Comerica Inc.
10/20/2021 | Press release | Distributed by Public on 10/20/2021 04:34
THIRD QUARTER 2021 NET INCOME OF $262 MILLION, $1.90 PER SHARE - Form 8-K
THIRD QUARTER 2021 NET INCOME OF $262 MILLION, $1.90 PER SHARE
Solid Loan Performance Overshadowed by PPP Forgiveness
General Middle Market Loans Up 3 Percent Excluding PPP
Strong Deposit Growth and Credit Quality Continued
Repurchased $220 Million, or 3.0 Million Common Shares, Under Program
"We generated earnings of $1.90 per share and an ROE of 13.53 percent in the third quarter," said Curt C. Farmer, Comerica Chairman, President and Chief Executive Officer. "Solid loan growth in a number of business lines was overshadowed by headwinds from PPP loan forgiveness and reduced auto dealer loans due to supply constraints. We continued to drive strong deposit growth, robust fee income, and excellent credit quality. Revenue increased quarter over quarter and year over year, despite the low-rate environment. Our efficiency ratio was stable as we remained focused on managing expenses while supporting our revenue-generating activities. Also, we repurchased over 3 million shares, reducing our share count by over 2 percent. We expect economic metrics to remain relatively strong over the next year, which bodes well for growth."
| (dollar amounts in millions, except per share data) | 3rd Qtr '21 | 2nd Qtr '21 | 3rd Qtr '20 | |||
| FINANCIAL RESULTS | ||||||
| Net interest income | $ | 475 | $ | 465 | $ | 458 |
| Provision for credit losses | (42) | (135) | 5 | |||
| Noninterest income | 280 | 284 | 252 | |||
| Noninterest expenses (a) | 465 | 463 | 438 | |||
| Pre-tax income (a) | 332 | 421 | 267 | |||
| Provision for income taxes (a) | 70 | 93 | 50 | |||
| Net income (a) | $ | 262 | $ | 328 | $ | 217 |
| Diluted earnings per common share (a) | $ | 1.90 | $ | 2.32 | $ | 1.48 |
| Average loans | 48,135 | 49,828 | 52,013 | |||
| Average deposits | 79,115 | 75,520 | 68,763 | |||
| Return on average assets (a) | 1.14 | % | 1.50 | % | 1.02 | % |
| Return on average common shareholders' equity (a) | 13.53 | 17.10 | 11.14 | |||
| Net interest margin | 2.23 | 2.29 | 2.33 | |||
| Common equity Tier 1 capital ratio (b) | 10.21 | 10.35 | 10.25 | |||
| Tier 1 capital ratio (b) | 10.79 | 10.93 | 10.84 | |||
| Common equity ratio | 7.84 | 8.53 | 8.94 | |||
| Common shareholders' equity per share of common stock | $ | 56.55 | $ | 56.28 | $ | 53.78 |
| Tangible common equity per share of common stock (c) | 51.61 | 51.43 | 49.20 |
(a)Recast 2020 results. See Reconciliations of Previously Reported Balances.
(b)Estimated for September 30, 2021. Ratios reflect deferral of CECL model impact as calculated per regulatory guidance.
(c)See Reconciliations of Non-GAAP Financial Measures and Regulatory Ratios.
Third Quarter 2021 Compared to Second Quarter 2021 Overview
Balance sheet items discussed in terms of average balances unless otherwise noted.
Loans decreased $1.7 billion to $48.1 billion, including a $1.8 billion decline to $1.7 billion in Paycheck Protection Program (PPP) loans driven by forgiveness activity.
•Decreases of $603 million in National Dealer Services, $424 million in Business Banking, $406 million in general Middle Market and $235 million in Retail Banking, partially offset by increases of $255 million in Equity Funds Services and $162 million in Environmental Services.
•Excluding the impact of PPP loans, average loans increased $106 million, primarily from increases of $357 million in general Middle Market, $255 million in Equity Funds Services and $192 million in Environmental Services, partially offset by a decrease of $498 million in National Dealer Services.
•Average loan yields increased 14 basis points to 3.39 percent, primarily driven by the net impact of PPP forgiveness activity.
Securities increased $566 million, or 4 percent, to $16.0 billion.
•Increase of $1.3 billion in mortgage-backed securities due to continued deployment of excess liquidity, partially offset by a $712 million decrease in Treasury securities related to maturities.
•Average yield on securities decreased 6 basis points to 1.76 percent due to lower yields on reinvestments.
Deposits increased $3.6 billion, or 5 percent, to $79.1 billion.
•Broad-based growth as interest-bearing and noninterest-bearing deposits increased $2.0 billion and $1.6 billion, respectively, due to customers' solid profitability and capital markets activity as well as the liquidity injected into the economy through fiscal and monetary actions.
•The average cost of interest-bearing deposits was stable at 6 basis points.
Net interest income increased $10 million to $475 million.
•Increase driven by an additional day in the third quarter, higher loan fees and the deployment of excess liquidity, partially offset by lower rates.
•Net interest margin decreased 6 basis points to 2.23 percent, primarily due to an increase in lower-yielding deposits held with the Federal Reserve Bank, partially offset by the net impact of PPP forgiveness.
Provision for credit losses increased $93 million to a benefit of $42 million.
•The allowance for credit losses decreased $44 million to $639 million at September 30, 2021, reflecting a reduction in criticized loans and sustained favorable economic forecasts. As a percentage of total loans, the allowance for credit losses was 1.33 percent, a decrease of 3 basis points.
•Net loan charge-offs were $2 million, or 0.01 percent of average loans.
Noninterest income decreased $4 million to $280 million.
•Increases of $7 million in warrant-related income, $4 million in commercial lending fees and $3 million each in bank-owned life insurance and service charges on deposit accounts were more than offset by decreases of $12 million in card fees, $6 million in deferred compensation asset returns (offset in other noninterest expenses) and smaller decreases in other categories.
Noninterest expenses increased $2 million to $465 million.
•Increases of $5 million in salaries and benefits expense, $4 million in consulting fees and smaller increases in other categories were partially offset by decreases of $6 million in outside processing fee expense and $5 million in litigation-related expenses.
◦The increase in salaries and benefits expense included an increase of $12 million in performance-based compensation partially offset by a decrease of $6 million in deferred compensation expense (offset in other noninterest income).
•Efficiency ratio remained stable at 62 percent.
Provision for income taxes decreased $23 million to $70 million.
•Included discrete tax benefits of $5 million related to annual federal filings and certain state matters.
Capital position remained solid with a common equity Tier 1 capital ratio of 10.21 percent and a Tier 1 capital ratio of 10.79 percent.
•Returned a total of $309 million to common shareholders through share repurchases and dividends.
◦Repurchased $220 million of common stock (3.0 million shares) under the share repurchase program.
◦Declared dividend of $6 million on preferred stock, payable October 1, 2021.
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Third Quarter 2021 Compared to Third Quarter 2020 Overview
Balance sheet items discussed in terms of average balances unless otherwise noted.
Loans decreased $3.9 billion, or 7 percent, including a $2.1 billion decrease in PPP loans.
•Decreases in National Dealer Services, Mortgage Banker Finance, Energy, Business Banking, general Middle Market and Technology and Life Sciences more than offset an increase in Equity Fund Services.
◦Excluding a $768 million decline in PPP loans, general Middle Market loans increased by $212 million.
•Average yield on loans increased 26 basis points, primarily driven by the impact of PPP loan forgiveness.
Securities increased $2.1 billion, or 15 percent.
•Reflects investment of excess liquidity into mortgage-backed securities, partially offset by decreases in Treasury securities related to maturities.
•Average yield on securities decreased 37 basis points, reflecting lower rates.
Deposits increased $10.4 billion, or 15 percent.
•Noninterest-bearing and interest-bearing deposits increased $6.1 billion and $4.3 billion, respectively, due to customers' solid profitability and capital markets activity as well as the liquidity injected into the economy through fiscal and monetary actions.
•Interest-bearing deposit costs decreased 11 basis points, reflecting prudent management of relationship pricing in a low interest rate environment.
Net interest income increased $17 million.
•Higher loan fees driven by PPP loan forgiveness as well as a decrease in deposit costs.
Provision for credit losses decreased $47 million.
•The allowance for credit losses decreased $399 million, primarily reflecting the economy re-opening as well as improvements in the economic forecast and in the Energy portfolio since the onset of the pandemic last year. As a percentage of total loans, the allowance for credit losses decreased 65 basis points.
Noninterest income increased $28 million.
Effective January 1, 2021, the Corporation reported customer derivative income, previously a component of other noninterest income, and foreign exchange income as a combined item captioned by derivative income. See Reconciliations of Previously Reported Balances.
•Increases in commercial lending fees, derivative income, fiduciary income and service charges on deposit accounts, partially offset by a decrease in deferred compensation asset returns (offset in noninterest expenses).
Noninterest expenses increased $27 million.
Effective January 1, 2021, the Corporation adopted a change in accounting method for certain components of expense related to the defined benefit pension plan. See Reconciliations of Previously Reported Balances.
•Increases in salaries and benefits expense, outside processing fee expense and consultant fees, partially offset by a decrease in pension expense (non-salary).
3
Net Interest Income
Balance sheet items presented and discussed in terms of average balances.
| (dollar amounts in millions) | 3rd Qtr '21 | 2nd Qtr '21 | 3rd Qtr '20 | |||
| Net interest income | $ | 475 | $ | 465 | $ | 458 |
| Net interest margin | 2.23 | % | 2.29 | % | 2.33 | % |
| Selected balances: | ||||||
| Total earning assets | $ | 84,788 | $ | 81,533 | $ | 78,555 |
| Total loans | 48,135 | 49,828 | 52,013 | |||
| Total investment securities | 15,969 | 15,403 | 13,850 | |||
| Federal Reserve Bank deposits | 20,176 | 15,701 | 12,260 | |||
| Total deposits | 79,115 | 75,520 | 68,763 | |||
| Total noninterest-bearing deposits | 41,984 | 40,340 | 35,934 | |||
| Medium- and long-term debt | 2,864 | 2,858 | 5,940 |
Net interest income increased $10 million, and net interest margin decreased 6 basis points compared to second quarter 2021.
