CMA Comerica Inc

Net Credit-Related Charge-Offs Stable, Consistent with Outlook Strong Liquidity and Capital Levels $1.1 Billion Increase in Average Core Deposits Expenses Remain Well Controlled EPS Impact from Preferred Stock Dividends to U.S. Treasury (22 Cents) DALLAS, Oct. 20 /PRNewswire-FirstCall/ -- Comerica Incorporated (NYSE: CMA) today reported third quarter 2009 net income of $19 million, compared to $18 million for the second quarter 2009 and $28 million for the third quarter 2008. After preferred dividends of $34 million in each of the third and second quarters of 2009, the net loss applicable to common stock was $15 million, or $0.10 per diluted share, for the third quarter 2009, compared to a net loss applicable to common stock of $16 million, or $0.10 per diluted share, for the second quarter 2009 and net income applicable to common stock of $28 million, or $0.19 per diluted share, for the third quarter 2008. Third quarter 2009 included a $311 million provision for loan losses, compared to $312 million for the second quarter 2009 and $165 million for the third quarter 2008. (Logo: http://www.newscom.com/cgi-bin/prnh/20010807/CMALOGO) ========================================================================== (dollar amounts in millions, except per 3rd Qtr 2nd Qtr 3rd Qtr share data) '09 '09 '08 -------------------------------------------------------------------------- Net interest income $385 $402 $466 Provision for loan losses 311 312 165 Noninterest income 315 298 240 Noninterest expenses 399 429 514 Net income 19 18 28 Preferred stock dividends to U.S. Treasury 34 34 - Net income (loss) applicable to common stock (15) (16) 28 Diluted earnings (loss) per common share (0.10) (0.10) 0.19 Tier 1 capital ratio 12.18%(a) 11.58% 7.32% Tangible common equity ratio (b) 7.96 7.55 7.60 Net interest margin (c) 2.68 2.73 3.11 (a) September 30, 2009 ratio is estimated. (b) See Reconciliation of Non-GAAP Financial Measures. (c) Excess liquidity, represented by average balances deposited with the Federal Reserve Bank, reduced the net interest margin by 16 basis points and 8 basis points in the third and second quarters of 2009, respectively. Excluding excess liquidity, the net interest margin would have been 2.84% and 2.81% in each respective period. Excess liquidity had no impact on the net interest margin in the third quarter 2008. ========================================================================== "Our third quarter results were consistent with our prior outlook and reflect the many actions we have taken to position our company for the slow economic recovery now underway," said Ralph W. Babb Jr., chairman and chief executive officer. "These actions include the strengthening of our already strong liquidity and capital levels, the quick identification of problem loans, the building of our reserves credit by credit, and the careful management of expenses. Coupled with our strong focus on customers, we believe we are well positioned for the future, with confidence in our strategy and a dedicated workforce to deliver the results. "In the third quarter 2009, loan demand continued to be weak and average core deposits continued to increase, as businesses and consumers remained cautious in this economic environment. "The provision for loan losses was stable in the third quarter, with charge-offs similar to the second quarter, as expected. Our credit issues remain focused on residential real estate development." Third Quarter 2009 Compared to Second Quarter 2009 -- Average earning assets decreased $2.0 billion, reflecting a $2.9 billion decrease in average loans and a $0.9 billion increase in other earning assets, primarily short-term investments. The decline in loans reflected reduced demand from customers in a challenged economic environment. New and renewed loan commitments totaled $11.8 billion in the third quarter 2009, an increase of $1.6 billion from the second quarter 2009. -- Average core deposits, excluding the Financial Services Division, increased $1.1 billion in the third quarter 2009, including an $835 million increase in noninterest-bearing deposits. -- The net interest margin of 2.68 percent decreased five basis points, from 2.73 percent in the second quarter 2009. Excluding excess liquidity, represented by average balances deposited with the Federal Reserve Bank, the net interest margin would have been 2.84 percent, an increase of 3 basis points from 2.81 percent in the second quarter 2009 that resulted primarily from improved loan spreads and lower core deposit rates. -- Net credit-related charge-offs were $239 million, or 2.14 percent of average total loans, for the third quarter 2009, compared to $248 million, or 2.08 percent of average total loans, for the second quarter 2009. The provision for loan losses was $311 million for the third quarter 2009, compared to $312 million for the second quarter 2009, and the period-end allowance to total loans ratio increased to 2.19 percent from 1.89 percent at June 30, 2009. Nonaccrual loans were charged down 41 percent as of September 30, 2009, compared to 39 percent as of June 30, 2009 and 32 percent one year ago. -- Noninterest income increased $17 million, reflecting increases in several fee categories. Also included in the third quarter 2009 was a $7 million gain on the repurchase of debt and lower securities gains ($107 million in the third quarter 2009 compared to $113 million in the second quarter 2009), primarily from sales of mortgage-backed government agency securities. The second quarter 2009 included a $16 million loss on the termination of certain leveraged leases and a $6 million gain on the sale of Comerica's proprietary defined contribution plan recordkeeping business. -- Noninterest expenses decreased $30 million from the second quarter, due to the second quarter 2009 industry-wide FDIC special assessment charge. Year-to-date September 2009 noninterest expenses decreased 9 percent from the same period in the prior year. -- The provision for income taxes increased $30 million from the second quarter, primarily due a benefit in the second quarter 2009 from a change in the accounting method used to determine interim period (quarterly) federal taxes. The third quarter 2009 provision for income taxes was reduced by approximately $9 million after-tax, reflecting the recognition of interest benefits related to certain anticipated federal tax refunds. -- The tangible common equity ratio was 7.96 percent at September 30, 2009, an increase of 41 basis points from June 30, 2009. The estimated Tier 1 common ratio was 8.02 percent and the estimated Tier 1 capital ratio was 12.18 percent at September 30, 2009, increases of 36 basis points and 60 basis points, respectively, from June 30, 2009. Net Interest Income and Net Interest Margin ========================================================================== 3rd Qtr 2nd Qtr 3rd Qtr (dollar amounts in millions) '09 '09 '08 -------------------------------------------------------------------------- Net interest income $385 $402 $466 Net interest margin (a) 2.68% 2.73% 3.11% Selected average balances: Total earning assets $57,513 $59,522 $59,946 Total investment securities 9,070 9,786 8,146 Total loans 44,782 47,648 51,508 Total loans, excluding FSD loans (primarily low-rate) 44,573 47,432 51,107 Total core deposits (b), excluding FSD 34,165 33,059 31,441 Total noninterest-bearing deposits 13,225 12,546 10,646 Total noninterest-bearing deposits, excluding FSD 11,967 11,132 9,104 (a) Excess liquidity, represented by average balances deposited with the Federal Reserve Bank, reduced the net interest margin by 16 basis points and 8 basis points in the third and second quarters of 2009, respectively. Excluding excess liquidity, the net interest margin would have been 2.84% and 2.81% in each respective period. Excess liquidity had no impact on the third quarter 2008 net interest margin. (b) Core deposits exclude other time deposits and foreign office time deposits. ========================================================================== -- The $17 million decrease in net interest income in the third quarter 2009, when compared to second quarter 2009, resulted primarily from decreases in the net interest margin and loans, partially offset by the impact of one more day ($4 million). -- Third quarter 2009 average core deposits, excluding the Financial Services Division, increased $1.1 billion compared to second quarter 2009, reflecting an $835 million increase in noninterest-bearing deposits and a $790 million increase in money market and NOW deposits, partially offset by a $512 million decrease in higher-cost customer certificates of deposits. -- The net interest margin of 2.68 percent decreased five basis points, compared to second quarter 2009, primarily from an increase in excess liquidity, which more than offset improved loan spreads and lower core deposit rates. The net interest margin was reduced by approximately 16 basis points in the third quarter 2009 from excess liquidity, which was represented by $3.5 billion of average balances deposited with the Federal Reserve Bank, compared to a reduction of eight basis points from $1.8 billion of average balances in the second quarter 2009. Excess liquidity resulted from strong core deposit growth and sales of mortgage-backed government agency securities. -- Total average Financial Services Division noninterest-bearing deposits decreased $156 million from the second quarter 2009. This division serves title and escrow companies that facilitate residential mortgage transactions and benefits from customer deposits related to mortgage escrow balances. Noninterest-bearing deposits decreased primarily due to decreased mortgage refinancing activity. Noninterest Income Noninterest income was $315 million for the third quarter 2009, compared to $298 million for the second quarter 2009 and $240 million for the third quarter 2008. Several fee categories increased in the third quarter 2009, including service charges on deposit accounts ($5 million), commercial lending fees ($2 million) and letter of credit fees ($2 million). Noninterest income in the third quarter 2009 included net securities gains of $107 million, primarily from gains on sales of mortgage-backed government agency securities ($102 million) and on redemptions of auction-rate securities ($5 million), compared to net securities gains of $113 million in the second quarter 2009. Noninterest income in the third quarter 2009 also reflected a $7 million gain on the repurchase of debt, while the second quarter 2009 included a $6 million gain on the sale of Comerica's proprietary defined contribution plan recordkeeping business. The second quarter 2009 also included a $16 million loss on the termination of certain leveraged leases. Selected categories of noninterest income are highlighted in the following table. ========================================================================== 3rd Qtr 2nd Qtr 3rd Qtr (in millions) '09 '09 '08 -------------------------------------------------------------------------- Net securities gains $107 $113 $27 Other noninterest income Loss on termination of leveraged leases - (16) - Net gain (loss) from principal investing and warrants (1) (4) 1 Deferred compensation asset returns (a) 4 8 (6) Gain on repurchase of debt 7 - - Net gain on sale of business - 6 - (a) Compensation deferred by Comerica officers is invested in stocks and bonds to reflect the investment selections of the officers. Income (loss) earned on these assets is reported in noninterest income and the offsetting increase (decrease) in the liability is reported in salaries expense. ========================================================================== Noninterest Expenses Noninterest expenses were $399 million for the third quarter 2009, compared to $429 million for the second quarter 2009 and $514 million for the third quarter 2008. The $30 million decrease in noninterest expenses in the third quarter 2009, compared to the second quarter 2009, was primarily due to the second quarter 2009 industry-wide FDIC special assessment charge ($29 million). Full-time equivalent staff decreased by approximately 100 employees from June 30, 2009 and 1,000 employees, or 9 percent, from September 30, 2008. Certain categories of noninterest expenses are highlighted in the table below. ========================================================================== 3rd Qtr 2nd Qtr 3rd Qtr '09 '09 '08 -------------------------------------------------------------------------- Salaries Regular salaries $142 $142 $155 Severance - (1) 2 Incentives (including commissions) 17 15 31 Deferred compensation plan costs 5 8 (6) Share-based compensation 7 7 10 ---- ---- ---- Total salaries 171 171 192 Employee benefits Pension expense 14 14 5 Other benefits 37 39 41 ---- ---- ---- Total employee benefits 51 53 46 FDIC insurance expense 15 45 5 Litigation and operational losses 3 3 105(a) Provision for credit losses on lending-related commitments 2 (4) 9 Other noninterest expenses Other real estate expense 10 10 3 (a) Third quarter 2008 litigation and operational losses included a $96 million charge related to an offer to repurchase auction-rate securities from customers. ========================================================================== Credit Quality "We are working hard to ensure we effectively manage credit, particularly in this economic environment," Babb said. "Early recognition of issues continues to be key. We have moved credits to our workout area at the first signs of significant stress. Over the past 15 months, we have reduced, by 46 percent, our exposure to residential real estate development, the main focus of our credit issues. As a result, we expect to see a modest reduction in net charge-offs in the fourth quarter." -- The allowance to total loans ratio increased to 2.19 percent at September 30, 2009, from 1.89 percent at June 30, 2009 and 1.38 percent at September 30, 2008. -- The provision for loan losses was relatively unchanged, as a decrease in Other Markets offset increases in the Midwest, Western and Florida markets. -- Net credit-related charge-offs in the Commercial Real Estate business line in the third quarter 2009 decreased to $91 million, from $108 million in the second quarter 2009. Commercial Real Estate net credit-related charge-offs increased in the Western and Texas markets, were stable in the Midwest market and decreased in Florida and Other Markets. -- Net credit-related charge-offs excluding the Commercial Real Estate business line were $148 million in the third quarter 2009, or 1.53 percent of average non-Commercial Real Estate loans, compared to $140 million, or 1.35 percent, in the second quarter 2009. -- Nonperforming assets increased $75 million to $1,305 million, or 2.99 percent of total loans and foreclosed property, at September 30, 2009. Excluding the Commercial Real Estate business line, nonperforming assets decreased $10 million compared to June 30, 2009. -- During the third quarter 2009, $361 million of loan relationships greater than $2 million were transferred to nonaccrual status, a decrease of $58 million from the second quarter 2009. Of the transfers of loan relationships greater than $2 million to nonaccrual in the third quarter 2009, $211 million were in the Commercial Real Estate business line, $89 million were in Middle Market and $29 million were in Leasing. -- Nonaccrual loans were charged down 41 percent as of September 30, 2009, compared to 39 percent as of June 30, 2009 and 32 percent one year ago. -- Loans past due 90 days or more and still accruing were $161 million at September 30, 2009, a decrease of $49 million compared to June 30, 2009. ========================================================================== 3rd Qtr 2nd Qtr 3rd Qtr (dollar amounts in millions) '09 '09 '08 -------------------------------------------------------------------------- Net loan charge-offs $239 $248 $116 Net lending-related commitment charge-offs - - - ----- ----- ----- Total net credit-related charge-offs 239 248 116 Net loan charge-offs/Average total loans 2.14% 2.08% 0.90% Net credit-related charge-offs/Average total loans 2.14 2.08 0.90 Provision for loan losses $311 $312 $165 Provision for credit losses on lending-related commitments 2 (4) 9 ----- ----- ----- Total provision for credit losses 313 308 174 Nonperforming loans 1,196 1,130 863 Nonperforming assets (NPAs) 1,305 1,230 881 NPAs/Total loans and foreclosed property 2.99% 2.64% 1.71% Loans past due 90 days or more and still accruing $161 $210 $97 Allowance for loan losses 953 880 712 Allowance for credit losses on lending-related commitments (a) 35 33 40 ----- ----- ----- Total allowance for credit losses 988 913 752 Allowance for loan losses/Total loans 2.19% 1.89% 1.38% Allowance for loan losses/Nonperforming loans 80 78 82 (a) Included in "Accrued expenses and other liabilities" on the consolidated balance sheets. ========================================================================== Balance Sheet and Capital Management Total assets and common shareholders' equity were $59.6 billion and $4.9 billion, respectively, at September 30, 2009, compared to $63.6 billion and $5.0 billion, respectively, at June 30, 2009. There were approximately 151 million common shares outstanding at September 30, 2009. Comerica's tangible common equity ratio was 7.96 percent at September 30, 2009. The third quarter 2009 estimated Tier 1 common, Tier 1 and total risk-based capital ratios were 8.02 percent, 12.18 percent and 16.75 percent, respectively. 2009 Outlook -- Management continues to focus on developing new and expanding existing customer relationships. While the economic recovery appears to be underway, management expects subdued loan demand as loan growth typically lags other economic indicators. -- Management expects the fourth quarter 2009 net interest margin to increase as a result of maturities of higher-cost certificates of deposit and wholesale funding and a reduction in excess liquidity. The target federal funds and short-term LIBOR rates are expected to remain flat for the remainder of 2009. -- Based on no significant deterioration of the economic environment, management expects net credit-related charge-offs in the fourth quarter 2009 to improve modestly compared to third quarter 2009. The provision for credit losses is expected to continue to exceed net charge-offs. -- Management does not expect significant securities gains from the sale of mortgage-backed government agency securities in the fourth quarter 2009. -- Management expects a mid- to high-single digit decrease in full-year 2009 noninterest expenses, compared to full-year 2008, due to control of discretionary expenses and workforce. Business Segments Comerica's continuing operations are strategically aligned into three major business segments: the Business Bank, the Retail Bank, and Wealth & Institutional Management. The Finance Division also is included as a segment. The financial results below are based on the internal business unit structure of the Corporation and methodologies in effect at September 30, 2009 and are presented on a fully taxable equivalent (FTE) basis. The accompanying narrative addresses third quarter 2009 results compared to second quarter 2009. The following table presents net income (loss) by business segment. ========================================================================== (dollar amounts in millions) 3rd Qtr '09 2nd Qtr '09 3rd Qtr '08 -------------------------------------------------------------------------- Business Bank $22 N/M% $5 N/M% $65 N/M% Retail Bank (11) (54) (18) N/M 21 57 Wealth & Institutional Management 10 48 15 N/M (51) N/M -------------------------------------------------------------------------- 21 100% 2 100% 35 100% Finance (7) 8 (2) Other (a) 5 8 (5) -------------------------------------------------------------------------- Total $19 $18 $28 ========================================================================== N/M - Not Meaningful. (a) Includes discontinued operations and items not directly associated with the three major business segments or the Finance Division. ========================================================================== Business Bank ========================================================================== (dollar amounts in millions) 3rd Qtr '09 2nd Qtr '09 3rd Qtr '08 -------------------------------------------------------------------------- Net interest income (FTE) $346 $328 $323 Provision for loan losses 252 252 135 Noninterest income 72 50 75 Noninterest expenses 160 157 175 Net income 22 5 65 Net credit-related charge-offs 195 211 95 Selected average balances: Assets 34,822 37,521 41,357 Loans 34,116 36,760 40,506 FSD loans 209 216 401 Deposits 15,735 14,827 14,933 FSD deposits 1,642 1,866 2,449 Net interest margin 4.01% 3.58% 3.18% ========================================================================== -- Average loans decreased $2.6 billion, reflecting declines across all markets and businesses. -- Average deposits, excluding the Financial Services Division, increased $1.1 billion, increasing in most businesses, but primarily in Middle Market and Global Corporate. -- The net interest margin of 4.01 percent increased 43 basis points, primarily due to an increase in loan and deposit spreads and an increase in noninterest-bearing deposits. -- The provision for loan losses was unchanged. Increases in Middle Market and Commercial Real Estate were offset by decreases, largely in Global Corporate, Leasing and National Dealer Services. -- Noninterest income increased $22 million, reflecting increases in several fee categories and a $16 million second quarter 2009 loss on the termination of certain leveraged leases. -- Noninterest expenses increased $3 million, as a decline in FDIC insurance expense, due to the industry-wide special assessment charge in the second quarter 2009, was offset by an increase in the provision for credit losses on lending related commitments. Retail Bank ========================================================================== (dollar amounts in millions) 3rd Qtr '09 2nd Qtr '09 3rd Qtr '08 -------------------------------------------------------------------------- Net interest income (FTE) $127 $128 $142 Provision for loan losses 42 42 33 Noninterest income 50 46 80 Noninterest expenses 154 167 161 Net income (loss) (11) (18) 21 Net credit-related charge-offs 34 29 17 Selected average balances: Assets 6,445 6,693 7,046 Loans 5,904 6,115 6,362 Deposits 17,563 17,666 16,596 Net interest margin 2.87% 2.90% 3.41% ========================================================================== -- Average loans decreased $211 