offset in noninterest expenses) and $3 million from bank-owned life insurance.
Noninterest expenses increased $6 million to $446 million.
•Increases of $8 million in salaries and benefits expense, $4 million in charitable contributions and $3 million in occupancy expense, partially offset by decreases of $4 million in outside processing fee expense and $3 million in operational and litigation-related costs.
◦The increase in salaries and benefits expense primarily reflected higher staff insurance expense and a $6 million increase in deferred compensation expense (offset in noninterest income).
Capital position remained solid with a common equity Tier 1 capital ratio of 10.26 percent and a Tier 1 capital ratio of 10.86 percent.
•Returned a total of $94 million to common shareholders through dividends.
•Declared dividend of $8 million on preferred stock, payable October 1, 2020, for the long first dividend period from May 26, 2020 to October 1, 2020.
Third Quarter 2020 Compared to Third Quarter 2019 Overview
Balance sheet items discussed in terms of average balances.
Loans increased $1.1 billion, or 2 percent.
•Increases in Mortgage Banker Finance, Commercial Real Estate, Business Banking and Personal Banking were partially offset by decreases in National Dealer Services and Energy.
•Average yield on loans declined 170 basis points, consistent with the lower interest rate environment.
Deposits increased $13.0 billion, or 23 percent.
•Included $9.6 billion, or 36 percent, increase in noninterest-bearing deposits.
•Interest-bearing deposit costs declined 82 basis points, with prudent management of relationship pricing in a lower rate environment.
Net interest income decreased $128 million.
•Primarily due to the impact of lower short-term rates.
Provision for credit losses, calculated using the CECL model effective first quarter 2020, decreased $30 million.
•Allowance for credit losses increased $357 million, or 66 basis points as a percentage of total loans, reflecting the expected impact of the COVID-19 pandemic and sustained pressures on Energy.
Noninterest income decreased $4 million.
•Increases in securities trading income, deferred compensation asset returns (offset in noninterest expenses) and card fees were more than offset by decreases in customer derivative income, service charges on deposit accounts, commercial lending fees (primarily syndication fees), brokerage service fees, fiduciary income and income on principal investing and warrants.
Noninterest expenses increased $11 million.
•Increases in software expense, which included a $9 million reclassification from outside processing fee expense due to a change in accounting classification effective first quarter 2020, salaries and benefits expense and charitable contributions as well as smaller increases in various categories.
Net Interest Income
Balance sheet items presented and discussed in terms of average balances.
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| (dollar amounts in millions) | 3rd Qtr '20 | | 2nd Qtr '20 | | 3rd Qtr '19 |
| Net interest income | $ | 458 | | | $ | 471 | | | $ | 586 | |
| Net interest margin | 2.33 | % | | 2.50 | % | | 3.52 | % |
| Selected balances: | | | | | |
| Total earning assets | $ | 78,555 | | | $ | 75,989 | | | $ | 66,285 | |
| Total loans | 52,013 | | | 53,498 | | | 50,887 | |
| Total investment securities | 13,850 | | | 12,642 | | | 12,203 | |
| Federal Reserve Bank deposits | 12,260 | | | 9,483 | | | 2,834 | |
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| Total deposits | 68,763 | | | 64,282 | | | 55,716 | |
| Total noninterest-bearing deposits | 35,934 | | | 32,686 | | | 26,339 | |
| Short-term borrowings | 218 | | | 882 | | | 268 | |
| Medium- and long-term debt | 5,940 | | | 7,206 | | | 7,100 | |
Net interest income decreased $13 million, and net interest margin decreased 17 basis points, compared to second quarter 2020.
•Interest income on loans decreased $26 million and reduced net interest margin by 13 basis points, primarily due to the impact of lower short-term rates (-$21 million, -11 basis points) and lower loan balances (-$14 million, -4 basis points), which were partially offset by higher loan fees (+$5 million, +2 basis points) and one more day in the quarter (+$4 million).
•Interest income on investment securities decreased $2 million and reduced net interest margin by 2 basis points primarily due to the impact of lower rates. The increase in securities to invest excess liquidity contributed $1 million in interest income but reduced margin by 1 basis point.
•Interest income on short-term investments increased $1 million and reduced net interest margin by 9 basis points, reflecting an increase in lower-yielding deposits with the Federal Reserve Bank.
•Interest expense on deposits decreased $5 million and improved net interest margin by 3 basis points, due to lower pay rates on deposits.
•Interest expense on debt decreased $9 million due to reduced balances (+$5 million, +2 basis points) and lower rates (+$4 million, +2 basis points).
The net impact of lower rates, including the change to deposit rates, to the third quarter of 2020 net interest income was a reduction of $15 million and 7 basis points to the net interest margin.
Credit Quality
"Comerica has a strong credit culture with conservative underwriting standards which has served us well in times of economic stress," said Farmer. "We are leveraging our experience and deep expertise, working closely with our customers, reviewing their financial performance and assessing their financial needs. During the current period of unprecedented disruption, our portfolio has performed well. Nonaccrual loans remain well below historic norms and net charge-offs were only 26 basis points in the third quarter. However, while the economy has been improving, given the uncertainty regarding the pace of recovery, our credit reserves remain at over $1.0 billion, resulting in a coverage ratio of close to 2 percent."
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| (dollar amounts in millions) | 3rd Qtr '20 | | 2nd Qtr '20 | | 3rd Qtr '19 |
| Credit-related charge-offs | $ | 53 | | | $ | 57 | | | $ | 61 | |
| Recoveries | 20 | | | 7 | | | 19 | |
| Net credit-related charge-offs | 33 | | | 50 | | | 42 | |
| Net credit-related charge-offs/Average total loans | 0.26 | % | | 0.37 | % | | 0.33 | % |
| Provision for credit losses | $ | 5 | | | $ | 138 | | | $ | 35 | |
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| Nonperforming loans | 325 | | | 271 | | | 226 | |
| Nonperforming assets (NPAs) | 335 | | | 282 | | | 229 | |
| NPAs/Total loans and foreclosed property | 0.64 | % | | 0.53 | % | | 0.44 | % |
| Loans past due 90 days or more and still accruing | $ | 29 | | | $ | 41 | | | $ | 31 | |
| Allowance for loan losses | 978 | | | 1,007 | | | 652 | |
| Allowance for credit losses on lending-related commitments (a) | 60 | | | 59 | | | 29 | |
| Total allowance for credit losses | 1,038 | | | 1,066 | | | 681 | |
| Allowance for loan losses/Period-end total loans | 1.87 | % | | 1.88 | % | | 1.27 | % |
| Allowance for loan losses/Period-end total loans excluding PPP loans | 2.01 | | | 2.03 | | | n/a |
| Allowance for credit losses/Period-end total loans | 1.98 | | | 1.99 | | | 1.32 | |
| Allowance for credit losses/Period-end total loans excluding PPP loans | 2.14 | | | 2.15 | | | n/a |
| Allowance for credit losses/Nonperforming loans | 3.2x | | 3.9x | | 3.0x |
(a) Included in accrued expenses and other liabilities on the Consolidated Balance Sheets.
n/a - not applicable
•The allowance for credit losses decreased $28 million to $1.0 billion, or 1.98 percent of total loans, primarily reflecting a decline in period-end loans. Additionally, the uncertainty of the COVID-19 pandemic, including the economic impacts of social distancing, remained unchanged. Excluding PPP loans, which are guaranteed by the Small Business Administration, allowance for credit losses totaled 2.14 percent of total loans.
◦Energy loans totaled $1.8 billion, or 4 percent of total loans at September 30, 2020. The allocation of reserves for Energy loans remained over 10 percent.
•Criticized loans remained at $3.4 billion, or 7 percent of total loans. Criticized loans are generally consistent with the Special Mention, Substandard and Doubtful categories defined by regulatory authorities.
◦Criticized Energy loans decreased $102 million to $720 million, or 21 percent of total criticized loans; 39 percent of Energy loans are criticized.
•Nonperforming assets increased $53 million to $335 million. Nonperforming assets as a percentage of total loans and foreclosed property increased to 0.64 percent compared to 0.53 percent in second quarter 2020.
◦Nonperforming Energy loans increased $39 million to $141 million.
•Net charge-offs were $33 million, or 0.26 percent of average loans.
◦Energy net charge-offs, which included $14 million in recoveries, totaled $9 million, compared to $45 million in second quarter 2020.
•Pandemic-related payment deferrals totaled $385 million, or 0.74 percent of total loans at September 30, 2020, primarily in commercial loans.
Outlook for Fourth Quarter 2020 Compared to Third Quarter 2020
This outlook is based on management expectations for gradual improvement in economic conditions. While some modest forgiveness of PPP loans is expected by the end of the year, given the current level of uncertainty, any impact from loan forgiveness on loans, net interest income and expenses is excluded from this outlook.
•Decline in average loans reflects decreases in Mortgage Banker Finance due to a reduction in activity and the cyclical impacts on Middle Market, Large Corporate and Energy, partially offset by growth in National Dealer Services as inventory levels begin to slowly rebuild.
•Average deposits to remain strong and relatively stable (excluding the benefit of possible additional fiscal stimulus).
•Net interest income relatively stable with lower loan balances as well as the impact of lower LIBOR and securities yields, mostly offset by careful management of loan and deposit pricing, the full quarter benefit of the larger securities portfolio and lower wholesale funding.
