COMERICA INCORPORATED 
By Average Loans Grew
Credit Costs Stable Given Current Economic Environment
Expense Controls Include Workforce Reductions
New Preferred Stock Enhances Already Strong Capital Levels
EPS Impacts from Severance (
(Logo: http://www.newscom.com/cgi-bin/prnh/20010807/CMALOGO)
--------------------------------------------------------------------
4th 3rd 4th
(dollar amounts in millions, except per Qtr Qtr Qtr
share data) '08 '08 '07
--------------------------------------------------------------------
Net interest income $431 $466 $489
Provision for loan losses 192 165 108
Noninterest income 174 240 230
Noninterest expenses 411 514 450
Net income 20 28 119
Preferred stock dividends 17 - -
Net income applicable to common stock 3 28 119
Diluted earnings per common share 0.02 0.19 0.79
Return on average common shareholders' equity 0.19% 2.25% 9.35%
Tier 1 capital ratio 10.67* 7.32 7.51
Tangible common equity ratio 7.21 7.60 7.97
Net interest margin 2.82 3.11 3.43
*December 31, 2008 ratio is estimated.
====================================================================
Net income applicable to common stock for full-year 2008 was
The following table illustrates the after-tax impact of certain items on net income applicable to common stock.
-------------------------------------------------------------------------
(dollar amounts in 4th Qtr '08 3rd Qtr '08 Full Year 2008
millions, except per Per Per Per
share data) Amount Share Amount Share Amount Share
-------------------------------------------------------------------------
Net impact of ARS* $8 $0.05 $(61) $(0.40) $(53) $(0.35)
Gains on sales of Visa
and MasterCard shares - - 17 0.11 39 0.26
Tax-related non-cash
charges to lease income - - (6) (0.04) (24) (0.16)
Severance-related
expenses (18) (0.12) (1) (0.01) (21) (0.14)
Reversal of Visa
loss-sharing expense - - - - 8 0.05
Other tax-related items - - (1) - (9) (0.06)
Preferred stock dividends (17) (0.11) - - (17) (0.11)
* Includes net loss on offer to repurchase ARS and gains on sales of ARS.
Excludes impact of ARS on net interest margin.
=========================================================================
"Mounting job losses and an economy headed deeper into recession have dampened business and consumer confidence," said
"Our capital position is strong. Our Tier 1 capital ratio is estimated to be 10.67 percent at
"With the appropriate pricing and credit standards in place, we are focusing our lending efforts on new and existing relationship customers for whom we serve as trusted advisors. This includes small businesses, middle market companies and wealth management clients in
"We are focused on controlling expenses, as evidenced by several initiatives to streamline operations and leverage technology. We have reduced our workforce by about 5 percent since the end of 2007 and expect to reduce it another 5 percent, largely to be completed by the end of the first quarter. In addition, we are freezing salaries in 2009 for the top 20 percent of our workforce. We also plan to slow our banking center expansion program, and will continue to reduce our capital expenditures and discretionary expenses in this challenged environment."
Fourth Quarter and Full Year 2008 Overview
Fourth Quarter 2008 Compared to Third Quarter 2008
-- On an annualized basis, average loans, excluding Financial Services
Division (FSD) loans, declined one percent, with declines of seven
percent in the Western market and two percent in the Midwest market
partially offset by growth of 15 percent in the Texas market. The
declines reflected reduced demand from customers in rapidly
deteriorating economic environments. Average loans, excluding Financial
Services Division loans, increased three percent when compared to the
fourth quarter 2007.
-- On an annualized basis, excluding Financial Services Division deposits,
average noninterest-bearing deposits increased seven percent.
-- The net interest margin of 2.82 percent decreased from 3.11 percent in
the third quarter 2008, and reflected the negative impact of three
Federal Reserve rate cuts totaling 175 basis points in a challenging
deposit pricing environment, partially offset by improved loan pricing.
-- Net credit-related charge-offs were $133 million, or 104 basis points as
a percent of average total loans, for the fourth quarter 2008, compared
to $116 million, or 90 basis points as a percent of average total loans,
for the third quarter 2008. The provision for loan losses was $192
million for the fourth quarter 2008, compared to $165 million for the
third quarter 2008, and the period-end allowance to total loans ratio
increased to 1.52 percent from 1.38 percent at September 30, 2008.