million, across all businesses. -- Average deposits decreased $103 million, reflecting a decrease in higher-cost customer certificates of deposit, partially offset by an increase in money market deposits. -- The net interest margin of 2.87 percent declined three basis points, primarily due to a decrease in loan balances. -- Noninterest income increase $4 million, primarily due to an increase in service charges on deposit accounts. -- Noninterest expenses decreased $13 million, primarily due to the second quarter 2009 industry-wide FDIC special assessment charge. Wealth and Institutional Management ========================================================================== (dollar amounts in millions) 3rd Qtr '09 2nd Qtr '09 3rd Qtr '08 -------------------------------------------------------------------------- Net interest income (FTE) $42 $40 $37 Provision for loan losses 20 13 7 Noninterest income 66 73 71 Noninterest expenses 73 77 180 Net income (loss) 10 15 (51) Net credit-related charge-offs 10 8 4 Selected average balances: Assets 4,856 4,965 4,759 Loans 4,760 4,776 4,624 Deposits 2,735 2,599 2,351 Net interest margin 3.48% 3.29% 3.18% ========================================================================== -- Average loans declined $16 million. -- Average deposits increased $136 million, primarily due to an increase in noninterest-bearing, NOW and money market deposits. -- The net interest margin of 3.48 percent increased 19 basis points, primarily due to an increase in loan and deposit spreads and the benefit provided by the increase in noninterest-bearing and NOW deposits. -- Noninterest income decreased $7 million, primarily due the $6 million second quarter 2009 gain on the sale of Comerica's proprietary defined contribution plan recordkeeping business. -- Noninterest expenses decreased $4 million, primarily due to the second quarter 2009 industry-wide FDIC special assessment charge. Geographic Market Segments Comerica also provides market segment results for four primary geographic markets: Midwest, Western, Texas and Florida. In addition to the four primary geographic markets, Other Markets and International are also reported as market segments. The financial results below are based on methodologies in effect at September 30, 2009 and are presented on a fully taxable equivalent (FTE) basis. The accompanying narrative addresses third quarter 2009 results compared to second quarter 2009. The following table presents net income (loss) by market segment. ========================================================================== (dollar amounts in millions) 3rd Qtr '09 2nd Qtr '09 3rd Qtr '08 -------------------------------------------------------------------------- Midwest $(6) (34)% $- N/M% $51 N/M% Western (7) (35) (7) N/M 9 25 Texas 7 36 5 N/M 13 36 Florida (12) (59) (8) N/M (1) (3) Other Markets 29 N/M 6 N/M (44) N/M International 10 46 6 N/M 7 21 -------------------------------------------------------------------------- 21 100% 2 100% 35 100% Finance & Other Businesses (a) (2) 16 (7) -------------------------------------------------------------------------- Total $19 $18 $28 ========================================================================== N/M - Not Meaningful. (a) Includes discontinued operations and items not directly associated with the geographic markets. ========================================================================== Midwest ========================================================================== (dollar amounts in millions) 3rd Qtr '09 2nd Qtr '09 3rd Qtr '08 -------------------------------------------------------------------------- Net interest income (FTE) $209 $200 $197 Provision for loan losses 144 119 52 Noninterest income 107 92 142 Noninterest expenses 188 186 205 Net income (loss) (6) - 51 Net credit-related charge-offs 102 99 44 Selected average balances: Assets 16,987 18,122 19,752 Loans 16,387 17,427 19,070 Deposits 17,395 17,166 15,857 Net interest margin 4.72% 4.56% 4.09% ========================================================================== -- Average loans decreased $1.0 billion, reflecting declines in Middle Market, Global Corporate and National Dealer Services. -- Average deposits increased $229 million, due to increases in Global Corporate, Small Business and Middle Market, partially offset by a decline in Personal Banking of higher-cost customer certificates of deposit. -- The net interest margin of 4.72 percent increased 16 basis points, primarily due to an increase in loan and deposit spreads and the benefit provided by an increase in noninterest-bearing deposits. -- The provision for loan losses increased $25 million, primarily due to an increase in Middle Market, partially offset by a decrease in Leasing. -- Noninterest income increased $15 million. Second quarter 2009 included a $16 million loss on the termination of certain leveraged leases. -- Noninterest expenses increased $2 million, reflecting an increase in the provision for credit losses on lending-related commitments and nominal increases in other expense categories, partially offset by a decline in FDIC insurance expense, due to the second quarter 2009 industry-wide FDIC special assessment charge. Western Market ========================================================================== (dollar amounts in millions) 3rd Qtr '09 2nd Qtr '09 3rd Qtr '08 -------------------------------------------------------------------------- Net interest income (FTE) $159 $154 $169 Provision for loan losses 101 90 82 Noninterest income 33 32 38 Noninterest expenses 106 113 112 Net income (loss) (7) (7) 9 Net credit-related charge-offs 95 70 51 Selected average balances: Assets 14,114 14,901 16,633 Loans 13,923 14,684 16,387 FSD loans 209 216 401 Deposits 11,146 10,717 11,730 FSD deposits 1,469 1,678 2,255 Net interest margin 4.53% 4.20% 4.10% ========================================================================== -- Average loans decreased $761 million, due to declines in National Dealer Services, Middle Market, Global Corporate and Commercial Real Estate. -- Average deposits, excluding the Financial Services Division, increased $638 million, primarily due to increases in Middle Market, Technology and Life Sciences and Private Banking. Financial Services Division average deposits decreased $209 million. -- The net interest margin of 4.53 percent increased 33 basis points, primarily due to an increase in loan and deposit spreads and the benefit provided by an increase in noninterest-bearing deposits. -- The provision for loan losses increased $11 million, primarily due to an increase in Commercial Real Estate, partially offset by a decrease in Global Corporate. -- Noninterest expenses decreased $7 million, primarily due to the second quarter 2009 industry-wide FDIC special assessment charge. Texas Market ========================================================================== (dollar amounts in millions) 3rd Qtr '09 2nd Qtr '09 3rd Qtr '08 -------------------------------------------------------------------------- Net interest income (FTE) $77 $73 $73 Provision for loan losses 29 28 18 Noninterest income 22 21 27 Noninterest expenses 58 60 61 Net income 7 5 13 Total net credit-related charge-offs 22 11 9 Selected average balances: Assets 7,444 7,798 7,945 Loans 7,221 7,547 7,691 Deposits 4,609 4,496 3,956 Net interest margin 4.22% 3.88% 3.76% ========================================================================== -- Average loans decreased $326 million, primarily due to a decrease in Energy Lending. -- Average deposits increased $113 million, primarily due to an increase in Middle Market. -- The net interest margin of 4.22 percent increased 34 basis points, primarily due to an increase in loan spreads and the benefit provided by an increase in noninterest-bearing deposits. -- Noninterest expenses decreased $2 million, primarily due to the second quarter 2009 industry-wide FDIC special assessment charge. Florida Market ========================================================================== (dollar amounts in millions) 3rd Qtr '09 2nd Qtr '09 3rd Qtr '08 -------------------------------------------------------------------------- Net interest income (FTE) $11 $11 $12 Provision for loan losses 24 20 7 Noninterest income 3 3 4 Noninterest expenses 10 9 10 Net loss (12) (8) (1) Net credit-related charge-offs 9 23 3 Selected average balances: Assets 1,673 1,820 1,900 Loans 1,674 1,820 1,900 Deposits 327 331 262 Net interest margin 2.70% 2.44% 2.54% ========================================================================== -- Average loans decreased $146 million, primarily due to a decrease in National Dealer Services. -- Average deposits decreased $4 million, primarily due to a decrease in Commercial Real Estate. -- The net interest margin of 2.70 percent increased 26 basis points, primarily due to an increase in loan spreads. -- The provision for loan losses increased $4 million, primarily due to an increase in Private Banking, partially offset by a decrease in Commercial Real Estate. Conference Call and Webcast Comerica will host a conference call to review third quarter 2009 financial results at 7 a.m. CT Tuesday, October 20, 2009. Interested parties may access the conference call by calling (800) 309-2262 or (706) 679-5261 (event ID No. 31081979). The call and supplemental financial information can also be accessed on the Internet at http://www.comerica.com/. A replay will be available approximately two hours following the conference call through October 31, 2009. The conference call replay can be accessed by calling (800) 642-1687 or (706) 645-9291 (event ID No. 31081979). A replay of the Webcast can also be accessed via Comerica's "Investor Relations" page at http://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 & Institutional 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, China 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 the reconcilement 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," "feels," "expects," "estimates," "seeks," "strives," "plans," "intends," "outlook," "forecast," "position," "target," "mission," "assume," "achievable," "potential," "strategy," "goal," "aspiration," "outcome," "continue," "remain," "maintain," "trend," "objective" and variations of such words and similar expressions, or future or conditional verbs such as "will," "would," "should," "could," "might," "can," "may" or similar expressions, as they relate to Comerica or its management, are intended to identify forward-looking statements. These forward-looking statements are predicated on the beliefs and assumptions of Comerica's management based on information known to Comerica's management as of the date of this news release and do not purport to speak as of any other date. Forward-looking statements may include descriptions of plans and objectives of Comerica's management for future or past operations, products or services, and forecasts of Comerica's revenue, earnings or other measures of economic performance, including statements of profitability, business segments and subsidiaries, estimates of credit trends and global stability. Such statements reflect the view of Comerica's management as of this date with respect to future events and are subject to risks and uncertainties. Should one or more of these risks materialize or should underlying beliefs or