•Provision for credit losses reflects pace of economic recovery; net charge-offs modestly higher.
•Decrease in noninterest income as third quarter levels of deferred compensation, securities trading income and bank-owned life insurance not to repeat. Reduced card fees as economic stimulus benefits recede, offset by growth in several fee categories due to improving economic conditions.
•Increase in noninterest expenses reflects technology projects and seasonal impact of staff insurance, mostly offset by third quarter levels of deferred compensation and charitable contributions not expected to repeat.
•Maintain strong capital levels with a focus on supporting growth as well as providing an attractive return to our shareholders.
Business Segments
Comerica's operations are strategically aligned into three major business segments: the Commercial 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, Comerica 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. The financial results provided are based on the internal business unit and geographic market structures of Comerica and methodologies in effect at September 30, 2020. A discussion of business segment and geographic market year-to-date results will be included in Comerica's Third Quarter 2020 Form 10-Q.
Conference Call and Webcast
Comerica will host a conference call to review third quarter 2020 financial results at 7 a.m. CT Tuesday, October 20, 2020. Interested parties may access the conference call by calling (800) 309-2262 or (706) 679-5261 (Event ID No. 4658569). 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 Commercial 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, 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 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 include credit risks (unfavorable developments concerning credit quality; declines or other changes in the businesses or industries of Comerica's customers, in particular the energy industry; and changes in customer behavior); market risks (changes in monetary and fiscal policies; fluctuations in interest rates and their impact on deposit pricing; and transitions away from LIBOR towards new interest rate benchmarks); liquidity risks (Comerica's ability to maintain adequate sources of funding and liquidity; reductions in Comerica's credit rating; and the interdependence of financial service companies); technology risks (cybersecurity risks and heightened legislative and regulatory focus on cybersecurity and data privacy); operational risks (operational, systems or infrastructure failures; reliance on other companies to provide certain key components of business infrastructure; the impact of legal and regulatory proceedings or determinations; losses due to fraud; and controls and procedures failures); compliance risks (changes in regulation or oversight; the effects of stringent capital requirements; and the impacts of future legislative, administrative or judicial changes to tax regulations); financial reporting risks (changes in accounting standards and the critical nature of Comerica's accounting policies); strategic risks (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 implementation of Comerica's strategies and business initiatives; management's ability to maintain and expand customer relationships; management's ability to retain key officers and employees; and any future strategic acquisitions or divestitures); and other general risks (changes in general economic, political or industry conditions; the effectiveness of methods of reducing risk exposures; the effects of catastrophic events; impacts from the COVID-19 global pandemic; 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 12 of Comerica's Annual Report on Form 10-K for the year ended December 31, 2019 and "Item 1A. Risk Factors" beginning on page 65 of Comerica's Quarterly Report on Form 10-Q for the quarter ended June 30, 2020. 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 Contacts: | Investor Contacts: |
| Wendy Bridges | Darlene P. Persons |
| (214) 462-4443 | (214) 462-6831 |
| |
| Louis H. Mora | Amanda Perkins |
| (214) 462-6669 | (214) 462-6731 |
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| CONSOLIDATED FINANCIAL HIGHLIGHTS (unaudited) | | | | | | |
| Comerica Incorporated and Subsidiaries | | | | | | |
| Three Months Ended | | | | Nine Months Ended | |
| September 30, | June 30, | September 30, | | September 30, | |
| (in millions, except per share data) | 2020 | 2020 | 2019 | | 2020 | 2019 |
| PER COMMON SHARE AND COMMON STOCK DATA | | | | | | |
| Diluted earnings per common share | $ | 1.44 | | $ | 0.80 | | $ | 1.96 | | | $ | 1.78 | | $ | 6.02 | |
| | | | | | |
| Cash dividends declared | 0.68 | | 0.68 | | 0.67 | | | 2.04 | | 2.01 | |
| Average diluted shares (in thousands) | 139,673 | | 139,453 | | 148,079 | | | 140,243 | | 153,562 | |
| PERFORMANCE RATIOS | | | | | | |
| Return on average common shareholders' equity | 10.84 | % | 6.09 | % | 15.97 | % | | 4.50 | % | 16.94 | % |
| Return on average assets | 0.99 | | 0.55 | | 1.61 | | | 0.43 | | 1.75 | |
| Efficiency ratio (a) | 62.79 | | 61.14 | | 51.54 | | | 60.10 | | 50.66 | |
| CAPITAL | | | | | | |
| Common equity tier 1 capital (b), (c) | $ | 6,805 | | $ | 6,698 | | $ | 6,892 | | | | |
| Tier 1 capital (b), (c) | 7,199 | | 7,093 | | 6,892 | | | | |
| Risk-weighted assets (b) | 66,299 | | 67,052 | | 69,223 | | | | |
| Common equity tier 1 capital ratio (b), (c) | 10.26 | % | 9.99 | % | 9.96 | % | | | |
| Tier 1 capital ratio (b), (c) | 10.86 | | 10.58 | | 9.96 | | | | |
| Total capital ratio (b) | 13.14 | | 12.95 | | 11.95 | | | | |
| Leverage ratio (b) | 8.59 | | 8.75 | | 9.63 | | | | |
| Common shareholders' equity per share of common stock | $ | 53.78 | | $ | 53.28 | | $ | 49.96 | | | | |
| Tangible common equity per share of common stock (c) | 49.20 | | 48.69 | | 45.52 | | | | |
| Common equity ratio | 8.94 | % | 8.78 | % | 9.88 | % | | | |
| Tangible common equity ratio (c) | 8.24 | | 8.08 | | 9.09 | | | | |
| AVERAGE BALANCES | | | | | | |
| Commercial loans | $ | 32,226 | | $ | 33,944 | | $ | 32,329 | | | $ | 32,289 | | $ | 32,135 | |
| Real estate construction loans | 4,037 | | 3,887 | | 3,344 | | | 3,830 | | 3,301 | |
| Commercial mortgage loans | 9,978 | | 9,800 | | 9,264 | | | 9,806 | | 9,108 | |
| Lease financing | 601 | | 592 | | 578 | | | 592 | | 548 | |
| International loans | 1,052 | | 1,137 | | 1,007 | | | 1,064 | | 1,015 | |
| Residential mortgage loans | 1,961 | | 1,895 | | 1,920 | | | 1,904 | | 1,943 | |
| Consumer loans | 2,158 | | 2,243 | | 2,445 | | | 2,221 | | 2,464 | |
| Total loans | 52,013 | | 53,498 | | 50,887 | | | 51,706 | | 50,514 | |
| Earning assets | 78,555 | | 75,989 | | 66,285 | | | 74,030 | | 65,604 | |
| Total assets | 84,268 | | 81,644 | | 71,736 | | | 79,742 | | 70,927 | |
| Noninterest-bearing deposits | 35,934 | | 32,686 | | 26,339 | | | 31,809 | | 26,535 | |
| Interest-bearing deposits | 32,829 | | 31,596 | | 29,377 | | | 31,482 | | 28,374 | |
| Total deposits | 68,763 | | 64,282 | | 55,716 | | | 63,291 | | 54,909 | |
| Common shareholders' equity | 7,439 | | 7,436 | | 7,254 | | | 7,438 | | 7,332 | |
| Total shareholders' equity | 7,834 | | 7,592 | | 7,254 | | | 7,622 | | 7,332 | |
| NET INTEREST INCOME | | | | | | |
| Net interest income | $ | 458 | | $ | 471 | | $ | 586 | | | $ | 1,442 | | $ | 1,795 | |
| Net interest margin | 2.33 | % | 2.50 | % | 3.52 | % | | 2.61 | % | 3.65 | % |
| CREDIT QUALITY | | | | | | |
| Nonperforming assets | $ | 335 | | $ | 282 | | $ | 229 | | | | |
| Loans past due 90 days or more and still accruing | 29 | | 41 | | 31 | | | | |
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| Net credit-related charge-offs | 33 | | 50 | | 42 | | | $ | 167 | | $ | 86 | |
| Allowance for loan losses | 978 | | 1,007 | | 652 | | | | |
| Allowance for credit losses on lending-related commitments | 60 | | 59 | | 29 | | | | |
| Total allowance for credit losses (d) | 1,038 | | 1,066 | | 681 | | | | |
| Allowance for credit losses as a percentage of total loans | 1.98 | % | 1.99 | % | 1.32 | % | | | |
| Net credit-related charge-offs as a percentage of average total loans | 0.26 | | 0.37 | | 0.33 | | | 0.43 | % | 0.22 | % |
| Nonperforming assets as a percentage of total loans and foreclosed property | 0.64 | | 0.53 | | 0.44 | | | | |
| Allowance for credit losses as a multiple of total nonperforming loans | 3.2x | 3.9x | 3.0x | | | |
| OTHER KEY INFORMATION | | | | | | |
| Number of banking centers | 433 | | 434 | | 436 | | | | |
| Number of employees - full time equivalent | 7,738 | | 7,777 | | 7,725 | | | | |
(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) Estimated for September 30, 2020, reflects deferral of CECL model impact as calculated per regulatory guidance.
(c) See Reconciliations of Non-GAAP Financial Measures and Regulatory Ratios.
