Exhibit 99.1
COMERICA REPORTS SECOND QUARTER 2005 EARNINGS
DETROIT/July 20, 2005— Comerica Incorporated (NYSE: CMA) today reported second quarter 2005 earnings of $217 million, or $1.28 per diluted share, compared to $199 million, or $1.16 per diluted share, for the first quarter 2005 and $192 million, or $1.10 per diluted share, for the second quarter 2004.
| | | | | | | | | | | | | |
| (dollar amounts in millions) | | 2ndQtr ‘05 | | | 1stQtr ‘05 | | | 2ndQtr ‘04 | |
| Diluted EPS | | $ | 1.28 | | | $ | 1.16 | | | $ | 1.10 | |
| Net Interest Income | | $ | 483 | | | $ | 460 | | | $ | 448 | |
| Net Interest Margin | | | 4.09 | % | | | 4.00 | % | | | 3.77 | % |
| Provision for Loan Losses | | $ | 2 | | | $ | 1 | | | $ | 20 | |
| Noninterest Income | | $ | 219 | | | $ | 210 | | | $ | 228 | |
| Noninterest Expenses | | $ | 383 | | | $ | 374 | | | $ | 372 | |
| Net Income | | $ | 217 | | | $ | 199 | | | $ | 192 | |
| Return on Equity | | | 16.99 | % | | | 15.73 | % | | | 15.35 | % |
“Comerica’s second quarter financial results reflect the continuation of positive trends that are evident across our markets and lines of business,” said Ralph W. Babb Jr., chairman and chief executive officer. “For the third consecutive quarter, we reported solid loan growth, with an increase in average loans of $1.1 billion, or 10 percent on an annualized basis, compared to the first quarter 2005. Our second quarter results also include increases in both net interest income and non-interest income, while expenses and credit costs remain well controlled.”
Net Interest Income
Net interest income was $483 million for the second quarter 2005, compared to $460 million for the first quarter 2005 and $448 million for the second quarter 2004. The $23 million increase in net interest income from the first quarter 2005 resulted from an increase in average earning assets, the spread improvement provided by non-interest bearing deposits in a rising interest rate environment, and the impact of one more day in the second quarter 2005. Average earning assets of $47.4 billion for the second quarter 2005 increased $767 million from the first quarter 2005, primarily as a result of a $1.1 billion, or three percent, increase in average loans to $43.2 billion for the second quarter 2005. Average deposits of $40.0 billion for the second quarter 2005 increased $218 million, less than one percent, from the first quarter 2005. Average short-term borrowings increased $741 million in the second quarter 2005, when compared to the prior quarter.
The net interest margin increased nine basis points from the first quarter 2005 to 4.09 percent in the second quarter 2005, due primarily to a greater contribution from noninterest-bearing deposits in a higher rate environment.
Noninterest Income
Noninterest income was $219 million for the second quarter 2005, compared to $210 million for the first quarter 2005 and $228 million for the second quarter 2004. Included in other noninterest income in the second quarter 2005 were write-downs (net of income distributions) recognized on unconsolidated venture capital and private equity investments of $5 million, compared to income distributions (net of write-downs) of $1 million in the first quarter 2005. Also included in other noninterest income in the second quarter 2005 were risk management hedge ineffectiveness gains of $5 million, compared to $5 million of losses in the first quarter 2005.
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COMERICA REPORTS SECOND QUARTER 2005 EARNINGS - 2
Noninterest Expenses
Noninterest expenses were $383 million for the second quarter 2005, compared to $374 million for the first quarter 2005 and $372 million for the second quarter 2004. Salaries expense increased $8 million in the second quarter 2005 compared to the first quarter 2005, primarily due to an increase in stock-based compensation and annual merit increases.
Credit Quality
| | | | | | | | | | | | | |
| (dollar amounts in millions) | | 2ndQtr ‘05 | | | 1stQtr ‘05 | | | 2ndQtr ‘04 | |
| Net Charge-offs | | $ | 29 | | | $ | 38 | | | $ | 56 | |
| Net Charge-offs/Average Total Loans | | | 0.27 | % | | | 0.36 | % | | | 0.55 | % |
| Provision for Loan Losses | | $ | 2 | | | $ | 1 | | | $ | 20 | |
| Nonperforming Assets (NPAs) | | $ | 246 | | | $ | 311 | | | $ | 430 | |
| NPAs/Total Loans, Other Real Estate & Nonaccrual Debt Securities | | | 0.57 | % | | | 0.75 | % | | | 1.07 | % |
| Allowance for Loan Losses | | $ | 609 | | | $ | 636 | | | $ | 762 | |
| Allowance for Loan Losses/Total Loans | | | 1.41 | % | | | 1.52 | % | | | 1.90 | % |
| Allowance for Credit Losses on Lending-related Commitments* | | $ | 15 | | | $ | 18 | | | $ | 28 | |
| * | | Included in “Accrued expenses and other liabilities” on the consolidated balance sheets. |
During the second quarter of 2005, $47 million of loans greater than $2 million were transferred to nonaccrual status, a decrease of $19 million from the first quarter of 2005. Nonperforming assets were $246 million at June 30, 2005, a decrease of $65 million from March 31, 2005.
“We were pleased by the continued improvements in credit quality metrics in the second quarter 2005, which resulted in a $27 million decline in the allowance for loan losses from the first quarter,” said Babb. “Nonperforming assets were at the lowest level in more than five years, and net charge-offs of $29 million were at the lowest level since the third quarter of 1999.”
Balance Sheet and Capital Management
Total assets and common shareholders’ equity were $54.7 billion and $5.1 billion, respectively, at June 30, 2005, compared to $53.5 billion and $5.0 billion, respectively, at March 31, 2005. There were approximately 167 million shares outstanding at June 30, 2005, compared to approximately 169 million shares outstanding at March 31, 2005. In the second quarter of 2005, approximately 2.0 million shares were repurchased in the open market for $114 million. Comerica’s second quarter 2005 estimated tier 1 common, tier 1 and total risk-based capital ratios were 7.90 percent, 8.52 percent and 12.09 percent, respectively.
Business Segments
Comerica’s operations are strategically aligned into three major business segments: the Business Bank, Small Business & Personal Financial Services, and Wealth & Institutional Management. The Finance Division also is included as a segment. The financial results below are based on the internal business unit structure of the Corporation and are presented on a fully taxable equivalent (FTE) basis.
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COMERICA REPORTS SECOND QUARTER 2005 EARNINGS - 3
The following table presents net income (loss) by business segment.
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| (dollar amounts in millions) | | 2ndQtr ‘05 | | 1stQtr ‘05 | | 2ndQtr ‘04 |
| |
| Business Bank | | $ | 163 | | | | 71 | % | | $ | 175 | | | | 72 | % | | $ | 188 | | | | 74 | % |
| Small Business & Personal Financial Services | | | 49 | | | | 21 | | | | 44 | | | | 18 | | | | 46 | | | | 18 | |
| Wealth & Institutional Management | | | 17 | | | | 8 | | | | 25 | | | | 10 | | | | 19 | | | | 8 | |
| |
| | | | 229 | | | | 100 | % | | | 244 | | | | 100 | % | | | 253 | | | | 100 | % |
| Finance | | | (18 | ) | | | | | | | (30 | ) | | | | | | | (42 | ) | | | | |
| Other* | | | 6 | | | | | | | | (15 | ) | | | | | | | (19 | ) | | | | |
| |
| Total | | $ | 217 | | | | | | | $ | 199 | | | | | | | $ | 192 | | | | | |
| |
| * | | Includes items not directly associated with the major business segments or the Finance Division |
Net income for the Business Bank was $163 million for the second quarter 2005, compared to $175 million for the first quarter 2005. Net interest income (FTE) of $350 million in the second quarter 2005 increased $13 million from the first quarter 2005. The provision for loan losses increased $14 million compared to the first quarter 2005 as the pace of credit quality improvement has slowed in the Midwest. Average loans of $34.1 billion in the second quarter 2005 increased $1.1 billion, or 14 percent on an annualized basis, compared to the first quarter 2005, primarily due to increases in Middle Market, Commercial Real Estate, National Dealer Services, and Global Corporate Banking loans. Average deposits of $20.4 billion in the second quarter 2005 increased $475 million, or 10 percent on an annualized basis, with the increase more than explained by higher deposits in the Financial Services Group.
Net income for Small Business & Personal Financial Services was $49 million for the second quarter 2005, compared to $44 million for the first quarter 2005. Net interest income (FTE) of $152 million in the second quarter 2005 increased $6 million from the first quarter 2005. Second quarter 2005 average loans of $5.8 billion were flat compared to first quarter 2005. Average deposits were $16.9 billion in the second quarter 2005, compared to $16.8 billion in the first quarter 2005, as increases in transaction and time deposit accounts were largely offset by decreases in money market deposit accounts.
Net income for Wealth & Institutional Management was $17 million for the second quarter 2005, compared to $25 million for the first quarter 2005. Net interest income (FTE) of $37 million in the second quarter 2005 increased $1 million from the first quarter 2005. Average loans were $3.3 billion in the second quarter 2005, compared to $3.4 billion in the first quarter 2005. Average deposits were $2.4 billion in the second quarter 2005, compared to $2.5 billion in the first quarter 2005.
Geographic Market Segments
Comerica also provides market segment results for four primary geographic markets: Midwest & Other Markets, Western, Texas and Florida. The financial results below are presented on a FTE basis.
The following table presents net income (loss) by market segment.
| | | | | | | | | | | | | | | | | | | | | | | | | |
| (dollar amounts in millions) | | 2ndQtr ‘05 | | | 1stQtr ‘05 | | | 2ndQtr ‘04 | |
| |
| Midwest & Other Markets | | $ | 111 | | | | 48 | % | | $ | 141 | | | | 58 | % | | $ | 149 | | | | 59 | % |
| Western | | | 84 | | | | 37 | | | | 80 | | | | 33 | | | | 77 | | | | 30 | |
| Texas | | | 29 | | | | 13 | | | | 20 | | | | 8 | | | | 22 | | | | 9 | |
| Florida | | | 5 | | | | 2 | | | | 3 | | | | 1 | | | | 5 | | | | 2 | |
| |
| | | | 229 | | | | 100 | % | | | 244 | | | | 100 | % | | | 253 | | | | 100 | % |
| Finance & Other Businesses | | | (12 | ) | | | | | | | (45 | ) | | | | | | | (61 | ) | | | | |
| |
| Total | | $ | 217 | | | | | | | $ | 199 | | | | | | | $ | 192 | | | | | |
| |
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COMERICA REPORTS SECOND QUARTER 2005 EARNINGS - 4
Net income for Midwest & Other Markets was $111 million for the second quarter 2005, compared to $141 million for the first quarter 2005. Net interest income (FTE) of $272 million in the second quarter 2005 increased $8 million from the first quarter 2005. Average loans of $23.9 billion increased $584 million, or 10 percent on an annualized basis, primarily due to increases in Middle Market, Commercial Real Estate, and Global Corporate Banking loans. Average deposits of $18.9 billion in the second quarter 2005 were flat compared to the first quarter 2005.
Net income for the Western market was $84 million for the second quarter 2005, compared to $80 million for the first quarter 2005. Net interest income (FTE) of $196 million in the second quarter 2005 increased $10 million from the first quarter 2005. Average loans of $13.0 billion increased $315 million, or 10 percent on an annualized basis, primarily due to increases in National Dealer Services, Middle Market, and Commercial Real Estate loans. Average deposits of $16.8 billion in the second quarter 2005 increased $475 million, or 12 percent on an annualized basis, with the increase more than explained by higher deposits in the Financial Services Group.
