CMA
$68.35
Comerica
$.66
.98%
Earnings Details
3rd Quarter September 2016
Tuesday, October 18, 2016 6:45:00 AM
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Summary

Comerica Beats

Comerica (CMA) reported 3rd Quarter September 2016 earnings of $0.92 per share on revenue of $752.0 million. The consensus earnings estimate was $0.79 per share on revenue of $723.7 million. The Earnings Whisper number was $0.79 per share. Revenue grew 5.6% on a year-over-year basis.

Comerica Inc is a financial services company which operates in three business segments: the Business Bank, the Retail Bank, and Wealth Management.

Results
Reported Earnings
$0.92
Earnings Whisper
$0.79
Consensus Estimate
$0.79
Reported Revenue
$752.0 Mil
Revenue Estimate
$723.7 Mil
Growth
Earnings Growth
Revenue Growth
Power Rating
Grade
Earnings Release

Comerica Reports Third Quarter 2016 Net Income Of $149 Million

Comerica Incorporated (CMA) today reported third quarter 2016 net income of $149 million, compared to $104 million for the second quarter 2016 and $136 million for the third quarter 2015. Earnings per diluted share were 84 cents for third quarter 2016 compared to 58 cents for second quarter 2016 and 74 cents for third quarter 2015. Comerica also continued the implementation of its efficiency and revenue initiative ("GEAR Up"), which is expected to drive additional annual pre-tax income of approximately $180 million by year-end 2017 and $270 million by year-end 2018.

http://photos.prnewswire.com/prnvar/20010807/CMALOGO

"On our last earnings call, we announced that we had identified more than 20 work streams in our GEAR Up initiative that are expected to drive a significant improvement in our bottom line. At that time, we also indicated there was more to come, as we were still identifying and analyzing opportunities. We have determined that those new opportunities add about $40 million to our initial financial target. As a result, we are now expecting to drive at least $270 million in additional pre-tax income for full-year 2018," said Ralph W. Babb, Jr., chairman and chief executive officer. "These actions, which we have already begun to execute with urgency, take us a long way towards achieving a double-digit return on equity. We expect to meet or exceed this goal with sustained growth, net of investment, normal credit costs, continued equity buybacks, and assuming only a 25 to 50 basis point increase in rates. We are not relying on a significantly better economic environment or a substantial increase in rates to reach our goal. We remain confident that as we deliver on this initiative, we will create greater shareholder value."

The GEAR Up initiative now includes expected pre-tax benefits of approximately $180 million in full-year 2017 and approximately $270 million in full-year 2018. Additional initiatives include a new retirement program that will replace the current pension plan and retirement account plan for most employees effective January 1, 2017. Active pension plan participants age 60 or older as of December 31, 2016 and current retirees will not be impacted. This initiative is expected to result in annual savings of approximately $35 million in full-year 2017 (assuming current actuarial assumptions). The initiative is also expected to reduce full-year 2016 pension expense to $7 million, resulting in a $4 million credit in the fourth quarter. In addition, streamlining additional operations and administrative support functions is expected to add about $5 million to the initial target.

Expense reduction targets have been increased to approximately $150 million for full-year 2017, which increases to approximately $200 million for full-year 2018. This is to be achieved through the additional actions identified above as well as the previously announced reduction in workforce, streamlining operational processes, real estate optimization including consolidating 38 banking centers, selective outsourcing of technology functions and reduction of technology system applications. Approximately two-thirds of the workforce reduction target will be completed by year-end 2016.

Revenue enhancements are unchanged and are expected to be approximately $30 million for full-year 2017, which increase to approximately $70 million for full-year 2018, through expanded product offerings, enhanced sales tools and training and improved customer analytics to drive opportunities.

Total expected pre-tax restructuring charges of $140 million to $160 million to be incurred through 2018 are unchanged.

(dollar amounts in millions, except per share data) 3rd Qtr ’16
2nd Qtr ’16
3rd Qtr ’15
Net interest income
$
450
$
445
$
422
Provision for credit losses
16
49
26
Noninterest income
272
268
260
Noninterest expenses
493
(a)
518
(a)
457
Pre-tax income
213
146
199
Provision for income taxes
64
42
63
Net income
$
149
$
104
$
136
Net income attributable to common shares
$
148
$
103
$
134
Diluted income per common share
0.84
0.58
0.74
Average diluted shares (in millions)
176
177
181
Common equity Tier 1 capital ratio (b)
10.68
%
10.49
%
10.51
%
Common equity ratio
10.42
10.79
10.73
Tangible common equity ratio (c)
9.64
9.98
9.91
(a) Included restructuring charge of $20 million (8 cents per share, after tax) in the third quarter 2016 and $53 million (19 cents per
share, after tax) in the second quarter 2016.
(b) September 30, 2016 ratio is estimated.
(c) See Reconciliation of Non-GAAP Financial Measures.

"Quarter over quarter, our earnings per share increased 45 percent. This reflected strong credit quality, a reduction in restructuring charges, solid revenue growth and well-managed expenses," said Babb. "While loans were relatively stable, average deposit growth was robust, increasing $1.5 billion. Criticized loans declined and net charge-offs were only 13 basis points of average loans. Our capital position remains solid. In line with our CCAR plan, we increased our share repurchases to 2.1 million shares for a total of $97 million, compared to $65 million in the second quarter.

"We believe we are well positioned for the future," said Babb. "We benefit meaningfully from any increase in interest rates and we continue to adeptly navigate the energy cycle. Yet, we are not waiting for the environment to improve. We are moving with urgency to execute our GEAR Up initiatives and are fully committed to delivering on these efficiency and revenue opportunities to further enhance our profitability."

Third Quarter 2016 Compared to Second Quarter 2016

Average total loans decreased $263 million to $49.2 billion.

Primarily reflected decreases in Energy, National Dealer Services and Technology and Life Sciences; partially offset by increases in Mortgage Banker Finance and Commercial Real Estate.

Period-end total loans decreased $1.1 billion to $49.3 billion, primarily due to decreases in National Dealer Services and Energy.

Average total deposits increased $1.5 billion to $58.1 billion.

Driven by a $2.1 billion increase in noninterest-bearing deposits, partially offset by a $534 million decrease in interest-bearing deposits.

Average total deposits increased in general Middle Market, Commercial Real Estate and Corporate Banking; partially offset by a decrease in Wealth Management.

Period-end deposits increased $2.9 billion to $59.3 billion, in part reflecting an elevated deposit level associated with the government card program on the final day of the quarter.

Net interest income increased $5 million to $450 million.

Primarily the result of one additional day in the third quarter and the benefit from an increase in LIBOR rates, partially offset by higher funding costs.

The provision for credit losses decreased $33 million to $16 million.

Net credit-related charge-offs were $16 million, or 0.13 percent of average loans, compared to $47 million, or 0.38 percent, in the second quarter 2016. Energy net credit-related charge-offs were $6 million compared to $32 million in the second quarter 2016.

The allowance for loan losses was $727 million, or 1.48 percent of total loans. The reserve allocation for Energy remained above 8 percent of loans in the Energy business line.

Noninterest income increased $4 million to $272 million.

Increases in commercial lending fees, largely due to an increase in syndication agent fees, partially offset by a decrease in fiduciary income.

Non-fee categories increased modestly, primarily due to an increase in income from bank-owned life insurance partially offset by a decrease in deferred compensation plan asset returns.

Noninterest expenses decreased $25 million to $493 million.

Excluding a $33 million decrease in restructuring charges, noninterest expenses increased $8 million, primarily due to a $6 million decrease in gains from the sale of leased assets and a $3 million increase in outside processing fees.

Capital position remained solid at September 30, 2016.

Increased repurchases by 640,000 shares to approximately 2.1 million shares of common stock under the equity repurchase program.

-- Dividend increased 4.5 percent to 23 cents per share.

-- Including dividends, returned a total of $137 million to shareholders.

Third Quarter 2016 Compared to Third Quarter 2015

Average total loans increased $234 million.

Primarily reflected continued growth in Commercial Real Estate and Mortgage Banker Finance, partially offset by declines in Energy and general Middle Market.

Average total deposits decreased $1.1 billion, or 2 percent.

Primarily driven by decreases in Municipalities, Corporate Banking, Technology and Life Sciences and the Financial Services Division; partially offset by increases in Retail Bank and Commercial Real Estate.

Net interest income increased $28 million, or 6 percent.

Primarily due to higher yields on loans and Federal Reserve Bank deposits, as well as earning asset growth; partially offset by an increase in funding costs.