assumptions prove incorrect, Comerica's actual results could differ materially from those discussed. Factors that could cause or contribute to such differences are further economic downturns, changes in the pace of an economic recovery and related changes in employment levels, changes in real estate values, fuel prices, energy costs or other events that could affect customer income levels or general economic conditions, changes related to the headquarters relocation or to its underlying assumptions, the effects of recently enacted legislation, such as the Emergency Economic Stabilization Act of 2008 and the American Recovery and Reinvestment Act of 2009, and actions taken by the U.S. Department of Treasury, the Board of Governors of the Federal Reserve System, the Texas Department of Banking and the Federal Deposit Insurance Corporation, the effects of war and other armed conflicts or acts of terrorism, the effects of natural disasters including, but not limited to, hurricanes, tornadoes, earthquakes, fires, droughts and floods, the disruption of private or public utilities, the implementation of Comerica's strategies and business models, management's ability to maintain and expand customer relationships, changes in customer borrowing, repayment, investment and deposit practices, management's ability to retain key officers and employees, changes in the accounting treatment of any particular item, the impact of regulatory examinations, declines or other changes in the businesses or industries in which Comerica has a concentration of loans, including, but not limited to, the automotive production industry and the real estate business lines, the anticipated performance of any new banking centers, the entry of new competitors in Comerica's markets, changes in the level of fee income, changes in applicable laws and regulations, including those concerning taxes, banking, securities and insurance, changes in trade, monetary and fiscal policies, including the interest rate policies of the Board of Governors of the Federal Reserve System, fluctuations in inflation or interest rates, changes in general economic, political or industry conditions and related credit and market conditions, the interdependence of financial service companies and adverse conditions in the stock market. Comerica cautions that the foregoing list of factors is not exclusive. For discussion of factors that may cause actual results to differ from expectations, please refer to our filings with the Securities and Exchange Commission. Forward-looking statements speak only as of the date they are made. Comerica does not undertake to update forward-looking statements to reflect facts, circumstances, assumptions or events that occur after the date the forward-looking statements are made. For any forward-looking statements made in this news release or in any documents, Comerica claims the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. CONSOLIDATED FINANCIAL HIGHLIGHTS (unaudited) Comerica Incorporated and Subsidiaries -------------------------------------------------------------------------- Three Months Ended --------------------------------- September June 30, September (in millions, except per share data) 30, 2009 2009 30, 2008 -------------------------------------------------------------------------- PER COMMON SHARE AND COMMON STOCK DATA Diluted net income (loss) $(0.10) $(0.10) $0.19 Cash dividends declared 0.05 0.05 0.66 Common shareholders' equity (at period end) 31.90 32.70 33.89 Average diluted shares (in thousands) 151,478 151,490 150,795 -------------------------------------------------------------------------- KEY RATIOS Return on average common shareholders' equity (1.27)% (1.25)% 2.25% Return on average assets 0.12 0.11 0.18 Tier 1 common capital ratio (a) (b) 8.02 7.66 6.67 Tier 1 risk-based capital ratio (b) 12.18 11.58 7.32 Total risk-based capital ratio (b) 16.75 15.97 11.19 Leverage ratio (b) 12.45 12.11 8.57 Tangible common equity ratio (a) 7.96 7.55 7.60 -------------------------------------------------------------------------- AVERAGE BALANCES Commercial loans $23,401 $25,657 $28,521 Real estate construction loans 4,033 4,325 4,675 Commercial mortgage loans 10,359 10,476 10,511 Residential mortgage loans 1,720 1,795 1,870 Consumer loans 2,550 2,572 2,599 Lease financing 1,218 1,227 1,365 International loans 1,501 1,596 1,967 ------- ------- ------- Total loans 44,782 47,648 51,508 Earning assets 57,513 59,522 59,946 Total assets 61,948 64,256 64,863 Noninterest-bearing deposits 13,225 12,546 10,646 Interest-bearing core deposits 22,582 22,379 23,244 Total core deposits 35,807 34,925 33,890 Common shareholders' equity 4,923 5,016 5,075 Total shareholders' equity 7,065 7,153 5,075 -------------------------------------------------------------------------- NET INTEREST INCOME Net interest income (fully taxable equivalent basis) (c) $387 $404 $467 Fully taxable equivalent adjustment 2 2 1 Net interest margin (c) (d) 2.68% 2.73% 3.11% -------------------------------------------------------------------------- CREDIT QUALITY Nonaccrual loans $1,194 $1,130 $863 Reduced-rate loans 2 - - ------- ------- ------- Total nonperforming loans 1,196 1,130 863 Foreclosed property 109 100 18 ------- ------- ------- Total nonperforming assets 1,305 1,230 881 Loans past due 90 days or more and still accruing 161 210 97 Gross loan charge-offs 245 257 122 Loan recoveries 6 9 6 ------- ------- ------- Net loan charge-offs 239 248 116 Lending-related commitment charge-offs - - - ------- ------- ------- Total net credit-related charge-offs 239 248 116 Allowance for loan losses 953 880 712 Allowance for credit losses on lending- related commitments 35 33 40 ------- ------- ------- Total allowance for credit losses 988 913 752 Allowance for loan losses as a percentage of total loans 2.19% 1.89% 1.38% Net loan charge-offs as a percentage of average total loans 2.14 2.08 0.90 Net credit-related charge-offs as a percentage of average total loans 2.14 2.08 0.90 Nonperforming assets as a percentage of total loans and foreclosed property 2.99 2.64 1.71 Allowance for loan losses as a percentage of total nonperforming loans 80 78 82 -------------------------------------------------------------------------- (a) See Reconciliation of Non-GAAP Financial Measures. (b) September 30, 2009 ratios are estimated (c) Third quarter 2008 and year-to-date 2008 net interest income declined $8 million and $38 million, respectively, due to tax-related non-cash lease income charges. Excluding these charges, the net interest margin would have been 3.17% and 3.16% for the three- and nine-month periods ended September 30, 2008. (d) Excess liquidity, represented by average balances deposited with the Federal Reserve Bank, reduced the net interest margin by 16 basis points, 8 basis points and 11 basis points in the third quarter 2009, second quarter 2009 and year-to-date 2009, respectively. Excluding excess liquidity, the net interest margin would have been 2.84%, 2.81% and 2.76% in each respective period. Excess liquidity had no impact on the net interest margin in third quarter 2008 or year-to-date 2008. Nine Months Ended ------------------ September 30, (in millions, except per share data) 2009 2008 -------------------------------------------------------------------------- PER COMMON SHARE AND COMMON STOCK DATA Diluted net income (loss) $(0.36) $1.28 Cash dividends declared 0.15 1.98 Common shareholders' equity (at period end) Average diluted shares (in thousands) 151,441 150,783 -------------------------------------------------------------------------- KEY RATIOS Return on average common shareholders' equity (1.48)% 5.00% Return on average assets 0.09 0.40 Tier 1 common capital ratio (a) (b) Tier 1 risk-based capital ratio (b) Total risk-based capital ratio (b) Leverage ratio (b) Tangible common equity ratio (a) -------------------------------------------------------------------------- AVERAGE BALANCES Commercial loans $25,399 $28,992 Real estate construction loans 4,287 4,776 Commercial mortgage loans 10,422 10,343 Residential mortgage loans 1,787 1,898 Consumer loans 2,565 2,532 Lease financing 1,248 1,354 International loans 1,603 2,013 ------- ------- Total loans 47,311 51,908 Earning assets 59,580 60,183 Total assets 64,296 64,917 Noninterest-bearing deposits 12,385 10,638 Interest-bearing core deposits 22,476 24,148 Total core deposits 34,861 34,786 Common shareholders' equity 4,987 5,153 Total shareholders' equity 7,124 5,153 -------------------------------------------------------------------------- NET INTEREST INCOME Net interest income (fully taxable equivalent basis) (c) $1,177 $1,387 Fully taxable equivalent adjustment 6 3 Net interest margin (c) (d) 2.65% 3.08% -------------------------------------------------------------------------- CREDIT QUALITY Nonaccrual loans Reduced-rate loans Total nonperforming loans Foreclosed property Total nonperforming assets Loans past due 90 days or more and still accruing Gross loan charge-offs $663 $356 Loan recoveries 19 18 ------- ------- Net loan charge-offs 644 338 Lending-related commitment charge-offs - 1 ------- ------- Total net credit-related charge-offs 644 339 Allowance for loan losses Allowance for credit losses on lending- related commitments Total allowance for credit losses Allowance for loan losses as a percentage of total loans Net loan charge-offs as a percentage of average total loans 1.82% 0.87% Net credit-related charge-offs as a percentage of average total loans 1.82 0.87 Nonperforming assets as a percentage of total loans and foreclosed property Allowance for loan losses as a percentage of total nonperforming loans -------------------------------------------------------------------------- (a) See Reconciliation of Non-GAAP Financial Measures. (b) September 30, 2009 ratios are estimated (c) Third quarter 2008 and year-to-date 2008 net interest income declined $8 million and $38 million, respectively, due to tax-related non-cash lease income charges. Excluding these charges, the net interest margin would have been 3.17% and 3.16% for the three- and nine-month periods ended September 30, 2008. (d) Excess liquidity, represented by average balances deposited with the Federal Reserve Bank, reduced the net interest margin by 16 basis points, 8 basis points and 11 basis points in the third quarter 2009, second quarter 2009 and year-to-date 2009, respectively. Excluding excess liquidity, the net interest margin would have been 2.84%, 2.81% and 2.76% in each respective period. Excess liquidity had no impact on the net interest margin in third quarter 2008 or year-to-date 2008. CONSOLIDATED BALANCE SHEETS (unaudited) Comerica Incorporated and Subsidiaries -------------------------------------------------------------------------- September June December September (in millions, except share 30, 30, 31, 30, data) 2009 2009 2008 2008 -------------------------------------------------------------------------- ASSETS Cash and due from banks $799 $948 $913 $1,404 Federal funds sold and securities purchased under agreements to resell - 650 202 3 Interest-bearing deposits with banks 2,219 3,542 2,308 25 Other short-term investments 142 129 158 222 Investment securities available-for-sale 8,882 7,757 9,201 8,158 - Commercial loans 22,546 24,922 27,999 28,604 Real estate construction loans 3,870 4,152 4,477 