Net income for the Texas market was $29 million for the second quarter 2005, compared to $20 million for the first quarter 2005. Net interest income (FTE) of $60 million in the second quarter 2005 increased $1 million from the first quarter 2005. Average loans of $4.9 billion increased $138 million, or 11 percent on an annualized basis, primarily due to growth in Middle Market, Commercial Real Estate, Small Business, and Energy Lending loans. Average deposits of $3.7 billion in the second quarter 2005 were flat compared to the first quarter 2005.
Net income for the Florida market was $5 million for the second quarter 2005, compared to $3 million for the first quarter 2005.
Conference Call and Webcast
Comerica will host a conference call to review second quarter 2005 financial results at 8 a.m. ET Wednesday, July 20, 2005. Interested parties may access the conference call by calling (706) 679-5261 (event ID No. 7007392). The call and supplemental financial information can also be accessed on the Internet at www.comerica.com. A replay of the conference call will be available approximately two hours following the call through Saturday, August 20, 2005. The conference call replay can be accessed by calling (800) 642-1687 or (706) 645-9291 (event ID No. 7007392). A replay of the Webcast can also be accessed via Comerica’s “Investor Relations” page at www.comerica.com.
Comerica Incorporated is a financial services company headquartered in Detroit, strategically aligned into three major business segments: the Business Bank, Small Business & Personal Financial Services, and Wealth & Institutional Management. Comerica focuses on relationships and helping businesses and people to be successful.
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COMERICA REPORTS SECOND QUARTER 2005 EARNINGS – 5
Forward-looking Statements
Any statements in this news release that are not historical facts are forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. Words such as “anticipates,” “believes,” “feels,” “expects,” “estimates,” “seeks,” “strives,” “plans,” “intends,” “outlook,” “forecast,” “position,” “target,” “mission,” “assume,” “achievable,” “potential,” “strategy,” “goal,” “aspiration,” “outcome,” “continue,” “remain,” “maintain,” “trend,” “objective” and variations of such words and similar expressions, or future or conditional verbs such as “will,” “would,” “should,” “could,” “might,” “can,” “may” or similar expressions, as they relate to Comerica or its management, are intended to identify forward-looking statements. These forward-looking statements are predicated on the beliefs and assumptions of Comerica’s management based on information known to Comerica’s management as of the date of this news release and do not purport to speak as of any other date. Forward-looking statements may include descriptions of plans and objectives of Comerica’s management for future or past operations, products or services, and forecasts of Comerica’s revenue, earnings or other measures of economic performance, including statements of profitability, business segments and subsidiaries, estimates of credit trends and global stability. Such statements reflect the view of Comerica’s management as of this date with respect to future events and are subject to risks and uncertainties. Should one or more of these risks materialize or should underlying beliefs or assumptions prove incorrect, Comerica’s actual results could differ materially from those discussed. Factors that could cause or contribute to such differences are changes in the pace of an economic recovery and related changes in employment levels, the effects of war and other armed conflicts or acts of terrorism, implementation of Comerica’s strategies and business models, management’s ability to maintain and expand customer relationships, changes in the accounting treatment of any particular item, the impact of regulatory examinations, declines or other changes in the businesses or industries in which Comerica has a concentration of loans, including, but not limited to, the automotive industry, the anticipated performance of any new banking branches, the entry of new competitors in Comerica’s markets, changes in the level of fee income, changes in applicable laws and regulations, including those concerning taxes, banking, securities and insurance, changes in trade, monetary and fiscal policies, including the interest rate policies of the Board of Governors of the Federal Reserve System, fluctuations in inflation or interest rates, changes in general economic conditions and related credit and market conditions and adverse conditions in the stock market. Comerica cautions that the foregoing list of factors is not exclusive. 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: |
| Sharon R. McMurray | | Paul E. Burdiss |
| (313) 222-4881 | | (313) 222-2840 |
| | | |
| Wayne J. Mielke | | Paul Jaremski |
| (313) 222-4732 | | (313) 222-6317 |
CONSOLIDATED FINANCIAL HIGHLIGHTS
Comerica Incorporated and Subsidiaries
| | | | | | | | | | | | | | | | | | | | | |
| |
| | | Three Months Ended | | | Six Months Ended |
| | | June 30, | | | March 31, | | | June 30, | | | June 30, | |
| (in millions, except per share data) | | 2005 | | | 2005 | | | 2004 | | | 2005 | | | 2004 | |
| |
PER SHARE AND COMMON STOCK DATA | | | | | | | | | | | | | | | | | | | | |
| Diluted net income | | $ | 1.28 | | | $ | 1.16 | | | $ | 1.10 | | | $ | 2.44 | | | $ | 2.02 | |
| Cash dividends declared | | | 0.55 | | | | 0.55 | | | | 0.52 | | | | 1.10 | | | | 1.04 | |
| Common shareholders’ equity (at period end) | | | 30.60 | | | | 29.81 | | | | 28.75 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
| Average diluted shares (in thousands) | | | 169,608 | | | | 171,382 | | | | 174,248 | | | | 170,404 | | | | 175,066 | |
| |
KEY RATIOS | | | | | | | | | | | | | | | | | | | | |
| Return on average common shareholders’ equity | | | 16.99 | % | | | 15.73 | % | | | 15.35 | % | | | 16.36 | % | | | 14.02 | % |
| Return on average assets | | | 1.68 | | | | 1.57 | | | | 1.49 | | | | 1.63 | | | | 1.38 | |
| Average common shareholders’ equity as a percentage of average assets | | | 9.88 | | | | 9.99 | | | | 9.70 | | | | 9.93 | | | | 9.87 | |
| Tier 1 common capital ratio * | | | 7.90 | | | | 8.04 | | | | 8.00 | | | | | | | | | |
| Tier 1 risk-based capital ratio * | | | 8.52 | | | | 8.66 | | | | 8.64 | | | | | | | | | |
| Total risk-based capital ratio * | | | 12.09 | | | | 12.49 | | | | 12.91 | | | | | | | | | |
| Leverage ratio * | | | 10.39 | | | | 10.50 | | | | 9.98 | | | | | | | | | |
| |
AVERAGE BALANCES | | | | | | | | | | | | | | | | | | | | |
| Commercial loans | | $ | 24,122 | | | $ | 23,248 | | | $ | 22,178 | | | $ | 23,688 | | | $ | 21,947 | |
| Real estate construction loans | | | 3,101 | | | | 3,052 | | | | 3,253 | | | | 3,077 | | | | 3,303 | |
| Commercial mortgage loans | | | 8,513 | | | | 8,315 | | | | 8,050 | | | | 8,415 | | | | 8,008 | |
| Residential mortgage loans | | | 1,357 | | | | 1,310 | | | | 1,209 | | | | 1,333 | | | | 1,217 | |
| Consumer loans | | | 2,673 | | | | 2,734 | | | | 2,653 | | | | 2,703 | | | | 2,640 | |
| Lease financing | | | 1,283 | | | | 1,261 | | | | 1,271 | | | | 1,272 | | | | 1,281 | |
| International loans | | | 2,185 | | | | 2,235 | | | | 2,115 | | | | 2,210 | | | | 2,182 | |
| |
| Total loans | | $ | 43,234 | | | $ | 42,155 | | | $ | 40,729 | | | $ | 42,698 | | | $ | 40,578 | |
| Earning assets | | | 47,412 | | | | 46,645 | | | | 47,639 | | | | 47,031 | | | | 47,230 | |
| Total assets | | | 51,635 | | | | 50,750 | | | | 51,593 | | | | 51,195 | | | | 51,165 | |
| Interest-bearing deposits | | | 25,005 | | | | 25,662 | | | | 26,183 | | | | 25,332 | | | | 26,402 | |
| Total interest-bearing liabilities | | | 30,501 | | | | 30,380 | | | | 31,011 | | | | 30,441 | | | | 31,368 | |
| Noninterest-bearing deposits | | | 14,995 | | | | 14,120 | | | | 14,730 | | | | 14,560 | | | | 13,858 | |
| Common shareholders’ equity | | | 5,100 | | | | 5,072 | | | | 5,003 | | | | 5,086 | | | | 5,049 | |
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NET INTEREST INCOME | | | | | | | | | | | | | | | | | | | | |
| Net interest income (fully taxable equivalent basis) | | $ | 484 | | | $ | 461 | | | $ | 448 | | | $ | 945 | | | $ | 894 | |
| Fully taxable equivalent adjustment | | | 1 | | | | 1 | | | | — | | | | 2 | | | | 1 | |
| Net interest margin | | | 4.09 | % | | | 4.00 | % | | | 3.77 | % | | | 4.04 | % | | | 3.80 | % |
| |
CREDIT QUALITY | | | | | | | | | | | | | | | | | | | | |
| Nonaccrual loans | | $ | 212 | | | $ | 269 | | | $ | 404 | | | | | | | | | |
| Other real estate | | | 34 | | | | 42 | | | | 26 | | | | | | | | | |
| Total nonperforming assets | | | 246 | | | | 311 | | | | 430 | | | | | | | | | |
| Loans 90 days past due and still accruing | | | 24 | | | | 23 | | | | 25 | | | | | | | | | |
| Gross charge-offs | | | 43 | | | | 46 | | | | 76 | | | $ | 89 | | | $ | 160 | |
| Recoveries | | | 14 | | | | 8 | | | | 20 | | | | 22 | | | | 34 | |
| Net charge-offs | | | 29 | | | | 38 | | | | 56 | | | | 67 | | | | 126 | |
| | | | | | | | | | | | | | | | | | | | | |
| Allowance for loan losses as a percentage of total loans | | | 1.41 | % | | | 1.52 | % | | | 1.90 | % | | | | | | | | |