The provision for credit losses decreased $10 million, or 38 percent.

Noninterest income increased $12 million, or 5 percent.

Excluding a $6 million increase in deferred compensation asset returns, noninterest income increased $6 million, primarily reflecting a $5 million increase in card fees and a $4 million increase in commercial lending fees, largely due to an increase in syndication agent fees; partially offset by decreases in warrant income and risk management hedge ineffectiveness.

Noninterest expense increased $36 million.

Noninterest expense increased $10 million excluding third quarter 2016 restructuring charges of $20 million and a $6 million increase in deferred compensation plan expense. The remaining increase primarily reflected increases of $5 million each in software expense and FDIC insurance premiums.

Net Interest Income
(dollar amounts in millions)
3rd Qtr ’16
2nd Qtr ’16
3rd Qtr ’15
Net interest income
$
450
$
445
$
422
Net interest margin
2.66
%
2.74
%
2.54
%
Selected average balances:
Total earning assets
$
67,648
$
65,597
$
66,191
Total loans
49,206
49,469
48,972
Total investment securities
12,373
12,334
10,232
Federal Reserve Bank deposits
5,781
3,495
6,710
Total deposits
58,065
56,521
59,140
Total noninterest-bearing deposits 30,454
28,376
28,623
Medium- and long-term debt
5,907
5,072
3,175

Net interest income increased $5 million to $450 million in the third quarter 2016, compared to the second quarter 2016.

Interest on loans increased $5 million, primarily reflecting the benefit from increases in LIBOR rates (+$4 million), one additional day in the third quarter (+$4 million) and the impact of a second quarter 2016 negative residual value adjustment to assets in the leasing portfolio (+$2 million), partially offset by the impact of a decrease in average loan balances (-$2 million), the impact of nonaccrual loans (-$1 million), lower fees (-$1 million) and other portfolio dynamics (-$1 million).

-- Interest on investment securities decreased $1 million due to a decrease in yields.

Interest on short-term investments increased $3 million due to an increase in average Federal Reserve Bank deposit balances.

Interest expense on debt increased $2 million, primarily due to higher costs on variable rate debt tied to LIBOR and the full-quarter impact of Federal Home Loan Bank (FHLB) borrowings during the second quarter.

The net interest margin of 2.66 percent decreased 8 basis points compared to the second quarter 2016, primarily due to the impact of an increase in lower-yielding Federal Reserve Bank deposit balances (-8 basis points).

Credit Quality

"Credit quality was strong, with total net charge-offs of $16 million, or 13 basis points, which is well below our historical norm," said Babb. "Criticized loans declined almost $300 million and comprised less than 7 percent of our total loans. Energy loans were 5 percent of total loans as they continued to decrease. While the overall performance of the Energy portfolio has improved, as evidenced by net charge-offs of only $6 million in the third quarter, and oil and gas prices have remained relatively stable for the past several months, we remain cautious and continued to maintain a reserve allocation of over 8 percent for Energy loans and a total reserve of 1.48 percent of total loans as of September 30, 2016. The solid performance of our total loan portfolio contributed to a reduction in our provision expense to $16 million."

(dollar amounts in millions)
3rd Qtr ’16
2nd Qtr ’16
3rd Qtr ’15
Credit-related charge-offs
$
35
$
59
$
34
Recoveries
19
12
11
Net credit-related charge-offs
16
47
23
Net credit-related charge-offs/Average total loans
0.13
%
0.38
%
0.19
%
Provision for credit losses
$
16
$
49
$
26
Nonperforming loans
639
613
369
Nonperforming assets (NPAs)
660
635
381
NPAs/Total loans and foreclosed property
1.34
%
1.26
%
0.78
%
Loans past due 90 days or more and still accruing
$
48
$
35
$
5
Allowance for loan losses
727
729
622
Allowance for credit losses on lending-related commitments (a) 45
43
48
Total allowance for credit losses
772
772
670
Allowance for loan losses/Period-end total loans
1.48
%
1.45
%
1.27
%
Allowance for loan losses/Nonperforming loans
114
119
169
(a) Included in "Accrued expenses and other liabilities" on the consolidated balance sheets.

Energy business line loans were $2.5 billion at September 30, 2016 compared to $2.7 billion at June 30, 2016.

-- Criticized Energy loans decreased $79 million, to $1.5 billion.

Energy net charge-offs were $6 million, compared to $32 million in the second quarter 2016.

The reserve allocation for loans in the Energy business line remained above 8 percent at September 30, 2016.

Net charge-offs decreased $31 million to $16 million, or 0.13 percent of average loans, in the third quarter 2016, compared to $47 million, or 0.38 percent, in the second quarter 2016. Aside from Energy, net charge-offs were $10 million, or 8 basis points, for the remainder of the portfolio.

During the third quarter 2016, $105 million of borrower relationships over $2 million were transferred to nonaccrual status, a decrease of $2 million compared to $107 million transferred during the second quarter. Third quarter 2016 transfers to nonaccrual included $63 million from Energy, compared to $51 million in the second quarter.

Criticized loans decreased $290 million to $3.3 billion at September 30, 2016, compared to $3.6 billion at June 30, 2016. Criticized loans are generally consistent with the Special Mention, Substandard and Doubtful categories defined by regulatory authorities.

Fourth Quarter 2016 Outlook

For fourth quarter 2016 compared to third quarter 2016, management expects the following, assuming a continuation of the current economic and low-rate environment:

Average loans stable, reflecting growth in National Dealer Services, Technology and Life Sciences and small increases in several other lines of business, offset by seasonality in Mortgage Banker and a continued decline in Energy.

Net interest income slightly higher, reflecting benefits from a decline in wholesale funding costs and an increase in LIBOR.

Provision for credit losses expected to remain low, with net charge-offs below historical norms. Provision and net charge-offs expected to be between second quarter 2016 and third quarter 2016 levels.

Noninterest income relatively stable, excluding income from bank-owned life insurance and deferred compensation asset returns, with fee income expected to remain strong at third quarter 2016 levels.

Noninterest expenses lower, excluding an estimated $30 million to $35 million in restructuring expense, with GEAR Up expense savings of approximately $25 million, primarily salaries and benefits (including pension); seasonal increases in outside processing, marketing and occupancy expected to be partially offset by third quarter 2016 level of deferred compensation expense not expected to repeat.

-- Income tax expense to approximate 30 percent of pre-tax income.

Business Segments

Comerica’s operations are strategically aligned into three major business segments: the Business Bank, the Retail Bank and Wealth Management. The Finance Division is also reported as a segment. The financial results below are based on the internal business unit structure of the Corporation and methodologies in effect at September 30, 2016. The accompanying narrative addresses third quarter 2016 results compared to second quarter 2016.

The following table presents net income (loss) by business segment.

(dollar amounts in millions) 3rd Qtr ’16
2nd Qtr ’16
3rd Qtr ’15
Business Bank
$
192
91
%
$
155
93
%
$
195
85
%
Retail Bank
1
--
(2)
(1)
13
6
Wealth Management
18
9
13
8
21
9
211
100 %
166
100 %
229
100 %
Finance
(61)
(63)
(94)
Other (a)
(1)
1
1
Total
$
149
$
104
$
136
(a) Includes items not directly associated with the three major business segments or the Finance Division.
Business Bank
(dollar amounts in millions)
3rd Qtr ’16
2nd Qtr ’16
3rd Qtr ’15
Net interest income
$
361
$
355
$
378
Provision for credit losses
2
46
30
Noninterest income
145
144
144
Noninterest expenses
215
(a) 222
(a) 198
Net income
192
155
195
Net credit-related charge-offs 14
42
23
Selected average balances:
Assets
39,618
39,983
39,768
Loans
38,243
38,574
38,113
Deposits
30,019
28,441
31,405
(a) Included restructuring charges of $10 million in the third quarter 2016 and $26 million in the second quarter 2016.

Average loans decreased $331 million, primarily reflecting decreases in Energy, National Dealer Services and Technology and Life Sciences, partially offset by an increase in Mortgage Banker Finance.

Average deposits increased $1.6 billion, primarily reflecting increases in general Middle Market, Commercial Real Estate and Corporate Banking.

Net interest income increased $6 million, primarily reflecting the benefit from one additional day in the third quarter, the impact of a second quarter 2016 negative residual value adjustment to assets in the leasing portfolio and an increase in net funds transfer pricing (FTP) credits, partially offset by the impact of a decrease in average loan balances. The increase in net FTP credits primarily reflected the benefit from the increase in average deposits partially offset by the impact of higher funding costs.