(d) Allowance for credit losses for September 30, 2020 and June 30, 2020 calculated using the CECL model effective first quarter 2020.
| | | | | | | | | | | | | | |
| CONSOLIDATED BALANCE SHEETS | | | | |
| Comerica Incorporated and Subsidiaries | | | | |
| | | | |
| September 30, | June 30, | December 31, | September 30, |
| (in millions, except share data) | 2020 | 2020 | 2019 | 2019 |
| (unaudited) | (unaudited) | | (unaudited) |
| ASSETS | | | | |
| Cash and due from banks | $ | 988 | | $ | 1,048 | | $ | 973 | | $ | 1,229 | |
| | | | |
| Interest-bearing deposits with banks | 10,153 | | 12,263 | | 4,845 | | 2,888 | |
| Other short-term investments | 160 | | 153 | | 155 | | 146 | |
| Investment securities available-for-sale | 15,090 | | 12,759 | | 12,398 | | 12,429 | |
| | | | |
| Commercial loans | 32,604 | | 33,826 | | 31,473 | | 32,890 | |
| Real estate construction loans | 4,146 | | 3,952 | | 3,455 | | 3,377 | |
| Commercial mortgage loans | 10,002 | | 9,925 | | 9,559 | | 9,234 | |
| Lease financing | 601 | | 589 | | 588 | | 578 | |
| International loans | 923 | | 1,104 | | 1,009 | | 1,055 | |
| Residential mortgage loans | 1,927 | | 1,886 | | 1,845 | | 1,906 | |
| Consumer loans | 2,166 | | 2,164 | | 2,440 | | 2,451 | |
| Total loans | 52,369 | | 53,446 | | 50,369 | | 51,491 | |
| Less allowance for loan losses | (978) | | (1,007) | | (637) | | (652) | |
| Net loans | 51,391 | | 52,439 | | 49,732 | | 50,839 | |
| Premises and equipment | 456 | | 450 | | 457 | | 467 | |
| Accrued income and other assets | 5,393 | | 5,285 | | 4,842 | | 4,850 | |
| Total assets | $ | 83,631 | | $ | 84,397 | | $ | 73,402 | | $ | 72,848 | |
| LIABILITIES AND SHAREHOLDERS' EQUITY | | | | |
| Noninterest-bearing deposits | $ | 36,533 | | $ | 35,582 | | $ | 27,382 | | $ | 27,134 | |
| Money market and interest-bearing checking deposits | 26,948 | | 26,895 | | 24,527 | | 23,992 | |
| Savings deposits | 2,588 | | 2,500 | | 2,184 | | 2,156 | |
| Customer certificates of deposit | 2,300 | | 2,656 | | 2,978 | | 2,853 | |
| Other time deposits | — | | — | | 133 | | 647 | |
| Foreign office time deposits | 90 | | 87 | | 91 | | 27 | |
| Total interest-bearing deposits | 31,926 | | 32,138 | | 29,913 | | 29,675 | |
| Total deposits | 68,459 | | 67,720 | | 57,295 | | 56,809 | |
| Short-term borrowings | 10 | | 752 | | 71 | | 51 | |
| Accrued expenses and other liabilities | 1,534 | | 1,602 | | 1,440 | | 1,477 | |
| Medium- and long-term debt | 5,754 | | 6,521 | | 7,269 | | 7,311 | |
| Total liabilities | 75,757 | | 76,595 | | 66,075 | | 65,648 | |
| Fixed-rate reset non-cumulative perpetual preferred stock, series A, no par value, $100,000 liquidation preference per share: | | | | |
| Authorized - 4,000 shares | | | | |
| Issued - 4,000 shares at 9/30/20 and 6/30/20 | 394 | | 395 | | — | | — | |
| Common stock - $5 par value: | | | | |
| Authorized - 325,000,000 shares | | | | |
| Issued - 228,164,824 shares | 1,141 | | 1,141 | | 1,141 | | 1,141 | |
| Capital surplus | 2,179 | | 2,173 | | 2,174 | | 2,172 | |
| Accumulated other comprehensive income (loss) | 116 | | 158 | | (235) | | (336) | |
| Retained earnings | 9,511 | | 9,404 | | 9,538 | | 9,369 | |
| Less cost of common stock in treasury - 89,095,470 shares at 9/30/20, 89,124,560 shares at 6/30/20, 86,069,234 shares at 12/31/19 and 84,028,400 shares at 9/30/19 | (5,467) | | (5,469) | | (5,291) | | (5,146) | |
| Total shareholders' equity | 7,874 | | 7,802 | | 7,327 | | 7,200 | |
| Total liabilities and shareholders' equity | $ | 83,631 | | $ | 84,397 | | $ | 73,402 | | $ | 72,848 | |
| | | | | | | | | | | | | | | | | |
| CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (unaudited) | | | | | |
| Comerica Incorporated and Subsidiaries | | | | | |
| | | | | |
| Three Months Ended | | | Nine Months Ended | |
| September 30, | | | September 30, | |
| (in millions, except per share data) | 2020 | 2019 | | 2020 | 2019 |
| INTEREST INCOME | | | | | |
| Interest and fees on loans | $ | 408 | | $ | 619 | | | $ | 1,359 | | $ | 1,875 | |
| Interest on investment securities | 72 | | 75 | | | 220 | | 222 | |
| Interest on short-term investments | 4 | | 17 | | | 25 | | 51 | |
| Total interest income | 484 | | 711 | | | 1,604 | | 2,148 | |
| INTEREST EXPENSE | | | | | |
| Interest on deposits | 15 | | 73 | | | 91 | | 192 | |
| Interest on short-term borrowings | — | | 2 | | | 1 | | 9 | |
| Interest on medium- and long-term debt | 11 | | 50 | | | 70 | | 152 | |
| Total interest expense | 26 | | 125 | | | 162 | | 353 | |
| Net interest income | 458 | | 586 | | | 1,442 | | 1,795 | |
| Provision for credit losses | 5 | | 35 | | | 554 | | 66 | |
| Net interest income after provision for credit losses | 453 | | 551 | | | 888 | | 1,729 | |
| NONINTEREST INCOME | | | | | |
| Card fees | 71 | | 67 | | | 198 | | 195 | |
| Fiduciary income | 51 | | 53 | | | 157 | | 154 | |
| Service charges on deposit accounts | 47 | | 51 | | | 138 | | 153 | |
| Commercial lending fees | 19 | | 23 | | | 53 | | 66 | |
| Foreign exchange income | 9 | | 11 | | | 29 | | 33 | |
| Bank-owned life insurance | 12 | | 11 | | | 33 | | 31 | |
| Letter of credit fees | 9 | | 10 | | | 27 | | 29 | |
| Brokerage fees | 5 | | 7 | | | 17 | | 21 | |
| Net securities losses | — | | — | | | — | | (8) | |
| Other noninterest income | 29 | | 23 | | | 84 | | 70 | |
| Total noninterest income | 252 | | 256 | | | 736 | | 744 | |
| NONINTEREST EXPENSES | | | | | |
| Salaries and benefits expense | 257 | | 253 | | | 748 | | 763 | |
| Outside processing fee expense | 58 | | 66 | | | 177 | | 194 | |
| Occupancy expense | 40 | | 39 | | | 114 | | 113 | |
| Software expense | 39 | | 30 | | | 115 | | 87 | |
| Equipment expense | 12 | | 13 | | | 36 | | 37 | |
| Advertising expense | 9 | | 10 | | | 24 | | 24 | |
| FDIC insurance expense | 8 | | 6 | | | 24 | | 17 | |
| Other noninterest expenses | 23 | | 18 | | | 73 | | 57 | |
| Total noninterest expenses | 446 | | 435 | | | 1,311 | | 1,292 | |
| Income before income taxes | 259 | | 372 | | | 313 | | 1,181 | |
| Provision for income taxes | 48 | | 80 | | | 54 | | 252 | |
| NET INCOME | 211 | | 292 | | | 259 | | 929 | |
| Less: | | | | | |
| Income allocated to participating securities | — | | 2 | | | 1 | | 5 | |
| Preferred stock dividends | 8 | | — | | | 8 | | — | |
| Net income attributable to common shares | $ | 203 | | $ | 290 | | | $ | 250 | | $ | 924 | |
| Earnings per common share: | | | | | |
| Basic | $ | 1.45 | | $ | 1.98 | | | $ | 1.79 | | $ | 6.08 | |
| Diluted | 1.44 | | 1.96 | | | 1.78 | | 6.02 | |
| Comprehensive income | 169 | | 338 | | | 610 | | 1,202 | |
| Cash dividends declared on common stock | 94 | | 97 | | | 284 | | 302 | |
| Cash dividends declared per common share | 0.68 | | 0.67 | | | 2.04 | | 2.01 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| CONSOLIDATED QUARTERLY STATEMENTS OF COMPREHENSIVE INCOME (unaudited) | | | | | | | | | | | |
| Comerica Incorporated and Subsidiaries | | | | | | | | | | | |
| | | | | | | | | | | |