| Net loans charged off as a percentage of average total loans | | | 0.27 | | | | 0.36 | | | | 0.55 | | | | 0.31 | % | | | 0.62 | % |
| Nonperforming assets as a percentage of total loans, other real estate and nonaccrual debt securities | | | 0.57 | | | | 0.75 | | | | 1.07 | | | | | | | | | |
| Allowance for loan losses as a percentage of total nonperforming assets | | | 248 | | | | 204 | | | | 177 | | | | | | | | | |
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ADDITIONAL DATA | | | | | | | | | | | | | | | | | | | | |
| Goodwill | | $ | 247 | | | $ | 247 | | | $ | 247 | | | | | | | | | |
| Other intangibles | | | 1 | | | | 1 | | | | 1 | | | | | | | | | |
| Loan servicing rights | | | 19 | | | | 19 | | | | 19 | | | | | | | | | |
| Deferred mutual fund distribution costs | | | 7 | | | | 7 | | | | 10 | | | | | | | | | |
| Amortization of intangibles | | | — | | | | — | | | | 1 | | | $ | — | | | $ | 1 | |
| |
| * | | June 30, 2005 ratios are estimated |
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CONSOLIDATED BALANCE SHEETS
Comerica Incorporated and Subsidiaries
| | | | | | | | | | | | | | | | | |
| |
| | | June 30, | | | March 31, | | | December 31, | | | June 30, | |
| (in millions, except share data) | | 2005 | | | 2005 | | | 2004 | | | 2004 | |
| |
ASSETS | | | | | | | | | | | | | | | | |
| Cash and due from banks | | $ | 1,687 | | | $ | 1,835 | | | $ | 1,139 | | | $ | 1,865 | |
| Short-term investments | | | 3,402 | | | | 3,794 | | | | 3,230 | | | | 5,977 | |
| Investment securities available-for-sale | | | 3,947 | | | | 3,687 | | | | 3,943 | | | | 4,332 | |
| |
| Commercial loans | | | 23,690 | | | | 22,780 | | | | 22,039 | | | | 21,458 | |
| Real estate construction loans | | | 3,168 | | | | 3,035 | | | | 3,053 | | | | 3,282 | |
| Commercial mortgage loans | | | 8,536 | | | | 8,415 | | | | 8,236 | | | | 8,080 | |
| Residential mortgage loans | | | 1,394 | | | | 1,335 | | | | 1,294 | | | | 1,211 | |
| Consumer loans | | | 2,701 | | | | 2,700 | | | | 2,751 | | | | 2,672 | |
| Lease financing | | | 1,296 | | | | 1,262 | | | | 1,265 | | | | 1,266 | |
| International loans | | | 2,239 | | | | 2,209 | | | | 2,205 | | | | 2,130 | |
| |
| Total loans | | | 43,024 | | | | 41,736 | | | | 40,843 | | | | 40,099 | |
| Less allowance for loan losses | | | (609 | ) | | | (636 | ) | | | (673 | ) | | | (762 | ) |
| |
| Net loans | | | 42,415 | | | | 41,100 | | | | 40,170 | | | | 39,337 | |
| | | | | | | | | | | | | | | | | |
| Premises and equipment | | | 481 | | | | 463 | | | | 415 | | | | 389 | |
| Customers’ liability on acceptances outstanding | | | 35 | | | | 40 | | | | 57 | | | | 44 | |
| Accrued income and other assets | | | 2,722 | | | | 2,591 | | | | 2,812 | | | | 2,599 | |
| |
| Total assets | | $ | 54,689 | | | $ | 53,510 | | | $ | 51,766 | | | $ | 54,543 | |
| |
| | | | | | | | | | | | | | | | | |
LIABILITIES AND SHAREHOLDERS’ EQUITY | | | | | | | | | | | | | | | | |
| Noninterest-bearing deposits | | $ | 19,236 | | | $ | 17,216 | | | $ | 15,164 | | | $ | 17,568 | |
| Interest-bearing deposits | | | 24,817 | | | | 25,490 | | | | 25,772 | | | | 26,343 | |
| |
| Total deposits | | | 44,053 | | | | 42,706 | | | | 40,936 | | | | 43,911 | |
| | | | | | | | | | | | | | | | | |
| Short-term borrowings | | | 108 | | | | 408 | | | | 193 | | | | 210 | |
| Acceptances outstanding | | | 35 | | | | 40 | | | | 57 | | | | 44 | |
| Accrued expenses and other liabilities | | | 1,067 | | | | 1,043 | | | | 1,189 | | | | 847 | |
| Medium- and long-term debt | | | 4,309 | | | | 4,283 | | | | 4,286 | | | | 4,597 | |
| |
| Total liabilities | | | 49,572 | | | | 48,480 | | | | 46,661 | | | | 49,609 | |
| | | | | | | | | | | | | | | | | |
| Common stock - - $5 par value: | | | | | | | | | | | | | | | | |
| Authorized - 325,000,000 shares | | | | | | | | | | | | | | | | |
| Issued - 178,735,252 shares at 6/30/05, 3/31/05, 12/31/04 and 6/30/04 | | | 894 | | | | 894 | | | | 894 | | | | 894 | |
| Capital surplus | | | 433 | | | | 433 | | | | 421 | | | | 398 | |
| Accumulated other comprehensive loss | | | (99 | ) | | | (154 | ) | | | (69 | ) | | | (82 | ) |
| Retained earnings | | | 4,546 | | | | 4,427 | | | | 4,331 | | | | 4,125 | |
| Less cost of common stock in treasury - 11,513,612 shares at 6/30/05, 9,988,453 shares at 3/31/05, 8,259,328 shares at 12/31/04 and 7,124,990 shares at 6/30/04 | | | (657 | ) | | | (570 | ) | | | (472 | ) | | | (401 | ) |
| |
| Total shareholders’ equity | | | 5,117 | | | | 5,030 | | | | 5,105 | | | | 4,934 | |
| |
| Total liabilities and shareholders’ equity | | $ | 54,689 | | | $ | 53,510 | | | $ | 51,766 | | | $ | 54,543 | |
| |
-7-
CONSOLIDATED STATEMENTS OF INCOME
Comerica Incorporated and Subsidiaries
| | | | | | | | | | | | | | | | | |
| |
| | | Three Months Ended | | | Six Months Ended | |
| | | June 30, | | | June 30, | |
| (in millions, except per share data) | | 2005 | | | 2004 | | | 2005 | | | 2004 | |
| |
INTEREST INCOME | | | | | | | | | | | | | | | | |
| Interest and fees on loans | | $ | 616 | | | $ | 500 | | | $ | 1,182 | | | $ | 996 | |
| Interest on investment securities | | | 34 | | | | 35 | | | | 69 | | | | 75 | |
| Interest on short-term investments | | | 5 | | | | 10 | | | | 11 | | | | 17 | |
| |
| Total interest income | | | 655 | | | | 545 | | | | 1,262 | | | | 1,088 | |
| | | | | | | | | | | | | | | | | |
INTEREST EXPENSE | | | | | | | | | | | | | | | | |
| Interest on deposits | | | 122 | | | | 72 | | | | 230 | | | | 145 | |
| Interest on short-term borrowings | | | 9 | | | | — | | | | 12 | | | | 1 | |
| Interest on medium- and long-term debt | | | 41 | | | | 25 | | | | 77 | | | | 49 | |
| |
| Total interest expense | | | 172 | | | | 97 | | | | 319 | | | | 195 | |
| |
| Net interest income | | | 483 | | | | 448 | | | | 943 | | | | 893 | |
| Provision for loan losses | | | 2 | | | | 20 | | | | 3 | | | | 85 | |
| |
| Net interest income after provision for loan losses | | | 481 | | | | 428 | | | | 940 | | | | 808 | |
| | | | | | | | | | | | | | | | | |
NONINTEREST INCOME | | | | | | | | | | | | | | | | |
| Service charges on deposit accounts | | | 54 | | | | 59 | | | | 108 | | | | 121 | |
| Fiduciary income | | | 43 | | | | 41 | | | | 89 | | | | 85 | |
| Commercial lending fees | | | 16 | | | | 13 | | | | 28 | | | | 27 | |
| Letter of credit fees | | | 18 | | | | 17 | | | | 38 | | | | 32 | |
| Foreign exchange income | | | 9 | | | | 10 | | | | 18 | | | | 19 | |
| Brokerage fees | | | 9 | | | | 8 | | | | 17 | | | | 18 | |
| Investment advisory revenue, net | | | 12 | | | | 9 | | | | 22 | | | | 18 | |
| Card fees | | | 9 | | | | 8 | | | | 18 | | | | 15 | |
| Bank-owned life insurance | | | 10 | | | | 9 | | | | 19 | | | | 18 | |
| Equity in earnings of unconsolidated subsidiaries | | | 4 | | | | 5 | | | | 9 | | | | 8 | |
| Warrant income | | | 3 | | | | 4 | | | | 5 | | | | 5 | |
| Net securities gains | | | — | | | | 1 | | | | — | | | | 6 | |
| Net gain on sales of businesses | | | — | | | | 7 | | | | — | | | | 7 | |
| Other noninterest income | | | 32 | | | | 37 | | | | 58 | | | | 69 | |
| |
| Total noninterest income | | | 219 | | | | 228 | | | | 429 | | | | 448 | |
| | | | | | | | | | | | | | | | | |
NONINTEREST EXPENSES | | | | | | | | | | | | | | | | |
| Salaries | | | 197 | | | | 195 | | | | 386 | | | | 382 | |
| Employee benefits | | | 44 | | | | 40 | | | | 91 | | | | 79 | |
| |
| Total salaries and employee benefits | | | 241 | | | | 235 | | | | 477 | | | | 461 | |
| Net occupancy expense | | | 28 | | | | 31 | | | | 60 | | | | 61 | |
| Equipment expense | | | 14 | | | | 14 | | | | 28 | | | | 29 | |
| Outside processing fee expense | | | 20 | | | | 18 | | | | 37 | | | | 35 | |
| Software expense | | | 11 | | | | 9 | | | | 23 | | | | 20 | |
| Customer services | | | 10 | | | | 7 | | | | 21 | | | | 9 | |
| Litigation and operational losses | | | 7 | | | | 3 | | | | 10 | | | | 11 | |
| Other noninterest expenses | | | 52 | | | | 55 | | | | 101 | | | | 115 | |
| |
| Total noninterest expenses | | | 383 | | | | 372 | | | | 757 | | | | 741 | |
| |
| Income before income taxes | | | 317 | | | | 284 | | | | 612 | | | | 515 | |
| Provision for income taxes | | | 100 | | | | 92 | | | | 196 | | | | 161 | |
| |
NET INCOME | | $ | 217 | | | $ | 192 | | | $ | 416 | | | $ | 354 | |
| |
| | | | | | | | | | | | | | | | | |
| Basic net income per common share | | $ | 1.29 | | | $ | 1.11 | | | $ | 2.47 | | | $ | 2.04 | |
| Diluted net income per common share | | | 1.28 | | | | 1.10 | | | | 2.44 | | | | 2.02 | |
| |
| Cash dividends declared on common stock | | | 92 | | | | 90 | | | | 185 | | | | 180 | |
| Dividends per common share | | | 0.55 | | | | 0.52 | | | | 1.10 | | | | 1.04 | |
| |
-8-
CONSOLIDATED QUARTERLY STATEMENTS OF INCOME
Comerica Incorporated and Subsidiaries
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | |
| | | Second | | | First | | | Fourth | | | Third | | | Second | | | Second Quarter 2005 Compared To: | |
| | | Quarter | | | Quarter | | | Quarter | | | Quarter | | | Quarter | | | First Quarter 2005 | | | Second Quarter 2004 | |
| (in millions, except per share data) | | 2005 | | | 2005 | | | 2004 | | | 2004 | | | 2004 | | | Amount | | | Percent | | | Amount | | | Percent | |