-- Noninterest expenses decreased $103 million from the third quarter,
primarily due to the third quarter $96 million charge related to the
repurchase of ARS and an $11 million decrease in the provision for
credit losses on lending-related commitments. This decrease was
partially offset by severance-related expenses of $29 million in the
fourth quarter 2008 related to the elimination of about five percent of
the workforce.
-- The estimated Tier 1 common and Tier 1 capital ratios were 7.08 percent
and 10.67 percent, respectively.
Full Year 2008 Compared to Full Year 2007
-- Average loan growth, excluding Financial Services Division loans, was
six percent, with growth of 14 percent in the Texas market, six percent
in the Western market and three percent in the Midwest market.
-- Excluding Financial Services Division deposits, average
noninterest-bearing deposits increased six percent.
-- The net interest margin was 3.02 percent for 2008, compared to 3.66
percent for 2007. The 2008 average Federal Funds rate declined more
than 300 basis points from the average rate for 2007.
-- Net credit-related charge-offs were 91 basis points as a percent of
average total loans for 2008, compared to 31 basis points for 2007,
largely due to deterioration in the residential real estate development
sector as housing prices continued to fall.
-- Excluding the $88 million net charge related to the repurchase of ARS in
2008, noninterest expenses decreased $28 million, or two percent, from
2007.
Net Interest Income and Net Interest Margin
------------------------------------------------------------------
(dollar amounts 4th Qtr 3rd Qtr 4th Qtr
in millions) '08 '08 '07
------------------------------------------------------------------
Net interest income $431 $466 $489
Net interest margin 2.82% 3.11% 3.43%
Selected average balances:
Total earning assets $61,134 $59,946 $56,621
Total investment
securities 8,734 8,146 5,533
Total loans 51,338 51,508 50,699
Total loans, excluding FSD
loans (primarily low-
rate) 51,015 51,107 49,758
Total core deposits*,
excluding FSD 30,944 31,439 32,129
Total noninterest-bearing
deposits 10,575 10,646 10,533
Total noninterest-bearing
deposits, excluding FSD 9,255 9,104 8,473
* Core deposits exclude other time deposits and foreign office time
deposits.
==================================================================
-- The $35 million decrease in net interest income in the fourth quarter
2008, when compared to third quarter 2008, reflected the negative impact
of three Federal Reserve rate cuts totaling 175 basis points in a
challenging deposit pricing environment, partially offset by improved
loan spreads.
-- December 31, 2008 core deposits, excluding the Financial Services
Division, decreased $224 million compared to September 30, 2008, due to
a decrease in money market investment accounts, partially offset by an
increase in customer certificates of deposit.
-- Total average Financial Services Division deposits decreased $295
million from the third quarter 2008. This division serves title and
escrow companies that facilitate residential mortgage transactions and
benefits from customer deposits related to mortgage escrow balances.
Deposits declined due to the impact of reduced home prices, as well as
lower home mortgage financing and refinancing activity.
Noninterest Income
Noninterest income was
-------------------------------------------------------------------------
4th 3rd 4th
Qtr Qtr Qtr
(in millions) '08 '08 '07
-------------------------------------------------------------------------
Net securities gains $4 $27 $3
Other noninterest income
Net income (loss) from principal investing
and warrants (5) 1 6
Deferred compensation asset returns* (18) (6) 2
* Compensation deferred by Comerica officers is invested in stocks and
bonds to reflect the investment selections of the officers. Income
(loss) earned on these assets is reported in noninterest income and the
offsetting increase (decrease) in the liability is reported in salaries
expense.
=========================================================================
Noninterest Expenses
Noninterest expenses were
-------------------------------------------------------------
4th 3rd 4th
Qtr Qtr Qtr
'08 '08 '07
-------------------------------------------------------------
Salaries
Regular salaries $152 $155 $163
Severance 24 2 3
Incentives 19 31 36
Deferred compensation plan costs (18) (6) 2
Share-based compensation 10 10 12
--- --- ---
Total salaries 187 192 216
Employee benefits
Regular benefits 48 46 48
Severance-related benefits 5 - -
--- --- ---
Total employee benefits 53 46 48
Litigation and operational losses 3* 105* 18
Provision for credit losses on
lending-related commitments (2) 9 3
Other noninterest expenses FDIC insurance 7 6 1
* Fourth quarter 2008 litigation and operational losses were
net of a reversal of $8 million of the $96 million charge
related to the repurchase of auction-rate securities from
customers recorded in the third quarter 2008.