4,565 Commercial mortgage loans 10,380 10,400 10,489 10,588 Residential mortgage loans 1,679 1,759 1,852 1,863 Consumer loans 2,544 2,562 2,592 2,644 Lease financing 1,197 1,234 1,343 1,360 International loans 1,355 1,523 1,753 1,931 -------------------------------------------------------------------------- Total loans 43,571 46,552 50,505 51,555 Less allowance for loan losses (953) (880) (770) (712) -------------------------------------------------------------------------- Net loans 42,618 45,672 49,735 50,843 Premises and equipment 657 667 683 668 Customers' liability on acceptances outstanding 12 7 14 21 Accrued income and other assets 4,261 4,258 4,334 3,809 -------------------------------------------------------------------------- Total assets $59,590 $63,630 $67,548 $65,153 ========================================================================== LIABILITIES AND SHAREHOLDERS' EQUITY Noninterest-bearing deposits $13,888 $13,558 $11,701 $12,094 - Money market and NOW deposits 13,556 12,352 12,437 13,553 Savings deposits 1,331 1,348 1,247 1,279 Customer certificates of deposit 7,466 8,524 8,807 8,147 Other time deposits 2,801 4,593 7,293 3,670 Foreign office time deposits 572 616 470 802 -------------------------------------------------------------------------- Total interest-bearing deposits 25,726 27,433 30,254 27,451 -------------------------------------------------------------------------- Total deposits 39,614 40,991 41,955 39,545 Short-term borrowings 425 490 1,749 3,625 Acceptances outstanding 12 7 14 21 Accrued expenses and other liabilities 1,252 1,478 1,625 1,486 Medium- and long-term debt 11,252 13,571 15,053 15,376 -------------------------------------------------------------------------- Total liabilities 52,555 56,537 60,396 60,053 Fixed rate cumulative perpetual preferred stock, series F, no par value, $1,000 liquidation value per share: Authorized - 2,250,000 shares Issued - 2,250,000 shares at 9/30/09, 6/30/09 and 12/31/08 2,145 2,140 2,129 - Common stock - $5 par value: Authorized - 325,000,000 shares Issued - 178,735,252 shares at 9/30/09, 6/30/09, 12/31/08 and 9/30/08 894 894 894 894 Capital surplus 738 731 722 586 Accumulated other comprehensive loss (361) (342) (309) (129) Retained earnings 5,205 5,257 5,345 5,379 Less cost of common stock in treasury - 27,620,576 shares at 9/30/09, 27,620,471 shares at 6/30/09, 28,244,967 shares at 12/31/2008 and 28,249,360 shares at 9/30/08 (1,586) (1,587) (1,629) (1,630) -------------------------------------------------------------------------- Total shareholders' equity 7,035 7,093 7,152 5,100 -------------------------------------------------------------------------- Total liabilities and shareholders' equity $59,590 $63,630 $67,548 $65,153 ========================================================================== CONSOLIDATED STATEMENTS OF INCOME (unaudited) Comerica Incorporated and Subsidiaries -------------------------------------------------------------------------- Three Months Nine Months Ended Ended September 30, September 30, ----------------------------- (in millions, except per share data) 2009 2008 2009 2008 -------------------------------------------------------------------------- INTEREST INCOME Interest and fees on loans $444 $634 $1,343 $2,037 Interest on investment securities 64 99 276 288 Interest on short-term investments 3 2 7 10 -------------------------------------------------------------------------- Total interest income 511 735 1,626 2,335 INTEREST EXPENSE Interest on deposits 89 141 320 576 Interest on short-term borrowings - 30 2 78 Interest on medium- and long-term debt 37 98 133 297 -------------------------------------------------------------------------- Total interest expense 126 269 455 951 -------------------------------------------------------------------------- Net interest income 385 466 1,171 1,384 Provision for loan losses 311 165 826 494 -------------------------------------------------------------------------- Net interest income after provision for loan losses 74 301 345 890 NONINTEREST INCOME Service charges on deposit accounts 60 57 173 174 Fiduciary income 39 49 122 152 Commercial lending fees 21 17 58 53 Letter of credit fees 18 19 50 52 Card fees 13 15 37 45 Brokerage fees 7 10 24 30 Foreign exchange income 10 11 30 33 Bank-owned life insurance 8 11 26 29 Net securities gains 107 27 233 63 Other noninterest income 32 24 83 88 -------------------------------------------------------------------------- Total noninterest income 315 240 836 719 NONINTEREST EXPENSES Salaries 171 192 513 594 Employee benefits 51 46 159 141 -------------------------------------------------------------------------- Total salaries and employee benefits 222 238 672 735 Net occupancy expense 40 40 119 114 Equipment expense 15 15 46 46 Outside processing fee expense 24 26 74 77 Software expense 21 18 61 57 FDIC insurance expense 15 5 75 9 Customer services 1 2 2 11 Litigation and operational losses 3 105 8 100 Provision for credit losses on lending- related commitments 2 9 (3) 20 Other noninterest expenses 56 56 171 171 -------------------------------------------------------------------------- Total noninterest expenses 399 514 1,225 1,340 -------------------------------------------------------------------------- Income (loss) from continuing operations before income taxes (10) 27 (44) 269 Provision (benefit) for income taxes (29) - (89) 76 -------------------------------------------------------------------------- Income from continuing operations 19 27 45 193 Income from discontinued operations, net of tax - 1 1 - -------------------------------------------------------------------------- NET INCOME 19 28 46 193 Preferred stock dividends 34 - 101 - -------------------------------------------------------------------------- Net income (loss) applicable to common stock $(15) $28 $(55) $193 ========================================================================== Basic earnings per common share: Income (loss) from continuing operations $(0.10) $0.18 $(0.37) $1.28 Net income (loss) (0.10) 0.19 (0.36) 1.28 Diluted earnings per common share: Income (loss) from continuing operations (0.10) 0.18 (0.37) 1.28 Net income (loss) (0.10) 0.19 (0.36) 1.28 Cash dividends declared on common stock 7 99 22 298 Cash dividends declared per common share 0.05 0.66 0.15 1.98 ========================================================================== CONSOLIDATED QUARTERLY STATEMENTS OF INCOME (unaudited) Comerica Incorporated and Subsidiaries -------------------------------------------------------------------------- Third Second First Fourth Third (in millions, except per Quarter Quarter Quarter Quarter Quarter share data) 2009 2009 2009 2008 2008 -------------------------------------------------------------------------- INTEREST INCOME Interest and fees on loans $444 $447 $452 $612 $634 Interest on investment securities 64 103 109 101 99 Interest on short-term investments 3 2 2 3 2 -------------------------------------------------------------------------- Total interest income 511 552 563 716 735 INTEREST EXPENSE Interest on deposits 89 106 125 158 141 Interest on short-term borrowings - - 2 9 30 Interest on medium- and long-term debt 37 44 52 118 98 -------------------------------------------------------------------------- Total interest expense 126 150 179 285 269 -------------------------------------------------------------------------- Net interest income 385 402 384 431 466 Provision for loan losses 311 312 203 192 165 -------------------------------------------------------------------------- Net interest income after provision for loan losses 74 90 181 239 301 NONINTEREST INCOME Service charges on deposit accounts 60 55 58 55 57 Fiduciary income 39 41 42 47 49 Commercial lending fees 21 19 18 16 17 Letter of credit fees 18 16 16 17 19 Card fees 13 12 12 13 15 Brokerage fees 7 8 9 12 10 Foreign exchange income 10 11 9 7 11 Bank-owned life insurance 8 10 8 9 11 Net securities gains 107 113 13 4 27 Other noninterest income 32 13 38 (6) 24 -------------------------------------------------------------------------- Total noninterest income 315 298 223 174 240 NONINTEREST EXPENSES Salaries 171 171 171 187 192 Employee benefits 51 53 55 53 46 -------------------------------------------------------------------------- Total salaries and employee benefits 222 224 226 240 238 Net occupancy expense 40 38 41 42 40 Equipment expense 15 15 16 16 15 Outside processing fee expense 24 25 25 27 26 Software expense 21 20 20 19 18 FDIC insurance expense 15 45 15 7 5 Customer services 1 1 - 2 2 Litigation and operational losses 3 3 2 3 105 Provision for credit losses on lending-related commitments 2 (4) (1) (2) 9 Other noninterest expenses 56 62 53 57 56 -------------------------------------------------------------------------- Total noninterest expenses 399 429 397 411 514 -------------------------------------------------------------------------- Income (loss) from continuing operations before income taxes (10) (41) 7 2 27 Provision (benefit) for income taxes (29) (59) (1) (17) - -------------------------------------------------------------------------- Income from continuing operations 19 18 8 19 27 Income from discontinued operations, net of tax - - 1 1 1 -------------------------------------------------------------------------- NET INCOME 19 18 9 20 28 Preferred stock dividends 34 34 33 17 - -------------------------------------------------------------------------- Net income (loss) applicable to common stock $(15) $(16) $(24) $3 $28 ========================================================================== Basic earnings per common share: Income (loss) from continuing operations $(0.10) $(0.11) $(0.16) $0.01 $0.18 Net income (loss) (0.10) (0.10) (0.16) 0.02 0.19 Diluted earnings per common share: Income (loss) from continuing operations (0.10) (0.11) (0.16) 0.01 0.18 Net income (loss) (0.10) (0.10) (0.16) 0.02 0.19 Cash dividends declared on common stock 7 8 7 50 99 Cash dividends declared per common share 0.05 0.05 0.05 0.33 0.66 ========================================================================== N/M - Not meaningful -------------------------------------------------------------------------- Third Quarter 2009 Compared To: ---------------------------------------- (in millions, except per Second Quarter 2009 Third Quarter 2008 share data) Amount Percent Amount Percent -------------------------------------------------------------------------- INTEREST INCOME Interest and fees on loans $(3) (1)% $(190) (30)% Interest on investment securities (39) (37) (35) (35) Interest on short-term investments 1 31 1 23 -------------------------------------------------------------------------- Total interest income (41) (8) (224) (31) INTEREST EXPENSE Interest on deposits (17) (16) (52) (37) Interest on short-term borrowings - (72) (30) (100) Interest on medium- and long-term debt (7) (17) (61) (62) -------------------------------------------------------------------------- Total interest expense (24) (17) (143) (53) -------------------------------------------------------------------------- Net interest income (17) (4) (81) (18) Provision for loan losses (1) - 146 88 -------------------------------------------------------------------------- Net interest income after provision for loan losses (16) (17) (227) (75) NONINTEREST INCOME Service charges on