| |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
INTEREST INCOME | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Interest and fees on loans | | $ | 616 | | | $ | 566 | | | $ | 544 | | | $ | 514 | | | $ | 500 | | | $ | 50 | | | | 8.6 | % | | $ | 116 | | | | 23.2 | % |
| Interest on investment securities | | | 34 | | | | 35 | | | | 36 | | | | 36 | | | | 35 | | | | (1 | ) | | | (0.4 | ) | | | (1 | ) | | | (4.0 | ) |
| Interest on short-term investments | | | 5 | | | | 6 | | | | 11 | | | | 8 | | | | 10 | | | | (1 | ) | | | (6.4 | ) | | | (5 | ) | | | (38.8 | ) |
| |
| Total interest income | | | 655 | | | | 607 | | | | 591 | | | | 558 | | | | 545 | | | | 48 | | | | 8.0 | | | | 110 | | | | 20.4 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
INTEREST EXPENSE | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Interest on deposits | | | 122 | | | | 108 | | | | 91 | | | | 79 | | | | 72 | | | | 14 | | | | 12.8 | | | | 50 | | | | 70.2 | |
| Interest on short-term borrowings | | | 9 | | | | 3 | | | | 2 | | | | 1 | | | | — | | | | 6 | | | | 206.4 | | | | 9 | | | | N/M | |
| Interest on medium- and long-term debt | | | 41 | | | | 36 | | | | 32 | | | | 27 | | | | 25 | | | | 5 | | | | 15.9 | | | | 16 | | | | 67.7 | |
| |
| Total interest expense | | | 172 | | | | 147 | | | | 125 | | | | 107 | | | | 97 | | | | 25 | | | | 17.5 | | | | 75 | | | | 77.8 | |
| |
| Net interest income | | | 483 | | | | 460 | | | | 466 | | | | 451 | | | | 448 | | | | 23 | | | | 4.9 | | | | 35 | | | | 8.0 | |
| Provision for loan losses | | | 2 | | | | 1 | | | | (21 | ) | | | — | | | | 20 | | | | 1 | | | | 100.0 | | | | (18 | ) | | | (90.0 | ) |
| |
| Net interest income after provision for loan losses | | | 481 | | | | 459 | | | | 487 | | | | 451 | | | | 428 | | | | 22 | | | | 4.7 | | | | 53 | | | | 12.5 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
NONINTEREST INCOME | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Service charges on deposit accounts | | | 54 | | | | 54 | | | | 53 | | | | 57 | | | | 59 | | | | — | | | | (1.4 | ) | | | (5 | ) | | | (9.8 | ) |
| Fiduciary income | | | 43 | | | | 46 | | | | 43 | | | | 43 | | | | 41 | | | | (3 | ) | | | (4.3 | ) | | | 2 | | | | 5.1 | |
| Commercial lending fees | | | 16 | | | | 12 | | | | 14 | | | | 14 | | | | 13 | | | | 4 | | | | 38.0 | | | | 3 | | | | 25.8 | |
| Letter of credit fees | | | 18 | | | | 20 | | | | 17 | | | | 17 | | | | 17 | | | | (2 | ) | | | (12.2 | ) | | | 1 | | | | 5.7 | |
| Foreign exchange income | | | 9 | | | | 9 | | | | 9 | | | | 9 | | | | 10 | | | | — | | | | 12.0 | | | | (1 | ) | | | (5.6 | ) |
| Brokerage fees | | | 9 | | | | 8 | | | | 9 | | | | 9 | | | | 8 | | | | 1 | | | | 9.1 | | | | 1 | | | | 1.5 | |
| Investment advisory revenue, net | | | 12 | | | | 10 | | | | 9 | | | | 8 | | | | 9 | | | | 2 | | | | 7.7 | | | | 3 | | | | 31.0 | |
| Card fees | | | 9 | | | | 9 | | | | 9 | | | | 8 | | | | 8 | | | | — | | | | 15.7 | | | | 1 | | | | 17.8 | |
| Bank-owned life insurance | | | 10 | | | | 9 | | | | 6 | | | | 10 | | | | 9 | | | | 1 | | | | 9.1 | | | | 1 | | | | 15.5 | |
| Equity in earnings of unconsolidated subsidiaries | | | 4 | | | | 5 | | | | 1 | | | | 3 | | | | 5 | | | | (1 | ) | | | (12.3 | ) | | | (1 | ) | | | (14.8 | ) |
| Warrant income | | | 3 | | | | 2 | | | | 1 | | | | 1 | | | | 4 | | | | 1 | | | | 23.4 | | | | (1 | ) | | | (21.8 | ) |
| Net securities gains (losses) | | | — | | | | — | | | | — | | | | (6 | ) | | | 1 | | | | — | | | | N/M | | | | (1 | ) | | | N/M | |
| Net gain on sales of businesses | | | — | | | | — | | | | — | | | | — | | | | 7 | | | | — | | | | N/M | | | | (7 | ) | | | (98.8 | ) |
| Other noninterest income | | | 32 | | | | 26 | | | | 32 | | | | 33 | | | | 37 | | | | 6 | | | | 21.4 | | | | (5 | ) | | | (13.9 | ) |
| |
| Total noninterest income | | | 219 | | | | 210 | | | | 203 | | | | 206 | | | | 228 | | | | 9 | | | | 4.3 | | | | (9 | ) | | | (3.8 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
NONINTEREST EXPENSES | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Salaries | | | 197 | | | | 189 | | | | 193 | | | | 185 | | | | 195 | | | | 8 | | | | 4.8 | | | | 2 | | | | 1.5 | |
| Employee benefits | | | 44 | | | | 47 | | | | 40 | | | | 40 | | | | 40 | | | | (3 | ) | | | (6.0 | ) | | | 4 | | | | 10.4 | |
| |
| Total salaries and employee benefits | | | 241 | | | | 236 | | | | 233 | | | | 225 | | | | 235 | | | | 5 | | | | 2.7 | | | | 6 | | | | 3.0 | |
| Net occupancy expense | | | 28 | | | | 32 | | | | 32 | | | | 32 | | | | 31 | | | | (4 | ) | | | (12.0 | ) | | | (3 | ) | | | (7.7 | ) |
| Equipment expense | | | 14 | | | | 14 | | | | 15 | | | | 14 | | | | 14 | | | | — | | | | (0.5 | ) | | | — | | | | (3.4 | ) |
| Outside processing fee expense | | | 20 | | | | 17 | | | | 17 | | | | 16 | | | | 18 | | | | 3 | | | | 15.3 | | | | 2 | | | | 10.1 | |
| Software expense | | | 11 | | | | 12 | | | | 12 | | | | 11 | | | | 9 | | | | (1 | ) | | | (4.0 | ) | | | 2 | | | | 13.9 | |
| Customer services | | | 10 | | | | 11 | | | | 6 | | | | 8 | | | | 7 | | | | (1 | ) | | | (6.6 | ) | | | 3 | | | | 55.9 | |
| Litigation and operational losses | | | 7 | | | | 3 | | | | (3 | ) | | | 16 | | | | 3 | | | | 4 | | | | 108.0 | | | | 4 | | | | 144.6 | |
| Other noninterest expenses | | | 52 | | | | 49 | | | | 68 | | | | 50 | | | | 55 | | | | 3 | | | | 3.8 | | | | (3 | ) | | | (6.9 | ) |
| |
| Total noninterest expenses | | | 383 | | | | 374 | | | | 380 | | | | 372 | | | | 372 | | | | 9 | | | | 2.5 | | | | 11 | | | | 3.0 | |
| |
| Income before income taxes | | | 317 | | | | 295 | | | | 310 | | | | 285 | | | | 284 | | | | 22 | | | | 7.3 | | | | 33 | | | | 11.9 | |
| Provision for income taxes | | | 100 | | | | 96 | | | | 103 | | | | 89 | | | | 92 | | | | 4 | | | | 4.6 | | | | 8 | | | | 9.7 | |
| |
NET INCOME | | $ | 217 | | | $ | 199 | | | $ | 207 | | | $ | 196 | | | $ | 192 | | | $ | 18 | | | | 8.6 | % | | $ | 25 | | | | 12.9 | % |
| |
| Basic net income per common share | | $ | 1.29 | | | $ | 1.18 | | | $ | 1.22 | | | $ | 1.15 | | | $ | 1.11 | | | $ | 0.11 | | | | 9.3 | % | | $ | 0.18 | | | | 16.2 | % |
| Diluted net income per common share | | | 1.28 | | | | 1.16 | | | | 1.21 | | | | 1.13 | | | | 1.10 | | | | 0.12 | | | | 10.3 | | | | 0.18 | | | | 16.4 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Cash dividends declared on common stock | | | 92 | | | | 93 | | | | 88 | | | | 88 | | | | 90 | | | | (1 | ) | | | (1.3 | ) | | | 2 | | | | 2.7 | |
| Dividends per common share | | | 0.55 | | | | 0.55 | | | | 0.52 | | | | 0.52 | | | | 0.52 | | | | — | | | | — | | | | 0.03 | | | | 5.8 | |
| |
N/M - Not meaningful
-9-
ANALYSIS OF THE ALLOWANCE FOR LOAN LOSSES
Comerica Incorporated and Subsidiaries
| | | | | | | | | | | | | | | | | | | | | |
| | |
| | | 2005 | | | 2004 | |
| (in millions) | | 2nd Qtr | | | 1st Qtr | | | 4th Qtr | | | 3rd Qtr | | | 2nd Qtr | |
| |
| Balance at beginning of period | | $ | 636 | | | $ | 673 | | | $ | 729 | | | $ | 762 | | | $ | 798 | |
| | | | | | | | | | | | | | | | | | | | | |
| Loans charged-off: | | | | | | | | | | | | | | | | | | | | |
| Commercial | | | 29 | | | | 28 | | | | 39 | | | | 41 | | | | 57 | |
| Real estate construction: | | | | | | | | | | | | | | | | | | | | |
| Real estate construction business line | | | — | | | | — | | | | — | | | | 1 | | | | 1 | |
| Other | | | — | | | | — | | | | — | | | | — | | | | — | |
| |
| Total real estate construction | | | — | | | | — | | | | — | | | | 1 | | | | 1 | |
| Commercial mortgage: | | | | | | | | | | | | | | | | | | | | |
| Commercial real estate business line | | | 2 | | | | 2 | | | | 4 | | | | — | | | | — | |
| Other | | | 5 | | | | 3 | | | | — | | | | 7 | | | | 6 | |
| |
| Total commercial mortgage | | | 7 | | | | 5 | | | | 4 | | | | 7 | | | | 6 | |
| Residential mortgage | | | — | | | | — | | | | — | | | | 1 | | | | — | |
| Consumer | | | 3 | | | | 3 | | | | 5 | | | | 2 | | | | 4 | |
| Lease financing | | | 3 | | | | 3 | | | | 4 | | | | — | | | | 1 | |
| International | | | 1 | | | | 7 | | | | 3 | | | | 1 | | | | 7 | |
| |
| Total loans charged-off | | | 43 | | | | 46 | | | | 55 | | | | 53 | | | | 76 | |
| | | | | | | | | | | | | | | | | | | | | |
| Recoveries on loans previously charged-off: | | | | | | | | | | | | | | | | | | | | |
| Commercial | | | 12 | | | | 7 | | | | 14 | | | | 13 | | | | 15 | |
| Real estate construction | | | — | | | | — | | | | — | | | | — | | | | — | |
| Commercial mortgage | | | 1 | | | | — | | | | 1 | | | | 1 | | | | 1 | |
| Residential mortgage | | | — | | | | — | | | | — | | | | — | | | | — | |
| Consumer | | | — | | | | 1 | | | | — | | | | 1 | | | | 1 | |
| Lease financing | | | — | | | | — | | | | — | | | | — | | | | — | |
| International | | | 1 | | | | — | | | | 5 | | | | 5 | | | | 3 | |
| |
| Total recoveries | | | 14 | | | | 8 | | | | 20 | | | | 20 | | | | 20 | |
| |
| Net loans charged-off | | | 29 | | | | 38 | | | | 35 | | | | 33 | | | | 56 | |
| Provision for loan losses | | | 2 | | | | 1 | | | | (21 | ) | | | — | | | | 20 | |
| |
| Balance at end of period | | $ | 609 | | | $ | 636 | | | $ | 673 | | | $ | 729 | | | $ | 762 | |
| |
| | | | | | | | | | | | | | | | | | | | | |