The provision for credit losses decreased $44 million, primarily reflecting decreases in Energy and Technology and Life Sciences, in part due to lower loan balances, partially offset by an increase in general Middle Market.

Noninterest income increased $1 million, primarily due to an increase in syndication agent fees.

Noninterest expenses decreased $7 million, primarily reflecting a decrease in restructuring charges, partially offset by a decrease in gains from the sale of leased assets and an increase in outside processing fees.

Retail Bank
(dollar amounts in millions)
3rd Qtr ’16
2nd Qtr ’16
3rd Qtr ’15
Net interest income
$
156
$
155
$
158
Provision for credit losses
10
1
2
Noninterest income
50
48
49
Noninterest expenses
195
(a) 205
(a) 185
Net income
1
(2)
13
Net credit-related charge-offs 3
1
1
Selected average balances:
Assets
6,544
6,558
6,518
Loans
5,871
5,879
5,835
Deposits
23,654
23,546
23,079
(a) Included restructuring charges of $8 million in the third quarter 2016 and $19 million in the second quarter 2016.

Average deposits increased $108 million, primarily reflecting an increase in noninterest-bearing Small Business deposits.

Net interest income increased $1 million, primarily the result of the FTP benefit provided by the increase in average deposits.

The provision for credit losses increased $9 million, primarily due to an increase in reserves for Small Business.

Noninterest income increased $2 million, primarily reflecting an increase in customer derivative income.

Noninterest expenses decreased $10 million, primarily reflecting a decrease in restructuring charges.

Wealth Management
(dollar amounts in millions)
3rd Qtr ’162nd Qtr ’163rd Qtr ’15
Net interest income
$
41
$
42
$
45
Provision for credit losses
(1)
3
(3)
Noninterest income
61
62
59
Noninterest expenses
75
(a) 81
(a) 75
Net income
18
13
21
Net credit-related charge-offs (recoveries) (1)
4
(1)
Selected average balances:
Assets
5,283
5,215
5,228
Loans
5,092
5,016
5,024
Deposits
4,030
4,213
4,188
(a) Included restructuring charges of $2 million in the third quarter 2016 and $8 million in the second quarter 2016.

Average loans increased $76 million, primarily reflecting an increase in Private Banking.

Average deposits decreased $183 million, primarily reflecting decreases in money market and checking deposits, partially offset by an increase in noninterest-bearing deposits.

The provision for credit losses decreased $4 million, primarily reflecting a decrease in net charge-offs.

Noninterest income decreased $1 million, primarily due to a decrease in fiduciary income.

Noninterest expenses decreased $6 million, primarily reflecting a decrease in restructuring charges.

Geographic Market Segments

Comerica also provides market segment results for three primary geographic markets: Michigan, California and Texas. In addition to the three primary geographic markets, Other Markets is also reported as a market segment. Other Markets includes Florida, Arizona, the International Finance division and businesses that have a significant presence outside of the three primary geographic markets. The tables below present the geographic market results based on the methodologies in effect at September 30, 2016.

The following table presents net income (loss) by market segment.

(dollar amounts in millions) 3rd Qtr ’16
2nd Qtr ’16
3rd Qtr ’15
Michigan
$
51
24
%
$
57
34
%
$
70
31
%
California
75
35
50
30
62
27
Texas
33
16
3
2
36
16
Other Markets
52
25
56
34
61
26
211
100 %
166
100 %
229
100 %
Finance & Other (a)
(62)
(62)
(93)
Total
$
149
$
104
$
136
(a) Includes items not directly associated with the geographic markets.

Average loans decreased $274 million in Texas, $172 million in Michigan and $71 million in California. The decrease in Texas primarily reflected a decrease in Energy, partially offset by an increase in Commercial Real Estate, while the decrease in Michigan primarily reflected a decrease in general Middle Market and the decrease in California primarily reflected a decrease in Technology and Life Sciences, partially offset by an increase in Commercial Real Estate.

Average deposits increased $741 million in California and $391 million in Michigan, and decreased $192 million in Texas. General Middle Market deposits increased in California and Michigan, and decreased in Texas. The increase in California also reflected an increase in Commercial Real Estate, while the decrease in Texas also reflected a decrease in Technology and Life Sciences.

Net interest income increased $3 million in Michigan and $3 million in California, and decreased $1 million in Texas. The increases in Michigan and California primarily reflected the FTP benefit from higher deposit balances and one additional day in the third quarter, partially offset by the impact of lower loan balances and higher FTP funding costs. The decrease in Texas primarily reflected an increase in FTP funding costs.

The provision for credit losses decreased $35 million in Texas and $21 million in California, and increased $10 million in Michigan. The decrease in Texas primarily reflected a decrease in Energy, in part due to lower loan balances. In California, the decrease primarily reflected decreases in Technology and Life Sciences and general Middle Market. The increase in Michigan primarily reflected an increase in general Middle Market.

Noninterest income increased $5 million in California, $2 million in Texas and $1 million in Michigan. The increase in California was primarily due to increases in warrant income, syndication agent fees and card fees. The increases in both Texas and Michigan were primarily due to increases in syndication agent fees.

Noninterest expenses decreased $11 million in Texas and $10 million in California and increased $2 million in Michigan. Restructuring charges decreased in all three primary markets. In addition to the impact of restructuring charges, the decrease in Texas reflected small decreases in several other categories and the increase in Michigan reflected a decrease in gains from the sale of leased assets.

Michigan Market
(dollar amounts in millions)
3rd Qtr ’16
2nd Qtr ’16
3rd Qtr ’15
Net interest income
$
169
$
166
$
179
Provision for credit losses
13
3
6
Noninterest income
82
81
84
Noninterest expenses
161
(a) 159
(a) 152
Net income
51
57
70
Net credit-related charge-offs (recoveries) 1
--
9
Selected average balances:
Assets
13,174
13,299
13,856
Loans
12,488
12,660
13,223
Deposits
21,944
21,553
21,946
(a) Included restructuring charges of $5 million in the third quarter 2016 and $15 million in the second quarter 2016.
California Market
(dollar amounts in millions)
3rd Qtr ’16
2nd Qtr ’16
3rd Qtr ’15
Net interest income
$
181
$
178
$
186
Provision for credit losses
(4)
17
24
Noninterest income
44
39
38
Noninterest expenses
110
(a) 120
(a) 101
Net income
75
50
62
Net credit-related charge-offs --
17
10
Selected average balances:
Assets
17,933
17,998
17,060
Loans
17,637
17,708
16,789
Deposits
17,674
16,933
18,371
(a) Included restructuring charges of $5 million in the third quarter 2016 and $16 million in the second quarter 2016.
Texas Market
(dollar amounts in millions)
3rd Qtr ’16
2nd Qtr ’16
3rd Qtr ’15
Net interest income
$
118
$
119
$
129
Provision for credit losses
(3)
32
10
Noninterest income
33
31
34
Noninterest expenses
102
(a) 113
(a) 97
Net income (loss)
33
3
36
Net credit-related charge-offs 10
31
4
Selected average balances:
Assets
11,014
11,287
11,578
Loans
10,566
10,840
10,997
Deposits
9,860
10,052
10,753
(a) Included restructuring charges of $7 million in the third quarter 2016 and $15 million in the second quarter 2016.

Conference Call and Webcast

Comerica will host a conference call to review third quarter 2016 financial results at 7 a.m. CT Tuesday, October 18, 2016. Interested parties may access the conference call by calling (877) 523-5249 or (210) 591-1147 (event ID No. 67807311). The call and supplemental financial information can also be accessed via Comerica’s "Investor Relations" page at www.comerica.com. A replay of the Webcast can be accessed via Comerica’s "Investor Relations" page at www.comerica.com.

Comerica Incorporated is a financial services company headquartered in Dallas, Texas, and strategically aligned by three major business segments: The Business Bank, The Retail Bank and Wealth Management. Comerica focuses on relationships and helping people and businesses be successful. In addition to Texas, Comerica Bank locations can be found in Arizona, California, Florida and Michigan, with select businesses operating in several other states, as well as in Canada and Mexico.

This press release contains both financial measures based on accounting principles generally accepted in the United States (GAAP) and non-GAAP based financial measures, which are used where management believes it to be helpful in understanding Comerica’s results of operations or financial position. Where non-GAAP financial measures are used, the comparable GAAP financial measure, as well as a reconciliation to the comparable GAAP financial measure, can be found in this press release. These disclosures should not be viewed as a substitute for operating results determined in accordance with GAAP, nor are they necessarily comparable to non-GAAP performance measures that may be presented by other companies.