deposit accounts 5 6 3 3 Fiduciary income (2) (5) (10) (21) Commercial lending fees 2 12 4 22 Letter of credit fees 2 9 (1) (4) Card fees 1 4 (2) (11) Brokerage fees (1) (12) (3) (27) Foreign exchange income (1) (1) (1) (1) Bank-owned life insurance (2) (10) (3) (25) Net securities gains (6) (5) 80 N/M Other noninterest income 19 N/M 8 31 -------------------------------------------------------------------------- Total noninterest income 17 5 75 31 NONINTEREST EXPENSES Salaries - - (21) (11) Employee benefits (2) (5) 5 8 -------------------------------------------------------------------------- Total salaries and employee benefits (2) (1) (16) (7) Net occupancy expense 2 6 - 1 Equipment expense - (1) - 1 Outside processing fee expense (1) (4) (2) (6) Software expense 1 2 3 12 FDIC insurance expense (30) (66) 10 N/M Customer services - (32) (1) (59) Litigation and operational losses - 24 (102) (97) Provision for credit losses on lending-related commitments 6 N/M (7) (73) Other noninterest expenses (6) (10) - 2 -------------------------------------------------------------------------- Total noninterest expenses (30) (7) (115) (22) -------------------------------------------------------------------------- Income (loss) from continuing operations before income taxes 31 74 (37) N/M Provision (benefit) for income taxes 30 51 (29) N/M -------------------------------------------------------------------------- Income from continuing operations 1 2 (8) (33) Income from discontinued operations, net of tax - N/M (1) N/M -------------------------------------------------------------------------- NET INCOME 1 1 (9) (37) Preferred stock dividends - - 34 N/M -------------------------------------------------------------------------- Net income (loss) applicable to common stock $1 1% $(43) N/M% ========================================================================== Basic earnings per common share: Income (loss) from continuing operations $0.01 9% $(0.28) N/M% Net income (loss) - - (0.29) N/M Diluted earnings per common share: Income (loss) from continuing operations 0.01 9 (0.28) N/M Net income (loss) - - (0.29) N/M Cash dividends declared on common stock (1) (2) (92) (93) Cash dividends declared per common share - - (0.61) (92) ========================================================================== N/M - Not meaningful ANALYSIS OF THE ALLOWANCE FOR LOAN LOSSES (unaudited) Comerica Incorporated and Subsidiaries -------------------------------------------------------------------------- 2009 2008 ------------------------- ---------------- (in millions) 3rd Qtr 2nd Qtr 1st Qtr 4th Qtr 3rd Qtr -------------------------------------------------------------------------- Balance at beginning of period $880 $816 $770 $712 $663 Loan charge-offs: Commercial 113 88 61 66 48 Real estate construction: Commercial Real Estate business line 63 81 57 35 40 Other business lines 1 - - - - -------------------------------------------------------------------------- Total real estate construction 64 81 57 35 40 Commercial mortgage: Commercial Real Estate business line 24 23 16 21 17 Other business lines 15 23 18 8 11 -------------------------------------------------------------------------- Total commercial mortgage 39 46 34 29 28 Residential mortgage 11 2 2 5 1 Consumer 7 12 6 7 5 Lease financing 6 24 - 1 - International 5 4 1 1 - -------------------------------------------------------------------------- Total loan charge-offs 245 257 161 144 122 Recoveries on loans previously charged-off: Commercial 3 5 3 6 3 Real estate construction 1 - - 1 1 Commercial mortgage - 2 - 2 - Residential mortgage - - - - - Consumer 1 - 1 1 1 Lease financing - 1 - - 1 International 1 1 - 1 - -------------------------------------------------------------------------- Total recoveries 6 9 4 11 6 -------------------------------------------------------------------------- Net loan charge-offs 239 248 157 133 116 Provision for loan losses 311 312 203 192 165 Foreign currency translation adjustment 1 - - (1) - -------------------------------------------------------------------------- Balance at end of period $953 $880 $816 $770 $712 ========================================================================== Allowance for loan losses as a percentage of total loans 2.19% 1.89% 1.68% 1.52% 1.38% Net loan charge-offs as a percentage of average total loans 2.14 2.08 1.26 1.04 0.90 Net credit-related charge-offs as a percentage of average total loans 2.14 2.08 1.26 1.04 0.90 ========================================================================== ANALYSIS OF THE ALLOWANCE FOR CREDIT LOSSES ON LENDING-RELATED COMMITMENTS (unaudited) Comerica Incorporated and Subsidiaries -------------------------------------------------------------------------- 2009 2008 ------------------------ ---------------- (in millions) 3rd Qtr 2nd Qtr 1st Qtr 4th Qtr 3rd Qtr -------------------------------------------------------------------------- Balance at beginning of period $33 $37 $38 $40 $31 Less: Charge-offs on lending-related commitments(a) - - - - - Add: Provision for credit losses on lending-related commitments 2 (4) (1) (2) 9 -------------------------------------------------------------------------- Balance at end of period $35 $33 $37 $38 $40 ========================================================================== Unfunded lending-related commitments sold $1 $- $- $- $- ========================================================================== (a) Charge-offs result from the sale of unfunded lending-related commitments. NONPERFORMING ASSETS (unaudited) Comerica Incorporated and Subsidiaries ------------------------------------------------------ ---------------- 2009 2008 --------------------------- ---------------- (in millions) 3rd Qtr 2nd Qtr 1st Qtr 4th Qtr 3rd Qtr -------------------------------------------------------------------------- SUMMARY OF NONPERFORMING ASSETS AND PAST DUE LOANS Nonaccrual loans: Commercial $290 $327 $258 $205 $206 Real estate construction: Commercial Real Estate business line 542 472 426 429 386 Other business lines 4 4 5 5 5 -------------------------------------------------------------------------- Total real estate construction 546 476 431 434 391 Commercial mortgage: Commercial Real Estate business line 137 134 131 132 137 Other business lines 161 175 138 130 114 -------------------------------------------------------------------------- Total commercial mortgage 298 309 269 262 251 Residential mortgage 27 7 8 7 8 Consumer 8 7 8 6 4 Lease financing 18 - 2 1 - International 7 4 6 2 3 -------------------------------------------------------------------------- Total nonaccrual loans 1,194 1,130 982 917 863 Reduced-rate loans 2 - - - - -------------------------------------------------------------------------- Total nonperforming loans 1,196 1,130 982 917 863 Foreclosed property 109 100 91 66 18 -------------------------------------------------------------------------- Total nonperforming assets $1,305 $1,230 $1,073 $983 $881 ========================================================================== Nonperforming loans as a percentage of total loans 2.74% 2.43% 2.02% 1.82% 1.67% Nonperforming assets as a percentage of total loans and foreclosed property 2.99 2.64 2.20 1.94 1.71 Allowance for loan losses as a percentage of total nonperforming loans 80 78 83 84 82 Loans past due 90 days or more and still accruing $161 $210 $207 $125 $97 -------------------------------------------------------------------------- ANALYSIS OF NONACCRUAL LOANS Nonaccrual loans at beginning of period $1,130 $982 $917 $863 $731 Loans transferred to nonaccrual (a) 361 419 241 258 280 Nonaccrual business loan gross charge-offs(b) (226) (242) (153) (132) (116) Loans transferred to accrual status (a) (4) - (4) (11) - Nonaccrual business loans sold (c) (41) (10) (3) (14) (18) Payments/Other (d) (26) (19) (16) (47) (14) -------------------------------------------------------------------------- Nonaccrual loans at end of period $1,194 $1,130 $982 $917 $863 ========================================================================== (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 $226 $242 $153 $132 $116 Performing watch list loans 1 1 - - - Consumer and residential mortgage loans 18 14 8 12 6 ------------------------------------------- Total gross loan charge-offs $245 $257 $161 $144 $122 =========================================== (c) Analysis of loans sold: Nonaccrual business loans $41 $10 $3 $14 $18 Performing watch list loans 24 6 - - 3 ------------------------------------------- Total loans sold $65 $16 $3 $14 $21 =========================================== (d) Includes net changes related to nonaccrual loans with balances less than $2 million, payments on non-accrual 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 (FTE) (unaudited) Comerica Incorporated and Subsidiaries -------------------------------------------------------------------------- Nine Months Ended -------------------------- September 30, 2009 -------------------------- Average Average (dollar amounts in millions) Balance Interest Rate -------------------------------------------------------------------------- Commercial loans (a) (b) $25,399 $678 3.57% Real estate construction loans 4,287 94 2.92 Commercial mortgage loans 10,422 327 4.20 Residential mortgage loans 1,787 76 5.69 Consumer loans 2,565 71 3.71 Lease financing (c) 1,248 29 3.08 International loans 1,603 46 3.80 Business loan swap income (expense) - 25 - -------------------------- Total loans (b) 47,311 1,346 3.80 Auction-rate securities available-for- sale 1,040 12 1.50 Other investment securities available-for-sale 8,617 267 4.24 -------------------------- Total investment securities available-for-sale 9,657 279 3.93 Federal funds sold and securities purchased under agreements to resell 24 - 0.32 Interest-bearing deposits with banks 2,426 5 0.25 Other short-term investments 162 2 1.79 -------------------------- Total earning assets 59,580 1,632 3.67 Cash and due from banks 901 Allowance for loan losses (913) Accrued income and other assets 4,728 ------- Total assets $64,296 ======= Money market and NOW deposits (a) $12,579 49 0.52 Savings deposits 1,326 1 0.12 Customer certificates of deposit 8,571 159 2.48 -------------------------- Total interest-bearing core deposits 22,476 209 1.25 Other time deposits 4,983 109 2.93 Foreign office time deposits 688 2 0.31 -------------------------- Total interest-bearing deposits 28,147 320 1.52 Short-term borrowings 1,262 2 0.25 Medium- and long-term debt 14,073 133 1.26 -------------------------- Total interest-bearing sources 43,482 455 1.40 --------------- Noninterest-bearing deposits (a) 12,385 Accrued expenses and other liabilities 1,305 Total shareholders' equity 7,124 ------- Total liabilities and shareholders' equity $64,296 ======= Net interest income/rate spread (FTE) $1,177 2.27 ====== FTE adjustment $6 ====== Impact of net noninterest-bearing sources of funds 0.38 -------------------------------------------------------------------------- Net interest margin (as a percentage of average earning assets)(FTE)(b)(c)(d) 2.65% ========================================================================== N/M - Not meaningful (a) FSD balances included above: Loans (primarily low-rate) $212 $3 1.87% Interest-bearing deposits 484 2 0.60 Noninterest-bearing deposits 1,313 (b) Impact of FSD loans (primarily low-rate) on the following: Commercial loans (0.01)% Total loans (0.01) Net interest margin (FTE) (assuming loans were funded by noninterest-bearing deposits) - (c) Year-to-date 2008 net interest income declined $38 million and the net interest margin declined eight basis points due to tax-related non-cash lease income charges. Excluding these charges, the net interest margin would have been 3.16% year-to-date 2008. (d) Excess liquidity, represented by average balances deposited with the Federal Reserve Bank, reduced the net interest margin by 11 basis points year-to-date 2009 and had no impact on the net interest margin year-to-date 2008. Excluding excess liquidity, the net interest margin would have been 2.76% year-to-date 2009. Nine Months Ended -------------------------- September 30, 2008 -------------------------- Average Average (dollar amounts in millions) Balance Interest Rate -------------------------------------------------------------------------- Commercial loans (a) (b) $28,992 $1,135 5.23% Real estate construction loans 4,776 184 5.16 Commercial mortgage loans 10,343 442 5.71 Residential mortgage loans 1,898 85 5.99 Consumer loans 2,532 100 5.29 Lease financing (c) 1,354 (4) N/M International loans 2,013 79 5.24 Business loan swap income (expense) - 19 - -------------------------- Total loans (b) 51,908 2,040 5.25 Auction-rate securities available-for- sale - - - Other investment securities available-for-sale 7,889 288 4.88 -------------------------- Total investment securities available-for-sale 7,889 288 4.88 Federal funds sold and securities purchased under agreements to resell 100 2 2.40 Interest-bearing deposits with banks 19 - 2.03 Other short-term investments 267 8 4.07 -------------------------- Total earning assets 60,183 2,338 5.19 Cash and due from banks 1,228 Allowance for loan losses (661) Accrued income and other assets 4,167 ------- Total assets $64,917 ======= Money market and NOW deposits (a) $14,774 170 1.54 Savings deposits 1,371 5 0.50 Customer certificates of deposit 8,003 200 3.35 -------------------------- Total interest-bearing core deposits 24,148 375 2.08 Other time deposits 6,719 176 3.49 Foreign office time deposits 1,064 25 3.09 -------------------------- Total interest-bearing deposits 31,931 576 2.41 Short-term borrowings 4,084 78 2.54 Medium- and long-term debt 11,597 297 3.42 -------------------------- Total interest-bearing sources 47,612 951 2.67 --------------- Noninterest-bearing deposits (a) 10,638 Accrued expenses and other liabilities 1,514 Total shareholders' equity 5,153 ------- Total liabilities and shareholders' equity $64,917 ======= Net interest income/rate spread (FTE) $1,387 2.52 ====== FTE adjustment $3 ====== Impact of net noninterest-bearing sources of funds 0.56 -------------------------------------------------------------------------- Net interest margin (as a percentage of average earning assets)(FTE)(b)(c)(d) 3.08% ========================================================================== N/M - Not meaningful (a) FSD balances included above: Loans (primarily low-rate) $557 $6 1.36% Interest-bearing deposits 998 16 2.11 Noninterest-bearing deposits 1,752 (b) Impact of FSD loans (primarily low-rate) on the following: Commercial loans (0.07)% Total loans (0.04) Net interest margin (FTE) (assuming loans were funded by noninterest-bearing deposits) (0.02) (c) Year-to-date 2008 net interest income declined $38 million and the net interest margin declined eight basis points due to tax-related non-cash lease income charges. Excluding these charges, the net interest margin would have been 3.16% year-to-date 2008. (d) Excess liquidity, represented by average balances deposited with the Federal Reserve Bank, reduced the net interest margin by 11 basis points year-to-date 2009 and had no impact on the net interest margin year-to-date 2008. Excluding excess liquidity, the net interest margin would have been 2.76% year-to-date 2009. ANALYSIS OF NET INTEREST INCOME (FTE) (unaudited) Comerica Incorporated and Subsidiaries -------------------------------------------------------------------------- Three Months Ended ------------------------- September 30, 2009 ------------------------- Average Average (dollar amounts in millions) Balance Interest Rate -------------------------------------------------------------------------- Commercial loans (a) (b) $23,401 $223 3.79% Real estate construction loans 4,033 29 2.83 Commercial mortgage loans 10,359 110 4.21 Residential mortgage loans 1,720 24 5.66 Consumer loans 2,550 24 3.68 Lease financing (c) 1,218 12 3.96 International loans 1,501 14 3.65 Business loan swap income - 9 - ------------------------- Total loans (b) 44,782 445 3.94 Auction-rate securities available-for-sale 962 3 1.29 Other investment securities available-for- sale 8,108 62 3.10 ------------------------- Total investment securities available-for- sale 9,070 65 2.91 Federal funds sold and securities purchased under agreements to resell 2 - 0.29 Interest-bearing deposits with banks 3,538 2 0.25 Other short-term investments 121 1 1.80 ------------------------- Total earning assets 57,513 513 3.55 Cash and due from banks 873 Allowance for loan losses (992) Accrued income and other assets 4,554 ------- Total assets $61,948 ======= Money market and NOW deposits (a) $13,090 15 0.46 Savings deposits 1,347 - 0.09 Customer certificates of deposit 8,145 46 2.23 ------------------------- Total interest-bearing core deposits 22,582 61 1.07 Other time deposits 3,573 28 3.05 Foreign office time deposits 660 - 0.24 ------------------------- Total interest-bearing deposits 26,815 89 1.32 Short-term borrowings 434 - 0.13 Medium- and long-term debt 13,311 37 1.10 ------------------------- Total interest-bearing sources 40,560 126 1.23 ------------ Noninterest-bearing deposits (a) 13,225 Accrued expenses and other liabilities 1,098 Total shareholders' equity 7,065 ------- Total liabilities and shareholders' equity $61,948 ======= Net interest income/rate spread (FTE) $387 2.32 ==== FTE adjustment $2 ==== Impact of net noninterest-bearing sources of funds 0.36 -------------------------------------------------------------------------- Net interest margin (as a percentage of average earning assets)(FTE)(b)(c)(d) 2.68% ========================================================================== N/M - Not meaningful (a) FSD balances included above: Loans (primarily low-rate) $209 $1 1.94% Interest-bearing deposits 384 - 0.47 Noninterest-bearing deposits 1,258 (b) Impact of FSD loans (primarily low-rate) on the following: Commercial loans (0.02)% Total loans (0.01) Net interest margin (FTE) (assuming loans were funded by noninterest-bearing deposits) - (c) Third quarter 2008 net interest income declined $8 million and the net interest margin declined six basis points due to a tax-related non-cash lease income charge. Excluding this charge, the net interest margin would have been 3.17% in the third quarter 2008. (d) Excess liquidity, represented by average balances deposited with the Federal Reserve Bank, reduced the net interest margin by 16 basis points and 8 basis points in the third and second quarters of 2009, respectively. Excluding excess liquidity, the net interest margin would have been 2.84% and 2.81% in each respective period. Excess liquidity had no impact on the net interest margin in the third quarter 2008. Three Months Ended ------------------------- June 30, 2009 ------------------------- Average Average (dollar amounts in millions) Balance Interest Rate -------------------------------------------------------------------------- Commercial loans (a) (b) $25,657 $225 3.55% Real estate construction loans 4,325 32 2.95 Commercial mortgage loans 10,476 108 4.17 Residential mortgage loans 1,795 26 5.74 Consumer loans 2,572 24 3.65 Lease financing (c) 1,227 8 2.48 International loans 1,596 16 3.90 Business loan swap income - 9 - ------------------------- Total loans (b) 47,648 448 3.77 Auction-rate securities available-for-sale 1,052 4 1.48 Other investment securities available-for- sale 8,734 100 4.70 ------------------------- Total investment securities available-for- sale 9,786 104 4.35 Federal funds sold and securities purchased under agreements to resell 13 - 0.33 Interest-bearing deposits with banks 1,876 1 0.28 Other short-term investments 199 1 1.88 ------------------------- Total earning assets 59,522 554 3.75 Cash and due from banks 881 Allowance for loan losses (913) Accrued income and other assets 4,766 ------- Total assets $64,256 ======= Money market and NOW deposits (a) $12,304 15 0.49 Savings deposits 1,354 - 0.11 Customer certificates of deposit 8,721 55 2.53 ------------------------- Total interest-bearing core deposits 22,379 70 1.26 Other time deposits 5,124 36 2.75 Foreign office time deposits 734 - 0.26 ------------------------- Total interest-bearing deposits 28,237 106 1.50 Short-term borrowings 1,010 - 0.20 Medium- and long-term debt 14,002 44 1.27 ------------------------- Total interest-bearing sources 43,249 150 1.40 ------------ Noninterest-bearing deposits (a) 12,546 Accrued expenses and other liabilities 1,308 Total shareholders' equity 7,153 ------- Total liabilities and shareholders' equity $64,256 ======= Net interest income/rate spread (FTE) $404 2.35 ==== FTE adjustment $2 ==== Impact of net noninterest-bearing sources of funds 0.38 -------------------------------------------------------------------------- Net interest margin (as a percentage of average earning assets)(FTE)(b)(c)(d) 2.73% ========================================================================== N/M - Not meaningful (a) FSD balances included above: Loans (primarily low-rate) $216 $1 1.71% Interest-bearing deposits 452 1 0.70 Noninterest-bearing deposits 1,414 (b) Impact of FSD loans (primarily low-rate) on the following: Commercial loans (0.01)% Total loans (0.01) Net interest margin (FTE) (assuming loans were funded by noninterest-bearing deposits) - (c) Third quarter 2008 net interest income declined $8 million and the net interest margin declined six basis points due to a tax-related non-cash lease income charge. Excluding this charge, the net interest margin would have been 3.17% in the third quarter 2008. (d) Excess liquidity, represented by average balances deposited with the Federal Reserve Bank, reduced the net interest margin by 16 basis points and 8 basis points in the third and second quarters of 2009, respectively. Excluding excess liquidity, the net interest margin would have been 2.84% and 2.81% in each respective period. Excess liquidity had no impact on the net interest margin in the third quarter 2008. Three Months Ended ------------------------- September 30, 2008 ------------------------- Average Average (dollar amounts in millions) Balance Interest Rate -------------------------------------------------------------------------- Commercial loans (a) (b) $28,521 $347 4.85% Real estate construction loans 4,675 55 4.65 Commercial mortgage loans 10,511 142 5.38 Residential mortgage loans 1,870 28 5.92 Consumer loans 2,599 31 4.83 Lease financing (c) 1,365 4 1.07 International loans 1,967 24 4.85 Business loan swap income - 4 - ------------------------- Total loans (b) 51,508 635 4.91 Auction-rate securities available-for-sale - - - Other investment securities available-for- sale 8,146 99 4.85 ------------------------- Total