=============================================================
Credit Quality
"Our credit costs remained stable, even as the economy deteriorated rapidly in the fourth quarter," said Babb. "We continue to monitor the performance of our customers very closely with credit quality reviews, risk rating migration analysis and stress testing. In addition, we are aggressively managing our problem loans by moving them to our workout area at the first sign of stress. We are working hard to stay ahead of the issues. Our strong focus on credit is evidenced by the continued reduction of exposure to
-- The allowance to total loans ratio increased to 1.52 percent at December
31, 2008, from 1.38 percent at September 30, 2008 and 1.10 percent at
December 31, 2007.
-- The provision for loan losses and loan quality reflected increasing
challenges in the Midwest and the weakened economies in other markets.
-- Net credit-related charge-offs in the Commercial Real Estate business
line in the fourth quarter 2008 were $59 million, of which $37 million
were from residential real estate developers in the Western market.
Comparable numbers for the third quarter 2008 were $57 million in total,
of which $39 million were from residential real estate developers in the
Western market.
-- Net loan charge-offs excluding the Commercial Real Estate business line
were $74 million in the fourth quarter 2008, or 66 basis points of
average non-Commercial Real Estate loans, compared to $59 million, or 52
basis points, in the third quarter 2008.
-- Nonperforming assets increased to 1.94 percent of total loans and
foreclosed property at December 31, 2008. During the fourth quarter,
$258 million of loan relationships greater than $2 million were
transferred to nonaccrual status, a decrease of $22 million from the
third quarter 2008. Of the transfers of loan relationships greater than
$2 million to nonaccrual in the fourth quarter 2008, $163 million were
in the Commercial Real Estate business line, an increase of $18 million
from the third quarter 2008.
-----------------------------------------------------------------
4th 3rd 4th
Qtr Qtr Qtr
(dollar amounts in millions) '08 '08 '07
-----------------------------------------------------------------
Net loan charge-offs $133 $116 $63
Net lending-related commitment charge-offs - - 1
---- ---- ----
Total net credit-related charge-offs 133 116 64
Net loan charge-offs/Average total loans 1.04% 0.90% 0.50%
Net credit-related charge-offs/Average
total loans 1.04 0.90 0.50
Provision for loan losses $192 $165 $108
Provision for credit losses on
lending-related commitments (2) 9 3
---- ---- ----
Total provision for credit losses 190 174 111
Nonperforming loans 916 863 404
Nonperforming assets (NPAs) 982 881 423
NPAs/Total loans and foreclosed property 1.94% 1.71% 0.83%
Allowance for loan losses $770 $712 $557
Allowance for credit losses on
lending-related commitments* 38 40 21
---- ---- ----
Total allowance for credit losses 808 752 578
Allowance for loan losses/Total loans 1.52% 1.38% 1.10%
Allowance for loan losses/Nonperforming
loans 84 82 138
* Included in "Accrued expenses and other liabilities" on the
consolidated balance sheets.
=================================================================
Balance Sheet and Capital Management
Total assets and common shareholders' equity were
Comerica's fourth quarter 2008 estimated Tier 1 common, Tier 1 and total risk-based capital ratios were 7.08 percent, 10.67 percent and 14.73 percent, respectively.
Full-Year 2009 Outlook Compared to Full-Year 2008
Management provides the following general comments with the observation that it is increasingly difficult to forecast in the current uncertain economic environment.
-- Management expects to focus on new and expanding relationships,
particularly in Small Business, Middle Market and Wealth Management in
Texas and California with the appropriate pricing and credit standards.
-- Management expects average full-year net interest margin pressure will
continue. Management anticipates no change in the Federal Funds rate.
Management also expects continued improvement in loan spreads,
challenging deposit pricing and demand deposits that provide less value
in an historically low interest rate environment.
-- Management expects full-year net credit-related charge-offs to remain
consistent with full-year 2008. The provision for credit losses is
expected to exceed net charge-offs.
-- Management expects a mid-single digit decrease in noninterest expenses,
due to control of discretionary expenses and workforce.
Business Segments
Comerica's continuing operations are strategically aligned into three major business segments: the Business Bank, the Retail Bank, and Wealth & Institutional Management. The Finance Division also is included as a segment. The financial results below are based on the internal business unit structure of the Corporation and methodologies in effect at
The following table presents net income (loss) by business segment.