| Third | Second | First | Fourth | Third | | Third Quarter 2020 Compared to: | | | | |
| Quarter | Quarter | Quarter | Quarter | Quarter | | Second Quarter 2020 | | | Third Quarter 2019 | |
| (in millions, except per share data) | 2020 | 2020 | 2020 | 2019 | 2019 | | Amount | Percent | | Amount | Percent |
| INTEREST INCOME | | | | | | | | | | | |
| Interest and fees on loans | $ | 408 | | $ | 434 | | $ | 517 | | $ | 564 | | $ | 619 | | | $ | (26) | | (6) | % | | $ | (211) | | (34) | % |
| Interest on investment securities | 72 | | 74 | | 74 | | 75 | | 75 | | | (2) | | (2) | | | (3) | | (3) | |
| Interest on short-term investments | 4 | | 3 | | 18 | | 20 | | 17 | | | 1 | | 20 | | | (13) | | (80) | |
| Total interest income | 484 | | 511 | | 609 | | 659 | | 711 | | | (27) | | (5) | | | (227) | | (32) | |
| INTEREST EXPENSE | | | | | | | | | | | |
| Interest on deposits | 15 | | 20 | | 56 | | 70 | | 73 | | | (5) | | (31) | | | (58) | | (81) | |
| Interest on short-term borrowings | — | | 1 | | — | | — | | 2 | | | (1) | | n/m | | (2) | | n/m |
| Interest on medium- and long-term debt | 11 | | 19 | | 40 | | 45 | | 50 | | | (8) | | (41) | | | (39) | | (77) | |
| Total interest expense | 26 | | 40 | | 96 | | 115 | | 125 | | | (14) | | (36) | | | (99) | | (79) | |
| Net interest income | 458 | | 471 | | 513 | | 544 | | 586 | | | (13) | | (3) | | (128) | | (22) |
| Provision for credit losses | 5 | | 138 | | 411 | | 8 | | 35 | | | (133) | | (96) | | | (30) | | (86) |
Net interest income after provision for credit losses | 453 | | 333 | | 102 | | 536 | | 551 | | | 120 | | 37 | | (98) | | (18) |
| NONINTEREST INCOME | | | | | | | | | | | |
| Card fees | 71 | | 68 | | 59 | | 62 | | 67 | | | 3 | | 3 | | | 4 | | 6 | |
| Fiduciary income | 51 | | 52 | | 54 | | 52 | | 53 | | | (1) | | (1) | | | (2) | | (4) | |
| Service charges on deposit accounts | 47 | | 42 | | 49 | | 50 | | 51 | | | 5 | | 10 | | | (4) | | (9) | |
| Commercial lending fees | 19 | | 17 | | 17 | | 25 | | 23 | | | 2 | | 13 | | | (4) | | (17) | |
| Foreign exchange income | 9 | | 9 | | 11 | | 11 | | 11 | | | — | | — | | | (2) | | (15) | |
| Bank-owned life insurance | 12 | | 9 | | 12 | | 10 | | 11 | | | 3 | | 29 | | | 1 | | 11 | |
| Letter of credit fees | 9 | | 9 | | 9 | | 9 | | 10 | | | — | | — | | | (1) | | (7) | |
| Brokerage fees | 5 | | 5 | | 7 | | 7 | | 7 | | | — | | — | | | (2) | | (30) | |
| Net securities gains (losses) | — | | 1 | | (1) | | 1 | | — | | | (1) | | n/m | | — | | — | |
| Other noninterest income | 29 | | 35 | | 20 | | 39 | | 23 | | | (6) | | (19) | | | 6 | | 18 | |
| Total noninterest income | 252 | | 247 | | 237 | | 266 | | 256 | | | 5 | | 2 | | | (4) | | (2) | |
| NONINTEREST EXPENSES | | | | | | | | | | | |
| Salaries and benefits expense | 257 | | 249 | | 242 | | 257 | | 253 | | | 8 | | 3 | | | 4 | | 1 | |
| Outside processing fee expense | 58 | | 62 | | 57 | | 70 | | 66 | | | (4) | | (5) | | | (8) | | (11) | |
| Occupancy expense | 40 | | 37 | | 37 | | 41 | | 39 | | | 3 | | 9 | | | 1 | | 2 | |
| Software expense | 39 | | 39 | | 37 | | 30 | | 30 | | | — | | — | | | 9 | | 33 | |
| Equipment expense | 12 | | 12 | | 12 | | 13 | | 13 | | | — | | — | | | (1) | | (1) | |
| Advertising expense | 9 | | 8 | | 7 | | 10 | | 10 | | | 1 | | 29 | | | (1) | | (4) | |
| FDIC insurance expense | 8 | | 8 | | 8 | | 6 | | 6 | | | — | | — | | | 2 | | 23 | |
| Other noninterest expenses | 23 | | 25 | | 25 | | 24 | | 18 | | | (2) | | (11) | | | 5 | | 22 | |
| Total noninterest expenses | 446 | | 440 | | 425 | | 451 | | 435 | | | 6 | | 2 | | | 11 | | 3 | |
| Income (loss) before income taxes | 259 | | 140 | | (86) | | 351 | | 372 | | | 119 | | 85 | | (113) | | (31) |
| Provision (benefit) for income taxes | 48 | | 27 | | (21) | | 82 | | 80 | | | 21 | | 75 | | (32) | | (41) |
| NET INCOME (LOSS) | 211 | | 113 | | (65) | | 269 | | 292 | | | 98 | | 87 | | (81) | | (28) |
| Less: | | | | | | | | | | | |
| Income allocated to participating securities | — | | 1 | | — | | 2 | | 2 | | | (1) | | n/m | | (2) | | n/m |
| Preferred stock dividends | 8 | | — | | — | | — | | — | | | 8 | | n/m | | 8 | | n/m |
| Net income (loss) attributable to common shares | $ | 203 | | $ | 112 | | $ | (65) | | $ | 267 | | $ | 290 | | | $ | 91 | | 80% | | $ | (87) | | (31) | % |
| Earnings (losses) per common share: | | | | | | | | | | | |
| Basic | $ | 1.45 | | $ | 0.81 | | $ | (0.46) | | $ | 1.87 | | $ | 1.98 | | | $ | 0.64 | | 80 | % | | $ | (0.53) | | (27) | % |
| Diluted | 1.44 | | 0.80 | | (0.46) | | 1.85 | | 1.96 | | | 0.64 | | 80 | | | (0.52) | | (26) | |
| Comprehensive income | 169 | | 97 | | 344 | | 370 | | 338 | | | 72 | | 74 | | (169) | | (50) |
| Cash dividends declared on common stock | 94 | | 98 | | 94 | | 96 | | 97 | | | (4) | | (4) | | (3) | | (3) |
| Cash dividends declared per common share | 0.68 | | 0.68 | | 0.68 | | 0.67 | | 0.67 | | | — | | — | | 0.01 | | 1 |
n/m - not meaningful
| | | | | | | | | | | | | | | | | | | | | | |
| ANALYSIS OF THE ALLOWANCE FOR CREDIT LOSSES (unaudited) | | | | | | | | |
| Comerica Incorporated and Subsidiaries | | | | | | | | |
| | | | | | | | |
| 2020 | | | | | | 2019 | |
| (in millions) | 3rd Qtr | 2nd Qtr | | | 1st Qtr | | 4th Qtr | 3rd Qtr |
| Balance at beginning of period: | | | | | | | | |
| Allowance for loan losses | $ | 1,007 | | $ | 916 | | | | $ | 637 | | | $ | 652 | | $ | 657 | |
| Allowance for credit losses on lending-related commitments | 59 | | 62 | | | | 31 | | | 29 | | 31 | |
| Allowance for credit losses | 1,066 | | 978 | | | | 668 | | | 681 | | 688 | |
| Cumulative effect of change in accounting principle | — | | — | | | | (17) | | | — | | — | |
| Loan charge-offs: | | | | | | | | |
| Commercial | 53 | | 55 | | | | 87 | | | 24 | | 59 | |
| | | | | | | | |
| Commercial mortgage | — | | 1 | | | | — | | | 2 | | — | |
| | | | | | | | |
| | | | | | | | |
| Residential mortgage | — | | — | | | | — | | | — | | 1 | |
| Consumer | — | | 1 | | | | 2 | | | 1 | | 1 | |
| Total loan charge-offs | 53 | | 57 | | | | 89 | | | 27 | | 61 | |
| | | | | | | | |
| Recoveries on loans previously charged-off: | | | | | | | | |
| Commercial | 17 | | 5 | | | | 3 | | | 3 | | 17 | |
| | | | | | | | |
| Commercial mortgage | 1 | | 1 | | | | 2 | | | 1 | | — | |
| | | | | | | | |
| International | — | | — | | | | — | | | 1 | | — | |
| Residential mortgage | — | | — | | | | — | | | — | | 1 | |
| Consumer | 2 | | 1 | | | | — | | | 1 | | 1 | |
| Total recoveries | 20 | | 7 | | | | 5 | | | 6 | | 19 | |
| Net loan charge-offs | 33 | | 50 | | | | 84 | | | 21 | | 42 | |
| Provision for credit losses: | | | | | | | | |
| Provision for loan losses | 4 | | 141 | | | | 380 | | | 6 | | 37 | |
| Provision for credit losses on lending-related commitments | 1 | | (3) | | | | 31 | | | 2 | | (2) | |
| Provision for credit losses | 5 | | 138 | | | | 411 | | | 8 | | 35 | |
| | | | | | | | |
| Balance at end of period: | | | | | | | | |
| Allowance for loan losses | 978 | | 1,007 | | | | 916 | | | 637 | | 652 | |