Forward-looking Statements

Any statements in this news release that are not historical facts are forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. Words such as "anticipates," "believes," "contemplates," "feels," "expects," "estimates," "seeks," "strives," "plans," "intends," "outlook," "forecast," "position," "target," "mission," "assume," "achievable," "potential," "strategy," "goal," "aspiration," "opportunity," "initiative," "outcome," "continue," "remain," "maintain," "on course," "trend," "objective," "looks forward," "projects," "models" and variations of such words and similar expressions, or future or conditional verbs such as "will," "would," "should," "could," "might," "can," "may" or similar expressions, as they relate to Comerica or its management, are intended to identify forward-looking statements. These forward-looking statements are predicated on the beliefs and assumptions of Comerica’s management based on information known to Comerica’s management as of the date of this news release and do not purport to speak as of any other date. Forward-looking statements may include descriptions of plans and objectives of Comerica’s management for future or past operations, products or services, including the GEAR Up initiative, and forecasts of Comerica’s revenue, earnings or other measures of economic performance, including statements of profitability, business segments and subsidiaries as well as estimates of the economic benefits of the GEAR Up initiative, estimates of credit trends and global stability. Such statements reflect the view of Comerica’s management as of this date with respect to future events and are subject to risks and uncertainties. Should one or more of these risks materialize or should underlying beliefs or assumptions prove incorrect, Comerica’s actual results could differ materially from those discussed. Factors that could cause or contribute to such differences are changes in general economic, political or industry conditions; changes in monetary and fiscal policies, including changes in interest rates; changes in regulation or oversight; Comerica’s ability to maintain adequate sources of funding and liquidity; the effects of more stringent capital or liquidity requirements; declines or other changes in the businesses or industries of Comerica’s customers, in particular the energy industry; unfavorable developments concerning credit quality; operational difficulties, failure of technology infrastructure or information security incidents; reliance on other companies to provide certain key components of business infrastructure; factors impacting noninterest expenses which are beyond Comerica’s control; changes in the financial markets, including fluctuations in interest rates and their impact on deposit pricing; reductions in Comerica’s credit rating; whether Comerica may achieve opportunities for revenue enhancements and efficiency improvements under the GEAR Up initiative, or changes in the scope or assumptions underlying the GEAR Up initiative; the interdependence of financial service companies; the implementation of Comerica’s strategies and business initiatives; damage to Comerica’s reputation; Comerica’s ability to utilize technology to efficiently and effectively develop, market and deliver new products and services; competitive product and pricing pressures among financial institutions within Comerica’s markets; changes in customer behavior; any future strategic acquisitions or divestitures; management’s ability to maintain and expand customer relationships; management’s ability to retain key officers and employees; the impact of legal and regulatory proceedings or determinations; the effectiveness of methods of reducing risk exposures; the effects of terrorist activities and other hostilities; the effects of catastrophic events including, but not limited to, hurricanes, tornadoes, earthquakes, fires, droughts and floods; changes in accounting standards and the critical nature of Comerica’s accounting policies. Comerica cautions that the foregoing list of factors is not exclusive. For discussion of factors that may cause actual results to differ from expectations, please refer to our filings with the Securities and Exchange Commission. In particular, please refer to "Item 1A. Risk Factors" beginning on page 12 of Comerica’s Annual Report on Form 10-K for the year ended December 31, 2015, "Item 1A. Risk Factors" on page 54 of Comerica’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2016 and "Item 1A. Risk Factors" on page 62 of Comerica’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2016. Forward-looking statements speak only as of the date they are made. Comerica does not undertake to update forward-looking statements to reflect facts, circumstances, assumptions or events that occur after the date the forward-looking statements are made. For any forward-looking statements made in this news release or in any documents, Comerica claims the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995.