•Interest income on loans increased $7 million and improved net interest margin by 6 basis points, primarily due to the net impact of PPP activity (+$2 million, +5 basis points), one additional day in the quarter (+$4 million), higher fees (+$3 million, +2 basis points) and higher non-PPP loan balances (+$2 million), which were partially offset by lower short-term rates (-$4 million, -1 basis point).
◦PPP income for the third quarter totaled $34 million, or 16 basis points, including $26 million in net accelerated fees resulting from forgiveness and $8 million in interest and regular amortization of deferred net fees combined.
•Interest income on investment securities was stable, but reduced net interest margin by 2 basis points, as the net impact of yields (-$4 million, -2 basis points) was offset by portfolio growth (+$4 million).
•Interest income on short-term investments increased $3 million and reduced net interest margin by 10 basis points, reflecting an increase in lower-yielding deposits with the Federal Reserve (+$2 million, -11 basis points) and a 5 basis point increase in the yield (+$1 million, +1 basis point).
4
Credit Quality
"Credit quality was excellent in the third quarter with net charge-offs of only $2 million, and criticized loans have declined to well below our historic average level," said Farmer. "Our reserve ratio decreased slightly to 1.33 percent, which reflects the positive outlook for the economy and our portfolio. Overall, our customers quickly adapted and navigated a very challenging environment. However, we remain vigilant given potential stress on our customers from lingering pandemic effects including supply chain disruptions, labor constraints and inflation. We expect our portfolio will continue to perform well, and the reserve ratio should move toward pre-pandemic levels over time."
| (dollar amounts in millions) | 3rd Qtr '21 | 2nd Qtr '21 | 3rd Qtr '20 | |||
| Credit-related charge-offs | $ | 26 | $ | 8 | $ | 53 |
| Recoveries | 24 | 19 | 20 | |||
| Net credit-related (recoveries) charge-offs | 2 | (11) | 33 | |||
|
Net credit-related charge-offs/Average total loans
|
0.01 | % | (0.09) | % | 0.26 | % |
| Provision for credit losses | $ | (42) | $ | (135) | $ | 5 |
| Nonperforming loans | 295 | 319 | 325 | |||
| Nonperforming assets (NPAs) | 296 | 320 | 335 | |||
| NPAs/Total loans and foreclosed property | 0.62 | % | 0.64 | % | 0.64 | % |
| Loans past due 90 days or more and still accruing | $ | 12 | $ | 27 | $ | 29 |
| Allowance for loan losses | 609 | 652 | 978 | |||
| Allowance for credit losses on lending-related commitments (a) | 30 | 31 | 60 | |||
| Total allowance for credit losses | 639 | 683 | 1,038 | |||
| Allowance for credit losses/Period-end total loans | 1.33 | 1.36 | 1.98 | |||
| Allowance for credit losses/Period-end total loans excluding PPP loans | 1.35 | 1.44 | 2.14 | |||
| Allowance for credit losses/Nonperforming loans | 2.2x | 2.1x | 3.2x |
(a) Included in accrued expenses and other liabilities on the Consolidated Balance Sheets.
•The allowance for credit losses decreased $44 million to $639 million, or 1.33 percent of total loans, primarily reflecting a reduction in criticized loans, growing economic confidence and sustained favorable economic forecasts, although some level of uncertainty remains.
•Criticized loans decreased $358 million to $1.8 billion, or 4 percent of total loans. Criticized loans are generally consistent with the Special Mention, Substandard and Doubtful categories defined by regulatory authorities.
◦Criticized loans decreased in nearly all business lines, led by decreases of $262 million in general Middle Market and $75 million in Energy.
•Nonperforming assets decreased $24 million to $296 million, or 0.62 percent of total loans and foreclosed property compared to 0.64 percent in second quarter 2021.
◦Nonperforming assets in Energy decreased by $24 million.
◦Loans transferred to nonaccrual totaled $55 million, a decrease of $7 million.
•Net charge-offs totaled $2 million, compared to net recoveries of $11 million in second quarter 2021.
◦Energy net recoveries totaled $16 million, compared to $12 million.
5
Outlook
This outlook is based on management expectations for continued economic growth.
| Fourth Quarter 2021 Compared to Third Quarter 2021 | |
| Average loans |
•Non-PPP portfolio to have growth in general Middle Market and several other business lines, partly offset by a decline in Mortgage Banker Finance. This growth is expected to be more than offset by forgiveness of the bulk of PPP loans.
|
| Average deposits |
•Deposits to remain strong.
|
| Net interest income |
•Non-PPP portfolio to have lower loan fees from elevated levels mostly offset by loan growth; this is expected to be more than offset by lower PPP-related income.
|
| Credit quality |
•Strong credit quality continues.
|
| Noninterest income |
•Growth in several customer-related fee categories, more than offset by lower commercial loan fees and warrant and BOLI income.
|
| Noninterest expenses |
•Increases in seasonal expenses and technology investments, offset by lower compensation expense from elevated level.
|
| Tax rate |
•Income tax expense for full-year 2021 to be between 22 and 23 percent of pre-tax income, excluding discrete items.
|
| Capital |
•CET1 target of approximately 10 percent.
|
6
Strategic Lines of Business and Markets
Comerica's operations are strategically aligned into three major business segments: the Commercial Bank, the Retail Bank and Wealth Management. The Finance Division is also reported as a segment. Comerica also provides market segment results for three primary geographic markets: Michigan, California and Texas. In addition to the three primary geographic markets, Other Markets is also reported as a market segment. Other Markets includes Florida, Arizona, the International Finance division and businesses that have a significant presence outside of the three primary geographic markets. For a summary of business segment and geographic market quarterly results, see the Business Segment Financial Results and Market Segment Financial Results tables included later in this report. From time to time, Comerica may make reclassifications among the segments to reflect management's current view of the segments, and methodologies may be modified as the management accounting system is enhanced and changes occur in the organizational structure and/or product lines. The financial results provided are based on the internal business unit and geographic market structures of Comerica and methodologies in effect at September 30, 2021. A discussion of business segment and geographic market year-to-date results will be included in Comerica's Third Quarter 2021 Form 10-Q.
Conference Call and Webcast
Comerica will host a conference call to review third quarter 2021 financial results at 7 a.m. CT Wednesday, October 20, 2021. Interested parties may access the conference call by calling (800) 309-2262 or (706) 679-5261 (Event ID No. 6988106). The call and supplemental financial information can also be accessed via Comerica's "Investor Relations" page at www.comerica.com. A replay of the Webcast can be accessed via Comerica's "Investor Relations" page at www.comerica.com.
Comerica Incorporated is a financial services company headquartered in Dallas, Texas, and strategically aligned by three major business segments: The Commercial Bank, The Retail Bank and Wealth Management. Comerica focuses on relationships and helping people and businesses be successful. In addition to Texas, Comerica Bank locations can be found in Arizona, California, Florida and Michigan, with select businesses operating in several other states, as well as in Canada and Mexico.
This press release contains both financial measures based on accounting principles generally accepted in the United States (GAAP) and non-GAAP based financial measures, which are used where management believes it to be helpful in understanding Comerica's results of operations or financial position. Where non-GAAP financial measures are used, the comparable GAAP financial measure, as well as a reconciliation to the comparable GAAP financial measure, can be found in this press release. These disclosures should not be viewed as a substitute for operating results determined in accordance with GAAP, nor are they necessarily comparable to non-GAAP performance measures that may be presented by other companies.
7
Forward-looking Statements
Any statements in this news release that are not historical facts are forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. Words such as "anticipates," "believes," "contemplates," "feels," "expects," "estimates," "seeks," "strives," "plans," "intends," "outlook," "forecast," "position," "target," "mission," "assume," "achievable," "potential," "strategy," "goal," "aspiration," "opportunity," "initiative," "outcome," "continue," "remain," "maintain," "on track," "trend," "objective," "looks forward," "projects," "models" and variations of such words and similar expressions, or future or conditional verbs such as "will," "would," "should," "could," "might," "can," "may" or similar expressions, as they relate to Comerica or its management, are intended to identify forward-looking statements. These forward-looking statements are predicated on the beliefs and assumptions of Comerica's management based on information known to Comerica's management as of the date of this news release and do not purport to speak as of any other date. Forward-looking statements may include descriptions of plans and objectives of Comerica's management for future or past operations, products or services, and forecasts of Comerica's revenue, earnings or other measures of economic performance, including statements of profitability, business segments and subsidiaries as well as estimates of credit trends and global stability. Such statements reflect the view of Comerica's management as of this date with respect to future events and are subject to risks and uncertainties. Should one or more of these risks materialize or should underlying beliefs or assumptions prove incorrect, Comerica's actual results could differ materially from those discussed. Factors that could cause or contribute to such differences include credit risks (unfavorable developments concerning credit quality; declines or other changes in the businesses or industries of Comerica's customers, in particular the energy industry; and changes in customer behavior); market risks (changes in monetary and fiscal policies; fluctuations in interest rates and their impact on deposit pricing; and transitions away from LIBOR towards new interest rate benchmarks); liquidity risks (Comerica's ability to maintain adequate sources of funding and liquidity; reductions in Comerica's credit rating; and the interdependence of financial service companies); technology risks (cybersecurity risks and heightened legislative and regulatory focus on cybersecurity and data privacy); operational risks (operational, systems or infrastructure failures; reliance on other companies to provide certain key components of business infrastructure; the impact of legal and regulatory proceedings or determinations; losses due to fraud; and controls and procedures failures); compliance risks (changes in regulation or oversight; the effects of stringent capital requirements; and the impacts of future legislative, administrative or judicial changes to tax regulations); strategic risks (damage to Comerica's reputation; Comerica's ability to utilize technology to efficiently and effectively develop, market and deliver new products and services; competitive product and pricing pressures among financial institutions within Comerica's markets; the implementation of Comerica's strategies and business initiatives; management's ability to maintain and expand customer relationships; management's ability to retain key officers and employees; and any future strategic acquisitions or divestitures); and other general risks (impacts from the COVID-19 global pandemic; changes in general economic, political or industry conditions; the effectiveness of methods of reducing risk exposures; the effects of catastrophic events; changes in accounting standards and the critical nature of Comerica's accounting policies; and the volatility of Comerica's stock price). Comerica cautions that the foregoing list of factors is not all-inclusive. For discussion of factors that may cause actual results to differ from expectations, please refer to our filings with the Securities and Exchange Commission. In particular, please refer to "Item 1A. Risk Factors" beginning on page 13 of Comerica's Annual Report on Form 10-K for the year ended December 31, 2020. Forward-looking statements speak only as of the date they are made. Comerica does not undertake to update forward-looking statements to reflect facts, circumstances, assumptions or events that occur after the date the forward-looking statements are made. For any forward-looking statements made in this news release or in any documents, Comerica claims the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995.