------------------------------------------------------------------------
4th Qtr 3rd Qtr 4th Qtr
(dollar amounts in millions) '08 '08 '07
------------------------------------------------------------------------
Business Bank $54 164% $65 186% $93 83%
Retail Bank (34) (104) 21 57 5 5
Wealth & Institutional
Management 13 40 (51)* (143) 13 12
------------------------------------------------------------------------
33 100% 35 100% 111 100%
Finance (38) (2) (8)
Other** 25 (5) 16
------------------------------------------------------------------------
Total $20 $28 $119
========================================================================
* Third quarter 2008 included a $96 million charge ($61 million,
after-tax) related to an offer to repurchase auction-rate securities
from customers.
** Includes discontinued operations and items not directly associated
with the three major business segments or the Finance Division.
========================================================================
Business Bank
-------------------------------------------------------------------------
(dollar amounts in millions) 4th Qtr '08 3rd Qtr '08 4th Qtr '07
-------------------------------------------------------------------------
Net interest income (FTE) $329 $323 $331
Provision for loan losses 139 135 88
Noninterest income 62 75 79
Noninterest expenses 172 175 186
Net income 54 65 93
Net credit-related charge-offs 101 95 50
Selected average balances:
Assets 41,364 41,357 41,327
Loans 40,244 40,506 40,285
FSD loans 323 401 941
Deposits 13,839 14,933 15,931
FSD deposits 2,154 2,449 3,181
Net interest margin 3.23% 3.17% 3.25%
=========================================================================
-- Average loans, excluding the Financial Services Division, decreased $184
million, led by declines in Middle Market and Commercial Real Estate,
partially offset by an increase in Global Corporate. Financial Services
Division loans decreased $78 million.
-- Average deposits, excluding the Financial Services Division, decreased
$799 million, primarily due to Middle Market, Technology and Life
Sciences and Commercial Real Estate, partially offset by a reassignment
of deposits from the Other category to the Business Bank. Financial
Services Division deposits decreased $295 million.
-- The net interest margin of 3.23 percent increased six basis points,
mostly due to an $8 million non-cash charge to lease income in the third
quarter 2008 (eight basis points) and an increase in loan spreads,
partially offset by a decrease in deposit spreads.
-- The provision for loan losses increased $4 million, primarily in
Commercial Real Estate and Global Corporate, partially offset by a
decrease in Middle Market.
-- Noninterest income decreased $13 million, primarily due to declines in
income from low income housing investments, income from principal
investing and warrants and investment banking fees.
-- Noninterest expenses decreased $3 million, due to decreases in the
provision for credit losses on lending-related commitments and
incentives, partially offset by increases in severance and related
expenses, other real estate expenses, legal fees and the allocation of
severance and related expenses of support units.
Retail Bank
-------------------------------------------------------------------------
(dollar amounts in millions) 4th Qtr '08 3rd Qtr '08 4th Qtr '07
-------------------------------------------------------------------------
Net interest income (FTE) $129 $142 $160
Provision for loan losses 43 33 26
Noninterest income 49 80 55
Noninterest expenses 180 161 181
Net income (34) 21 5
Net credit-related charge-offs 23 17 14
Selected average balances:
Assets 7,007 7,046 6,998
Loans 6,380 6,362 6,229
Deposits 17,065 16,596 17,254
Net interest margin 3.00% 3.40% 3.69%
=========================================================================
-- Average loans increased $18 million, or one percent on an annualized
basis.
-- Average deposits increased $469 million, primarily due to an increase in
customer certificates of deposit, partially offset by a decrease in
money market investment accounts.
-- The net interest margin of 3.00 percent declined 40 basis points,
primarily due to an increase in lower-spread customer certificates of
deposit.
-- The provision for loan losses increased $10 million, mostly due to Small
Business and home equity lending.
-- Noninterest income decreased $31 million, primarily due to the third
quarter 2008 gain of $27 million on the sale of Visa shares and a
decrease in service charges on deposit accounts.
-- Noninterest expenses increased $19 million, primarily due to increases
in severance and related expenses, occupancy expense and the allocation
of severance and related expenses of support units.
-- Fifteen new banking centers were opened in the fourth quarter 2008 (28
new banking centers were opened in the full-year 2008).
Wealth and Institutional Management
-------------------------------------------------------------------------
(dollar amounts in millions) 4th Qtr '08 3rd Qtr '08 4th Qtr '07
-------------------------------------------------------------------------
Net interest income (FTE) $38 $37 $36
Provision for loan losses 13 7 1
Noninterest income 73 71 73
Noninterest expenses 80 180 87
Net income 13 (51) 13
Net credit-related charge-offs 9 4 -
Selected average balances:
Assets 4,879 4,759 4,321
Loans 4,724 4,624 4,146
Deposits 2,255 2,351 2,552
Net interest margin 3.13% 3.17% 3.43%
=========================================================================
-- Average loans increased $100 million, or nine percent on an annualized
basis.