CONSOLIDATED FINANCIAL HIGHLIGHTS (unaudited)
Comerica Incorporated and Subsidiaries
Three Months Ended
Nine Months Ended
(in millions, except per share data)
September 30,
June 30,
September 30,
September 30,
2016
2016
2015
2016
2015
PER COMMON SHARE AND COMMON STOCK DATA
Diluted net income
$
0.84
$
0.58
$
0.74
$
1.76
$
2.20
Cash dividends declared
0.23
0.22
0.21
0.66
0.62
Average diluted shares (in thousands)
176,184
177,195
180,714
176,476
181,807
KEY RATIOS
Return on average common shareholders’ equity
7.80
%
5.44
%
7.19
%
5.46
%
7.20
%
Return on average assets
0.82
0.59
0.76
0.59
0.78
Common equity tier 1 and tier 1 risk-based capital ratio (a)
10.68
10.49
10.51
Total risk-based capital ratio (a)
12.82
12.74
12.82
Leverage ratio (a)
10.14
10.39
10.28
Common equity ratio
10.42
10.79
10.73
Tangible common equity ratio (b)
9.64
9.98
9.91
AVERAGE BALANCES
Commercial loans
$
31,132
$
31,511
$
31,900
$
31,152
$
31,596
Real estate construction loans
2,646
2,429
1,833
2,397
1,859
Commercial mortgage loans
9,012
9,033
8,691
9,002
8,648
Lease financing
662
730
788
706
793
International loans
1,349
1,396
1,401
1,388
1,455
Residential mortgage loans
1,883
1,880
1,882
1,885
1,872
Consumer loans
2,522
2,490
2,477
2,493
2,432
Total loans
49,206
49,469
48,972
49,023
48,655
Earning assets
67,648
65,597
66,191
65,796
64,561
Total assets
72,909
70,668
71,333
70,942
69,688
Noninterest-bearing deposits
30,454
28,376
28,623
28,966
27,569
Interest-bearing deposits
27,611
28,145
30,517
28,136
30,282
Total deposits
58,065
56,521
59,140
57,102
57,851
Common shareholders’ equity
7,677
7,654
7,559
7,654
7,508
NET INTEREST INCOME
Net interest income
$
450
$
445
$
422
$
1,342
$
1,256
Net interest margin (fully taxable equivalent)
2.66
%
2.74
%
2.54
%
2.74
%
2.61
%
CREDIT QUALITY
Total nonperforming assets
$
660
$
635
$
381
Loans past due 90 days or more and still accruing
48
35
5
Net credit-related charge-offs
16
47
23
$
121
$
49
Allowance for loan losses
727
729
622
Allowance for credit losses on lending-related commitments
45
43
48
Total allowance for credit losses
772
772
670
Allowance for loan losses as a percentage of total loans
1.48
%
1.45
%
1.27
%
Net credit-related charge-offs as a percentage of average total loans
0.13
0.38
0.19
0.33
%
0.14
%
Nonperforming assets as a percentage of total loans and foreclosed property 1.34
1.26
0.78
Allowance for loan losses as a percentage of total nonperforming loans
114
119
169
(a) September 30, 2016 ratios are estimated.
(b) See Reconciliation of Non-GAAP Financial Measures.
CONSOLIDATED BALANCE SHEETS
Comerica Incorporated and Subsidiaries
September 30,June 30,
December 31, September 30,
(in millions, except share data)
2016
2016
2015
2015
(unaudited)
(unaudited)
(unaudited)
ASSETS
Cash and due from banks
$
1,292
$
1,172
$
1,157
$
1,101
Interest-bearing deposits with banks
6,748
2,938
4,990
6,099
Other short-term investments
92
100
113
107
Investment securities available-for-sale
10,789
10,712
10,519
8,749
Investment securities held-to-maturity
1,695
1,807
1,981
1,863
Commercial loans
31,152
32,360
31,659
31,777
Real estate construction loans
2,743
2,553
2,001
1,874
Commercial mortgage loans
9,013
9,038
8,977
8,787
Lease financing
648
684
724
751
International loans
1,303
1,365
1,368
1,382
Residential mortgage loans
1,874
1,856
1,870
1,880
Consumer loans
2,541
2,524
2,485
2,491
Total loans
49,274
50,380
49,084
48,942
Less allowance for loan losses
(727)
(729)
(634)
(622)
Net loans
48,547
49,651
48,450
48,320
Premises and equipment
528
544
550
541
Accrued income and other assets
4,433
4,356
4,117
4,232
Total assets
$
74,124
$
71,280
$
71,877
$
71,012
LIABILITIES AND SHAREHOLDERS’ EQUITY
Noninterest-bearing deposits
$
31,776
$
28,559
$
30,839
$
28,697
Money market and interest-bearing checking deposits
22,436
22,539
23,532
23,948
Savings deposits
2,052
2,022
1,898
1,853
Customer certificates of deposit
2,967
3,230
3,552
4,126
Foreign office time deposits
30
24
32
144
Total interest-bearing deposits
27,485
27,815
29,014
30,071
Total deposits
59,261
56,374
59,853
58,768
Short-term borrowings
12
12
23
109
Accrued expenses and other liabilities
1,234
1,279
1,383
1,413
Medium- and long-term debt
5,890
5,921
3,058
3,100
Total liabilities
66,397
63,586
64,317
63,390
Common stock - $5 par value:
Authorized - 325,000,000 shares
Issued - 228,164,824 shares
1,141
1,141
1,141
1,141
Capital surplus
2,174
2,165
2,173
2,165
Accumulated other comprehensive loss
(292)
(295)
(429)
(345)
Retained earnings
7,262
7,157
7,084
7,007
Less cost of common stock in treasury - 56,096,416 shares at 9/30/16, 54,247,325 shares at 6/30/16, 52,457,113 shares at 12/31/15, and 51,010,418 shares at 9/30/15 (2,558)
(2,474)
(2,409)
(2,346)
Total shareholders’ equity
7,727
7,694
7,560
7,622
Total liabilities and shareholders’ equity
$
74,124
$
71,280
$
71,877
$
71,012
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (unaudited)
Comerica Incorporated and Subsidiaries
Three Months Ended
Nine Months Ended
September 30,
September 30,
(in millions, except per share data)
2016
2015
2016
2015
INTEREST INCOME
Interest and fees on loans
$
411
$
390
$
1,223
$
1,156
Interest on investment securities
61
54
185
160
Interest on short-term investments
8
4
17
11
Total interest income
480
448
1,425
1,327
INTEREST EXPENSE
Interest on deposits
10
11
30
33
Interest on medium- and long-term debt
20
15
53
38
Total interest expense
30
26
83
71
Net interest income
450
422
1,342
1,256
Provision for credit losses
16
26
213
87
Net interest income after provision for credit losses 434
396
1,129
1,169
NONINTEREST INCOME
Card fees
76
71
224
203
Service charges on deposit accounts
55
57
165
168
Fiduciary income
47
47
142
142
Commercial lending fees
26
22
68
69
Letter of credit fees
12
13
38
39
Bank-owned life insurance
12
10
30
29
Foreign exchange income
10
10
31
29
Brokerage fees
5
5
14
13
Net securities losses
--
--
(3)
(2)
Other noninterest income
29
25
75
79
Total noninterest income
272
260
784
769
NONINTEREST EXPENSES
Salaries and benefits expense
247
243
742
747
Outside processing fee expense
86
83
247
239
Net occupancy expense
40
41
117
118
Equipment expense
13
13
40
39
Restructuring charges
20
--
73
--
Software expense
31
26
90
73
FDIC insurance expense
14
9
39
27
Advertising expense
5
6
15
17
Litigation-related expense
--
(3)
--
(32)
Other noninterest expenses
37
39
106
117
Total noninterest expenses
493
457
1,469
1,345
Income before income taxes
213
199
444
593
Provision for income taxes
64
63
131
188
NET INCOME
149
136
313
405
Less income allocated to participating securities
1
2
3
5
Net income attributable to common shares
$
148
$
134
$
310
$
400
Earnings per common share:
Basic
$
0.87
$
0.76
$
1.80
$
2.27
Diluted
0.84
0.74
1.76
2.20
Comprehensive income
152
187
450
472
Cash dividends declared on common stock
40
37
115
110
Cash dividends declared per common share
0.23
0.21
0.66
0.62
CONSOLIDATED QUARTERLY STATEMENTS OF COMPREHENSIVE INCOME (unaudited)
Comerica Incorporated and Subsidiaries
(in millions, except per share data)
Third
Second
First
Fourth
Third
Third Quarter 2016 Compared To:
Quarter
Quarter
Quarter
Quarter
Quarter
Second Quarter 2016 Third Quarter 2015
2016
2016
2016
2015
2015
Amount
Percent
Amount
Percent
INTEREST INCOME
Interest and fees on loans
$
411
$
406
$
406
$
395
$
390
$
5
1
%
$
21
5
%
Interest on investment securities
61
62
62
56
54
(1)
(1)
7
14
Interest on short-term investments
8
5
4
6
4
3
62
4
67
Total interest income
480
473
472
457
448
7
1
32
7
INTEREST EXPENSE
Interest on deposits
10
10
10
10
11
--
--
(1)
(9)
Interest on medium- and long-term debt
20
18
15
14
15
2
12
5
37
Total interest expense
30
28
25
24
26
2
8
4
18