| Media Contacts: | Investor Contacts: |
| Wendy Bridges | Darlene P. Persons |
| (214) 462-4443 | (214) 462-6831 |
| Louis H. Mora | Amanda Perkins |
| (214) 462-6669 | (214) 462-6731 |
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| CONSOLIDATED FINANCIAL HIGHLIGHTS (unaudited) | ||||||||||
| Comerica Incorporated and Subsidiaries | ||||||||||
| Three Months Ended | Nine Months Ended | |||||||||
| September 30, | June 30, | September 30, | September 30, | |||||||
| (in millions, except per share data) | 2021 | 2021 | 2020 | 2021 | 2020 | |||||
| PER COMMON SHARE AND COMMON STOCK DATA | ||||||||||
| Diluted earnings per common share (a) | $ | 1.90 | $ | 2.32 | $ | 1.48 | $ | 6.67 | $ | 1.90 |
| Cash dividends declared | 0.68 | 0.68 | 0.68 | 2.04 | 2.04 | |||||
| Average diluted shares (in thousands) | 134,322 | 138,070 | 139,673 | 137,800 | 140,243 | |||||
| PERFORMANCE RATIOS | ||||||||||
| Return on average common shareholders' equity (a) | 13.53 | % | 17.10 | % | 11.14 | % | 16.23 | % | 4.81 | % |
| Return on average assets (a) | 1.14 | 1.50 | 1.02 | 1.43 | 0.46 | |||||
| Efficiency ratio (a), (b) | 61.57 | 61.66 | 61.74 | 61.92 | 59.08 | |||||
| CAPITAL | ||||||||||
| Common equity tier 1 capital (c), (d) | $ | 6,965 | $ | 7,004 | $ | 6,805 | ||||
| Tier 1 capital (c), (d) | 7,359 | 7,398 | 7,199 | |||||||
| Risk-weighted assets (c) | 68,193 | 67,685 | 66,405 | |||||||
| Common equity tier 1 capital ratio (c), (d) | 10.21 | % | 10.35 | % | 10.25 | % | ||||
| Tier 1 capital ratio (c), (d) | 10.79 | 10.93 | 10.84 | |||||||
| Total capital ratio (c) | 12.51 | 12.95 | 13.12 | |||||||
| Leverage ratio (c) | 8.08 | 8.45 | 8.60 | |||||||
| Common shareholders' equity per share of common stock | $ | 56.55 | $ | 56.28 | $ | 53.78 | ||||
| Tangible common equity per share of common stock (d) | 51.61 | 51.43 | 49.20 | |||||||
| Common equity ratio | 7.84 | % | 8.53 | % | 8.94 | % | ||||
| Tangible common equity ratio (d) | 7.20 | 7.85 | 8.24 | |||||||
| AVERAGE BALANCES | ||||||||||
| Commercial loans | $ | 28,244 | $ | 30,042 | $ | 32,226 | $ | 29,741 | $ | 32,289 |
| Real estate construction loans | 3,160 | 4,191 | 4,037 | 3,826 | 3,830 | |||||
| Commercial mortgage loans | 11,165 | 10,093 | 9,978 | 10,408 | 9,806 | |||||
| Lease financing | 580 | 578 | 601 | 583 | 592 | |||||
| International loans | 1,075 | 1,034 | 1,052 | 1,024 | 1,064 | |||||
| Residential mortgage loans | 1,816 | 1,817 | 1,961 | 1,814 | 1,904 | |||||
| Consumer loans | 2,095 | 2,073 | 2,158 | 2,112 | 2,221 | |||||
| Total loans | 48,135 | 49,828 | 52,013 | 49,508 | 51,706 | |||||
| Earning assets | 84,788 | 81,533 | 78,555 | 81,637 | 74,030 | |||||
| Total assets | 91,353 | 87,860 | 84,268 | 87,949 | 79,742 | |||||
| Noninterest-bearing deposits | 41,984 | 40,340 | 35,934 | 39,912 | 31,809 | |||||
| Interest-bearing deposits | 37,131 | 35,180 | 32,829 | 35,459 | 31,482 | |||||
| Total deposits | 79,115 | 75,520 | 68,763 | 75,371 | 63,291 | |||||
| Common shareholders' equity | 7,523 | 7,563 | 7,439 | 7,610 | 7,438 | |||||
| Total shareholders' equity | 7,917 | 7,957 | 7,834 | 8,004 | 7,622 | |||||
| NET INTEREST INCOME | ||||||||||
| Net interest income | $ | 475 | $ | 465 | $ | 458 | $ | 1,383 | $ | 1,442 |
| Net interest margin | 2.23 | % | 2.29 | % | 2.33 | % | 2.27 | % | 2.61 | % |
| CREDIT QUALITY | ||||||||||
| Nonperforming assets | $ | 296 | $ | 320 | $ | 335 | ||||
| Loans past due 90 days or more and still accruing | 12 | 27 | 29 | |||||||
| Net credit-related charge-offs | 2 | (11) | 33 | $ | (6) | $ | 167 | |||
| Allowance for loan losses | 609 | 652 | 978 | |||||||
| Allowance for credit losses on lending-related commitments | 30 | 31 | 60 | |||||||
| Total allowance for credit losses | 639 | 683 | 1,038 | |||||||
| Allowance for credit losses as a percentage of total loans | 1.33 | % | 1.36 | % | 1.98 | % | ||||
| Net loan charge-offs (recoveries) as a percentage of average total loans | 0.01 | (0.09) | 0.26 | (0.02 | %) | 0.43 | % | |||
|
Nonperforming assets as a percentage of total loans and foreclosed property
|
0.62 | 0.64 | 0.64 | |||||||
| Allowance for credit losses as a multiple of total nonperforming loans | 2.2x | 2.1x | 3.2x | |||||||
| OTHER KEY INFORMATION | ||||||||||
| Number of banking centers | 433 | 431 | 433 | |||||||
| Number of employees - full time equivalent | 7,459 | 7,532 | 7,738 |
(a) See Reconciliations of Previously Reported Balances.
(b) Noninterest expenses as a percentage of the sum of net interest income and noninterest income excluding a derivative contract tied to the conversion rate of Visa Class B shares.
(c) September 30, 2021 ratios are estimated. Ratios reflect deferral of CECL model impact as calculated per regulatory guidance.
(d) See Reconciliations of Non-GAAP Financial Measures and Regulatory Ratios.
9
| CONSOLIDATED BALANCE SHEETS | ||||||||
| Comerica Incorporated and Subsidiaries | ||||||||
| September 30, | June 30, | December 31, | September 30, | |||||
| (in millions, except share data) | 2021 | 2021 | 2020 | 2020 | ||||
| (unaudited) | (unaudited) | (recast) | (unaudited) | |||||
| ASSETS | ||||||||
| Cash and due from banks | $ | 1,050 | $ | 1,008 | $ | 1,031 | $ | 988 |
| Interest-bearing deposits with banks | 22,539 | 15,493 | 14,736 | 10,153 | ||||
| Other short-term investments | 187 | 183 | 172 | 160 | ||||
| Investment securities available-for-sale | 16,846 | 15,837 | 15,028 | 15,090 | ||||
| Commercial loans | 28,355 | 30,207 | 32,753 | 32,604 | ||||
| Real estate construction loans | 3,010 | 3,172 | 4,082 | 4,146 | ||||
| Commercial mortgage loans | 11,215 | 11,334 | 9,912 | 10,002 | ||||
| Lease financing | 569 | 589 | 594 | 601 | ||||
| International loans | 1,131 | 1,036 | 926 | 923 | ||||
| Residential mortgage loans | 1,813 | 1,807 | 1,830 | 1,927 | ||||
| Consumer loans | 2,102 | 2,083 | 2,194 | 2,166 | ||||
| Total loans | 48,195 | 50,228 | 52,291 | 52,369 | ||||
| Allowance for loan losses | (609) | (652) | (948) | (978) | ||||
| Net loans | 47,586 | 49,576 | 51,343 | 51,391 | ||||
| Premises and equipment | 447 | 454 | 459 | 456 | ||||
| Accrued income and other assets | 5,874 | 5,804 | 5,360 | 5,393 | ||||
| Total assets | $ | 94,529 | $ | 88,355 | $ | 88,129 | $ | 83,631 |
| LIABILITIES AND SHAREHOLDERS' EQUITY | ||||||||
| Noninterest-bearing deposits | $ | 44,093 | $ | 40,514 | $ | 39,420 | $ | 36,533 |
| Money market and interest-bearing checking deposits | 32,932 | 30,319 | 28,540 | 26,948 | ||||
| Savings deposits | 3,125 | 3,095 | 2,710 | 2,588 | ||||
| Customer certificates of deposit | 2,091 | 2,115 | 2,133 | 2,300 | ||||
| Foreign office time deposits | 43 | 23 | 66 | 90 | ||||
| Total interest-bearing deposits | 38,191 | 35,552 | 33,449 | 31,926 | ||||
| Total deposits | 82,284 | 76,066 | 72,869 | 68,459 | ||||
| Short-term borrowings | - | - | - | 10 | ||||
| Accrued expenses and other liabilities | 1,605 | 1,504 | 1,482 | 1,534 | ||||
| Medium- and long-term debt | 2,837 | 2,854 | 5,728 | 5,754 | ||||
| Total liabilities | 86,726 | 80,424 | 80,079 | 75,757 | ||||
| Fixed-rate reset non-cumulative perpetual preferred stock, series A, no par value, $100,000 liquidation preference per share: | ||||||||
| Authorized - 4,000 shares | ||||||||
| Issued - 4,000 shares | 394 | 394 | 394 | 394 | ||||
| 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 | 2,170 | 2,163 | 2,185 | 2,179 | ||||
| Accumulated other comprehensive (loss) income (a) | (207) | (120) | 64 | 18 | ||||
| Retained earnings (a) | 10,366 | 10,202 | 9,727 | 9,609 | ||||
|
Less cost of common stock in treasury - 97,158,441 shares at 9/30/21, 94,247,402 shares at 6/30/21, 88,997,430 shares at 12/31/20 and 89,095,470 shares at 9/30/20