| Allowance for loan losses as a percentage of total loans | | | 1.41 | % | | | 1.52 | % | | | 1.65 | % | | | 1.83 | % | | | 1.90 | % |
| | | | | | | | | | | | | | | | | | | | | |
| Net loans charged-off as a percentage of average total loans | | | 0.27 | | | | 0.36 | | | | 0.34 | | | | 0.33 | | | | 0.55 | |
| |
| Allowance for credit losses on lending-related commitments* | | $ | 15 | | | $ | 18 | | | $ | 21 | | | $ | 24 | | | $ | 28 | |
| |
| * | | Included in “Accrued expenses and other liabilities” on the consolidated balance sheets. |
-10-
NONPERFORMING ASSETS
Comerica Incorporated and Subsidiaries
| | | | | | | | | | | | | | | | | | | | | |
| | |
| | | 2005 | | | 2004 | |
| (in millions) | | 2nd Qtr | | | 1st Qtr | | | 4th Qtr | | | 3rd Qtr | | | 2nd Qtr | |
| |
SUMMARY OF NONPERFORMING ASSETS AND PAST DUE LOANS | | | | | | | | | | | | | | | | | | | | |
| Nonaccrual loans: | | | | | | | | | | | | | | | | | | | | |
| Commercial | | $ | 125 | | | $ | 161 | | | $ | 161 | | | $ | 181 | | | $ | 229 | |
| Real estate construction: | | | | | | | | | | | | | | | | | | | | |
| Real estate construction business line | | | 8 | | | | 18 | | | | 31 | | | | 28 | | | | 20 | |
| Other | | | 2 | | | | 2 | | | | 3 | | | | 3 | | | | 3 | |
| |
| Total real estate construction | | | 10 | | | | 20 | | | | 34 | | | | 31 | | | | 23 | |
| Commercial mortgage: | | | | | | | | | | | | | | | | | | | | |
| Commercial real estate business line | | | 9 | | | | 11 | | | | 6 | | | | 10 | | | | 12 | |
| Other | | | 32 | | | | 38 | | | | 58 | | | | 70 | | | | 80 | |
| |
| Total commercial mortgage | | | 41 | | | | 49 | | | | 64 | | | | 80 | | | | 92 | |
| Residential mortgage | | | 2 | | | | 2 | | | | 1 | | | | 1 | | | | 3 | |
| Consumer | | | 2 | | | | 1 | | | | 1 | | | | 2 | | | | 2 | |
| Lease financing | | | 9 | | | | 12 | | | | 15 | | | | 19 | | | | 13 | |
| International | | | 23 | | | | 24 | | | | 36 | | | | 47 | | | | 42 | |
| |
| Total nonaccrual loans | | | 212 | | | | 269 | | | | 312 | | | | 361 | | | | 404 | |
| Reduced-rate loans | | | — | | | | — | | | | — | | | | — | | | | — | |
| |
| Total nonperforming loans | | | 212 | | | | 269 | | | | 312 | | | | 361 | | | | 404 | |
| Other real estate | | | 34 | | | | 42 | | | | 27 | | | | 27 | | | | 26 | |
| Nonaccrual debt securities | | | — | | | | — | | | | — | | | | — | | | | — | |
| |
| Total nonperforming assets | | $ | 246 | | | $ | 311 | | | $ | 339 | | | $ | 388 | | | $ | 430 | |
| |
| | | | | | | | | | | | | | | | | | | | | |
| Nonperforming loans as a percentage of total loans | | | 0.49 | % | | | 0.64 | % | | | 0.76 | % | | | 0.91 | % | | | 1.01 | % |
| Nonperforming assets as a percentage of total loans, other real estate and nonaccrual debt securities | | | 0.57 | | | | 0.75 | | | | 0.83 | | | | 0.98 | | | | 1.07 | |
| Allowance for loan losses as a percentage of total nonperforming assets | | | 248 | | | | 204 | | | | 198 | | | | 188 | | | | 177 | |
| Loans past due 90 days or more and still accruing | | $ | 24 | | | $ | 23 | | | $ | 15 | | | $ | 20 | | | $ | 25 | |
| |
| |
| | | | | | | | | | | | | | | | | | | | | |
ANALYSIS OF NONACCRUAL LOANS | | | | | | | | | | | | | | | | | | | | |
| Nonaccrual loans at beginning of period | | $ | 269 | | | $ | 312 | | | $ | 361 | | | $ | 404 | | | $ | 489 | |
| Loans transferred to nonaccrual (1) | | | 47 | | | | 66 | | | | 71 | | | | 106 | | | | 63 | |
| Nonaccrual business loan gross charge-offs (2) | | | (38 | ) | | | (42 | ) | | | (49 | ) | | | (48 | ) | | | (71 | ) |
| Loans transferred to accrual status (1) | | | — | | | | (4 | ) | | | (7 | ) | | | — | | | | — | |
| Nonaccrual business loans sold (3) | | | — | | | | (14 | ) | | | (33 | ) | | | (16 | ) | | | (33 | ) |
| Payments/Other (4) | | | (66 | ) | | | (49 | ) | | | (31 | ) | | | (85 | ) | | | (44 | ) |
| |
| Nonaccrual loans at end of period | | $ | 212 | | | $ | 269 | | | $ | 312 | | | $ | 361 | | | $ | 404 | |
| |
| (1) | | Based on an analysis of nonaccrual loans with book balances greater than $2 million. |
| |
| (2) | | Analysis of gross loan charge-offs: |
| | | | | | | | | | | | | | | | | | | | | |
| Nonaccrual business loans | | $ | 38 | | | $ | 42 | | | $ | 49 | | | $ | 48 | | | $ | 71 | |
| Performing watch list loans | | | 2 | | | | 1 | | | | 1 | | | | 2 | | | | 1 | |
| Consumer loans and residential mortgage loans | | | 3 | | | | 3 | | | | 5 | | | | 3 | | | | 4 | |
| | | |
| Total gross loan charge-offs | | $ | 43 | | | $ | 46 | | | $ | 55 | | | $ | 53 | | | $ | 76 | |
| | | |
| (3) | | Analysis of loans sold: |
| | | | | | | | | | | | | | | | | | | | | |
| Nonaccrual business loans | | $ | — | | | $ | 14 | | | $ | 33 | | | $ | 16 | | | $ | 33 | |
| Performing watch list loans sold | | | 7 | | | | 4 | | | | 7 | | | | 30 | | | | 14 | |
| | | |
| Total loans sold | | $ | 7 | | | $ | 18 | | | $ | 40 | | | $ | 46 | | | $ | 47 | |
| | | |
| (4) | | Net change related to nonaccrual loans with balances less than $2 million, other than business loan gross charge-offs and nonaccrual loans sold, are included in Payments/Other. |
-11-
ANALYSIS OF NET INTEREST INCOME (FTE)
Comerica Incorporated and Subsidiaries
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | |
| | | Three Months Ended | |
| | | June 30, 2005 | | | March 31, 2005 | | | June 30, 2004 | |
| | | Average | | | | | | | Average | | | Average | | | | | | | Average | | | Average | | | | | | | Average | |
| (dollar amounts in millions) | | Balance | | | Interest | | | Rate | | | Balance | | | Interest | | | Rate | | | Balance | | | Interest | | | Rate | |
| |
| Commercial loans | | $ | 24,122 | | | $ | 329 | | | | 5.46 | % | | $ | 23,248 | | | $ | 286 | | | | 5.00 | % | | $ | 22,178 | | | $ | 217 | | | | 3.93 | % |
| Real estate construction loans | | | 3,101 | | | | 54 | | | | 6.99 | | | | 3,052 | | | | 49 | | | | 6.48 | | | | 3,253 | | | | 42 | | | | 5.13 | |
| Commercial mortgage loans | | | 8,513 | | | | 129 | | | | 6.06 | | | | 8,315 | | | | 118 | | | | 5.77 | | | | 8,050 | | | | 100 | | | | 4.99 | |
| Residential mortgage loans | | | 1,357 | | | | 20 | | | | 5.75 | | | | 1,310 | | | | 18 | | | | 5.58 | | | | 1,209 | | | | 17 | | | | 5.73 | |
| Consumer loans | | | 2,673 | | | | 38 | | | | 5.75 | | | | 2,734 | | | | 36 | | | | 5.32 | | | | 2,653 | | | | 30 | | | | 4.57 | |
| Lease financing | | | 1,283 | | | | 13 | | | | 4.08 | | | | 1,261 | | | | 13 | | | | 4.13 | | | | 1,271 | | | | 14 | | | | 4.29 | |
| International loans | | | 2,185 | | | | 31 | | | | 5.77 | | | | 2,235 | | | | 30 | | | | 5.43 | | | | 2,115 | | | | 23 | | | | 4.42 | |
| Business loan swap income | | | — | | | | 3 | | | | — | | | | — | | | | 17 | | | | — | | | | — | | | | 57 | | | | — | |
| | | |
| Total loans | | | 43,234 | | | | 617 | | | | 5.72 | | | | 42,155 | | | | 567 | | | | 5.45 | | | | 40,729 | | | | 500 | | | | 4.93 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Investment securities available-for-sale (1) | | | 3,681 | | | | 34 | | | | 3.67 | | | | 3,790 | | | | 35 | | | | 3.60 | | | | 4,460 | | | | 35 | | | | 3.17 | |
| Short-term investments | | | 497 | | | | 5 | | | | 4.54 | | | | 700 | | | | 6 | | | | 3.47 | | | | 2,450 | | | | 10 | | | | 1.51 | |
| | | |
| Total earning assets | | | 47,412 | | | | 656 | | | | 5.54 | | | | 46,645 | | | | 608 | | | | 5.27 | | | | 47,639 | | | | 545 | | | | 4.59 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Cash and due from banks | | | 1,697 | | | | | | | | | | | | 1,639 | | | | | | | | | | | | 1,727 | | | | | | | | | |
| Allowance for loan losses | | | (645 | ) | | | | | | | | | | | (685 | ) | | | | | | | | | | | (812 | ) | | | | | | | | |
| Accrued income and other assets | | | 3,171 | | | | | | | | | | | | 3,151 | | | | | | | | | | | | 3,039 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Total assets | | $ | 51,635 | | | | | | | | | | | $ | 50,750 | | | | | | | | | | | $ | 51,593 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Money market and NOW deposits | | $ | 17,190 | | | | 77 | | | | 1.80 | | | $ | 17,810 | | | | 69 | | | | 1.56 | | | $ | 17,886 | | | | 43 | | | | 0.95 | |
| Savings deposits | | | 1,568 | | | | 1 | | | | 0.42 | | | | 1,582 | | | | 2 | | | | 0.41 | | | | 1,651 | | | | 1 | | | | 0.38 | |
| Certificates of deposit | | | 5,509 | | | | 36 | | | | 2.57 | | | | 5,558 | | | | 31 | | | | 2.28 | | | | 5,991 | | | | 24 | | | | 1.61 | |
| Foreign office time deposits | | | 738 | | | | 8 | | | | 4.23 | | | | 712 | | | | 6 | | | | 3.72 | | | | 655 | | | | 4 | | | | 2.20 | |
| | | |
| Total interest-bearing deposits | | | 25,005 | | | | 122 | | | | 1.96 | | | | 25,662 | | | | 108 | | | | 1.71 | | | | 26,183 | | | | 72 | | | | 1.10 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Short-term borrowings | | | 1,182 | | | | 9 | | | | 3.06 | | | | 441 | | | | 3 | | | | 2.71 | | | | 262 | | | | — | | | | 0.94 | |
| Medium- and long-term debt | | | 4,314 | | | | 41 | | | | 3.83 | | | | 4,277 | | | | 36 | | | | 3.37 | | | | 4,566 | | | | 25 | | | | 2.17 | |
| | | |
| Total interest-bearing sources | | | 30,501 | | | | 172 | | | | 2.26 | | | | 30,380 | | | | 147 | | | | 1.96 | | | | 31,011 | | | | 97 | | | | 1.26 | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Noninterest-bearing deposits | | | 14,995 | | | | | | | | | | | | 14,120 | | | | | | | | | | | | 14,730 | | | | | | | | | |