| Allowance for credit losses on lending-related commitments | 60 | | 59 | | | | 62 | | | 31 | | 29 | |
| Allowance for credit losses | $ | 1,038 | | $ | 1,066 | | | | $ | 978 | | | $ | 668 | | $ | 681 | |
| | | | | | | | |
| Allowance for loan losses as a percentage of total loans | 1.87 | % | 1.88 | % | | | 1.71 | % | | 1.27 | % | 1.27 | % |
| Allowance for loan losses as a percentage of total loans excluding PPP loans | 2.01 | | 2.03 | | | | n/a | | n/a | n/a |
| Allowance for credit losses as a percentage of total loans | 1.98 | | 1.99 | | | | 1.83 | | | 1.33 | | 1.32 | |
| Allowance for credit losses as a percentage of total loans excluding PPP loans | 2.14 | | 2.15 | | | | n/a | | n/a | n/a |
| Net loan charge-offs as a percentage of average total loans | 0.26 | | 0.37 | | | | 0.68 | | | 0.16 | | 0.33 | |
| | | | | | | | |
| | | | | | | | |
n/a - not applicable
| | | | | | | | | | | | | | | | | | | | | | |
| NONPERFORMING ASSETS (unaudited) | | | | | | | | |
| Comerica Incorporated and Subsidiaries | | | | | | | | |
| | | | | | | | |
| 2020 | | | | | | 2019 | |
| (in millions) | 3rd Qtr | 2nd Qtr | | | 1st Qtr | | 4th Qtr | 3rd Qtr |
| SUMMARY OF NONPERFORMING ASSETS AND PAST DUE LOANS | | | | | | | | |
| Nonaccrual loans: | | | | | | | | |
| Business loans: | | | | | | | | |
| Commercial | $ | 241 | | $ | 200 | | | | $ | 173 | | | $ | 148 | | $ | 152 | |
| | | | | | | | |
| Commercial mortgage | 20 | | 21 | | | | 19 | | | 14 | | 13 | |
| Lease financing | 1 | | 1 | | | | 1 | | | — | | — | |
| International | — | | — | | | | — | | | — | | 2 | |
| Total nonaccrual business loans | 262 | | 222 | | | | 193 | | | 162 | | 167 | |
| Retail loans: | | | | | | | | |
| Residential mortgage | 40 | | 24 | | | | 20 | | | 20 | | 36 | |
| Consumer: | | | | | | | | |
| Home equity | 20 | | 21 | | | | 22 | | | 17 | | 17 | |
| | | | | | | | |
| Total nonaccrual retail loans | 60 | | 45 | | | | 42 | | | 37 | | 53 | |
| Total nonaccrual loans | 322 | | 267 | | | | 235 | | | 199 | | 220 | |
| Reduced-rate loans | 3 | | 4 | | | | 4 | | | 5 | | 6 | |
| Total nonperforming loans | 325 | | 271 | | | | 239 | | | 204 | | 226 | |
| Foreclosed property | 10 | | 11 | | | | 11 | | | 11 | | 3 | |
| Total nonperforming assets | $ | 335 | | $ | 282 | | | | $ | 250 | | | $ | 215 | | $ | 229 | |
| Nonperforming loans as a percentage of total loans | 0.62 | % | 0.51 | % | | | 0.45 | % | | 0.40 | % | 0.44 | % |
| Nonperforming assets as a percentage of total loans and foreclosed property | 0.64 | | 0.53 | | | | 0.47 | | | 0.43 | | 0.44 | |
| Allowance for credit losses as a multiple of total nonperforming loans | 3.2x | 3.9x | | | 4.1x | | 3.3x | 3.0x |
| Loans past due 90 days or more and still accruing | $ | 29 | | $ | 41 | | | | $ | 64 | | | $ | 26 | | $ | 31 | |
| ANALYSIS OF NONACCRUAL LOANS | | | | | | | | |
| Nonaccrual loans at beginning of period | $ | 267 | | $ | 235 | | | | $ | 199 | | | $ | 220 | | $ | 224 | |
| Loans transferred to nonaccrual (a) | 161 | | 96 | | | | 137 | | | 48 | | 85 | |
| Nonaccrual loan gross charge-offs | (53) | | (57) | | | | (89) | | | (27) | | (61) | |
| Loans transferred to accrual status (a) | — | | — | | | | — | | | (7) | | — | |
| Nonaccrual loans sold | (14) | | — | | | | — | | | (10) | | — | |
| Payments/Other (b) | (39) | | (7) | | | | (12) | | | (25) | | (28) | |
| Nonaccrual loans at end of period | $ | 322 | | $ | 267 | | | | $ | 235 | | | $ | 199 | | $ | 220 | |
(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 | | | | | | | |
| | | | | | | |
| Nine Months Ended | | | | | | |
| September 30, 2020 | | | | September 30, 2019 | | |
| Average | | Average | | Average | | Average |
| (dollar amounts in millions) | Balance | Interest | Rate | | Balance | Interest | Rate |
| Commercial loans (a) | $ | 32,289 | | $ | 840 | | 3.48 | % | | $ | 32,135 | | $ | 1,191 | | 4.96 | % |
| Real estate construction loans | 3,830 | | 112 | | 3.90 | | | 3,301 | | 140 | | 5.67 | |
| Commercial mortgage loans | 9,806 | | 248 | | 3.38 | | | 9,108 | | 342 | | 5.02 | |
| Lease financing | 592 | | 15 | | 3.30 | | | 548 | | 14 | | 3.34 | |
| International loans | 1,064 | | 30 | | 3.73 | | | 1,015 | | 40 | | 5.26 | |
| Residential mortgage loans | 1,904 | | 50 | | 3.52 | | | 1,943 | | 56 | | 3.87 | |
| Consumer loans | 2,221 | | 64 | | 3.90 | | | 2,464 | | 92 | | 4.98 | |
| Total loans | 51,706 | | 1,359 | | 3.51 | | | 50,514 | | 1,875 | | 4.96 | |
| Mortgage-backed securities (b) | 9,686 | | 168 | | 2.36 | | | 9,320 | | 172 | | 2.44 | |
| U.S. Treasury securities (c) | 3,258 | | 52 | | 2.18 | | | 2,764 | | 50 | | 2.42 | |
| Total investment securities | 12,944 | | 220 | | 2.31 | | | 12,084 | | 222 | | 2.43 | |
| Interest-bearing deposits with banks | 9,229 | | 24 | | 0.35 | | | 2,866 | | 49 | | 2.29 | |
| Other short-term investments | 151 | | 1 | | 0.62 | | | 140 | | 2 | | 1.32 | |
| Total earning assets | 74,030 | | 1,604 | | 2.91 | | | 65,604 | | 2,148 | | 4.37 | |
| Cash and due from banks | 866 | | | | | 896 | | | |
| Allowance for loan losses | (876) | | | | | (668) | | | |
| Accrued income and other assets | 5,722 | | | | | 5,095 | | | |
| Total assets | $ | 79,742 | | | | | $ | 70,927 | | | |
| Money market and interest-bearing checking deposits | $ | 26,220 | | 65 | | 0.33 | | | $ | 23,010 | | 157 | | 0.91 | |
| Savings deposits | 2,386 | | 1 | | 0.03 | | | 2,164 | | 1 | | 0.04 | |
| Customer certificates of deposit | 2,764 | | 25 | | 1.18 | | | 2,383 | | 19 | | 1.09 | |
| Other time deposits | 23 | | — | | 2.00 | | | 804 | | 15 | | 2.45 | |
| Foreign office time deposits | 89 | | — | | 0.54 | | | 13 | | — | | 1.51 | |
| Total interest-bearing deposits | 31,482 | | 91 | | 0.39 | | | 28,374 | | 192 | | 0.91 | |
| Short-term borrowings | 418 | | 1 | | 0.32 | | | 472 | | 9 | | 2.43 | |
| Medium- and long-term debt | 6,821 | | 70 | | 1.38 | | | 6,837 | | 152 | | 2.97 | |
| Total interest-bearing sources | 38,721 | | 162 | | 0.56 | | | 35,683 | | 353 | | 1.32 | |
| Noninterest-bearing deposits | 31,809 | | | | | 26,535 | | | |
| Accrued expenses and other liabilities | 1,590 | | | | | 1,377 | | | |
| Shareholders' equity | 7,622 | | | | | 7,332 | | | |
| Total liabilities and shareholders' equity | $ | 79,742 | | | | | $ | 70,927 | | | |
| Net interest income/rate spread | | $ | 1,442 | | 2.35 | | | | $ | 1,795 | | 3.05 | |
| | | | | | | |
| | | | | | | |
| Impact of net noninterest-bearing sources of funds | | | 0.26 | | | | | 0.60 | |
| Net interest margin (as a percentage of average earning assets) | | | 2.61 | % | | | | 3.65 | % |
| | | | | | | |
(a)Includes PPP loans with average balance of $2.1 billion, interest income of $36 million and average yield of 2.27% for the nine months ended September 30, 2020.
(b)Average balances included $212 million and $(62) million of unrealized gains and losses for the nine months ended September 30, 2020 and 2019, respectively; yields calculated gross of these unrealized gains and losses.