-- Average deposits decreased $96 million, primarily due to declines in
money market investment account balances and customer certificates of
deposit, partially offset by an increase in noninterest-bearing
transaction accounts.
-- The net interest margin of 3.13 percent declined four basis points,
primarily due to a decline in deposit spreads.
-- The provision for loan losses increased $6 million due to an increase in
Private Banking.
-- Noninterest expenses decreased $100 million, mostly due to the $96
million charge related to the offer to repurchase auction-rate
securities (ARS) recorded in the third quarter 2008 and an $8 million
reversal of the ARS charge recorded in the fourth quarter 2008,
partially offset by an increase in severance and related expenses and
the allocation of severance and related expenses of support units.
Geographic Market Segments
Comerica also provides market segment results for four primary geographic markets: Midwest, Western,
The following table presents net income (loss) by market segment.
------------------------------------------------------------------------
4th Qtr 3rd Qtr 4th Qtr
(dollar amounts in millions) '08 '08 '07
------------------------------------------------------------------------
Midwest $16 45% $52 146% $60 53%
Western 2 7 9 25 (3) (2)
Texas 4 13 13 36 14 13
Florida (7) (22) (1) (3) (1) (1)
Other Markets 14 44 (45)* (125) 30 27
International 4 13 7 21 11 10
------------------------------------------------------------------------
33 100% 35 100% 111 100%
Finance & Other Businesses** (13) (7) 8
------------------------------------------------------------------------
Total $20 $28 $119
========================================================================
* Third quarter 2008 included a $96 million charge ($61 million,
after-tax) related to an offer to repurchase auction-rate securities
from customers.
** Includes discontinued operations and items not directly associated
with the geographic markets.
========================================================================
Midwest
-------------------------------------------------------------------------
(dollar amounts in millions) 4th Qtr 3rd Qtr 4th Qtr
'08 '08 '07
-------------------------------------------------------------------------
Net interest income (FTE) $202 $196 $212
Provision for loan losses 59 52 20
Noninterest income 109 142 120
Noninterest expenses 217 203 218
Net income 16 52 60
Net credit-related charge-offs 38 44 38
Selected average balances:
Assets 19,945 19,754 19,176
Loans 18,966 19,070 18,564
Deposits 16,204 15,858 16,056
Net interest margin 4.20% 4.08% 4.51%
=========================================================================
-- Average loans decreased $104 million, led by a decline in Middle Market,
partially offset by growth in Global Corporate.
-- Average deposits increased $346 million, primarily due to increases in
Retail deposits and a reassignment of deposits from the Other category
to the Business Bank, partially offset by a decrease in Global
Corporate.
-- The net interest margin of 4.20 percent increased 12 basis points due to
an $8 million non-cash charge to lease income in the third quarter 2008
(17 basis points) and an increase in loan spreads, partially offset by a
decrease in deposit spreads.
-- The provision for loan losses increased $7 million, due to Commercial
Real Estate and home equity lending, partially offset by a decrease in
Middle Market.
-- Noninterest income decreased $33 million, primarily due to a $22 million
third quarter 2008 gain on the sale of Visa shares and a decrease in
income from principal investing and warrants.
-- Noninterest expenses increased $14 million, due to increases in
severance and related expenses and the allocation of severance and
related expenses of support units.
Western Market
-------------------------------------------------------------------------
(dollar amounts in millions) 4th Qtr '08 3rd Qtr '08 4th Qtr '07
-------------------------------------------------------------------------
Net interest income (FTE) $157 $169 $178
Provision for loan losses 70 82 93
Noninterest income 34 38 35
Noninterest expenses 113 112 121
Net income (loss) 2 9 (3)
Net credit-related charge-offs 65 51 22
Selected average balances:
Assets 16,243 16,627 17,137
Loans 16,032 16,381 16,615
FSD loans 323 401 941
Deposits 10,762 11,729 13,012
FSD deposits 1,969 2,255 3,045
Net interest margin 3.87% 4.09% 4.24%
=========================================================================
-- Average loans, excluding Financial Services Division, decreased $271
million, due to declines in Middle Market and Commercial Real Estate.