|
(6,061) | (5,849) | (5,461) | (5,467) | ||||
| Total shareholders' equity | 7,803 | 7,931 | 8,050 | 7,874 | ||||
| Total liabilities and shareholders' equity | $ | 94,529 | $ | 88,355 | $ | 88,129 | $ | 83,631 |
10
| CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME | ||||||||
| Comerica Incorporated and Subsidiaries | ||||||||
| Three Months Ended | Nine Months Ended | |||||||
| September 30, | September 30, | |||||||
| (in millions, except per share data) | 2021 | 2020 | 2021 | 2020 | ||||
| (unaudited) | (unaudited) | (unaudited) | (unaudited) | |||||
| INTEREST INCOME | ||||||||
| Interest and fees on loans | $ | 411 | $ | 408 | $ | 1,201 | $ | 1,359 |
| Interest on investment securities | 70 | 72 | 209 | 220 | ||||
| Interest on short-term investments | 8 | 4 | 17 | 25 | ||||
| Total interest income | 489 | 484 | 1,427 | 1,604 | ||||
| INTEREST EXPENSE | ||||||||
| Interest on deposits | 5 | 15 | 17 | 91 | ||||
| Interest on short-term borrowings | - | - | - | 1 | ||||
| Interest on medium- and long-term debt | 9 | 11 | 27 | 70 | ||||
| Total interest expense | 14 | 26 | 44 | 162 | ||||
| Net interest income | 475 | 458 | 1,383 | 1,442 | ||||
| Provision for credit losses | (42) | 5 | (359) | 554 | ||||
| Net interest income after provision for credit losses | 517 | 453 | 1,742 | 888 | ||||
| NONINTEREST INCOME | ||||||||
| Card fees | 72 | 71 | 227 | 198 | ||||
| Fiduciary income | 58 | 51 | 171 | 157 | ||||
| Service charges on deposit accounts | 50 | 47 | 145 | 138 | ||||
| Commercial lending fees | 31 | 19 | 76 | 53 | ||||
| Derivative income (a) | 20 | 9 | 72 | 48 | ||||
| Bank-owned life insurance | 12 | 12 | 32 | 33 | ||||
| Letter of credit fees | 10 | 9 | 30 | 27 | ||||
| Brokerage fees | 3 | 5 | 11 | 17 | ||||
| Other noninterest income (a) | 24 | 29 | 70 | 65 | ||||
| Total noninterest income | 280 | 252 | 834 | 736 | ||||
| NONINTEREST EXPENSES | ||||||||
| Salaries and benefits expense | 282 | 257 | 841 | 748 | ||||
| Outside processing fee expense | 65 | 58 | 200 | 177 | ||||
| Occupancy expense | 40 | 40 | 117 | 114 | ||||
| Software expense | 40 | 39 | 117 | 115 | ||||
| Equipment expense | 13 | 12 | 38 | 36 | ||||
| Advertising expense | 10 | 9 | 25 | 24 | ||||
| FDIC insurance expense | 4 | 8 | 17 | 24 | ||||
| Other noninterest expenses (a) | 11 | 15 | 20 | 51 | ||||
| Total noninterest expenses (a) | 465 | 438 | 1,375 | 1,289 | ||||
| Income before income taxes (a) | 332 | 267 | 1,201 | 335 | ||||
| Provision for income taxes (a) | 70 | 50 | 261 | 59 | ||||
| NET INCOME (a) | 262 | 217 | 940 | 276 | ||||
| Less: | ||||||||
| Income allocated to participating securities | 1 | - | 4 | 1 | ||||
| Preferred stock dividends | 6 | 8 | 17 | 8 | ||||
| Net income attributable to common shares (a) | $ | 255 | $ | 209 | $ | 919 | $ | 267 |
| Earnings per common share: | ||||||||
| Basic (a) | $ | 1.92 | $ | 1.49 | $ | 6.75 | $ | 1.91 |
| Diluted (a) | 1.90 | 1.48 | 6.67 | 1.90 | ||||
| Comprehensive income | 175 | 169 | 669 | 610 | ||||
| Cash dividends declared on common stock | 89 | 94 | 276 | 284 | ||||
| Cash dividends declared per common share | 0.68 | 0.68 | 2.04 | 2.04 |
(a)Recast 2020 results. See Reconciliations of Previously Reported Balances.
11
| CONSOLIDATED QUARTERLY STATEMENTS OF COMPREHENSIVE INCOME (unaudited) | ||||||||||||||||||
| Comerica Incorporated and Subsidiaries | ||||||||||||||||||
| Third | Second | First | Fourth | Third | Third Quarter 2021 Compared to: | |||||||||||||
| Quarter | Quarter | Quarter | Quarter | Quarter | Second Quarter 2021 | Third Quarter 2020 | ||||||||||||
| (in millions, except per share data) | 2021 | 2021 | 2021 | 2020 | 2020 | Amount | Percent | Amount | Percent | |||||||||
| INTEREST INCOME | ||||||||||||||||||
| Interest and fees on loans | $ | 411 | $ | 404 | $ | 386 | $ | 414 | $ | 408 | $ | 7 | 2 | % | $ | 3 | 1 | % |
| Interest on investment securities | 70 | 70 | 69 | 71 | 72 | - | - | (2) | (3) | |||||||||
| Interest on short-term investments | 8 | 5 | 4 | 4 | 4 | 3 | 78 | 4 | n/m | |||||||||
| Total interest income | 489 | 479 | 459 | 489 | 484 | 10 | 2 | 5 | 1 | |||||||||
| INTEREST EXPENSE | ||||||||||||||||||
| Interest on deposits | 5 | 5 | 7 | 10 | 15 | - | - | (10) | (62) | |||||||||
| Interest on medium- and long-term debt | 9 | 9 | 9 | 10 | 11 | - | - | (2) | (28) | |||||||||
| Total interest expense | 14 | 14 | 16 | 20 | 26 | - | - | (12) | (47) | |||||||||
| Net interest income | 475 | 465 | 443 | 469 | 458 | 10 | 2 | 17 | 4 | |||||||||
| Provision for credit losses | (42) | (135) | (182) | (17) | 5 | 93 | (69) | (47) | n/m | |||||||||
|
Net interest income after provision
for credit losses
|
517 | 600 | 625 | 486 | 453 | (83) | (14) | 64 | 14 | |||||||||
| NONINTEREST INCOME | ||||||||||||||||||
| Card fees | 72 | 84 | 71 | 72 | 71 | (12) | (15) | 1 | 2 | |||||||||
| Fiduciary income | 58 | 60 | 53 | 52 | 51 | (2) | (2) | 7 | 14 | |||||||||
| Service charges on deposit accounts | 50 | 47 | 48 | 47 | 47 | 3 | 4 | 3 | 7 | |||||||||
| Commercial lending fees | 31 | 27 | 18 | 24 | 19 | 4 | 17 | 12 | 62 | |||||||||
| Derivative income (a) | 20 | 22 | 30 | 19 | 9 | (2) | (7) | 11 | n/m | |||||||||
| Bank-owned life insurance | 12 | 9 | 11 | 11 | 12 | 3 | 33 | - | - | |||||||||
| Letter of credit fees | 10 | 10 | 10 | 10 | 9 | - | - | 1 | 8 | |||||||||
| Brokerage fees | 3 | 4 | 4 | 4 | 5 | (1) | 8 | (2) | (25) | |||||||||
| Other noninterest income (a) | 24 | 21 | 25 | 26 | 29 | 3 | 8 | (5) | (19) | |||||||||
| Total noninterest income | 280 | 284 | 270 | 265 | 252 | (4) | (2) | 28 | 11 | |||||||||
| NONINTEREST EXPENSES | ||||||||||||||||||
| Salaries and benefits expense | 282 | 277 | 282 | 271 | 257 | 5 | 2 | 25 | 10 | |||||||||
| Outside processing fee expense | 65 | 71 | 64 | 65 | 58 | (6) | (8) | 7 | 11 | |||||||||
| Occupancy expense | 40 | 38 | 39 | 42 | 40 | 2 | 7 | - | - | |||||||||
| Software expense | 40 | 38 | 39 | 39 | 39 | 2 | 1 | 1 | (1) | |||||||||
| Equipment expense | 13 | 13 | 12 | 13 | 12 | - | - | 1 | 6 | |||||||||
| Advertising expense | 10 | 9 | 6 | 11 | 9 | 1 | 6 | 1 | (3) | |||||||||
| FDIC insurance expense | 4 | 7 | 6 | 9 | 8 | (3) | (29) | (4) | (42) | |||||||||
| Other noninterest expenses (a) | 11 | 10 | (1) | 15 | 15 | 1 | 18 | (4) | (24) | |||||||||
| Total noninterest expenses (a) | 465 | 463 | 447 | 465 | 438 | 2 | 1 | 27 | 6 | |||||||||
| Income before income taxes (a) | 332 | 421 | 448 | 286 | 267 | (89) | (21) | 65 | 25 | |||||||||
| Provision for income taxes (a) | 70 | 93 | 98 | 65 | 50 | (23) | (25) | 20 | 41 | |||||||||
| NET INCOME (a) | 262 | 328 | 350 | 221 | 217 | (66) | (20) | 45 | 21 | |||||||||
| Less: | ||||||||||||||||||
| Income allocated to participating securities | 1 | 2 | 1 | 1 | - | (1) | (13) | 1 | 30 | |||||||||
| Preferred stock dividends | 6 | 5 | 6 | 5 | 8 | 1 | - | (2) | (28) | |||||||||
| Net income attributable to common shares (a) | $ | 255 | $ | 321 | $ | 343 | $ | 215 | $ | 209 | $ | (66) | (20) | % | $ | 46 | 23 | % |
| Earnings per common share: | ||||||||||||||||||
| Basic (a) | $ | 1.92 | $ | 2.35 | $ | 2.46 | $ | 1.54 | $ | 1.49 | $ | (0.43) | (18) | % | $ | 0.43 | 29 | % |
| Diluted (a) | 1.90 | 2.32 | 2.43 | 1.53 | 1.48 | (0.42) | (18) | 0.42 | 28 | |||||||||
| Comprehensive income | 175 | 313 | 181 | 267 | 169 | (138) | (44) | 6 | 4 | |||||||||
| Cash dividends declared on common stock | 89 | 92 | 95 | 94 | 94 | (3) | (2) | (5) | (5) | |||||||||
| Cash dividends declared per common share | 0.68 | 0.68 | 0.68 | 0.68 | 0.68 | - | - | - | - |
(a)Recast 2020 results. See Reconciliations of Previously Reported Balances.