(c)Average balances included $94 million and $23 million of unrealized gains and losses for the nine months ended September 30, 2020 and 2019, respectively; yields calculated gross of these unrealized gains and losses.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| ANALYSIS OF NET INTEREST INCOME (unaudited) | | | | | | | | | | | |
| Comerica Incorporated and Subsidiaries | | | | | | | | | | | |
| | | | | | | | | | | |
| Three Months Ended | | | | | | | | | | |
| September 30, 2020 | | | | June 30, 2020 | | | | September 30, 2019 | | |
| Average | | Average | | Average | | Average | | Average | | Average |
| (dollar amounts in millions) | Balance | Interest | Rate | | Balance | Interest | Rate | | Balance | Interest | Rate |
| Commercial loans (a) | $ | 32,226 | | $ | 255 | | 3.15 | % | | $ | 33,944 | | $ | 271 | | 3.22 | % | | $ | 32,329 | | $ | 392 | | 4.82 | % |
| Real estate construction loans | 4,037 | | 34 | | 3.35 | | | 3,887 | | 35 | | 3.60 | | | 3,344 | | 47 | | 5.53 | |
| Commercial mortgage loans | 9,978 | | 71 | | 2.85 | | | 9,800 | | 76 | | 3.12 | | | 9,264 | | 112 | | 4.82 | |
| Lease financing | 601 | | 5 | | 2.94 | | | 592 | | 5 | | 3.34 | | | 578 | | 6 | | 3.83 | |
| International loans | 1,052 | | 9 | | 3.25 | | | 1,137 | | 10 | | 3.51 | | | 1,007 | | 13 | | 5.12 | |
| Residential mortgage loans | 1,961 | | 16 | | 3.41 | | | 1,895 | | 17 | | 3.49 | | | 1,920 | | 18 | | 3.84 | |
| Consumer loans | 2,158 | | 18 | | 3.45 | | | 2,243 | | 20 | | 3.62 | | | 2,445 | | 31 | | 4.92 | |
| Total loans | 52,013 | | 408 | | 3.13 | | | 53,498 | | 434 | | 3.26 | | | 50,887 | | 619 | | 4.83 | |
| Mortgage-backed securities (b) | 9,759 | | 54 | | 2.28 | | | 9,785 | | 57 | | 2.39 | | | 9,408 | | 58 | | 2.45 | |
| U.S. Treasury securities (c) | 4,091 | | 18 | | 1.77 | | | 2,857 | | 17 | | 2.47 | | | 2,795 | | 17 | | 2.45 | |
| Total investment securities | 13,850 | | 72 | | 2.13 | | | 12,642 | | 74 | | 2.41 | | | 12,203 | | 75 | | 2.45 | |
| Interest-bearing deposits with banks | 12,534 | | 4 | | 0.10 | | | 9,709 | | 2 | | 0.11 | | | 3,049 | | 16 | | 2.13 | |
| Other short-term investments | 158 | | — | | 0.29 | | | 140 | | 1 | | 0.48 | | | 146 | | 1 | | 1.28 | |
| Total earning assets | 78,555 | | 484 | | 2.47 | | | 75,989 | | 511 | | 2.71 | | | 66,285 | | 711 | | 4.26 | |
| Cash and due from banks | 911 | | | | | 848 | | | | | 864 | | | |
| Allowance for loan losses | (1,002) | | | | | (932) | | | | | (673) | | | |
| Accrued income and other assets | 5,804 | | | | | 5,739 | | | | | 5,260 | | | |
| Total assets | $ | 84,268 | | | | | $ | 81,644 | | | | | $ | 71,736 | | | |
| Money market and interest-bearing checking deposits | $ | 27,671 | | 8 | | 0.12 | | | $ | 26,320 | | 12 | | 0.18 | | | $ | 23,497 | | 57 | | 0.97 | |
| Savings deposits | 2,560 | | 1 | | 0.02 | | | 2,394 | | — | | 0.02 | | | 2,155 | | 1 | | 0.04 | |
| Customer certificates of deposit | 2,495 | | 6 | | 0.87 | | | 2,801 | | 8 | | 1.21 | | | 2,627 | | 8 | | 1.30 | |
| Other time deposits | — | | — | | — | | | — | | — | | — | | | 1,085 | | 7 | | 2.46 | |
| Foreign office time deposits | 103 | | — | | 0.10 | | | 81 | | — | | 0.34 | | | 13 | | — | | 1.45 | |
| Total interest-bearing deposits | 32,829 | | 15 | | 0.17 | | | 31,596 | | 20 | | 0.26 | | | 29,377 | | 73 | | 0.99 | |
| Short-term borrowings | 218 | | — | | 0.25 | | | 882 | | 1 | | 0.25 | | | 268 | | 2 | | 2.33 | |
| Medium- and long-term debt | 5,940 | | 11 | | 0.78 | | | 7,206 | | 19 | | 1.09 | | | 7,100 | | 50 | | 2.78 | |
| Total interest-bearing sources | 38,987 | | 26 | | 0.27 | | | 39,684 | | 40 | | 0.41 | | | 36,745 | | 125 | | 1.34 | |
| Noninterest-bearing deposits | 35,934 | | | | | 32,686 | | | | | 26,339 | | | |
| Accrued expenses and other liabilities | 1,513 | | | | | 1,682 | | | | | 1,398 | | | |
| Shareholders' equity | 7,834 | | | | | 7,592 | | | | | 7,254 | | | |
| Total liabilities and shareholders' equity | $ | 84,268 | | | | | $ | 81,644 | | | | | $ | 71,736 | | | |
| Net interest income/rate spread | | $ | 458 | | 2.20 | | | | $ | 471 | | 2.30 | | | | $ | 586 | | 2.92 | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| Impact of net noninterest-bearing sources of funds | | | 0.13 | | | | | 0.20 | | | | | 0.60 | |
| Net interest margin (as a percentage of average earning assets) | | | 2.33 | % | | | | 2.50 | % | | | | 3.52 | % |
| | | | | | | | | | | |
(a)Includes PPP loans with average balance of $3.8 billion and $2.6 billion, interest income of $22 million and $14 million and average yields of 2.31% and 2.21% for the three months ended September 30, 2020 and June 30, 2020, respectively.
(b)Average balances included $254 million, $278 million and $28 million of unrealized gains and losses for the three months ended September 30, 2020, June 30, 2020 and September 30, 2019, respectively; yields calculated gross of these unrealized gains and losses.
(c)Average balances included $99 million, $111 million and $51 million of unrealized gains and losses for the three months ended September 30, 2020, June 30, 2020 and September 30, 2019, respectively; yields calculated gross of these unrealized gains and losses.