| Accrued expenses and other liabilities | | | 1,039 | | | | | | | | | | | | 1,178 | | | | | | | | | | | | 849 | | | | | | | | | |
| Common shareholders’ equity | | | 5,100 | | | | | | | | | | | | 5,072 | | | | | | | | | | | | 5,003 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Total liabilities and shareholders’ equity | | $ | 51,635 | | | | | | | | | | | $ | 50,750 | | | | | | | | | | | $ | 51,593 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| |
| Net interest income/rate spread (FTE) | | | | | | $ | 484 | | | | 3.28 | | | | | | | $ | 461 | | | | 3.31 | | | | | | | $ | 448 | | | | 3.33 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| |
| FTE adjustment | | | | | | $ | 1 | | | | | | | | | | | $ | 1 | | | | | | | | | | | $ | — | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| |
| Impact of net noninterest-bearing sources of funds | | | | | | | | | | | 0.81 | | | | | | | | | | | | 0.69 | | | | | | | | | | | | 0.44 | |
| |
| Net interest margin (as a percentage of average earning assets) (FTE) | | | | | | | | | | | 4.09 | % | | | | | | | | | | | 4.00 | % | | | | | | | | | | | 3.77 | % |
| |
| (1) | | The average rate for investment securities available-for-sale was computed using average historical cost. |
-12-
ANALYSIS OF NET INTEREST INCOME (FTE)
Comerica Incorporated and Subsidiaries
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | |
| | | Six Months Ended | |
| | | June 30, 2005 | | | June 30, 2004 | |
| | | Average | | | | | | | Average | | | Average | | | | | | | Average | |
| (dollar amounts in millions) | | Balance | | | Interest | | | Rate | | | Balance | | | Interest | | | Rate | |
| |
| Commercial loans | | $ | 23,688 | | | $ | 615 | | | | 5.23 | % | | $ | 21,947 | | | $ | 435 | | | | 3.99 | % |
| Real estate construction loans | | | 3,077 | | | | 103 | | | | 6.74 | | | | 3,303 | | | | 83 | | | | 5.07 | |
| Commercial mortgage loans | | | 8,415 | | | | 247 | | | | 5.92 | | | | 8,008 | | | | 200 | | | | 5.01 | |
| Residential mortgage loans | | | 1,333 | | | | 38 | | | | 5.67 | | | | 1,217 | | | | 35 | | | | 5.75 | |
| Consumer loans | | | 2,703 | | | | 74 | | | | 5.53 | | | | 2,640 | | | | 61 | | | | 4.59 | |
| Lease financing | | | 1,272 | | | | 26 | | | | 4.10 | | | | 1,281 | | | | 28 | | | | 4.34 | |
| International loans | | | 2,210 | | | | 61 | | | | 5.60 | | | | 2,182 | | | | 46 | | | | 4.26 | |
| Business loan swap income | | | — | | | | 20 | | | | — | | | | — | | | | 109 | | | | — | |
| | | |
| Total loans | | | 42,698 | | | | 1,184 | | | | 5.59 | | | | 40,578 | | | | 997 | | | | 4.94 | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Investment securities available-for-sale (1) | | | 3,735 | | | | 69 | | | | 3.64 | | | | 4,505 | | | | 75 | | | | 3.32 | |
| Short-term investments | | | 598 | | | | 11 | | | | 3.92 | | | | 2,147 | | | | 17 | | | | 1.57 | |
| | | |
| Total earning assets | | | 47,031 | | | | 1,264 | | | | 5.41 | | | | 47,230 | | | | 1,089 | | | | 4.63 | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Cash and due from banks | | | 1,668 | | | | | | | | | | | | 1,695 | | | | | | | | | |
| Allowance for loan losses | | | (665 | ) | | | | | | | | | | | (821 | ) | | | | | | | | |
| Accrued income and other assets | | | 3,161 | | | | | | | | | | | | 3,061 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | |
| Total assets | | $ | 51,195 | | | | | | | | | | | $ | 51,165 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Money market and NOW deposits | | $ | 17,499 | | | | 146 | | | | 1.68 | | | $ | 17,897 | | | | 85 | | | | 0.95 | |
| Savings deposits | | | 1,575 | | | | 3 | | | | 0.41 | | | | 1,629 | | | | 3 | | | | 0.39 | |
| Certificates of deposit | | | 5,533 | | | | 67 | | | | 2.43 | | | | 6,254 | | | | 50 | | | | 1.60 | |
| Foreign office time deposits | | | 725 | | | | 14 | | | | 3.98 | | | | 622 | | | | 7 | | | | 2.30 | |
| | | |
| Total interest-bearing deposits | | | 25,332 | | | | 230 | | | | 1.83 | | | | 26,402 | | | | 145 | | | | 1.10 | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Short-term borrowings | | | 814 | | | | 12 | | | | 2.97 | | | | 286 | | | | 1 | | | | 0.91 | |
| Medium- and long-term debt | | | 4,295 | | | | 77 | | | | 3.61 | | | | 4,680 | | | | 49 | | | | 2.11 | |
| | | |
| Total interest-bearing sources | | | 30,441 | | | | 319 | | | | 2.11 | | | | 31,368 | | | | 195 | | | | 1.25 | |
| | | | | | | | | | | | | |
| Noninterest-bearing deposits | | | 14,560 | | | | | | | | | | | | 13,858 | | | | | | | | | |
| Accrued expenses and other liabilities | | | 1,108 | | | | | | | | | | | | 890 | | | | | | | | | |
| Common shareholders’ equity | | | 5,086 | | | | | | | | | | | | 5,049 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | |
| Total liabilities and shareholders’ equity | | $ | 51,195 | | | | | | | | | | | $ | 51,165 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | |
| |
| Net interest income/rate spread (FTE) | | | | | | $ | 945 | | | | 3.30 | | | | | | | $ | 894 | | | | 3.38 | |
| | | | | | | | | | | | | | | | | | | | | | | |
| |
| FTE adjustment | | | | | | $ | 2 | | | | | | | | | | | $ | 1 | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | |
| |
| Impact of net noninterest-bearing sources of funds | | | | | | | | | | | 0.74 | | | | | | | | | | | | 0.42 | |
| |
| Net interest margin (as a percentage of average earning assets) (FTE) | | | | | | | | | | | 4.04 | % | | | | | | | | | | | 3.80 | % |
| |
| (1) | | The average rate for investment securities available-for-sale was computed using average historical cost. |
-13-
CONSOLIDATED STATISTICAL DATA
Comerica Incorporated and Subsidiaries
| | | | | | | | | | | | | | | | | | | | | |
| | |
| | | June 30, | | | March 31, | | | December 31, | | | September 30, | | | June 30, | |
| (in millions, except per share data) | | 2005 | | | 2005 | | | 2004 | | | 2004 | | | 2004 | |
| |
| Commercial loans: | | | | | | | | | | | | | | | | | | | | |
| Floor plan | | $ | 2,766 | | | $ | 2,668 | | | $ | 2,575 | | | $ | 2,270 | | | $ | 2,802 | |
| Other | | | 20,924 | | | | 20,112 | | | | 19,464 | | | | 18,876 | | | | 18,656 | |
| |
| Total commercial loans | | | 23,690 | | | | 22,780 | | | | 22,039 | | | | 21,146 | | | | 21,458 | |
| Real estate construction loans: | | | | | | | | | | | | | | | | | | | | |
| Real estate construction business line | | | 2,587 | | | | 2,451 | | | | 2,461 | | | | 2,641 | | | | 2,661 | |
| Other | | | 581 | | | | 584 | | | | 592 | | | | 635 | | | | 621 | |
| |
| Total real estate construction loans | | | 3,168 | | | | 3,035 | | | | 3,053 | | | | 3,276 | | | | 3,282 | |
| Commercial mortgage loans: | | | | | | | | | | | | | | | | | | | | |
| Commercial real estate business line | | | 1,465 | | | | 1,555 | | | | 1,556 | | | | 1,498 | | | | 1,656 | |
| Other | | | 7,071 | | | | 6,860 | | | | 6,680 | | | | 6,433 | | | | 6,424 | |
| |
| Total commercial mortgage loans | | | 8,536 | | | | 8,415 | | | | 8,236 | | | | 7,931 | | | | 8,080 | |
| Residential mortgage loans | | | 1,394 | | | | 1,335 | | | | 1,294 | | | | 1,263 | | | | 1,211 | |
| Consumer loans: | | | | | | | | | | | | | | | | | | | | |
| Home equity | | | 1,867 | | | | 1,797 | | | | 1,837 | | | | 1,815 | | | | 1,788 | |
| Other consumer | | | 834 | | | | 903 | | | | 914 | | | | 907 | | | | 884 | |
| |
| Total consumer loans | | | 2,701 | | | | 2,700 | | | | 2,751 | | | | 2,722 | | | | 2,672 | |
| Lease financing | | | 1,296 | | | | 1,262 | | | | 1,265 | | | | 1,260 | | | | 1,266 | |
| International loans | | | 2,239 | | | | 2,209 | | | | 2,205 | | | | 2,117 | | | | 2,130 | |
| |
| Total loans | | $ | 43,024 | | | $ | 41,736 | | | $ | 40,843 | | | $ | 39,715 | | | $ | 40,099 | |
| |
| | | | | | | | | | | | | | | | | | | | | |
| Goodwill | | $ | 247 | | | $ | 247 | | | $ | 247 | | | $ | 247 | | | $ | 247 | |
| Other intangible assets | | | 1 | | | | 1 | | | | 1 | | | | 1 | | | | 1 | |
| Loan servicing rights | | | 19 | | | | 19 | | | | 20 | | | | 20 | | | | 19 | |
| Deferred mutual fund distribution costs | | | 7 | | | | 7 | | | | 8 | | | | 9 | | | | 10 | |
| Amortization of intangibles (quarterly) | | | — | | | | — | | | | — | | | | — | | | | 1 | |
| | | | | | | | | | | | | | | | | | | | | |
| Tier 1 common capital ratio* | | | 7.90 | % | | | 8.04 | % | | | 8.13 | % | | | 8.16 | % | | | 8.00 | % |
| Tier 1 risk-based capital ratio* | | | 8.52 | | | | 8.66 | | | | 8.77 | | | | 8.81 | | | | 8.64 | |
| Total risk-based capital ratio * | | | 12.09 | | | | 12.49 | | | | 12.75 | | | | 13.06 | | | | 12.91 | |
| Leverage ratio* | | | 10.39 | | | | 10.50 | | | | 10.37 | | | | 10.28 | | | | 9.97 | |
| | | | | | | | | | | | | | | | | | | | | |
| Book value per share | | $ | 30.60 | | | $ | 29.81 | | | $ | 29.94 | | | $ | 29.52 | | | $ | 28.75 | |
| | | | | | | | | | | | | | | | | | | | | |
| Market value per share for the quarter: | | | | | | | | | | | | | | | | | | | | |
| High | | $ | 59.29 | | | $ | 61.40 | | | $ | 63.80 | | | $ | 61.48 | | | $ | 56.99 | |
| Low | | | 53.17 | | | | 53.70 | | | | 57.81 | | | | 53.00 | | | | 50.45 | |
| Close | | | 57.80 | | | | 55.08 | | | | 61.02 | | | | 59.35 | | | | 54.88 | |
| | | | | | | | | | | | | | | | | | | | | |