n/m - not meaningful
12
| ANALYSIS OF THE ALLOWANCE FOR CREDIT LOSSES (unaudited) | ||||||||||
| Comerica Incorporated and Subsidiaries | ||||||||||
| 2021 | 2020 | |||||||||
| (in millions) | 3rd Qtr | 2nd Qtr | 1st Qtr | 4th Qtr | 3rd Qtr | |||||
| Balance at beginning of period: | ||||||||||
| Allowance for loan losses | $ | 652 | $ | 777 | $ | 948 | $ | 978 | $ | 1,007 |
| Allowance for credit losses on lending-related commitments | 31 | 30 | 44 | 60 | 59 | |||||
| Allowance for credit losses | 683 | 807 | 992 | 1,038 | 1,066 | |||||
| Loan charge-offs: | ||||||||||
| Commercial | 24 | 7 | 14 | 37 | 53 | |||||
| Commercial mortgage | - | - | 1 | - | - | |||||
| International | 2 | - | - | - | - | |||||
| Consumer | - | 1 | 1 | 2 | - | |||||
| Total loan charge-offs | 26 | 8 | 16 | 39 | 53 | |||||
| Recoveries on loans previously charged-off: | ||||||||||
| Commercial | 22 | 18 | 11 | 9 | 17 | |||||
| Commercial mortgage | - | - | 1 | - | 1 | |||||
| International | - | 1 | - | - | - | |||||
| Residential mortgage | 1 | - | - | - | - | |||||
| Consumer | 1 | - | 1 | 1 | 2 | |||||
| Total recoveries | 24 | 19 | 13 | 10 | 20 | |||||
| Net loan charge-offs (recoveries) | 2 | (11) | 3 | 29 | 33 | |||||
| Provision for credit losses: | ||||||||||
| Provision for loan losses | (41) | (136) | (168) | (1) | 4 | |||||
| Provision for credit losses on lending-related commitments | (1) | 1 | (14) | (16) | 1 | |||||
| Provision for credit losses | (42) | (135) | (182) | (17) | 5 | |||||
| Balance at end of period: | ||||||||||
| Allowance for loan losses | 609 | 652 | 777 | 948 | 978 | |||||
| Allowance for credit losses on lending-related commitments | 30 | 31 | 30 | 44 | 60 | |||||
| Allowance for credit losses | $ | 639 | $ | 683 | $ | 807 | $ | 992 | $ | 1,038 |
| Allowance for loan losses as a percentage of total loans | 1.26 | % | 1.30 | % | 1.54 | % | 1.81 | % | 1.87 | % |
| Allowance for loan losses as a percentage of total loans excluding PPP loans | 1.29 | 1.37 | 1.66 | 1.94 | 2.01 | |||||
| Allowance for credit losses as a percentage of total loans | 1.33 | 1.36 | 1.59 | 1.90 | 1.98 | |||||
| Allowance for credit losses as a percentage of total loans excluding PPP loans | 1.35 | 1.44 | 1.72 | 2.03 | 2.14 | |||||
| Net loan charge-offs (recoveries) as a percentage of average total loans | 0.01 | (0.09) | 0.03 | 0.22 | 0.26 |
13
| NONPERFORMING ASSETS (unaudited) | ||||||||||
| Comerica Incorporated and Subsidiaries | ||||||||||
| 2021 | 2020 | |||||||||
| (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 | $ | 200 | $ | 221 | $ | 230 | $ | 252 | $ | 241 |
| Real estate construction | 6 | 4 | 1 | 1 | - | |||||
| Commercial mortgage | 30 | 31 | 34 | 29 | 20 | |||||
| Lease financing | - | - | 1 | 1 | 1 | |||||
| International | 8 | - | - | - | - | |||||
| Total nonaccrual business loans | 244 | 256 | 266 | 283 | 262 | |||||
| Retail loans: | ||||||||||
| Residential mortgage | 35 | 41 | 33 | 47 | 40 | |||||
| Consumer: | ||||||||||
| Home equity | 12 | 14 | 15 | 17 | 20 | |||||
| Total nonaccrual retail loans | 47 | 55 | 48 | 64 | 60 | |||||
| Total nonaccrual loans | 291 | 311 | 314 | 347 | 322 | |||||
| Reduced-rate loans | 4 | 8 | 2 | 3 | 3 | |||||
| Total nonperforming loans | 295 | 319 | 316 | 350 | 325 | |||||
| Foreclosed property | 1 | - | 8 | 8 | 10 | |||||
| Other repossessed assets | - | 1 | 1 | 1 | - | |||||
| Total nonperforming assets | $ | 296 | $ | 320 | $ | 325 | $ | 359 | $ | 335 |
| Nonperforming loans as a percentage of total loans | 0.61 | % | 0.64 | % | 0.63 | % | 0.67 | % | 0.62 | % |
|
Nonperforming assets as a percentage of total loans and foreclosed property
|
0.62 | 0.64 | 0.64 | 0.69 | 0.64 | |||||
| Allowance for credit losses as a multiple of total nonperforming loans | 2.2x | 2.1x | 2.6x | 2.8x | 3.2x | |||||
| Loans past due 90 days or more and still accruing | $ | 12 | $ | 27 | $ | 60 | $ | 45 | $ | 29 |
| ANALYSIS OF NONACCRUAL LOANS | ||||||||||
| Nonaccrual loans at beginning of period | $ | 311 | $ | 314 | $ | 347 | $ | 322 | $ | 267 |
| Loans transferred to nonaccrual (a) | 55 | 62 | 61 | 88 | 161 | |||||
| Nonaccrual loan gross charge-offs | (26) | (8) | (16) | (39) | (53) | |||||
| Loans transferred to accrual status (a) | (8) | - | (17) | (3) | - | |||||
| Nonaccrual loans sold | (9) | - | (25) | - | (14) | |||||
| Payments/other (b) | (32) | (57) | (36) | (21) | (39) | |||||
| Nonaccrual loans at end of period | $ | 291 | $ | 311 | $ | 314 | $ | 347 | $ | 322 |
(a)Based on an analysis of nonaccrual loans with book balances greater than $2 million.
(b)Includes net changes related to nonaccrual loans with balances less than or equal to $2 million, payments on nonaccrual loans with book balances greater than $2 million and transfers of nonaccrual loans to foreclosed property.
14
| ANALYSIS OF NET INTEREST INCOME (unaudited) | ||||||||||||
| Comerica Incorporated and Subsidiaries | ||||||||||||
| Nine Months Ended | ||||||||||||
| September 30, 2021 | September 30, 2020 | |||||||||||
| Average | Average | Average | Average | |||||||||
| (dollar amounts in millions) | Balance | Interest | Rate | Balance | Interest | Rate | ||||||
| Commercial loans (a) | $ | 29,741 | $ | 769 | 3.46 | % | $ | 32,289 | $ | 840 | 3.48 | % |
| Real estate construction loans | 3,826 | 97 | 3.37 | 3,830 | 112 | 3.90 | ||||||
| Commercial mortgage loans | 10,408 | 224 | 2.87 | 9,806 | 248 | 3.38 | ||||||
| Lease financing (b) | 583 | (7) | (1.55) | 592 | 15 | 3.30 | ||||||
| International loans | 1,024 | 24 | 3.17 | 1,064 | 30 | 3.73 | ||||||
| Residential mortgage loans | 1,814 | 41 | 3.05 | 1,904 | 50 | 3.52 | ||||||
| Consumer loans | 2,112 | 53 | 3.36 | 2,221 | 64 | 3.90 | ||||||
| Total loans | 49,508 | 1,201 | 3.24 | 51,706 | 1,359 | 3.51 | ||||||
| Mortgage-backed securities (c) | 11,221 | 163 | 1.95 | 9,686 | 168 | 2.36 | ||||||
| U.S. Treasury securities (d) | 4,205 | 46 | 1.49 | 3,258 | 52 | 2.18 | ||||||
| Total investment securities | 15,426 | 209 | 1.82 | 12,944 | 220 | 2.31 | ||||||
| Interest-bearing deposits with banks | 16,524 | 17 | 0.13 | 9,229 | 24 | 0.35 | ||||||
| Other short-term investments | 179 | - | 0.23 | 151 | 1 | 0.62 | ||||||
| Total earning assets | 81,637 | 1,427 | 2.34 | 74,030 | 1,604 | 2.91 | ||||||
| Cash and due from banks | 972 | 866 | ||||||||||
| Allowance for loan losses | (770) | (876) | ||||||||||
| Accrued income and other assets | 6,110 | 5,722 | ||||||||||
| Total assets | $ | 87,949 | $ | 79,742 | ||||||||
| Money market and interest-bearing checking deposits | $ | 30,300 | 14 | 0.06 | $ | 26,220 | 65 | 0.33 | ||||
| Savings deposits | 2,974 | - | 0.01 | 2,386 | 1 | 0.03 | ||||||
| Customer certificates of deposit | 2,137 | 3 | 0.22 | 2,764 | 25 | 1.18 | ||||||
| Other time deposits | - | - | - | 23 | - | 2.00 | ||||||
| Foreign office time deposits | 48 | - | 0.09 | 89 | - | 0.54 | ||||||
| Total interest-bearing deposits | 35,459 | 17 | 0.07 | 31,482 | 91 | 0.39 | ||||||
| Short-term borrowings | 2 | - | - | 418 | 1 | 0.32 | ||||||
| Medium- and long-term debt | 3,107 | 27 | 1.10 | 6,821 | 70 | 1.38 | ||||||
| Total interest-bearing sources | 38,568 | 44 | 0.15 | 38,721 | 162 | 0.56 | ||||||
| Noninterest-bearing deposits | 39,912 | 31,809 | ||||||||||
| Accrued expenses and other liabilities | 1,465 | 1,590 | ||||||||||
| Shareholders' equity | 8,004 | 7,622 | ||||||||||
| Total liabilities and shareholders' equity | $ | 87,949 | $ | 79,742 | ||||||||
| Net interest income/rate spread | $ | 1,383 | 2.19 | $ | 1,442 | 2.35 | ||||||
| Impact of net noninterest-bearing sources of funds | 0.08 | 0.26 | ||||||||||
| Net interest margin (as a percentage of average earning assets) | 2.27 | % | 2.61 | % |
(a)Included PPP loans with average balances of $2.9 billion and $2.1 billion, interest income of $96 million and $36 million and average yields of 4.43% and 2.27% for the nine months ended September 30, 2021 and 2020, respectively.