Financial Services Division loans decreased $78 million.
-- Average deposits, excluding the Financial Services Division, decreased
$681 million, primarily due to decreases in Middle Market and Technology
and Life Sciences. Financial Services Division deposits decreased $286
million.
-- The net interest margin of 3.87 percent decreased 22 basis points, due
to declines in deposit spreads and deposit balances, partially offset by
increasing loan spreads.
-- The provision for loan losses decreased $12 million, primarily due an
improvement in Middle Market, partially offset by Residential Real
Estate.
-- Noninterest income decreased $4 million, primarily due to a decrease in
income from principal investing and warrants.
-- Noninterest expenses increased $1 million. Increases in severance and
related expenses and the allocation of severance and related expenses of
support units were partially offset by decreases in incentives.
-- Eight new banking centers were opened in the fourth quarter 2008 (18 new
banking centers were opened for the full-year 2008).
-------------------------------------------------------------------------
(dollar amounts in millions) 4th Qtr '08 3rd Qtr '08 4th Qtr '07
-------------------------------------------------------------------------
Net interest income (FTE) $72 $73 $74
Provision for loan losses 19 18 7
Noninterest income 21 27 23
Noninterest expenses 64 61 67
Net income 4 13 14
Total net credit-related
charge-offs 8 9 3
Selected average balances:
Assets 8,215 7,945 7,677
Loans 7,974 7,691 7,381
Deposits 4,070 3,956 3,935
Net interest margin 3.56% 3.75% 3.95%
=========================================================================
-- Average loans increased $283 million, or 15 percent on an annualized
basis, primarily due to increases in Energy Lending, Commercial Real
Estate and Global Corporate.
-- Average deposits increased $114 million, primarily due to increases in
Global Corporate and Retail deposits, partially offset by a decline in
Technology and Life Sciences.
-- The net interest margin of 3.56 percent decreased 19 basis points,
primarily due a decline in deposit spreads related to a shift from money
market investment accounts to lower-spread customer certificates of
deposit, partially offset by increasing loan spreads.
-- Noninterest income decreased $6 million, primarily due to a $4 million
gain on the sale of Visa shares in the third quarter 2008.
-- Noninterest expenses increased $3 million, primarily from severance and
related expenses and the allocation of severance and related expenses of
support units.
-- Seven new banking center were opened in the fourth quarter 2008 (nine
new banking centers were opened in full-year 2008).
-------------------------------------------------------------------------
(dollar amounts in millions) 4th Qtr '08 3rd Qtr '08 4th Qtr '07
-------------------------------------------------------------------------
Net interest income (FTE) $11 $12 $11
Provision for loan losses 14 7 5
Noninterest income 4 4 4
Noninterest expenses 11 10 11
Net income (loss) (7) (1) (1)
Net credit-related charge-offs 6 3 -
Selected average balances:
Assets 1,938 1,900 1,732
Loans 1,942 1,900 1,719
Deposits 222 262 299
Net interest margin 2.25% 2.53% 2.67%
=========================================================================
-- Average loans increased $42 million, or nine percent on an annualized
basis, primarily due to growth in Private Banking, National Dealer
Services and Global Corporate.
-- Average deposits decreased $40 million due to declines in Commercial
Real Estate and Global Corporate.
-- The net interest margin of 2.25 percent decreased 28 basis points,
primarily due to a decline in loan spreads in part from a higher level
of nonaccrual loans.
-- The provision for loan losses increased $7 million. The largest
contributor to the increase was Private Banking.
Conference Call and Webcast
Comerica will host a conference call to review fourth quarter 2008 and full-year financial results at
Comerica Incorporated is a financial services company headquartered in
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 further economic downturns, changes in the pace of an economic recovery and related changes in employment levels, changes in real estate values, fuel prices, energy costs or other events that could affect customer income levels or general economic conditions, changes related to the headquarters relocation or to its underlying assumptions, the effects of recently enacted legislation, such as the Emergency Economic Stabilization Act of 2008, and actions taken by the U.S. Department of Treasury and the Federal Deposit Insurance Corporation, the effects of war and other armed conflicts or acts of terrorism, the effects of natural disasters including, but not limited to, hurricanes, tornadoes, earthquakes, fires, droughts and floods, the disruption of private or public utilities, the implementation of Comerica's strategies and business models, management's ability to maintain and expand customer relationships, changes in customer borrowing, repayment, investment and deposit practices, management's ability to retain key officers and employees, 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 production industry and the real estate business lines, the anticipated performance of any new banking centers, 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, political or industry conditions and related credit and market conditions, the interdependence of financial service companies and adverse conditions in the stock market. Comerica cautions that the foregoing list of factors is not exclusive. For discussion of these and other factors that may cause actual results to differ from expectations, please refer to our filings with the Securities and Exchange Commission. 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.