| Quarterly ratios: | | | | | | | | | | | | | | | | | | | | |
| Return on average common shareholders’ equity | | | 16.99 | % | | | 15.73 | % | | | 16.39 | % | | | 15.68 | % | | | 15.35 | % |
| Return on average assets | | | 1.68 | | | | 1.57 | | | | 1.63 | | | | 1.55 | | | | 1.49 | |
| Efficiency ratio | | | 54.49 | | | | 55.70 | | | | 56.61 | | | | 56.08 | | | | 55.08 | |
| | | | | | | | | | | | | | | | | | | | | |
| Number of banking offices | | | 363 | | | | 375 | | | | 376 | | | | 364 | | | | 361 | |
| | | | | | | | | | | | | | | | | | | | | |
| Number of employees - full time equivalent | | | 10,899 | | | | 10,878 | | | | 10,968 | | | | 10,919 | | | | 11,111 | |
| * June 30, 2005 ratios are estimated |
-14-
PARENT COMPANY ONLY BALANCE SHEETS
Comerica Incorporated
| | | | | | | | | | | | | |
| |
| | | June 30, | | | December 31, | | | June 30, | |
| (in millions, except share data) | | 2005 | | | 2004 | | | 2004 | |
| |
ASSETS | | | | | | | | | | | | |
| Cash and due from subsidiary bank | | $ | — | | | $ | 1 | | | $ | 5 | |
| Short-term investments with subsidiary bank | | | 280 | | | | 289 | | | | 226 | |
| Investment in subsidiaries, principally banks | | | 5,640 | | | | 5,585 | | | | 5,487 | |
| Premises and equipment | | | 3 | | | | 3 | | | | 3 | |
| Other assets | | | 293 | | | | 304 | | | | 277 | |
| |
| Total assets | | $ | 6,216 | | | $ | 6,182 | | | $ | 5,998 | |
| |
| | | | | | | | | | | | | |
LIABILITIES AND SHAREHOLDERS’ EQUITY | | | | | | | | | | | | |
| Long-term debt | | $ | 829 | | | $ | 824 | | | $ | 813 | |
| Other liabilities | | | 270 | | | | 253 | | | | 251 | |
| |
| Total liabilities | | | 1,099 | | | | 1,077 | | | | 1,064 | |
| | | | | | | | | | | | | |
| Common stock - - $5 par value: | | | | | | | | | | | | |
| Authorized - 325,000,000 shares | | | | | | | | | | | | |
| Issued - 178,735,252 shares at 6/30/05, 12/31/04 and 6/30/04 | | | 894 | | | | 894 | | | | 894 | |
| Capital surplus | | | 433 | | | | 421 | | | | 398 | |
| Accumulated other comprehensive loss | | | (99 | ) | | | (69 | ) | | | (82 | ) |
| Retained earnings | | | 4,546 | | | | 4,331 | | | | 4,125 | |
| Less cost of common stock in treasury - 11,513,612 shares at 6/30/05, 8,259,328 shares at 12/31/04 and 7,124,990 shares at 6/30/04 | | | (657 | ) | | | (472 | ) | | | (401 | ) |
| |
| Total shareholders’ equity | | | 5,117 | | | | 5,105 | | | | 4,934 | |
| |
| Total liabilities and shareholders’ equity | | $ | 6,216 | | | $ | 6,182 | | | $ | 5,998 | |
| |
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY
Comerica Incorporated and Subsidiaries
| | | | | | | | | | | | | | | | | | | | | | | | | |
| |
| | | | | | | | | | | Accumulated | | | | | | | | | | | | |
| | | | | | | | | | | Other | | | | | | | | | | | Total | |
| | | Common | | | Capital | | | Comprehensive | | | Retained | | | Treasury | | | Shareholders’ | |
| (in millions, except share data) | | Stock | | | Surplus | | | Income (Loss) | | | Earnings | | | Stock | | | Equity | |
| |
BALANCE AT JANUARY 1, 2004 | | $ | 894 | | | $ | 384 | | | $ | 74 | | | $ | 3,973 | | | $ | (215 | ) | | $ | 5,110 | |
| Net income | | | — | | | | — | | | | — | | | | 354 | | | | — | | | | 354 | |
| Other comprehensive loss, net of tax | | | — | | | | — | | | | (156 | ) | | | — | | | | — | | | | (156 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | |
| Total comprehensive income | | | | | | | | | | | | | | | | | | | | | | | 198 | |
| Cash dividends declared on common stock ($1.04 per share) | | | — | | | | — | | | | — | | | | (180 | ) | | | — | | | | (180 | ) |
| Purchase of 4,458,423 shares of common stock | | | — | | | | — | | | | — | | | | — | | | | (247 | ) | | | (247 | ) |
| Net issuance of common stock under employee stock plans | | | — | | | | (6 | ) | | | — | | | | (22 | ) | | | 61 | | | | 33 | |
| Recognition of stock-based compensation expense | | | — | | | | 20 | | | | — | | | | — | | | | — | | | | 20 | |
| |
BALANCE AT JUNE 30, 2004 | | $ | 894 | | | $ | 398 | | | $ | (82 | ) | | $ | 4,125 | | | $ | (401 | ) | | $ | 4,934 | |
| |
BALANCE AT JANUARY 1, 2005 | | $ | 894 | | | $ | 421 | | | $ | (69 | ) | | $ | 4,331 | | | $ | (472 | ) | | $ | 5,105 | |
| Net income | | | — | | | | — | | | | — | | | | 416 | | | | — | | | | 416 | |
| Other comprehensive loss, net of tax | | | — | | | | — | | | | (30 | ) | | | — | | | | — | | | | (30 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | |
| Total comprehensive income | | | | | | | | | | | | | | | | | | | | | | | 386 | |
| Cash dividends declared on common stock ($1.10 per share) | | | — | | | | — | | | | — | | | | (185 | ) | | | — | | | | (185 | ) |
| Purchase of 4,078,100 shares of common stock | | | — | | | | — | | | | — | | | | — | | | | (232 | ) | | | (232 | ) |
| Net issuance of common stock under employee stock plans | | | — | | | | (9 | ) | | | — | | | | (16 | ) | | | 47 | | | | 22 | |
| Recognition of stock-based compensation expense | | | — | | | | 21 | | | | — | | | | — | | | | — | | | | 21 | |
| |
BALANCE AT JUNE 30, 2005 | | $ | 894 | | | $ | 433 | | | $ | (99 | ) | | $ | 4,546 | | | $ | (657 | ) | | $ | 5,117 | |
| |
-15-
BUSINESS SEGMENT FINANCIAL RESULTS
Comerica Incorporated and Subsidiaries
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | |
| (dollar amounts in millions) | | | | | | Business Bank | | | | | | | | Small Business & Personal Financial Services | | | | Wealth & Institutional Management | |
| | | |
| | | June 30, | | | March 31, | | | June 30, | | | | June 30, | | | March 31, | | | June 30, | | | | June 30, | | | March 31, | | | June 30, | |
| Three Months Ended | | 2005 | | | 2005 | | | 2004 | | | | 2005 | | | 2005 | | | 2004 | | | | 2005 | | | 2005 | | | 2004 | |
| | | |
| Earnings summary: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Net interest income (expense) (FTE) | | $ | 350 | | | $ | 337 | | | $ | 345 | | | | $ | 152 | | | $ | 146 | | | $ | 144 | | | | $ | 37 | | | $ | 36 | | | $ | 37 | |
| Provision for loan losses | | | 18 | | | | 4 | | | | (19 | ) | | | | (2 | ) | | | 2 | | | | 3 | | | | | 1 | | | | (2 | ) | | | — | |
| Noninterest income | | | 71 | | | | 69 | | | | 79 | | | | | 53 | | | | 49 | | | | 56 | | | | | 79 | | | | 80 | | | | 77 | |
| Noninterest expenses | | | 159 | | | | 141 | | | | 151 | | | | | 132 | | | | 126 | | | | 125 | | | | | 88 | | | | 80 | | | | 84 | |
| Provision (benefit) for income taxes (FTE) | | | 81 | | | | 86 | | | | 104 | | | | | 26 | | | | 23 | | | | 26 | | | | | 10 | | | | 13 | | | | 11 | |
| | | | | |
| Net income (loss) | | $ | 163 | | | $ | 175 | | | $ | 188 | | | | $ | 49 | | | $ | 44 | | | $ | 46 | | | | $ | 17 | | | $ | 25 | | | $ | 19 | |
| | | | | |
| Net charge-offs | | $ | 21 | | | $ | 29 | | | $ | 49 | | | | $ | 5 | | | $ | 4 | | | $ | 5 | | | | $ | 3 | | | $ | 5 | | | $ | 2 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Selected average balances: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Assets | | $ | 35,435 | | | $ | 34,210 | | | $ | 33,078 | | | | $ | 6,446 | | | $ | 6,435 | | | $ | 6,473 | | | | $ | 3,622 | | | $ | 3,628 | | | $ | 3,292 | |
| Loans | | | 34,110 | | | | 32,970 | | | | 31,951 | | | | | 5,768 | | | | 5,778 | | | | 5,751 | | | | | 3,335 | | | | 3,368 | | | | 3,037 | |
| Deposits | | | 20,352 | | | | 19,877 | | | | 20,143 | | | | | 16,874 | | | | 16,796 | | | | 16,795 | | | | | 2,414 | | | | 2,451 | | | | 2,629 | |
| Liabilities | | | 21,151 | | | | 20,682 | | | | 20,786 | | | | | 16,871 | | | | 16,792 | | | | 16,788 | | | | | 2,423 | | | | 2,457 | | | | 2,639 | |
| Attributed equity | | | 2,501 | | | | 2,476 | | | | 2,441 | | | | | 792 | | | | 779 | | | | 788 | | | | | 412 | | | | 417 | | | | 406 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Statistical data: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Return on average assets (1) | | | 1.84 | % | | | 2.05 | % | | | 2.28 | % | | | | 1.10 | % | | | 0.99 | % | | | 1.04 | % | | | | 1.83 | % | | | 2.79 | % | | | 2.29 | % |
| Return on average attributed equity | | | 26.08 | | | | 28.28 | | | | 30.84 | | | | | 24.56 | | | | 22.29 | | | | 23.31 | | | | | 16.13 | | | | 24.26 | | | | 18.61 | |
| Net interest margin (2) | | | 4.10 | | | | 4.12 | | | | 4.33 | | | | | 3.63 | | | | 3.52 | | | | 3.46 | | | | | 4.38 | | | | 4.34 | | | | 4.88 | |
| Efficiency ratio | | | 37.89 | | | | 34.64 | | | | 35.63 | | | | | 64.34 | | | | 64.71 | | | | 62.50 | | | | | 75.74 | | | | 68.60 | | | | 73.54 | |
| | | | | | |
| | | | | | | Finance | | | | | | | | | | | | Other | | | | | | | | | | | | Total | | | | | |
| | | |
| | | June 30, | | | March 31, | | | June 30, | | | | June 30, | | | March 31, | | | June 30, | | | | June 30, | | | March 31, | | | June 30, | |
| Three Months Ended | | 2005 | | | 2005 | | | 2004 | | | | 2005 | | | 2005 | | | 2004 | | | | 2005 | | | 2005 | | | 2004 | |
| | | |
| Earnings summary: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Net interest income (expense) (FTE) | | $ | (56 | ) | | $ | (59 | ) | | $ | (72 | ) | | | $ | 1 | | | $ | 1 | | | $ | (6 | ) | | | $ | 484 | | | $ | 461 | | | $ | 448 | |
| Provision for loan losses | | | — | | | | — | | | | — | | | | | (15 | ) | | | (3 | ) | | | 36 | | | | | 2 | | | | 1 | | | | 20 | |