(b)The nine months ended September 30, 2021 included residual value adjustments totaling $20 million, or a 6 basis point impact to average loan yield.
(c)Average balances included $109 million and $212 million of unrealized gains and losses for the years ended September 30, 2021 and 2020, respectively; yields calculated gross of these unrealized gains and losses.
(d)Average balances included $37 million and $94 million of unrealized gains and losses for the years ended September 30, 2021 and 2020, respectively; yields calculated gross of these unrealized gains and losses.
15
| ANALYSIS OF NET INTEREST INCOME (unaudited) | ||||||||||||||||||
| Comerica Incorporated and Subsidiaries | ||||||||||||||||||
| Three Months Ended | ||||||||||||||||||
| September 30, 2021 | June 30, 2021 | September 30, 2020 | ||||||||||||||||
| Average | Average | Average | Average | Average | Average | |||||||||||||
| (dollar amounts in millions) | Balance | Interest | Rate | Balance | Interest | Rate | Balance | Interest | Rate | |||||||||
| Commercial loans (a) | $ | 28,244 | $ | 262 | 3.67 | % | $ | 30,042 | $ | 255 | 3.38 | % | $ | 32,226 | $ | 255 | 3.15 | % |
| Real estate construction loans | 3,160 | 28 | 3.46 | 4,191 | 34 | 3.30 | 4,037 | 34 | 3.35 | |||||||||
| Commercial mortgage loans | 11,165 | 82 | 2.90 | 10,093 | 72 | 2.87 | 9,978 | 71 | 2.85 | |||||||||
| Lease financing | 580 | 1 | 1.12 | 578 | 4 | 2.82 | 601 | 5 | 2.94 | |||||||||
| International loans | 1,075 | 8 | 3.13 | 1,034 | 8 | 3.21 | 1,052 | 9 | 3.25 | |||||||||
| Residential mortgage loans | 1,816 | 13 | 2.92 | 1,817 | 14 | 3.09 | 1,961 | 16 | 3.41 | |||||||||
| Consumer loans | 2,095 | 17 | 3.31 | 2,073 | 17 | 3.37 | 2,158 | 18 | 3.45 | |||||||||
| Total loans | 48,135 | 411 | 3.39 | 49,828 | 404 | 3.25 | 52,013 | 408 | 3.13 | |||||||||
| Mortgage-backed securities (b) | 12,331 | 58 | 1.89 | 11,053 | 53 | 1.94 | 9,759 | 54 | 2.28 | |||||||||
| U.S. Treasury securities (c) | 3,638 | 12 | 1.32 | 4,350 | 17 | 1.53 | 4,091 | 18 | 1.77 | |||||||||
| Total investment securities | 15,969 | 70 | 1.76 | 15,403 | 70 | 1.82 | 13,850 | 72 | 2.13 | |||||||||
| Interest-bearing deposits with banks | 20,494 | 8 | 0.16 | 16,126 | 5 | 0.11 | 12,534 | 4 | 0.10 | |||||||||
| Other short-term investments | 190 | - | 0.20 | 176 | - | 0.20 | 158 | - | 0.29 | |||||||||
| Total earning assets | 84,788 | 489 | 2.30 | 81,533 | 479 | 2.36 | 78,555 | 484 | 2.47 | |||||||||
| Cash and due from banks | 964 | 982 | 911 | |||||||||||||||
| Allowance for loan losses | (644) | (755) | (1,002) | |||||||||||||||
| Accrued income and other assets | 6,245 | 6,100 | 5,804 | |||||||||||||||
| Total assets | $ | 91,353 | $ | 87,860 | $ | 84,268 | ||||||||||||
| Money market and interest-bearing checking deposits | $ | 31,865 | 4 | 0.05 | $ | 29,993 | 4 | 0.06 | $ | 27,671 | 8 | 0.12 | ||||||
| Savings deposits | 3,097 | - | 0.01 | 3,021 | - | 0.01 | 2,560 | 1 | 0.02 | |||||||||
| Customer certificates of deposit | 2,128 | 1 | 0.20 | 2,126 | 1 | 0.22 | 2,495 | 6 | 0.87 | |||||||||
| Foreign office time deposits | 41 | - | 0.08 | 40 | - | 0.10 | 103 | - | 0.10 | |||||||||
| Total interest-bearing deposits | 37,131 | 5 | 0.06 | 35,180 | 5 | 0.06 | 32,829 | 15 | 0.17 | |||||||||
| Short-term borrowings | 1 | - | - | 2 | - | - | 218 | - | 0.25 | |||||||||
| Medium- and long-term debt | 2,864 | 9 | 1.16 | 2,858 | 9 | 1.18 | 5,940 | 11 | 0.78 | |||||||||
| Total interest-bearing sources | 39,996 | 14 | 0.14 | 38,040 | 14 | 0.15 | 38,987 | 26 | 0.27 | |||||||||
| Noninterest-bearing deposits | 41,984 | 40,340 | 35,934 | |||||||||||||||
| Accrued expenses and other liabilities | 1,456 | 1,523 | 1,513 | |||||||||||||||
| Shareholders' equity | 7,917 | 7,957 | 7,834 | |||||||||||||||
| Total liabilities and shareholders' equity | $ | 91,353 | $ | 87,860 | $ | 84,268 | ||||||||||||
| Net interest income/rate spread | $ | 475 | 2.16 | $ | 465 | 2.21 | $ | 458 | 2.20 | |||||||||
| Impact of net noninterest-bearing sources of funds | 0.07 | 0.08 | 0.13 | |||||||||||||||
| Net interest margin (as a percentage of average earning assets) | 2.23 | % | 2.29 | % | 2.33 | % |
(a)Included PPP loans with average balances of $1.7 billion, $3.5 billion and $3.8 billion, interest income of $34 million, $32 million and $22 million and average yields of 8.02%, 3.66% and 2.31% for the three months ended September 30, 2021, June 30, 2021 and September 30, 2020, respectively.
(b)Average balances included $78 million, $91 million and $254 million of unrealized gains and losses for the three months ended September 30, 2021, June 30, 2021 and September 30, 2020, respectively; yields calculated gross of these unrealized gains and losses.
(c)Average balances included $23 million, $33 million and $99 million of unrealized gains and losses for the three months ended September 30, 2021, June 30, 2021 and September 30, 2020, respectively; yields calculated gross of these unrealized gains and losses.
16
| CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (unaudited) | |||||||||||||||
| Comerica Incorporated and Subsidiaries | |||||||||||||||
| Accumulated | |||||||||||||||
| Nonredeemable | Common Stock | Other | Retained | Total | |||||||||||
| Preferred | Shares | Capital | Comprehensive | Earnings | Treasury | Shareholders' | |||||||||
| (in millions, except per share data) | Stock | Outstanding | Amount | Surplus | Income (Loss) (a) | (a) | Stock | Equity | |||||||
| BALANCE AT JUNE 30, 2020 | $ | 395 | 139.0 | $ | 1,141 | $ | 2,173 | $ | 66 | $ | 9,496 | $ | (5,469) | $ | 7,802 |
| Net income | - | - | - | - | - | 217 | - | 217 | |||||||
| Other comprehensive loss, net of tax | - | - | - | - | (48) | - | - | (48) | |||||||
| Cash dividends declared on common stock ($0.68 per share) | - | - | - | - | - | (94) | - | (94) | |||||||
| Cash dividends declared on preferred stock | - | - | - | - | - | (8) | - | (8) | |||||||
| Issuance of preferred stock | (1) | - | - | - | - | - | - | (1) | |||||||
| Net issuance of common stock under employee stock plans | - | 0.1 | - | - | - | (2) | 2 | - | |||||||
| Share-based compensation | - | - | - | 6 | - | - | - | 6 | |||||||
| BALANCE AT SEPTEMBER 30, 2020 | $ | 394 | 139.1 | $ | 1,141 | $ | 2,179 | $ | 18 | $ | 9,609 | $ | (5,467) | $ | 7,874 |
| BALANCE AT JUNE 30, 2021 | $ | 394 | 133.9 | $ | 1,141 | $ | 2,163 | $ | (120) | $ | 10,202 | $ | (5,849) | $ | 7,931 |
| Net income | - | - | - | - | - | 262 | - | 262 | |||||||
| Other comprehensive loss, net of tax | - | - | - | - | (87) | - | - | (87) | |||||||
| Cash dividends declared on common stock ($0.68 per share) | - | - | - | - | - | (89) | - | (89) | |||||||
| Cash dividends declared on preferred stock | - | - | - | - | - | (6) | - | (6) | |||||||
| Purchase of common stock | - | (3.1) | - | - | - | - | (220) | (220) | |||||||
| Net issuance of common stock under employee stock plans | - | 0.2 | - | - | - | (3) | 8 | 5 | |||||||
| Share-based compensation | - | - | - | 7 | - | - | - | 7 | |||||||
| BALANCE AT SEPTEMBER 30, 2021 | $ | 394 | 131.0 | $ | 1,141 | $ | 2,170 | $ | (207) | $ | 10,366 | $ | (6,061) | $ | 7,803 |
| BALANCE AT DECEMBER 31, 2019 | $ | - | 142.1 | $ | 1,141 | $ | 2,174 | $ | (316) | $ | 9,619 | $ | (5,291) | $ | 7,327 |
| Cumulative effect of change in accounting principle | - | - | - | - | - | 13 | - | 13 | |||||||
| Net income | - | - | - | - | - | 276 | - | 276 | |||||||
| Other comprehensive income, net of tax | - | - | - | - | 334 | - | - | 334 | |||||||
| Cash dividends declared on common stock ($2.04 per share) | - | - | - | - | - | (284) | - | (284) | |||||||
| Cash dividends declared on preferred stock | - | - | - | - | - | (8) | - | (8) | |||||||
| Purchase of common stock | - | (3.4) | - | - | - | - | (194) | (194) | |||||||
| Issuance of preferred stock | 394 | - | - | - | - | - | - | 394 | |||||||
| Net issuance of common stock under employee stock plans | - | 0.4 | - | (13) | - | (7) | 18 | (2) | |||||||
| Share-based compensation | - | - | - | 18 | - | - | - | 18 | |||||||
| BALANCE AT SEPTEMBER 30, 2020 | $ | 394 | 139.1 | $ | 1,141 | $ | 2,179 | $ | 18 | $ | 9,609 | $ | (5,467) | $ | 7,874 |
| BALANCE AT DECEMBER 31, 2020 | $ | 394 | 139.2 | $ | 1,141 | $ | 2,185 | $ | 64 | $ | 9,727 | $ | (5,461) | $ | 8,050 |
| Net income | - | - | - | - | - | 940 | - | 940 | |||||||
| Other comprehensive loss, net of tax | - | - | - | - | (271) | - | - | (271) | |||||||
| Cash dividends declared on common stock ($2.04 per share) | - | - | - | - | - | (276) | - | (276) | |||||||
| Cash dividends declared on preferred stock | - | - | - | - | - | (17) | - | (17) | |||||||
| Purchase of common stock | - | (9.0) | - | (24) | - | - | (649) | (673) | |||||||
| Net issuance of common stock under employee stock plans | - | 0.8 | - | (27) | - | (8) | 49 | 14 | |||||||
| Share-based compensation | - | - | - | 36 | - | - | - | 36 | |||||||
| BALANCE AT SEPTEMBER 30, 2021 | $ | 394 | 131.0 | $ | 1,141 | $ | 2,170 | $ | (207) | $ | 10,366 | $ | (6,061) | $ | 7,803 |
(a)See Reconciliations of Previously Reported Balances.