Net interest income
450
445
447
433
422
5
1
28
6
Provision for credit losses
16
49
148
60
26
(33)
(67)
(10)
(38)
Net interest income after provision
434
396
299
373
396
38
9
38
9
for credit losses
NONINTEREST INCOME
Card fees
76
76
72
73
71
--
--
5
7
Service charges on deposit accounts
55
55
55
55
57
--
--
(2)
(2)
Fiduciary income
47
49
46
45
47
(2)
(3)
--
--
Commercial lending fees
26
22
20
30
22
4
12
4
12
Letter of credit fees
12
13
13
14
13
(1)
(1)
(1)
(3)
Bank-owned life insurance
12
9
9
11
10
3
37
2
18
Foreign exchange income
10
11
10
11
10
(1)
--
--
--
Brokerage fees
5
5
4
4
5
--
--
--
--
Net securities losses
--
(1)
(2)
--
--
1
38
--
--
Other noninterest income
29
29
17
23
25
--
--
4
14
Total noninterest income
272
268
244
266
260
4
2
12
5
NONINTEREST EXPENSES
Salaries and benefits expense
247
247
248
262
243
--
--
4
2
Outside processing fee expense
86
83
78
79
83
3
3
3
3
Net occupancy expense
40
39
38
41
41
1
--
(1)
(3)
Equipment expense
13
14
13
14
13
(1)
(5)
--
--
Restructuring charges
20
53
--
--
--
(33)
(63)
20
n/m
Software expense
31
30
29
26
26
1
1
5
20
FDIC insurance expense
14
14
11
10
9
--
--
5
62
Advertising expense
5
6
4
7
6
(1)
(22)
(1)
(13)
Litigation-related expense
--
--
--
--
(3)
--
--
3
n/m
Other noninterest expenses
37
32
37
43
39
5
15
(2)
(7)
Total noninterest expenses
493
518
458
482
457
(25)
(5)
36
8
Income before income taxes
213
146
85
157
199
67
45
14
7
Provision for income taxes
64
42
25
41
63
22
48
1
--
NET INCOME
149
104
60
116
136
45
44
13
10
Less income allocated to participating securities 1
1
1
1
2
--
--
(1)
(4)
Net income attributable to common shares
$
148
$
103
$
59
$
115
$
134
$
45
44
%
$
14
10
%
Earnings per common share:
Basic
$
0.87
$
0.60
$
0.34
$
0.65
$
0.76
$
0.27
45
%
$
0.11
14
%
Diluted
0.84
0.58
0.34
0.64
0.74
0.26
45
0.10
14
Comprehensive income
152
137
161
32
187
15
11
(35)
(19)
Cash dividends declared on common stock
40
38
37
37
37
2
3
3
6
Cash dividends declared per common share
0.23
0.22
0.21
0.21
0.21
0.01
5
0.02
10
n/m - not meaningful
ANALYSIS OF THE ALLOWANCE FOR LOAN LOSSES (unaudited)
Comerica Incorporated and Subsidiaries
2016
2015
(in millions)
3rd Qtr
2nd Qtr
1st Qtr
4th Qtr
3rd Qtr
Balance at beginning of period
$
729
$
724
$
634
$
622
$
618
Loan charge-offs:
Commercial
24
48
72
73
30
Commercial mortgage
2
--
--
1
--
International
8
4
3
--
1
Consumer
1
2
2
2
3
Total loan charge-offs
35
54
77
76
34
Recoveries on loans previously charged-off:
Commercial
15
9
12
6
8
Commercial mortgage
3
2
12
11
2
Residential mortgage
--
--
--
1
--
Consumer
1
1
1
7
1
Total recoveries
19
12
25
25
11
Net loan charge-offs
16
42
52
51
23
Provision for loan losses
14
47
141
63
28
Foreign currency translation adjustment
--
--
1
--
(1)
Balance at end of period
$
727
$
729
$
724
$
634
$
622
Allowance for loan losses as a percentage of total loans
1.48
%
1.45
%
1.47
%
1.29
%
1.27
%
Net loan charge-offs as a percentage of average total loans 0.13
0.34
0.43
0.42
0.19
ANALYSIS OF THE ALLOWANCE FOR CREDIT LOSSES ON LENDING-RELATED COMMITMENTS (unaudited)
Comerica Incorporated and Subsidiaries
2016
2015
(in millions)
3rd Qtr
2nd Qtr
1st Qtr
4th Qtr
3rd Qtr
Balance at beginning of period
$
43
$
46
$
45
$
48
$
50
Charge-offs on lending-related commitments (a)
--
(5)
(6)
--
--
Provision for credit losses on lending-related commitments 2
2
7
(3)
(2)
Balance at end of period
$
45
$
43
$
46
$
45
$
48
Unfunded lending-related commitments sold
$
--
$
12
$
11
$
--
$
--
(a) Charge-offs result from the sale of unfunded lending-related commitments.
NONPERFORMING ASSETS (unaudited)
Comerica Incorporated and Subsidiaries
2016
2015
(in millions)
3rd Qtr
2nd Qtr
1st Qtr
4th Qtr
3rd Qtr
SUMMARY OF NONPERFORMING ASSETS AND PAST DUE LOANS
Nonaccrual loans:
Business loans:
Commercial
$
508
$
482
$
547
$
238
$
214
Real estate construction
--
--
--
1
1
Commercial mortgage
44
44
47
60
66
Lease financing
6
6
6
6
8
International
19
18
27
8
8
Total nonaccrual business loans
577
550
627
313
297
Retail loans:
Residential mortgage
23
26
26
27
31
Consumer:
Home equity
27
28
27
27
28
Other consumer
4
1
1
--
1
Total consumer
31
29
28
27
29
Total nonaccrual retail loans
54
55
54
54
60
Total nonaccrual loans
631
605
681
367
357
Reduced-rate loans
8
8
8
12
12
Total nonperforming loans
639
613
689
379
369
Foreclosed property
21
22
25
12
12
Total nonperforming assets
$
660
$
635
$
714
$
391
$
381
Nonperforming loans as a percentage of total loans
1.30
% 1.22
% 1.40
%
0.77
% 0.75
%
Nonperforming assets as a percentage of total loans 1.34
1.26
1.45
0.80
0.78
and foreclosed property
Allowance for loan losses as a percentage of total
114
119
105
167
169
nonperforming loans
Loans past due 90 days or more and still accruing
$
48
$
35
$
13
$
17
$
5
ANALYSIS OF NONACCRUAL LOANS
Nonaccrual loans at beginning of period
$
605
$
681
$
367
$
357
$
349
Loans transferred to nonaccrual (a)
105
107
446
105
69
Nonaccrual business loan gross charge-offs (b)
(34)
(52)
(75)
(49)
(31)
Nonaccrual business loans sold (c)
(2)
(40)
(21)
--
--
Payments/Other (d)
(43)
(91)
(36)
(46)
(30)
Nonaccrual loans at end of period
$
631
$
605
$
681
$
367
$
357
(a) Based on an analysis of nonaccrual loans with book balances greater than $2 million.
(b) Analysis of gross loan charge-offs:
Nonaccrual business loans
$
34
$
52
$
75
$
49
$
31
Performing business loans
--
--
--
25
--
Consumer and residential mortgage loans
1
2
2
2
3
Total gross loan charge-offs
$
35
$
54
$
77
$
76
$
34
(c) Analysis of loans sold:
Nonaccrual business loans
$
2
$
40
$
21
$
--
$
--
Performing criticized loans
--
--
--
3
--
Total criticized loans sold
$
2
$
40
$
21
$
3
$
--
(d) Includes net changes related to nonaccrual loans with balances less than $2 million, payments on nonaccrual loans with book balances
greater than $2 million and transfers of nonaccrual loans to foreclosed property. Excludes business loan gross charge-offs and business
nonaccrual loans sold.
ANALYSIS OF NET INTEREST INCOME (unaudited)
Comerica Incorporated and Subsidiaries
Nine Months Ended
September 30, 2016
September 30, 2015
(dollar amounts in millions)
Average
Average
Average
Average
Balance
Interest
Rate (a)
Balance
Interest
Rate (a)
Commercial loans
$
31,152
$
753
3.24 %
$
31,596
$
718
3.05 %
Real estate construction loans
2,397
65
3.61
1,859
48
3.44
Commercial mortgage loans
9,002
236
3.50
8,648
220
3.40
Lease financing
706
15
2.86
793
19
3.13
International loans
1,388
38
3.61
1,455
39
3.63
Residential mortgage loans
1,885
54
3.81
1,872
53
3.78
Consumer loans
2,493
62
3.34
2,432
59
3.23
Total loans
49,023
1,223
3.34
48,655
1,156
3.19
Mortgage-backed securities (b)
9,347
152
2.20
9,076
151
2.23
Other investment securities
3,008
33
1.50
950
9
1.18
Total investment securities (b)
12,355
185
2.03
10,026
160
2.13
Interest-bearing deposits with banks
4,313
16
0.50
5,774
11
0.25
Other short-term investments
105
1
0.65
106
--
0.78
Total earning assets
65,796
1,425
2.90
64,561
1,327
2.76
Cash and due from banks
1,098
1,054
Allowance for loan losses
(726)
(614)
Accrued income and other assets
4,774
4,687
Total assets
$
70,942
$
69,688
Money market and interest-bearing checking deposits
$
22,797
20
0.11
$
23,973
20
0.11
Savings deposits
1,996
--
0.02
1,827
--
0.02
Customer certificates of deposit
3,308
10
0.40
4,359
12
0.37
Foreign office time deposits
35
--
0.34
123
1
1.13
Total interest-bearing deposits
28,136
30
0.14
30,282
33
0.14
Short-term borrowings
180
--
0.45
93
--
0.05
Medium- and long-term debt
4,695
53
1.51
2,843
38
1.80
Total interest-bearing sources
33,011
83
0.33
33,218
71
0.28
Noninterest-bearing deposits
28,966
27,569
Accrued expenses and other liabilities
1,311
1,393
Total shareholders’ equity
7,654