CONSOLIDATED FINANCIAL HIGHLIGHTS
Comerica Incorporated and Subsidiaries
----------------------------------------------------------------
Three Months Ended
-----------------------------------
(in millions, except per December September December
share data) 31, 2008 30, 2008 31, 2007
----------------------------------------------------------------
PER COMMON SHARE AND COMMON
STOCK DATA
Diluted net income $0.02 $0.19 $0.79
Cash dividends declared 0.33 0.66 0.64
Common shareholders'
equity (at period end) 33.31 33.89 34.12
Average diluted shares (in
thousands) 150,834 150,795 150,943
----------------------------------------------------------------
KEY RATIOS
Return on average common
shareholders' equity 0.19% 2.25% 9.35%
Return on average assets 0.12 0.18 0.79
Average common shareholders'
equity as a percentage of
average assets 7.89 7.82 8.41
Tier 1 common capital
ratio * 7.08 6.67 6.85
Tier 1 risk-based capital
ratio * 10.67 7.32 7.51
Total risk-based capital
ratio * 14.73 11.19 11.20
Leverage ratio * 11.78 8.57 9.26
Tangible common equity ratio 7.21 7.60 7.97
----------------------------------------------------------------
AVERAGE BALANCES
Commercial loans $28,507 $28,521 $28,393
Real estate
construction loans 4,536 4,675 4,846
Commercial mortgage loans 10,613 10,511 9,941
Residential mortgage loans 1,851 1,870 1,891
Consumer loans 2,639 2,599 2,412
Lease financing 1,359 1,365 1,327
International loans 1,833 1,967 1,889
------ ------ ------
Total loans 51,338 51,508 50,699
Earning assets 61,134 59,946 56,621
Total assets 65,981 64,863 60,507
Noninterest-bearing deposits 10,575 10,646 10,533
Interest-bearing core
deposits 22,523 23,244 24,777
Total core deposits 33,098 33,890 35,310
Common shareholders' equity 5,206 5,075 5,087
Total shareholders' equity 6,301 5,075 5,087
----------------------------------------------------------------
NET INTEREST INCOME
Net interest income (fully
taxable equivalent
basis)** $434 $467 $489
Fully taxable equivalent
adjustment 3 1 -
Net interest margin** 2.82% 3.11% 3.43%
----------------------------------------------------------------
CREDIT QUALITY
Nonaccrual loans $916 $863 $391
Reduced-rate loans - - 13
------ ------ ------
Total nonperforming loans 916 863 404
Foreclosed property 66 18 19
------ ------ ------
Total nonperforming assets 982 881 423
Loans past due 90 days or
more and still accruing 125 97 54
Gross loan charge-offs 144 122 72
Loan recoveries 11 6 9
------ ------ ------
Net loan charge-offs 133 116 63
Lending-related commitment
charge-offs - - 1
------ ------ ------
Total net credit-related
charge-offs 133 116 64
Allowance for loan losses 770 712 557
Allowance for credit losses
on lending-related
commitments 38 40 21
------ ------ ------
Total allowance for
credit losses 808 752 578
Allowance for loan
losses as a
percentage of total
loans 1.52% 1.38% 1.10%
Net loan charge-offs as a
percentage of average total
loans 1.04 0.90 0.50
Net credit-related charge-
offs as a percentage of
average total loans 1.04 0.90 0.50
Nonperforming assets as a
percentage of total loans
and foreclosed property 1.94 1.71 0.83
Allowance for loan losses
as a percentage of total
nonperforming loans 84 82 138
----------------------------------------------------------------
* December 31, 2008 ratios are estimated
** Third quarter and year-to-date 2008 net interest income declined
$8 million and $38 million, respectively, due to tax-related non-cash
lease income charges. Excluding these charges, the net interest margin
would have been 3.17% and 3.08% for the third quarter 2008 and year
ended December 31, 2008, respectively.