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (unaudited) | | | | | | | | |
| Comerica Incorporated and Subsidiaries | | | | | | | | |
| | | | | | | | |
| | | | | Accumulated | | | |
| Nonredeemable | Common Stock | | | Other | | | Total |
| Preferred | Shares | | Capital | Comprehensive | Retained | Treasury | Shareholders' |
| (in millions, except per share data) | Stock | Outstanding | Amount | Surplus | Income (Loss) | Earnings | Stock | Equity |
| BALANCE AT JUNE 30, 2019 | $ | — | | 149.8 | | $ | 1,141 | | $ | 2,168 | | $ | (382) | | $ | 9,176 | | $ | (4,780) | | $ | 7,323 | |
| | | | | | | | |
| Net income | — | | — | | — | | — | | — | | 292 | | — | | 292 | |
| Other comprehensive income, net of tax | — | | — | | — | | — | | 46 | | — | | — | | 46 | |
| Cash dividends declared on common stock ($0.67 per share) | — | | — | | — | | — | | — | | (97) | | — | | (97) | |
| Purchase of common stock | — | | (5.7) | | — | | — | | — | | — | | (370) | | (370) | |
| | | | | | | | |
| Net issuance of common stock under employee stock plans | — | | — | | — | | (1) | | — | | (2) | | 4 | | 1 | |
| | | | | | | | |
| Share-based compensation | — | | — | | — | | 5 | | — | | — | | — | | 5 | |
| | | | | | | | |
| BALANCE AT SEPTEMBER 30, 2019 | $ | — | | 144.1 | | $ | 1,141 | | $ | 2,172 | | $ | (336) | | $ | 9,369 | | $ | (5,146) | | $ | 7,200 | |
| BALANCE AT JUNE 30, 2020 | $ | 395 | | 139.0 | | $ | 1,141 | | $ | 2,173 | | $ | 158 | | $ | 9,404 | | $ | (5,469) | | $ | 7,802 | |
| | | | | | | | |
| Net income | — | | — | | — | | — | | — | | 211 | | — | | 211 | |
| Other comprehensive loss, net of tax | — | | — | | — | | — | | (42) | | — | | — | | (42) | |
| Cash dividends declared on common stock ($0.68 per share) | — | | — | | — | | — | | — | | (94) | | — | | (94) | |
| Cash dividends declared on preferred stock | — | | — | | — | | — | | — | | (8) | | — | | (8) | |
| | | | | | | | |
| Issuance of preferred stock | (1) | | — | | — | | — | | — | | — | | — | | (1) | |
| Net issuance of common stock under employee stock plans | — | | 0.1 | | — | | — | | — | | (2) | | 2 | | — | |
| Share-based compensation | — | | — | | — | | 6 | | — | | — | | — | | 6 | |
| | | | | | | | |
| BALANCE AT SEPTEMBER 30, 2020 | $ | 394 | | 139.1 | | $ | 1,141 | | $ | 2,179 | | $ | 116 | | $ | 9,511 | | $ | (5,467) | | $ | 7,874 | |
| BALANCE AT DECEMBER 31, 2018 | $ | — | | 160.1 | | $ | 1,141 | | $ | 2,148 | | $ | (609) | | $ | 8,781 | | $ | (3,954) | | $ | 7,507 | |
Cumulative effect of change in accounting principle
| — | | — | | — | | — | | — | | (14) | | — | | (14) | |
| Net income | — | | — | | — | | — | | — | | 929 | | — | | 929 | |
| Other comprehensive income, net of tax | — | | — | | — | | — | | 273 | | — | | — | | 273 | |
| Cash dividends declared on common stock ($2.01 per share) | — | | — | | — | | — | | — | | (302) | | — | | (302) | |
| Purchase of common stock | — | | (16.6) | | — | | — | | — | | — | | (1,229) | | (1,229) | |
| | | | | | | | |
| Net issuance of common stock under employee stock plans | — | | 0.6 | | — | | (13) | | — | | (25) | | 37 | | (1) | |
| | | | | | | | |
| Share-based compensation | — | | — | | — | | 37 | | — | | — | | — | | 37 | |
| | | | | | | | |
| BALANCE AT SEPTEMBER 30, 2019 | $ | — | | 144.1 | | $ | 1,141 | | $ | 2,172 | | $ | (336) | | $ | 9,369 | | $ | (5,146) | | $ | 7,200 | |
| BALANCE AT DECEMBER 31, 2019 | $ | — | | 142.1 | | $ | 1,141 | | $ | 2,174 | | $ | (235) | | $ | 9,538 | | $ | (5,291) | | $ | 7,327 | |
| Cumulative effect of change in accounting principle | — | | — | | — | | — | | — | | 13 | | — | | 13 | |
| Net income | — | | — | | — | | — | | — | | 259 | | — | | 259 | |
| | | | | | | | |
| Other comprehensive income, net of tax | — | | — | | — | | — | | 351 | | — | | — | | 351 | |
| Cash dividends declared on common stock ($2.04 per share) | — | | — | | — | | — | | — | | (284) | | — | | (284) | |
| Cash dividends declared on preferred stock | — | | — | | — | | — | | — | | (8) | | — | | (8) | |
| Purchase of common stock | — | | (3.4) | | — | | — | | — | | — | | (194) | | (194) | |
| Issuance of preferred stock | 394 | | — | | — | | — | | — | | — | | — | | 394 | |
| | | | | | | | |
| Net issuance of common stock under employee stock plans | — | | 0.4 | | — | | (13) | | — | | (7) | | 18 | | (2) | |
| | | | | | | | |
| Share-based compensation | — | | — | | — | | 18 | | — | | — | | — | | 18 | |
| | | | | | | | |
| BALANCE AT SEPTEMBER 30, 2020 | $ | 394 | | 139.1 | | $ | 1,141 | | $ | 2,179 | | $ | 116 | | $ | 9,511 | | $ | (5,467) | | $ | 7,874 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| BUSINESS SEGMENT FINANCIAL RESULTS (unaudited) | | | | | | | | | | | |
| Comerica Incorporated and Subsidiaries | | | | | | | | | | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| (dollar amounts in millions) | Commercial | | Retail | | Wealth | | | | | | |
| Three Months Ended September 30, 2020 | Bank | | Bank | | Management | | Finance | | Other | | Total |
| Earnings summary: | | | | | | | | | | | |
| Net interest income (expense) | $ | 413 | | | $ | 127 | | | $ | 42 | | | $ | (125) | | | $ | 1 | | | $ | 458 | |
| Provision for credit losses | 14 | | | (2) | | | (7) | | | — | | | — | | | 5 | |
| Noninterest income | 135 | | | 28 | | | 64 | | | 16 | | | 9 | | | 252 | |
| Noninterest expenses | 206 | | | 153 | | | 76 | | | — | | | 11 | | | 446 | |
| Provision (benefit) for income taxes | 67 | | | — | | | 8 | | | (26) | | | (1) | | | 48 | |
| Net income (loss) | $ | 261 | | | $ | 4 | | | $ | 29 | | | $ | (83) | | | $ | — | | | $ | 211 | |
| Net credit-related charge-offs (recoveries) | $ | 36 | | | $ | (1) | | | $ | (2) | | | $ | — | | | $ | — | | | $ | 33 | |
| Selected average balances: | | | | | | | | | | | |
| Assets | $ | 45,636 | | | $ | 3,487 | | | $ | 5,198 | | | $ | 15,909 | | | $ | 14,038 | | | $ | 84,268 | |
| Loans | 44,248 | | | 2,678 | | | 5,094 | | | — | | | (7) | | | 52,013 | |
| Deposits | 39,535 | | | 23,604 | | | 4,439 | | | 1,004 | | | 181 | | | 68,763 | |
| Statistical data: | | | | | | | | | | | |
| Return on average assets (a) | 2.27 | % | | 0.05 | % | | 2.24 | % | | n/m | | n/m | | 0.99 | % |
| Efficiency ratio (b) | 37.60 | | | 98.29 | | | 71.72 | | | n/m | | n/m | | 62.79 | |
| | | | | | | | | | | |
| Commercial | | Retail | | Wealth | | | | | | |
| Three Months Ended June 30, 2020 | Bank | | Bank | | Management | | Finance | | Other | | Total |
| Earnings summary: | | | | | | | | | | | |
| Net interest income (expense) | $ | 402 | | | $ | 120 | | | $ | 40 | | | $ | (95) | | | $ | 4 | | | $ | 471 | |
| Provision for credit losses | 117 | | | 5 | | | 16 | | | — | | | — | | | 138 | |
| Noninterest income | 144 | | | 24 | | | 66 | | | 11 | | | 2 | | | 247 | |
| Noninterest expenses | 207 | | | 155 | | | 73 | | | 1 | | | 4 | | | 440 | |
| Provision (benefit) for income taxes | 47 | | | (4) | | | 3 | | | (20) | | | 1 | | | 27 | |
| Net income (loss) | $ | 175 | | | $ | (12) | | | $ | 14 | | | $ | (65) | | | $ | 1 | | | $ | 113 | |
| Net credit-related charge-offs | $ | 48 | | | $ | 1 | | | $ | 1 | | | $ | — | | | $ | — | | | $ | 50 | |
| Selected average balances: | | | | | | | | | | | |
| Assets | $ | 47,392 | | | $ | 3,306 | | | $ | 5,191 | | | $ | 14,500 | | | $ | 11,255 | | | $ | 81,644 | |
| Loans | 45,914 | | | 2,479 | | | 5,077 | | | — | | | 28 | | | 53,498 | |
| Deposits | 36,318 | | | 22,647 | | | 4,217 | | | 950 | | | 150 | | | 64,282 | |
| Statistical data: | | | | | | | | | | | |
| Return on average assets (a) | 1.49 | % | | (0.21 | %) | | 1.00 | % | | n/m | | n/m | | 0.55 | % |
| Efficiency ratio (b) | 37.67 | | | 107.15 | | | 69.86 | | | n/m | | n/m | | 61.14 | |
| | | | | | | | | | | |
| Commercial | | Retail | | Wealth | | | | | | |
| Three Months Ended September 30, 2019 | Bank | | Bank | | Management | | Finance | | Other | | Total |
| Earnings summary: | | | | | | | | | | | |
| Net interest income (expense) | $ | 420 | | | $ | 142 | | | $ | 47 | | | $ | (38) | | | $ | 15 | | | $ | 586 | |
| Provision for credit losses | 39 | | | (2) | | | (3) | | | — | | | 1 | | | 35 | |
| Noninterest income | 140 | | | 31 | | | 69 | | | 12 | | | 4 | | | 256 | |
| Noninterest expenses | 199 | | | 149 | | | 69 | | | (1) | | | 19 | | | 435 | |
| Provision (benefit) for income taxes | 74 | | | 5 | | | 12 | | | (8) | | | (3) | | | 80 | |
| Net income (loss) | $ | 248 | | | $ | 21 | | | $ | 38 | | | $ | (17) | | | $ | 2 | | | $ | 292 | |
| Net credit-related charge-offs (recoveries) | $ | 43 | | | $ | 1 | | | $ | (2) | | | $ | — | | | $ | — | | | $ | 42 | |
| Selected average balances: | | | | | | | | | | | |
| Assets | $ | 45,460 | | | $ | 2,871 | | | $ | 5,032 | | | $ | 14,061 | | | $ | 4,312 | | | $ | 71,736 | |
| Loans | 43,904 | | | 2,114 | | | 4,884 | | | — | | | (15) | | | 50,887 | |
| Deposits | 28,917 | | | 20,761 | | | 3,775 | | | 2,049 | | | 214 | | | 55,716 | |
| Statistical data: | | | | | | | | | | | |
| Return on average assets (a) | 2.17 | % | | 0.39 | % | | 3.01 | % | | n/m | | n/m | | 1.61 | % |
| Efficiency ratio (b) | 35.62 | | | 84.54 | | | 59.79 | | | n/m | | n/m | | 51.54 | |
(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.