7,508
Total liabilities and shareholders’ equity
$
70,942
$
69,688
Net interest income/rate spread
$
1,342
2.57
$
1,256
2.48
Impact of net noninterest-bearing sources of funds
0.17
0.13
Net interest margin (as a percentage of average earning assets)
2.74 %
2.61 %
(a) Fully taxable equivalent.
(b) Includes investment securities available-for-sale and investment securities held-to-maturity.
ANALYSIS OF NET INTEREST INCOME (unaudited)
Comerica Incorporated and Subsidiaries
Three Months Ended
September 30, 2016
June 30, 2016
September 30, 2015
(dollar amounts in millions)
Average
Average
Average
Average
Average
Average
Balance
Interest Rate (a)
Balance
InterestRate (a)
Balance
InterestRate (a)
Commercial loans
$
31,132
$
253
3.25 %
$
31,511
$
251
3.23 %
$
31,900
$
243
3.04 %
Real estate construction loans
2,646
24
3.57
2,429
22
3.62
1,833
16
3.47
Commercial mortgage loans
9,012
78
3.43
9,033
78
3.47
8,691
74
3.39
Lease financing
662
5
3.30
730
4
1.98
788
6
3.16
International loans
1,349
12
3.56
1,396
13
3.63
1,401
13
3.51
Residential mortgage loans
1,883
18
3.74
1,880
17
3.76
1,882
18
3.79
Consumer loans
2,522
21
3.31
2,490
21
3.37
2,477
20
3.21
Total loans
49,206
411
3.33
49,469
406
3.31
48,972
390
3.17
Mortgage-backed securities (b)
9,359
50
2.17
9,326
51
2.21
9,099
50
2.21
Other investment securities
3,014
11
1.51
3,008
11
1.50
1,133
4
1.26
Total investment securities (b)
12,373
61
2.01
12,334
62
2.03
10,232
54
2.11
Interest-bearing deposits with banks
5,967
8
0.51
3,690
5
0.50
6,869
4
0.25
Other short-term investments
102
--
0.43
104
--
0.58
118
--
0.82
Total earning assets
67,648
480
2.84
65,597
473
2.91
66,191
448
2.70
Cash and due from banks
1,152
1,074
1,095
Allowance for loan losses
(749)
(749)
(628)
Accrued income and other assets
4,858
4,746
4,675
Total assets
$
72,909
$
70,668
$
71,333
Money market and interest-bearing checking deposits
$
22,415
7
0.12
$
22,785
6
0.11
$
24,298
7
0.11
Savings deposits
2,042
--
0.03
2,010
--
0.02
1,860
--
0.02
Customer certificates of deposit
3,129
3
0.40
3,320
4
0.40
4,232
4
0.37
Foreign office time deposits
25
--
0.37
30
--
0.35
127
--
0.70
Total interest-bearing deposits
27,611
10
0.14
28,145
10
0.14
30,517
11
0.14
Short-term borrowings
17
--
0.47
159
--
0.45
91
--
0.04
Medium- and long-term debt
5,907
20
1.36
5,072
18
1.42
3,175
15
1.85
Total interest-bearing sources
33,535
30
0.36
33,376
28
0.33
33,783
26
0.30
Noninterest-bearing deposits
30,454
28,376
28,623
Accrued expenses and other liabilities
1,243
1,262
1,368
Total shareholders’ equity
7,677
7,654
7,559
Total liabilities and shareholders’ equity
$
72,909
$
70,668
$
71,333
Net interest income/rate spread
$
450
2.48
$
445
2.58
$
422
2.40
Impact of net noninterest-bearing sources of funds
0.18
0.16
0.14
Net interest margin (as a percentage of average earning assets)
2.66 %
2.74 %
2.54 %
(a) Fully taxable equivalent.
(b) Includes investment securities available-for-sale and investment securities held-to-maturity.
CONSOLIDATED STATISTICAL DATA (unaudited)
Comerica Incorporated and Subsidiaries
(in millions, except per share data)
September 30,
June 30,
March 31,
December 31,
September 30,
2016
2016
2016
2015
2015
Commercial loans:
Floor plan
$
3,778
$
4,120
$
3,902
$
3,939
$
3,538
Other
27,374
28,240
27,660
27,720
28,239
Total commercial loans
31,152
32,360
31,562
31,659
31,777
Real estate construction loans
2,743
2,553
2,290
2,001
1,874
Commercial mortgage loans
9,013
9,038
8,982
8,977
8,787
Lease financing
648
684
731
724
751
International loans
1,303
1,365
1,455
1,368
1,382
Residential mortgage loans
1,874
1,856
1,874
1,870
1,880
Consumer loans:
Home equity
1,792
1,779
1,738
1,720
1,714
Other consumer
749
745
745
765
777
Total consumer loans
2,541
2,524
2,483
2,485
2,491
Total loans
$
49,274
$
50,380
$
49,377
$
49,084
$
48,942
Goodwill
$
635
$
635
$
635
$
635
$
635
Core deposit intangible
8
9
9
10
10
Other intangibles
3
3
4
4
4
Common equity tier 1 capital (a)
7,378
7,346
7,331
7,350
7,327
Risk-weighted assets (a)
69,100
70,056
69,319
69,731
69,718
Common equity tier 1 and tier 1 risk-based capital ratio (a) 10.68
%
10.49
%
10.58
%
10.54
%
10.51
%
Total risk-based capital ratio (a)
12.82
12.74
12.84
12.69
12.82
Leverage ratio (a)
10.14
10.39
10.60
10.22
10.28
Common equity ratio
10.42
10.79
11.08
10.52
10.73
Tangible common equity ratio (b)
9.64
9.98
10.23
9.70
9.91
Common shareholders’ equity per share of common stock
$
44.91
$
44.24
$
43.66
$
43.03
$
43.02
Tangible common equity per share of common stock (b)
41.15
40.52
39.96
39.33
39.36
Market value per share for the quarter:
High
47.81
47.55
41.74
47.44
52.93
Low
38.39
36.27
30.48
39.52
40.01
Close
47.32
41.13
37.87
41.83
41.10
Quarterly ratios:
Return on average common shareholders’ equity
7.80
%
5.44
%
3.13
%
6.08
%
7.19
%
Return on average assets
0.82
0.59
0.34
0.64
0.76
Efficiency ratio (c)
68.15
72.43
65.99
68.92
66.87
Number of banking centers
473
473
477
477
477
Number of employees - full time equivalent
8,476
8,792
8,869
8,880
8,941
(a) September 30, 2016 amounts and ratios are estimated.
(b) See Reconciliation of Non-GAAP Financial Measures.
(c) Noninterest expenses as a percentage of the sum of net interest income (FTE) and noninterest income excluding net securities gains (losses).
PARENT COMPANY ONLY BALANCE SHEETS (unaudited)
Comerica Incorporated
September 30, December 31,September 30,
(in millions, except share data)
2016
2015
2015
ASSETS
Cash and due from subsidiary bank
$
--
$
4
$
5
Short-term investments with subsidiary bank
588
569
563
Other short-term investments
88
89
89
Investment in subsidiaries, principally banks
7,685
7,523
7,596
Premises and equipment
2
3
2
Other assets
161
137
138
Total assets
$
8,524
$
8,325
$
8,393
LIABILITIES AND SHAREHOLDERS’ EQUITY
Medium- and long-term debt
$
626
$
608
$
618
Other liabilities
171
157
153
Total liabilities
797
765
771
Common stock - $5 par value:
Authorized - 325,000,000 shares
Issued - 228,164,824 shares
1,141
1,141
1,141
Capital surplus
2,174
2,173
2,165
Accumulated other comprehensive loss
(292)
(429)
(345)
Retained earnings
7,262
7,084
7,007
Less cost of common stock in treasury - 56,096,416 shares at 9/30/16, 52,457,113 shares at 12/31/15 and 51,010,418 shares at 9/30/15 (2,558)
(2,409)
(2,346)
Total shareholders’ equity
7,727
7,560
7,622
Total liabilities and shareholders’ equity
$
8,524
$
8,325
$
8,393
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY (unaudited)
Comerica Incorporated and Subsidiaries
Accumulated
Common Stock
Other
Total
(in millions, except per share data)
Shares
Capital
Comprehensive Retained
Treasury
Shareholders’
Outstanding Amount
Surplus
Loss
Earnings
Stock
Equity
BALANCE AT DECEMBER 31, 2014
179.0
$
1,141
$
2,188
$
(412)
$
6,744
$
(2,259)
$
7,402
Net income
--
--
--
--
405
--
405
Other comprehensive income, net of tax
--
--
--
67
--
--
67
Cash dividends declared on common stock ($0.62 per share) --
--
--
--
(110)
--
(110)
Purchase of common stock
(3.8)
--
--
--
--
(175)
(175)
Purchase and retirement of warrants
--
--
(10)
--
--
--
(10)
Net issuance of common stock under employee stock plans
1.0
--
(21)
--
(10)
45
14
Net issuance of common stock for warrants
1.0
--
(21)
--
(22)
43
--
Share-based compensation
--
--
29
--
--
--
29
BALANCE AT SEPTEMBER 30, 2015
177.2
$
1,141
$
2,165
$
(345)
$
7,007
$
(2,346)
$
7,622
BALANCE AT DECEMBER 31, 2015
175.7
$
1,141
$
2,173
$
(429)
$
7,084
$
(2,409)
$
7,560
Net income
--
--
--
--
313
--
313
Other comprehensive income, net of tax
--
--
--
137
--
--
137
Cash dividends declared on common stock ($0.66 per share) --
--
--
--
(115)
--
(115)
Purchase of common stock
(5.0)
--
--
--
--
(211)
(211)
Net issuance of common stock under employee stock plans