17
| BUSINESS SEGMENT FINANCIAL RESULTS (unaudited) | ||||||||||||
| Comerica Incorporated and Subsidiaries | ||||||||||||
| (dollar amounts in millions) | Commercial | Retail | Wealth | |||||||||
| Three Months Ended September 30, 2021 | Bank | Bank | Management | Finance | Other | Total | ||||||
| Earnings summary: | ||||||||||||
| Net interest income (expense) | $ | 407 | $ | 149 | $ | 40 | $ | (124) | $ | 3 | $ | 475 |
| Provision for credit losses | (25) | (5) | (13) | - | 1 | (42) | ||||||
| Noninterest income | 169 | 32 | 69 | 10 | - | 280 | ||||||
| Noninterest expenses | 224 | 159 | 79 | - | 3 | 465 | ||||||
| Provision (benefit) for income taxes | 83 | 4 | 10 | (27) | - | 70 | ||||||
| Net income (loss) | $ | 294 | $ | 23 | $ | 33 | $ | (87) | $ | (1) | $ | 262 |
| Net credit-related charge-offs (recoveries) | $ | 4 | $ | (1) | $ | (1) | $ | - | $ | - | $ | 2 |
| Selected average balances: | ||||||||||||
| Assets | $ | 43,240 | $ | 3,105 | $ | 4,956 | $ | 17,922 | $ | 22,130 | $ | 91,353 |
| Loans | 41,040 | 2,297 | 4,829 | - | (31) | 48,135 | ||||||
| Deposits | 46,632 | 26,088 | 5,209 | 977 | 209 | 79,115 | ||||||
| Statistical data: | ||||||||||||
| Return on average assets (a) | 2.33 | % | 0.34 | % | 2.36 | % | n/m | n/m | 1.14 | % | ||
| Efficiency ratio (b) | 38.82 | 87.18 | 72.83 | n/m | n/m | 61.57 | ||||||
| Commercial | Retail | Wealth | ||||||||||
| Three Months Ended June 30, 2021 | Bank | Bank | Management | Finance | Other | Total | ||||||
| Earnings summary: | ||||||||||||
| Net interest income (expense) | $ | 402 | $ | 145 | $ | 43 | $ | (127) | $ | 2 | $ | 465 |
| Provision for credit losses | (123) | (7) | (4) | - | (1) | (135) | ||||||
| Noninterest income | 167 | 30 | 71 | 9 | 7 | 284 | ||||||
| Noninterest expenses | 204 | 173 | 77 | 1 | 8 | 463 | ||||||
| Provision (benefit) for income taxes | 111 | 1 | 9 | (26) | (2) | 93 | ||||||
| Net income (loss) | $ | 377 | $ | 8 | $ | 32 | $ | (93) | $ | 4 | $ | 328 |
| Net credit-related (recoveries) charge-offs | $ | (12) | $ | 1 | $ | - | $ | - | $ | - | $ | (11) |
| Selected average balances: | ||||||||||||
| Assets | $ | 44,283 | $ | 3,395 | $ | 5,063 | $ | 17,461 | $ | 17,658 | $ | 87,860 |
| Loans | 42,350 | 2,533 | 4,936 | - | 9 | 49,828 | ||||||
| Deposits | 43,682 | 25,573 | 5,103 | 944 | 218 | 75,520 | ||||||
| Statistical data: | ||||||||||||
| Return on average assets (a) | 3.21 | % | 0.12 | % | 2.40 | % | n/m | n/m | 1.50 | % | ||
| Efficiency ratio (b) | 35.95 | 98.06 | 66.85 | n/m | n/m | 61.66 | ||||||
| Commercial | Retail | Wealth | ||||||||||
| Three Months Ended September 30, 2020 | Bank | Bank | Management | Finance | Other | Total | ||||||
| Earnings summary: | ||||||||||||
| Net interest income (expense) | $ | 412 | $ | 128 | $ | 42 | $ | (125) | $ | 1 | $ | 458 |
| Provision for credit losses | 14 | (2) | (7) | - | - | 5 | ||||||
| Noninterest income | 135 | 28 | 64 | 16 | 9 | 252 | ||||||
| Noninterest expenses (c) | 203 | 151 | 74 | - | 10 | 438 | ||||||
| Provision (benefit) for income taxes (c) | 68 | - | 9 | (26) | (1) | 50 | ||||||
| Net income (loss) (c) | $ | 262 | $ | 7 | $ | 30 | $ | (83) | $ | 1 | $ | 217 |
| Net credit-related charge-offs (recoveries) | $ | 35 | $ | (1) | $ | (1) | $ | - | $ | - | $ | 33 |
| Selected average balances: | ||||||||||||
| Assets | $ | 45,638 | $ | 3,489 | $ | 5,197 | $ | 15,909 | $ | 14,035 | $ | 84,268 |
| Loans | 44,250 | 2,680 | 5,094 | - | (11) | 52,013 | ||||||
| Deposits | 39,535 | 23,604 | 4,439 | 1,004 | 181 | 68,763 | ||||||
| Statistical data: | ||||||||||||
| Return on average assets (a), (c) | 2.29 | % | 0.09 | % | 2.35 | % | n/m | n/m | 1.02 | % | ||
| Efficiency ratio (b), (c) | 37.12 | 96.36 | 70.03 | n/m | n/m | 61.74 |
(a)Return on average assets is calculated based on the greater of average assets or average liabilities and attributed equity.
(b)Noninterest expenses as a percentage of the sum of net interest income and noninterest income excluding a derivative contract tied to the conversion rate of Visa Class B shares.
(c)See Reconciliations of Previously Reported Balances.
n/m - not meaningful
18
| MARKET SEGMENT FINANCIAL RESULTS (unaudited) | ||||||||||||
| Comerica Incorporated and Subsidiaries | ||||||||||||
| (dollar amounts in millions) | Other | Finance | ||||||||||
| Three Months Ended September 30, 2021 | Michigan | California | Texas | Markets | & Other | Total | ||||||
| Earnings summary: | ||||||||||||
| Net interest income (expense) | $ | 180 | $ | 180 | $ | 117 | $ | 119 | $ | (121) | $ | 475 |
| Provision for credit losses | (12) | 1 | (30) | (2) | 1 | (42) | ||||||
| Noninterest income | 70 | 40 | 42 | 118 | 10 | 280 | ||||||
| Noninterest expenses | 144 | 105 | 95 | 118 | 3 | 465 | ||||||
| Provision (benefit) for income taxes | 23 | 26 | 20 | 28 | (27) | 70 | ||||||
| Net income (loss) | $ | 95 | $ | 88 | $ | 74 | $ | 93 | $ | (88) | $ | 262 |
| Net credit-related charge-offs (recoveries) | $ | 4 | $ | 5 | $ | (9) | $ | 2 | $ | - | $ | 2 |
| Selected average balances: | ||||||||||||
| Assets | $ | 12,063 | $ | 17,213 | $ | 10,303 | $ | 11,717 | $ | 40,057 | $ | 91,353 |
| Loans | 11,445 | 17,042 | 9,650 | 10,024 | (26) | 48,135 | ||||||
| Deposits | 27,735 | 23,112 | 11,377 | 15,705 | 1,186 | 79,115 | ||||||
| Statistical data: | ||||||||||||
| Return on average assets (a) | 1.33 | % | 1.44 | % | 2.37 | % | 2.11 | % | n/m | 1.14 | % | |
| Efficiency ratio (b) | 57.15 | 47.99 | 59.33 | 50.07 | n/m | 61.57 | ||||||
| Other | Finance | |||||||||||
| Three Months Ended June 30, 2021 | Michigan | California | Texas | Markets | & Other | Total | ||||||
| Earnings summary: | ||||||||||||
| Net interest income (expense) | $ | 178 | $ | 174 | $ | 114 | $ | 124 | $ | (125) | $ | 465 |
| Provision for credit losses | (26) | (24) | (77) | (7) | (1) | (135) | ||||||
| Noninterest income | 72 | 41 | 35 | 120 | 16 | 284 | ||||||
| Noninterest expenses | 136 | 116 | 91 | 111 | 9 | 463 | ||||||
| Provision (benefit) for income taxes | 29 | 29 | 29 | 34 | (28) | 93 | ||||||
| Net income (loss) | $ | 111 | $ | 94 | $ | 106 | $ | 106 | $ | (89) | $ | 328 |
| Net credit-related charge-offs (recoveries) | $ | 1 | $ | - | $ | (12) | $ | - | $ | - | $ | (11) |
| Selected average balances: | ||||||||||||
| Assets | $ | 12,830 | $ | 17,679 | $ | 10,615 | $ | 11,614 | $ | 35,122 | $ | 87,860 |
| Loans | 12,245 | 17,515 | 10,008 | 10,048 | 12 | 49,828 | ||||||
| Deposits | 26,709 | 20,582 | 11,153 | 15,914 | 1,162 | 75,520 | ||||||
| Statistical data: | ||||||||||||
| Return on average assets (a) | 1.62 | % | 1.75 | % | 3.35 | % | 2.51 | % | n/m | 1.50 | % | |
| Efficiency ratio (b) | 54.18 | 53.63 | 61.35 | 45.41 | n/m | 61.66 | ||||||
| Other | Finance | |||||||||||
| Three Months Ended September 30, 2020 | Michigan | California | Texas | Markets | & Other | Total | ||||||
| Earnings summary: | ||||||||||||
| Net interest income (expense) | $ | 167 | $ | 173 | $ | 118 | $ | 124 | $ | (124) | $ | 458 |
| Provision for credit losses | 18 | 15 | (25) | (3) | - | 5 | ||||||
| Noninterest income | 66 | 31 | 28 | 102 | 25 | 252 | ||||||
| Noninterest expenses (c) | 138 | 97 | 88 | 105 | 10 | 438 | ||||||
| Provision (benefit) for income taxes (c) | 13 | 21 | 17 | 26 | (27) | 50 | ||||||
| Net income (loss) (c) | $ | 64 | $ | 71 | $ | 66 | $ | 98 | $ | (82) | $ | 217 |
| Net credit-related charge-offs | $ | 6 | $ | 14 | $ | 11 | $ | 2 | $ | - | $ | 33 |
| Selected average balances: | ||||||||||||
| Assets | $ | 13,232 | $ | 17,886 | $ | 11,339 | $ | 11,867 | $ | 29,944 | $ | 84,268 |
| Loans | 12,681 | 17,771 | 10,911 | 10,661 | (11) | 52,013 | ||||||
| Deposits | 24,685 | 18,868 | 10,649 | 13,376 | 1,185 | 68,763 | ||||||
| Statistical data: | ||||||||||||
| Return on average assets (a), (c) | 0.99 | % | 1.44 | % | 2.17 | % | 2.67 | % | n/m | 1.02 | % | |
| Efficiency ratio (b), (c) | 58.79 | 47.54 | 60.32 | 46.87 | n/m | 61.74 |
(a)Return on average assets is calculated based on the greater of average assets or average liabilities and attributed equity.