| Noninterest income | | | 21 | | | | 11 | | | | 13 | | | | | (5 | ) | | | 1 | | | | 3 | | | | | 219 | | | | 210 | | | | 228 | |
| Noninterest expenses | | | — | | | | 1 | | | | — | | | | | 4 | | | | 26 | | | | 12 | | | | | 383 | | | | 374 | | | | 372 | |
| Provision (benefit) for income taxes (FTE) | | | (17 | ) | | | (19 | ) | | | (17 | ) | | | | 1 | | | | (6 | ) | | | (32 | ) | | | | 101 | | | | 97 | | | | 92 | |
| | | | | |
| Net income (loss) | | $ | (18 | ) | | $ | (30 | ) | | $ | (42 | ) | | | $ | 6 | | | $ | (15 | ) | | $ | (19 | ) | | | $ | 217 | | | $ | 199 | | | $ | 192 | |
| | | | | |
| Net charge-offs | | $ | — | | | $ | — | | | $ | — | | | | $ | — | | | $ | — | | | $ | — | | | | $ | 29 | | | $ | 38 | | | $ | 56 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Selected average balances: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Assets | | $ | 5,192 | | | $ | 5,518 | | | $ | 7,906 | | | | $ | 940 | | | $ | 959 | | | $ | 844 | | | | $ | 51,635 | | | $ | 50,750 | | | $ | 51,593 | |
| Loans | | | (22 | ) | | | (7 | ) | | | (20 | ) | | | | 43 | | | | 46 | | | | 10 | | | | | 43,234 | | | | 42,155 | | | | 40,729 | |
| Deposits | | | 338 | | | | 612 | | | | 1,312 | | | | | 22 | | | | 46 | | | | 34 | | | | | 40,000 | | | | 39,782 | | | | 40,913 | |
| Liabilities | | | 5,844 | | | | 5,390 | | | | 6,157 | | | | | 247 | | | | 357 | | | | 220 | | | | | 46,535 | | | | 45,678 | | | | 46,590 | |
| Attributed equity | | | 519 | | | | 538 | | | | 605 | | | | | 876 | | | | 862 | | | | 763 | | | | | 5,100 | | | | 5,072 | | | | 5,003 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Statistical data: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Return on average assets (1) | | | N/M | | | | N/M | | | | N/M | | | | | N/M | | | | N/M | | | | N/M | | | | | 1.68 | % | | | 1.57 | % | | | 1.49 | % |
| Return on average attributed equity | | | N/M | | | | N/M | | | | N/M | | | | | N/M | | | | N/M | | | | N/M | | | | | 16.99 | | | | 15.73 | | | | 15.35 | |
| Net interest margin (2) | | | N/M | | | | N/M | | | | N/M | | | | | N/M | | | | N/M | | | | N/M | | | | | 4.09 | | | | 4.00 | | | | 3.77 | |
| Efficiency ratio | | | N/M | | | | N/M | | | | N/M | | | | | N/M | | | | N/M | | | | N/M | | | | | 54.49 | | | | 55.70 | | | | 55.08 | |
| | | |
| (1) | | Return on average assets is calculated based on the greater of average assets or average liabilities and attributed equity. |
| |
| (2) | | Net interest margin is calculated based on the greater of average earning assets or average deposits and purchased funds. |
| |
| N/M – Not Meaningful |
-16-
MARKET SEGMENT FINANCIAL RESULTS
Comerica Incorporated and Subsidiaries
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | |
| (dollar amounts in millions) | | Midwest & Other Markets | | | | | | | | | | | | Western | | | | | | | | | | | | Texas | | | | | |
| | | |
| | | June 30, | | | March 31, | | | June 30, | | | | June 30, | | | March 31, | | | June 30, | | | | June 30, | | | March 31, | | | June 30, | |
| Three Months Ended | | 2005 | | | 2005 | | | 2004 | | | | 2005 | | | 2005 | | | 2004 | | | | 2005 | | | 2005 | | | 2004 | |
| | | |
| Earnings summary: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Net interest income (expense) (FTE) | | $ | 272 | | | $ | 264 | | | $ | 266 | | | | $ | 196 | | | $ | 186 | | | $ | 193 | | | | $ | 60 | | | $ | 59 | | | $ | 59 | |
| Provision for loan losses | | | 30 | | | | 2 | | | | (30 | ) | | | | (4 | ) | | | (3 | ) | | | 13 | | | | | (10 | ) | | | 4 | | | | 1 | |
| Noninterest income | | | 148 | | | | 147 | | | | 145 | | | | | 32 | | | | 30 | | | | 44 | | | | | 19 | | | | 18 | | | | 19 | |
| Noninterest expenses | | | 229 | | | | 205 | | | | 220 | | | | | 98 | | | | 91 | | | | 92 | | | | | 46 | | | | 43 | | | | 44 | |
| Provision (benefit) for income taxes (FTE) | | | 50 | | | | 63 | | | | 72 | | | | | 50 | | | | 48 | | | | 55 | | | | | 14 | | | | 10 | | | | 11 | |
| | | | | |
| Net income (loss) | | $ | 111 | | | $ | 141 | | | $ | 149 | | | | $ | 84 | | | $ | 80 | | | $ | 77 | | | | $ | 29 | | | $ | 20 | | | $ | 22 | |
| | | | | |
| Net charge-offs | | $ | 24 | | | $ | 17 | | | $ | 21 | | | | $ | 5 | | | $ | 9 | | | $ | 33 | | | | $ | — | | | $ | 8 | | | $ | 2 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Selected average balances: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Assets | | $ | 25,281 | | | $ | 24,621 | | | $ | 24,277 | | | | $ | 13,640 | | | $ | 13,252 | | | $ | 12,655 | | | | $ | 5,127 | | | $ | 5,003 | | | $ | 4,603 | |
| Loans | | | 23,854 | | | | 23,270 | | | | 23,049 | | | | | 12,971 | | | | 12,656 | | | | 11,948 | | | | | 4,945 | | | | 4,807 | | | | 4,445 | |
| Deposits | | | 18,910 | | | | 18,858 | | | | 19,068 | | | | | 16,778 | | | | 16,303 | | | | 16,310 | | | | | 3,678 | | | | 3,674 | | | | 3,980 | |
| Liabilities | | | 19,671 | | | | 19,628 | | | | 19,721 | | | | | 16,823 | | | | 16,344 | | | | 16,312 | | | | | 3,678 | | | | 3,673 | | | | 3,972 | |
| Attributed equity | | | 2,130 | | | | 2,131 | | | | 2,104 | | | | | 1,043 | | | | 1,025 | | | | 1,036 | | | | | 463 | | | | 449 | | | | 433 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Statistical data: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Return on average assets (1) | | | 1.76 | % | | | 2.28 | % | | | 2.46 | % | | | | 1.89 | % | | | 1.84 | % | | | 1.79 | % | | | | 2.24 | % | | | 1.60 | % | | | 1.85 | % |
| Return on average attributed equity | | | 20.89 | | | | 26.39 | | | | 28.34 | | | | | 32.40 | | | | 31.15 | | | | 29.93 | | | | | 24.85 | | | | 17.82 | | | | 19.73 | |
| Net interest margin (2) | | | 4.53 | | | | 4.56 | | | | 4.60 | | | | | 4.69 | | | | 4.62 | | | | 4.76 | | | | | 4.87 | | | | 4.93 | | | | 5.31 | |
| Efficiency ratio | | | 54.43 | | | | 49.86 | | | | 53.72 | | | | | 42.99 | | | | 42.33 | | | | 38.61 | | | | | 57.33 | | | | 56.05 | | | | 56.62 | |
|
| | | | | | |
| | | | | | | Florida | | | | | | | | Finance & Other Businesses | | | | | | | | Total | | | | | |
| | | |
| | | June 30, | | | March 31, | | | June 30, | | | | June 30, | | | March 31, | | | June 30, | | | | June 30, | | | March 31, | | | June 30, | |
| Three Months Ended | | 2005 | | | 2005 | | | 2004 | | | | 2005 | | | 2005 | | | 2004 | | | | 2005 | | | 2005 | | | 2004 | |
| | | |
| Earnings summary: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Net interest income (expense) (FTE) | | $ | 11 | | | $ | 10 | | | $ | 9 | | | | $ | (55 | ) | | $ | (58 | ) | | $ | (79 | ) | | | $ | 484 | | | $ | 461 | | | $ | 448 | |
| Provision for loan losses | | | 2 | | | | 2 | | | | 1 | | | | | (16 | ) | | | (4 | ) | | | 35 | | | | | 2 | | | | 1 | | | | 20 | |
| Noninterest income | | | 4 | | | | 4 | | | | 4 | | | | | 16 | | | | 11 | | | | 16 | | | | | 219 | | | | 210 | | | | 228 | |
| Noninterest expenses | | | 6 | | | | 7 | | | | 4 | | | | | 4 | | | | 28 | | | | 12 | | | | | 383 | | | | 374 | | | | 372 | |
| Provision (benefit) for income taxes (FTE) | | | 2 | | | | 2 | | | | 3 | | | | | (15 | ) | | | (26 | ) | | | (49 | ) | | | | 101 | | | | 97 | | | | 92 | |
| | | | | |
| Net income (loss) | | $ | 5 | | | $ | 3 | | | $ | 5 | | | | $ | (12 | ) | | $ | (45 | ) | | $ | (61 | ) | | | $ | 217 | | | $ | 199 | | | $ | 192 | |
| | | | | |
| Net charge-offs | | $ | — | | | $ | 4 | | | $ | — | | | | $ | — | | | $ | — | | | $ | — | | | | $ | 29 | | | $ | 38 | | | $ | 56 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Selected average balances: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Assets | | $ | 1,455 | | | $ | 1,396 | | | $ | 1,308 | | | | $ | 6,132 | | | $ | 6,478 | | | $ | 8,750 | | | | $ | 51,635 | | | $ | 50,750 | | | $ | 51,593 | |
| Loans | | | 1,442 | | | | 1,383 | | | | 1,298 | | | | | 22 | | | | 39 | | | | (11 | ) | | | | 43,234 | | | | 42,155 | | | | 40,729 | |
| Deposits | | | 274 | | | | 289 | | | | 210 | | | | | 360 | | | | 658 | | | | 1,345 | | | | | 40,000 | | | | 39,782 | | | | 40,913 | |
| Liabilities | | | 273 | | | | 287 | | | | 209 | | | | | 6,090 | | | | 5,746 | | | | 6,377 | | | | | 46,535 | | | | 45,678 | | | | 46,590 | |
| Attributed equity | | | 69 | | | | 67 | | | | 62 | | | | | 1,395 | | | | 1,400 | | | | 1,368 | | | | | 5,100 | | | | 5,072 | | | | 5,003 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Statistical data: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Return on average assets (1) | | | 1.04 | % | | | 0.95 | % | | | 1.54 | % | | | | N/M | | | | N/M | | | | N/M | | | | | 1.68 | % | | | 1.57 | % | | | 1.49 | % |
| Return on average attributed equity | | | 22.09 | | | | 19.76 | | | | 32.45 | | | | | N/M | | | | N/M | | | | N/M | | | | | 16.99 | | | | 15.73 | | | | 15.35 | |
| Net interest margin (2) | | | 2.92 | | | | 2.99 | | | | 2.89 | | | | | N/M | | | | N/M | | | | N/M | | | | | 4.09 | | | | 4.00 | | | | 3.77 | |
| Efficiency ratio | | | 47.94 | | | | 52.81 | | | | 31.92 | | | | | N/M | | | | N/M | | | | N/M | | | | | 54.49 | | | | 55.70 | | | | 55.08 | |
| |
| (1) | | Return on average assets is calculated based on the greater of average assets or average liabilities and attributed equity. |
| |
| (2) | | Net interest margin is calculated based on the greater of average earning assets or average deposits and purchased funds. |
| |
| N/M – Not Meaningful |
-17-