n/m - not meaningful
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| MARKET SEGMENT FINANCIAL RESULTS (unaudited) | | | | | | | | | | | |
| Comerica Incorporated and Subsidiaries | | | | | | | | | | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| (dollar amounts in millions) | | | | | | | Other | | Finance | | |
| Three Months Ended September 30, 2020 | Michigan | | California | | Texas | | Markets | | & Other | | Total |
| Earnings summary: | | | | | | | | | | | |
| Net interest income (expense) | $ | 168 | | | $ | 179 | | | $ | 117 | | | $ | 118 | | | $ | (124) | | | $ | 458 | |
| Provision for credit losses | 19 | | | 11 | | | (25) | | | — | | | — | | | 5 | |
| Noninterest income | 66 | | | 33 | | | 28 | | | 100 | | | 25 | | | 252 | |
| Noninterest expenses | 139 | | | 102 | | | 89 | | | 105 | | | 11 | | | 446 | |
| Provision (benefit) for income taxes | 13 | | | 21 | | | 17 | | | 24 | | | (27) | | | 48 | |
| Net income (loss) | $ | 63 | | | $ | 78 | | | $ | 64 | | | $ | 89 | | | $ | (83) | | | $ | 211 | |
| Net credit-related charge-offs | $ | 6 | | | $ | 16 | | | $ | 11 | | | $ | — | | | $ | — | | | $ | 33 | |
| Selected average balances: | | | | | | | | | | | |
| Assets | $ | 13,280 | | | $ | 18,357 | | | $ | 11,365 | | | $ | 11,322 | | | $ | 29,944 | | | $ | 84,268 | |
| Loans | 12,607 | | | 18,095 | | | 10,923 | | | 10,399 | | | (11) | | | 52,013 | |
| Deposits | 24,759 | | | 20,130 | | | 10,654 | | | 12,035 | | | 1,185 | | | 68,763 | |
| Statistical data: | | | | | | | | | | | |
| Return on average assets (a) | 0.95 | % | | 1.46 | % | | 2.14 | % | | 2.68 | % | | n/m | | 0.99 | % |
| Efficiency ratio (b) | 59.79 | | | 47.98 | | | 61.16 | | | 48.22 | | | n/m | | 62.79 | |
| | | | | | | | | | | |
| | | | | | | Other | | Finance | | |
| Three Months Ended June 30, 2020 | Michigan | | California | | Texas | | Markets | | & Other | | Total |
| Earnings summary: | | | | | | | | | | | |
| Net interest income (expense) | $ | 159 | | | $ | 176 | | | $ | 116 | | | $ | 111 | | | $ | (91) | | | $ | 471 | |
| Provision for credit losses | 40 | | | 51 | | | 31 | | | 16 | | | — | | | 138 | |
| Noninterest income | 64 | | | 36 | | | 30 | | | 104 | | | 13 | | | 247 | |
| Noninterest expenses | 139 | | | 103 | | | 91 | | | 102 | | | 5 | | | 440 | |
| Provision (benefit) for income taxes | 8 | | | 13 | | | 4 | | | 21 | | | (19) | | | 27 | |
| Net income (loss) | $ | 36 | | | $ | 45 | | | $ | 20 | | | $ | 76 | | | $ | (64) | | | $ | 113 | |
| Net credit-related charge-offs | $ | — | | | $ | 4 | | | $ | 46 | | | $ | — | | | $ | — | | | $ | 50 | |
| Selected average balances: | | | | | | | | | | | |
| Assets | $ | 13,643 | | | $ | 18,948 | | | $ | 11,597 | | | $ | 11,732 | | | $ | 25,724 | | | $ | 81,644 | |
| Loans | 13,014 | | | 18,663 | | | 11,184 | | | 10,640 | | | (3) | | | 53,498 | |
| Deposits | 23,460 | | | 18,463 | | | 10,209 | | | 11,050 | | | 1,100 | | | 64,282 | |
| Statistical data: | | | | | | | | | | | |
| Return on average assets (a) | 0.59 | % | | 0.93 | % | | 0.68 | % | | 2.53 | % | | n/m | | 0.55 | % |
| Efficiency ratio (b) | 62.08 | | | 48.61 | | | 61.88 | | | 47.41 | | | n/m | | 61.14 | |
| | | | | | | | | | | |
| | | | | | | Other | | Finance | | |
| Three Months Ended September 30, 2019 | Michigan | | California | | Texas | | Markets | | & Other | | Total |
| Earnings summary: | | | | | | | | | | | |
| Net interest income (expense) | $ | 185 | | | $ | 203 | | | $ | 125 | | | $ | 96 | | | $ | (23) | | | $ | 586 | |
| Provision for credit losses | (1) | | | (6) | | | 50 | | | (9) | | | 1 | | | 35 | |
| Noninterest income | 74 | | | 41 | | | 31 | | | 94 | | | 16 | | | 256 | |
| Noninterest expenses | 139 | | | 102 | | | 86 | | | 90 | | | 18 | | | 435 | |
| Provision (benefit) for income taxes | 27 | | | 37 | | | 5 | | | 22 | | | (11) | | | 80 | |
| Net income (loss) | $ | 94 | | | $ | 111 | | | $ | 15 | | | $ | 87 | | | $ | (15) | | | $ | 292 | |
| Net credit-related charge-offs (recoveries) | $ | 6 | | | $ | 5 | | | $ | 34 | | | $ | (3) | | | $ | — | | | $ | 42 | |
| Selected average balances: | | | | | | | | | | | |
| Assets | $ | 13,205 | | | $ | 18,595 | | | $ | 11,462 | | | $ | 10,100 | | | $ | 18,374 | | | $ | 71,736 | |
| Loans | 12,554 | | | 18,261 | | | 10,805 | | | 9,282 | | | (15) | | | 50,887 | |
| Deposits | 20,164 | | | 16,705 | | | 8,705 | | | 7,879 | | | 2,263 | | | 55,716 | |
| Statistical data: | | | | | | | | | | | |
| Return on average assets (a) | 1.79 | % | | 2.37 | % | | 0.48 | % | | 3.45 | % | | n/m | | 1.61 | % |
| Efficiency ratio (b) | 53.30 | | | 41.70 | | | 55.57 | | | 47.08 | | | n/m | | 51.54 | |
(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.
n/m - not meaningful
| | | | | | | | | | | | | | | | | |
| RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES AND REGULATORY RATIOS (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 our performance trends. Tangible common equity is used by Comerica to measure the quality of capital and the return relative to balance sheet risk.
Common equity tier 1 capital ratio removes preferred stock from the Tier 1 capital ratio as defined by and calculated in conformity with bank regulations. 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.
| | | | | | | | | | | | | |
| September 30, | June 30, | | | September 30, |
| (dollar amounts in millions) | 2020 | 2020 | | | 2019 |
| Common Equity Tier 1 Capital (a): | | | | | |
| Tier 1 capital | $ | 7,199 | | $ | 7,093 | | | | $ | 6,892 | |
| Less: | | | | | |
| Fixed-rate reset non-cumulative perpetual preferred stock | 394 | | 395 | | | | — | |
| Common equity tier 1 capital | $ | 6,805 | | $ | 6,698 | | | | $ | 6,892 | |
| Risk-weighted assets | $ | 66,299 | | $ | 67,052 | | | | $ | 69,223 | |
| Tier 1 capital ratio | 10.86 | % | 10.58 | % | | | 9.96 | % |
| Common equity tier 1 capital ratio | 10.26 | | 9.99 | | | | 9.96 | |
| Tangible Common Equity: | | | | | |
| Total shareholders' equity | $ | 7,874 | | $ | 7,802 | | | | $ | 7,200 | |
| Less: | | | | | |
| Fixed-rate reset non-cumulative perpetual preferred stock | 394 | | 395 | | | | — | |
| Goodwill | 635 | | 635 | | | | 635 | |
| Other intangible assets | 2 | | 3 | | | | 4 | |
| Tangible common equity | $ | 6,843 | | $ | 6,769 | | | | $ | 6,561 | |
| Total assets | $ | 83,631 | | $ | 84,397 | | | | $ | 72,848 | |
| Less: | | | | | |
| Goodwill | 635 | | 635 | | | | 635 | |
| Other intangible assets | 2 | | 3 | | | | 4 | |
| Tangible assets | $ | 82,994 | | $ | 83,759 | | | | $ | 72,209 | |
| Common equity ratio | 8.94 | % | 8.78 | % | | | 9.88 | % |
| Tangible common equity ratio | 8.24 | | 8.08 | | | | 9.09 | |
| Tangible Common Equity per Share of Common Stock: | | | | | |
| Common shareholders' equity | $ | 7,480 | | $ | 7,407 | | | | $ | 7,200 | |
| Tangible common equity | 6,843 | | 6,769 | | | | 6,561 | |
| Shares of common stock outstanding (in millions) | 139 | | 139 | | | | 144 | |
| Common shareholders' equity per share of common stock | $ | 53.78 | | $ | 53.28 | | | | $ | 49.96 | |
| Tangible common equity per share of common stock | 49.20 | | 48.69 | | | | 45.52 | |
(a)Tier 1 capital as defined by regulation; estimated for September 30, 2020, reflects deferral of CECL model impact.