1.4
--
(29)
--
(20)
62
13
Share-based compensation
--
--
30
--
--
--
30
BALANCE AT SEPTEMBER 30, 2016
172.1
$
1,141
$
2,174
$
(292)
$
7,262
$
(2,558)
$
7,727
BUSINESS SEGMENT FINANCIAL RESULTS (unaudited)
Comerica Incorporated and Subsidiaries
(dollar amounts in millions)
Three Months Ended September 30, 2016
Business
Retail
Wealth
Bank
Bank
Management
Finance
Other
Total
Earnings summary:
Net interest income (expense)
$
361
$
156
$
41
$
(114)
$ 6
$
450
Provision for credit losses
2
10
(1)
--
5
16
Noninterest income
145
50
61
13
3
272
Noninterest expenses
215
195
75
(1)
9
493
Provision (benefit) for income taxes
97
--
10
(39)
(4)
64
Net income (loss)
$
192
$
1
$
18
$
(61)
$ (1)
$
149
Net credit-related charge-offs (recoveries) $
14
$
3
$
(1)
$
--
$ --
$
16
Selected average balances:
Assets
$
39,618
$
6,544
$
5,283
$
14,144
$ 7,320
$
72,909
Loans
38,243
5,871
5,092
--
--
49,206
Deposits
30,019
23,654
4,030
98
264
58,065
Statistical data:
Return on average assets (a)
1.94
%
0.01
%
1.39
%
N/M
N/M
0.82
%
Efficiency ratio (b)
42.38
94.57
73.07
N/M
N/M
68.15
Three Months Ended June 30, 2016
Business
Retail
Wealth
Bank
Bank
Management
Finance
Other
Total
Earnings summary:
Net interest income (expense)
$
355
$
155
$
42
$
(113)
$ 6
$
445
Provision for credit losses
46
1
3
--
(1)
49
Noninterest income
144
48
62
10
4
268
Noninterest expenses
222
205
81
(1)
11
518
Provision (benefit) for income taxes
76
(1)
7
(39)
(1)
42
Net income (loss)
$
155
$
(2)
$
13
$
(63)
$ 1
$
104
Net credit-related charge-offs
$
42
$
1
$
4
$
--
$ --
$
47
Selected average balances:
Assets
$
39,983
$
6,558
$
5,215
$
13,927
$ 4,985
$
70,668
Loans
38,574
5,879
5,016
--
--
49,469
Deposits
28,441
23,546
4,213
50
271
56,521
Statistical data:
Return on average assets (a)
1.55
%
(0.03)
%
1.02
%
N/M
N/M
0.59
%
Efficiency ratio (b)
44.31
101.12
77.65
N/M
N/M
72.43
Three Months Ended September 30, 2015
Business
Retail
Wealth
Bank
Bank
Management
Finance
Other
Total
Earnings summary:
Net interest income (expense)
$
378
$
158
$
45
$
(163)
$ 4
$
422
Provision for credit losses
30
2
(3)
--
(3)
26
Noninterest income
144
49
59
12
(4)
260
Noninterest expenses
198
185
75
--
(1)
457
Provision (benefit) for income taxes
99
7
11
(57)
3
63
Net income (loss)
$
195
$
13
$
21
$
(94)
$ 1
$
136
Net credit-related charge-offs (recoveries) $
23
$
1
$
(1)
$
--
$ --
$
23
Selected average balances:
Assets
$
39,768
$
6,518
$
5,228
$
11,761
$ 8,058
$
71,333
Loans
38,113
5,835
5,024
--
--
48,972
Deposits
31,405
23,079
4,188
203
265
59,140
Statistical data:
Return on average assets (a)
1.96
%
0.23
%
1.62
%
N/M
N/M
0.76
%
Efficiency ratio (b)
37.98
89.33
71.12
N/M
N/M
66.87
(a)
Return on average assets is calculated based on the greater of average assets or average liabilities and attributed equity.
(b)
Noninterest expenses as a percentage of the sum of net interest income (fully taxable equivalent basis) and noninterest income excluding net securities gains.
N/M - Not Meaningful
MARKET SEGMENT FINANCIAL RESULTS (unaudited)
Comerica Incorporated and Subsidiaries
(dollar amounts in millions)
Other
Finance
Three Months Ended September 30, 2016
Michigan
California
Texas
Markets
& Other
Total
Earnings summary:
Net interest income (expense)
$
169
$
181
$
118
$
90
$ (108)
$
450
Provision for credit losses
13
(4)
(3)
5
5
16
Noninterest income
82
44
33
97
16
272
Noninterest expenses
161
110
102
112
8
493
Provision (benefit) for income taxes
26
44
19
18
(43)
64
Net income (loss)
$
51
$
75
$
33
$
52
$ (62)
$
149
Net credit-related charge-offs
$
1
$
--
$
10
$
5
$ --
$
16
Selected average balances:
Assets
$
13,174
$
17,933
$
11,014
$
9,324
$ 21,464
$
72,909
Loans
12,488
17,637
10,566
8,515
--
49,206
Deposits
21,944
17,674
9,860
8,225
362
58,065
Statistical data:
Return on average assets (a)
0.90
%
1.61
%
1.18
%
2.23
%
N/M
0.82
%
Efficiency ratio (b)
64.10
48.56
67.29
59.87
N/M
68.15
Other
Finance
Three Months Ended June 30, 2016
Michigan
California
Texas
Markets
& Other
Total
Earnings summary:
Net interest income (expense)
$
166
$
178
$
119
$
89
$ (107)
$
445
Provision for credit losses
3
17
32
(2)
(1)
49
Noninterest income
81
39
31
103
14
268
Noninterest expenses
159
120
113
116
10
518
Provision (benefit) for income taxes
28
30
2
22
(40)
42
Net income (loss)
$
57
$
50
$
3
$
56
$ (62)
$
104
Net credit-related charge-offs (recoveries) $
--
$
17
$
31
$
(1)
$ --
$
47
Selected average balances:
Assets
$
13,299
$
17,998
$
11,287
$
9,172
$ 18,912
$
70,668
Loans
12,660
17,708
10,840
8,261
--
49,469
Deposits
21,553
16,933
10,052
7,662
321
56,521
Statistical data:
Return on average assets (a)
1.01
%
1.10
%
0.11
%
2.46
%
N/M
0.59
%
Efficiency ratio (b)
64.13
55.30
74.91
60.43
N/M
72.43
Other
Finance
Three Months Ended September 30, 2015
Michigan
California
Texas
Markets
& Other
Total
Earnings summary:
Net interest income (expense)
$
179
$
186
$
129
$
87
$ (159)
$
422
Provision for credit losses
6
24
10
(11)
(3)
26
Noninterest income
84
38
34
96
8
260
Noninterest expenses
152
101
97
108
(1)
457
Provision (benefit) for income taxes
35
37
20
25
(54)
63
Net income (loss)
$
70
$
62
$
36
$
61
$ (93)
$
136
Net credit-related charge-offs
$
9
$
10
$
4
$
--
$ --
$
23
Selected average balances:
Assets
$
13,856
$
17,060
$
11,578
$
9,020
$ 19,819
$
71,333
Loans
13,223
16,789
10,997
7,963
--
48,972
Deposits
21,946
18,371
10,753
7,602
468
59,140
Statistical data:
Return on average assets (a)
1.23
%
1.27
%
1.16
%
2.70
%
N/M
0.76
%
Efficiency ratio (b)
57.42
45.19
59.48
59.00
N/M
66.87
(a)
Return on average assets is calculated based on the greater of average assets or average liabilities and attributed equity.
(b)
Noninterest expenses as a percentage of the sum of net interest income (fully taxable equivalent basis) and noninterest income excluding net securities gains.
N/M - Not Meaningful
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES (unaudited)
Comerica Incorporated and Subsidiaries
(dollar amounts in millions)
September 30,
June 30,
March 31,
December 31,
September 30,
2016
2016
2016
2015
2015
Tangible Common Equity Ratio:
Common shareholders’ equity
$
7,727
$
7,694
$
7,644
$
7,560
$
7,622
Less:
Goodwill
635
635
635
635
635
Other intangible assets
11
12
13
14
14
Tangible common equity
$
7,081
$
7,047
$
6,996
$
6,911
$
6,973
Total assets
$
74,124
$
71,280
$
69,007
$
71,877
$
71,012
Less:
Goodwill
635
635
635
635
635
Other intangible assets
11
12
13
14
14
Tangible assets
$
73,478
$
70,633
$
68,359
$
71,228
$
70,363
Common equity ratio
10.42
% 10.79
% 11.08
%
10.52
%
10.73
%
Tangible common equity ratio
9.64
9.98
10.23
9.70
9.91
Tangible Common Equity per Share of Common Stock:
Common shareholders’ equity
$
7,727
$
7,694
$
7,644
$
7,560
$
7,622
Tangible common equity
7,081
7,047
6,996
6,911
6,973
Shares of common stock outstanding (in millions)
172
174
175
176
177
Common shareholders’ equity per share of common stock $
44.91
$
44.24
$
43.66
$
43.03
$
43.02
Tangible common equity per share of common stock
41.15
40.52
39.96
39.33
39.36

The tangible common equity ratio removes preferred stock and the effect of intangible assets from capital and the effect of intangible assets from total assets. Tangible common equity per share of common stock removes the effect of intangible assets from common shareholders equity per share of common stock. Comerica believes these measurements are meaningful measures of capital adequacy used by investors, regulators, management and others to evaluate the adequacy of common equity and to compare against other companies in the industry.

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SOURCE Comerica Incorporated

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