----------------------------------------------------------
Years Ended
---------------
December 31,
(in millions, except per share data) 2008 2007
----------------------------------------------------------
PER COMMON SHARE AND COMMON STOCK DATA
Diluted net income $1.29 $4.43
Cash dividends declared 2.31 2.56
Common shareholders' equity (at
period end)
Average diluted shares (in thousands) 151,035 154,809
----------------------------------------------------------
KEY RATIOS
Return on average common
shareholders' equity 3.79% 13.52%
Return on average assets 0.33 1.17
Average common shareholders' equity as
a percentage of average assets 7.93 8.66
Tier 1 common capital ratio *
Tier 1 risk-based capital ratio *
Total risk-based capital ratio *
Leverage ratio *
Tangible common equity ratio
----------------------------------------------------------
AVERAGE BALANCES
Commercial loans $28,870 $28,132
Real estate construction loans 4,715 4,552
Commercial mortgage loans 10,411 9,771
Residential mortgage loans 1,886 1,814
Consumer loans 2,559 2,367
Lease financing 1,356 1,302
International loans 1,968 1,883
------ ------
Total loans 51,765 49,821
Earning assets 60,422 54,688
Total assets 65,185 58,574
Noninterest-bearing deposits 10,623 11,287
Interest-bearing core deposits 23,739 24,013
Total core deposits 34,362 35,300
Common shareholders' equity 5,166 5,070
Total shareholders' equity 5,442 5,070
----------------------------------------------------------
NET INTEREST INCOME
Net interest income (fully taxable
equivalent basis)** $1,821 $2,006
Fully taxable equivalent adjustment 6 3
Net interest margin** 3.02% 3.66%
----------------------------------------------------------
CREDIT QUALITY
Nonaccrual loans
Reduced-rate loans
Total nonperforming loans
Foreclosed property
Total nonperforming assets
Loans past due 90 days or more and
still accruing
Gross loan charge-offs $500 $196
Loan recoveries 29 47
------ ------
Net loan charge-offs 471 149
Lending-related commitment charge-offs 1 4
------ ------
Total net credit-related charge-offs 472 153
Allowance for loan losses
Allowance for credit losses on lending-
related commitments
Total allowance for credit losses
Allowance for loan losses as a
percentage of total loans
Net loan charge-offs as a percentage of
average total loans 0.91% 0.30%
Net credit-related charge-offs as a
percentage of average total loans 0.91 0.31
Nonperforming assets as a percentage of
total loans and foreclosed property
Allowance for loan losses as a
percentage of total nonperforming
loans
----------------------------------------------------------
* December 31, 2008 ratios are estimated
** Third quarter and year-to-date 2008 net interest income declined
$8 million and $38 million, respectively, due to tax-related non-cash
lease income charges. Excluding these charges, the net interest margin
would have been 3.17% and 3.08% for the third quarter 2008 and year
ended December 31, 2008, respectively.
CONSOLIDATED BALANCE SHEETS
Comerica Incorporated and Subsidiaries
-------------------------------------------------------------------------
(in millions, except share December September December
data) 31, 2008 30, 2008 31, 2007
-------------------------------------------------------------------------
ASSETS
Cash and due from banks $913 $1,404 $1,440
Federal funds sold and
securities purchased under
agreements to resell 202 3 36
Interest-bearing deposits with
Federal
Reserve Bank 2,266 - -
Interest-bearing deposits with
other banks 42 25 38
Other short-term investments 158 222 335
Investment securities
available-for-sale 9,201 8,158 6,296
Commercial loans 27,999 28,604 28,223
Real estate construction loans 4,477 4,565 4,816
Commercial mortgage loans 10,489 10,588 10,048
Residential mortgage loans 1,852 1,863 1,915
Consumer loans 2,592 2,644 2,464
Lease financing 1,343 1,360 1,351
International loans 1,753 1,931 1,926
-------------------------------------------------------------------------
Total loans 50,505 51,555 50,743
Less allowance for loan losses (770) (712) (557)
-------------------------------------------------------------------------
Net loans 49,735 50,843 50,186
Premises and equipment 683 668 650
Customers' liability on
acceptances outstanding 14 21 48
Accrued income and other assets 4,334 3,809 3,302
-------------------------------------------------------------------------
Total assets $67,548 $65,153 $62,331
=========================================================================
LIABILITIES AND SHAREHOLDERS' EQUITY
Noninterest-bearing deposits $11,701 $12,094 $11,920
Money market and NOW deposits 12,437 13,553 15,261
Savings deposits 1,247 1,279 1,325
Customer certificates of
deposit