(b)Noninterest expenses as a percentage of the sum of net interest income and noninterest income excluding a derivative contract tied to the conversion rate of Visa Class B shares.
(c)See Reconciliations of Previously Reported Balances.
n/m - not meaningful
19
| RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES AND REGULATORY RATIOS (unaudited) |
| Comerica Incorporated and Subsidiaries |
Comerica believes non-GAAP measures are meaningful because they reflect adjustments commonly made by management, investors, regulators and analysts to evaluate the adequacy of common equity and our performance trends. Tangible common equity is used by Comerica to measure the quality of capital and the return relative to balance sheet risk.
Common equity tier 1 capital ratio removes preferred stock from the Tier 1 capital ratio as defined by and calculated in conformity with bank regulations. The tangible common equity ratio removes the effect of intangible assets from capital and total assets. Tangible common equity per share of common stock removes the effect of intangible assets from common shareholders' equity per share of common stock.
| September 30, | June 30, | September 30, | ||||
| (dollar amounts in millions) | 2021 | 2021 | 2020 | |||
| Common Equity Tier 1 Capital (a): | ||||||
| Tier 1 capital | $ | 7,359 | $ | 7,398 | $ | 7,199 |
| Less: | ||||||
| Fixed-rate reset non-cumulative perpetual preferred stock | 394 | 394 | 394 | |||
| Common equity tier 1 capital | $ | 6,965 | $ | 7,004 | $ | 6,805 |
| Risk-weighted assets | $ | 68,193 | $ | 67,685 | $ | 66,405 |
| Tier 1 capital ratio | 10.79 | % | 10.93 | % | 10.84 | % |
| Common equity tier 1 capital ratio | 10.21 | 10.35 | 10.25 | |||
| Tangible Common Equity: | ||||||
| Total shareholders' equity | $ | 7,803 | $ | 7,931 | $ | 7,874 |
| Less: | ||||||
| Fixed-rate reset non-cumulative perpetual preferred stock | 394 | 394 | 394 | |||
| Common shareholders' equity | $ | 7,409 | $ | 7,537 | $ | 7,480 |
| Less: | ||||||
| Goodwill | 635 | 635 | 635 | |||
| Other intangible assets (b) | 12 | 14 | 2 | |||
| Tangible common equity | $ | 6,762 | $ | 6,888 | $ | 6,843 |
| Total assets | $ | 94,529 | $ | 88,355 | $ | 83,631 |
| Less: | ||||||
| Goodwill | 635 | 635 | 635 | |||
| Other intangible assets (b) | 12 | 14 | 2 | |||
| Tangible assets | $ | 93,882 | $ | 87,706 | $ | 82,994 |
| Common equity ratio | 7.84 | % | 8.53 | % | 8.94 | % |
| Tangible common equity ratio | 7.20 | 7.85 | 8.24 | |||
| Tangible Common Equity per Share of Common Stock: | ||||||
| Common shareholders' equity | $ | 7,409 | $ | 7,537 | $ | 7,480 |
| Tangible common equity | 6,762 | 6,888 | 6,843 | |||
| Shares of common stock outstanding (in millions) | 131 | 134 | 139 | |||
| Common shareholders' equity per share of common stock | $ | 56.55 | $ | 56.28 | $ | 53.78 |
| Tangible common equity per share of common stock | 51.61 | 51.43 | 49.20 |
(a)September 30, 2021 ratios are estimated. Ratios reflect deferral of CECL model impact as calculated per regulatory guidance. The deferred amounts were zero at both September 30, 2021 (estimated) and June 30, 2021 and $83 million at September 30, 2020.
(b)In first quarter 2021, the Corporation acquired $13 million in intangible assets to be amortized over ten years.
20
| RECONCILIATIONS OF PREVIOUSLY REPORTED BALANCES (unaudited) |
| Comerica Incorporated and Subsidiaries |
Defined Benefit Plan Accounting Method Change
Effective January 1, 2021, the Corporation elected to change the accounting methodology for determining the market-related value of assets for certain classes of assets in the qualified defined benefit pension plan. The change in accounting methodology is applied retrospectively to all prior periods presented in the consolidated financial statements. The following table reconciles the impact of the change to the qualified defined benefit plan on the Corporation's previously reported consolidated financial statements.
Consolidated Statements of Comprehensive Income
| Three Months Ended | Nine Months Ended | |||||
| December 31, | September 30, | September 30, | ||||
| (in millions, except per share data) | 2020 | 2020 | 2020 | |||
| Other noninterest expenses: | ||||||
| As reported | $ | 23 | $ | 23 | $ | 73 |
| Effect of accounting change | (8) | (8) | (22) | |||
| Recast other noninterest expense | $ | 15 | $ | 15 | $ | 51 |
| Provision for income taxes: | ||||||
| As reported | $ | 63 | $ | 48 | $ | 54 |
| Effect of accounting change | 2 | 2 | 5 | |||
| Recast provision for income taxes | $ | 65 | $ | 50 | $ | 59 |
| Net income: | ||||||
| As reported | $ | 215 | $ | 211 | $ | 259 |
| Effect of accounting change | 6 | 6 | 17 | |||
| Recast net income | $ | 221 | $ | 217 | $ | 276 |
| Basic earnings per common share: | ||||||
| As reported | $ | 1.50 | $ | 1.45 | $ | 1.79 |
| Effect of accounting change | 0.04 | 0.04 | 0.12 | |||
| Recast basic earnings per common share | $ | 1.54 | $ | 1.49 | $ | 1.91 |
| Diluted earnings per common share: | ||||||
| As reported | $ | 1.49 | $ | 1.44 | $ | 1.78 |
| Effect of accounting change | 0.04 | 0.04 | 0.12 | |||
| Recast diluted earnings per common share | $ | 1.53 | $ | 1.48 | $ | 1.90 |
Consolidated Balance Sheets
| December 31, | September 30, | June 30, | December 31, | |||||
| (in millions) | 2020 | 2020 | 2020 | 2019 | ||||
| Accumulated other comprehensive income (loss): | ||||||||
| As reported | $ | 168 | $ | 116 | $ | 158 | $ | (235) |
| Effect of accounting change | (104) | (98) | (92) | (81) | ||||
| Recast accumulated other comprehensive income (loss) | $ | 64 | $ | 18 | $ | 66 | $ | (316) |
| Retained earnings: | ||||||||
| As reported | $ | 9,623 | $ | 9,511 | $ | 9,404 | $ | 9,538 |
| Effect of accounting change | 104 | 98 | $ | 92 | 81 | |||
| Recast retained earnings | $ | 9,727 | $ | 9,609 | $ | 9,496 | $ | 9,619 |
21
| RECONCILIATIONS OF PREVIOUSLY REPORTED BALANCES (unaudited) |
| Comerica Incorporated and Subsidiaries |
Change in Presentation of Customer Derivative Income and Foreign Exchange Income
Beginning with the first quarter 2021, the Corporation reported customer derivative income, previously a component of other noninterest income, and foreign exchange income as a combined item captioned derivative income on the Consolidated Statements of Comprehensive Income. Prior periods have been adjusted to conform to this presentation. The changes in presentation did not impact total noninterest income. The table below reconciles amounts previously reported to the new presentation.
| Three Months Ended | Nine Months Ended | |||||
| December 31, | September 30, | September 30, | ||||
| (in millions) | 2020 | 2020 | 2020 | |||
| Foreign exchange income (as reported) | $ | 11 | $ | 9 | $ | 29 |
| Customer derivative income (a) | 8 | - | 19 | |||
| Derivative income | $ | 19 | $ | 9 | $ | 48 |
| Other noninterest income (as reported) | $ | 34 | $ | 29 | $ | 84 |
| Less: Customer derivative income (a) | 8 | - | 19 | |||
| Other noninterest income (as adjusted) | $ | 26 | $ | 29 | $ | 65 |
(a)Previously reported as a component of other noninterest income.
22