investment securities available-for- sale 8,146 99 4.85 Federal funds sold and securities purchased under agreements to resell 70 - 1.87 Interest-bearing deposits with banks 20 - 1.72 Other short-term investments 202 2 3.67 ------------------------- Total earning assets 59,946 736 4.89 Cash and due from banks 1,228 Allowance for loan losses (723) Accrued income and other assets 4,412 ------- Total assets $64,863 ======= Money market and NOW deposits (a) $14,204 45 1.26 Savings deposits 1,350 1 0.42 Customer certificates of deposit 7,690 53 2.73 ------------------------- Total interest-bearing core deposits 23,244 99 1.70 Other time deposits 5,209 37 2.81 Foreign office time deposits 814 5 2.51 ------------------------- Total interest-bearing deposits 29,267 141 1.92 Short-term borrowings 5,413 30 2.20 Medium- and long-term debt 12,880 98 3.02 ------------------------- Total interest-bearing sources 47,560 269 2.25 ------------ Noninterest-bearing deposits (a) 10,646 Accrued expenses and other liabilities 1,582 Total shareholders' equity 5,075 ------- Total liabilities and shareholders' equity $64,863 ======= Net interest income/rate spread (FTE) $467 2.64 ==== FTE adjustment $1 ==== Impact of net noninterest-bearing sources of funds 0.47 -------------------------------------------------------------------------- Net interest margin (as a percentage of average earning assets)(FTE)(b)(c)(d) 3.11% ========================================================================== N/M - Not meaningful (a) FSD balances included above: Loans (primarily low-rate) $401 $2 1.74% Interest-bearing deposits 907 4 1.65 Noninterest-bearing deposits 1,542 (b) Impact of FSD loans (primarily low-rate) on the following: Commercial loans (0.05)% Total loans (0.02) Net interest margin (FTE) (assuming loans were funded by noninterest-bearing deposits) (0.01) (c) Third quarter 2008 net interest income declined $8 million and the net interest margin declined six basis points due to a tax-related non-cash lease income charge. Excluding this charge, the net interest margin would have been 3.17% in the third quarter 2008. (d) Excess liquidity, represented by average balances deposited with the Federal Reserve Bank, reduced the net interest margin by 16 basis points and 8 basis points in the third and second quarters of 2009, respectively. Excluding excess liquidity, the net interest margin would have been 2.84% and 2.81% in each respective period. Excess liquidity had no impact on the net interest margin in the third quarter 2008. CONSOLIDATED STATISTICAL DATA Comerica Incorporated and Subsidiaries -------------------------------------------------------------------------- (in millions, except per September 30, June 30, March 31, share data) 2009 2009 2009 -------------------------------------------------------------------------- Commercial loans: Floor plan $857 $1,492 $1,763 Other 21,689 23,430 24,668 -------------------------------------------------------------------------- Total commercial loans 22,546 24,922 26,431 Real estate construction loans: Commercial Real Estate business line 3,328 3,500 3,711 Other business lines 542 652 668 -------------------------------------------------------------------------- Total real estate construction loans 3,870 4,152 4,379 Commercial mortgage loans: Commercial Real Estate business line 1,678 1,728 1,659 Other business lines 8,702 8,672 8,855 -------------------------------------------------------------------------- Total commercial mortgage loans 10,380 10,400 10,514 Residential mortgage loans 1,679 1,759 1,836 Consumer loans: Home equity 1,804 1,801 1,791 Other consumer 740 761 786 -------------------------------------------------------------------------- Total consumer loans 2,544 2,562 2,577 Lease financing 1,197 1,234 1,232 International loans 1,355 1,523 1,655 -------------------------------------------------------------------------- Total loans $43,571 $46,552 $48,624 ========================================================================== Goodwill $150 $150 $150 Loan servicing rights 8 9 10 Tier 1 common capital ratio(a)(b) 8.02% 7.66% 7.32% Tier 1 risk-based capital ratio(b) 12.18 11.58 11.06 Total risk-based capital ratio(b) 16.75 15.97 15.36 Leverage ratio (b) 12.45 12.11 11.65 Tangible common equity ratio(a) 7.96 7.55 7.27 Book value per common share $31.90 $32.70 $33.32 Market value per share for the quarter: High 31.83 26.47 21.20 Low 19.94 16.03 11.72 Close 29.67 21.15 18.31 Quarterly ratios: Return on average common shareholders' equity (1.27)% (1.25)% (1.90)% Return on average assets 0.12 0.11 0.06 Efficiency ratio 67.14 72.75 66.61 Number of banking centers 444 441 440 Number of employees - full time equivalent 9,384 9,497 9,696 (a) See Reconciliation of Non-GAAP Financial Measures (b) September 30, 2009 ratios are estimated December 31, September 30, (in millions, except per share data) 2008 2008 -------------------------------------------------------------------------- Commercial loans: Floor plan $2,341 $2,151 Other 25,658 26,453 -------------------------------------------------------------------------- Total commercial loans 27,999 28,604 Real estate construction loans: Commercial Real Estate business line 3,831 3,937 Other business lines 646 628 -------------------------------------------------------------------------- Total real estate construction loans 4,477 4,565 Commercial mortgage loans: Commercial Real Estate business line 1,619 1,668 Other business lines 8,870 8,920 -------------------------------------------------------------------------- Total commercial mortgage loans 10,489 10,588 Residential mortgage loans 1,852 1,863 Consumer loans: Home equity 1,781 1,693 Other consumer 811 951 -------------------------------------------------------------------------- Total consumer loans 2,592 2,644 Lease financing 1,343 1,360 International loans 1,753 1,931 -------------------------------------------------------------------------- Total loans $50,505 $51,555 ========================================================================== Goodwill $150 $150 Loan servicing rights 11 12 Tier 1 common capital ratio(a)(b) 7.08% 6.67% Tier 1 risk-based capital ratio(b) 10.66 7.32 Total risk-based capital ratio(b) 14.72 11.19 Leverage ratio(b) 11.77 8.57 Tangible common equity ratio(a) 7.21 7.60 Book value per common share $33.31 $33.89 Market value per share for the quarter: High 37.01 43.99 Low 15.05 19.31 Close 19.85 32.79 Quarterly ratios: Return on average common shareholders' equity 0.19% 2.25% Return on average assets 0.12 0.18 Efficiency ratio 68.19 75.53 Number of banking centers 439 424 Number of employees - full time equivalent 10,186 10,347 (a) See Reconciliation of Non-GAAP Financial Measures (b) September 30, 2009 ratios are estimated PARENT COMPANY ONLY BALANCE SHEETS (unaudited) Comerica Incorporated -------------------------------------------------------------------------- (in millions, except September 30, December 31, September 30, share data) 2009 2008 2008 -------------------------------------------------------------------------- ASSETS Cash and due from subsidiary bank $7 $11 $16 Short-term investments with subsidiary bank 2,169 2,329 158 Other short-term investments 84 80 99 Investment in subsidiaries, principally banks 5,711 5,690 5,849 Premises and equipment 4 5 5 Other assets 197 210 163 -------------------------------------------------------------------------- Total assets $8,172 $8,325 $6,290 ========================================================================== LIABILITIES AND SHAREHOLDERS' EQUITY Medium- and long-term debt $992 $1,002 $969 Other liabilities 145 171 221 -------------------------------------------------------------------------- Total liabilities 1,137 1,173 1,190 Fixed rate cumulative perpetual preferred stock, series F, no par value, $1,000 liquidation preference per share: Authorized - 2,250,000 shares Issued - 2,250,000 shares at 9/30/09 and 12/31/08 2,145 2,129 - Common stock - $5 par value: Authorized - 325,000,000 shares Issued - 178,735,252 shares at 09/30/09, 12/31/08 and 09/30/08 894 894 894 Capital surplus 738 722 586 Accumulated other comprehensive loss (361) (309) (129) Retained earnings 5,205 5,345 5,379 Less cost of common stock in treasury - 27,620,576 shares at 9/30/09, 28,244,967 shares at 12/31/08 and 28,249,360 shares at 9/30/08 (1,586) (1,629) (1,630) -------------------------------------------------------------------------- Total shareholders' equity 7,035 7,152 5,100 -------------------------------------------------------------------------- Total liabilities and shareholders' equity $8,172 $8,325 $6,290 ========================================================================== CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (unaudited) Comerica Incorporated and Subsidiaries -------------------------------------------------------------------------- Common Stock (in millions, Nonredeemable -------------------- except per Preferred Shares Capital share data) Stock Outstanding Amount Surplus -------------------------------------------------------------------------- BALANCE AT JANUARY 1, 2008 $- 150.0 $894 $564 Net income - - - - Other comprehensive income, net of tax - - - - Total comprehensive income Cash dividends declared on common stock ($1.98 per share) - - - - Purchase of common stock - - - - Net issuance of common stock under employee stock plans - 0.5 - (19) Share-based compensation - - - 41 -------------------------------------------------------------------------- BALANCE AT SEPTEMBER 30, 2008 $- 150.5 $894 $586 ========================================================================== BALANCE AT JANUARY 1, 2009 $2,129 150.5 $894 $722 Net income - - - - Other comprehensive loss, net of tax - - - - Total comprehensive loss Cash dividends declared on preferred stock - - - - Cash dividends declared on common stock ($0.15 per share) - - - - Purchase of common stock - (0.1) - - Accretion of discount on preferred stock 16 - - - Net issuance of common stock under employee stock plans - 0.7 - (13) Share-based compensation - - - 25 Other - - - 4 -------------------------------------------------------------------------- BALANCE AT SEPTEMBER 30, 2009 $2,145 151.1 $894 $738 ========================================================================== Accumulated (in millions, Other Total except per Comprehensive Retained Treasury Shareholders' share data) Loss Earnings Stock Equity -------------------------------------------------------------------------- BALANCE AT JANUARY 1, 2008 $(177) $5,497 $(1,661) $5,117 Net income - 193 - 193 Other comprehensive income, net of tax 48 - - 48 ------ Total comprehensive income 241 Cash dividends declared on common stock ($1.98 per share) - (298) - (298) Purchase of common stock - - (1) (1) Net issuance of common stock under employee stock plans - (13) 32 - Share-based compensation - - - 41 -------------------------------------------------------------------------- BALANCE AT SEPTEMBER 30, 2008 $(129) $5,379 $(1,630) $5,100 ========================================================================== BALANCE AT JANUARY 1, 2009 $(309) $5,345 $(1,629) $7,152 Net income - 46 - 46 Other comprehensive loss, net of tax (52) - - (52) ------ Total comprehensive loss (6) Cash dividends declared on preferred stock - (114) - (114) Cash dividends declared on common stock ($0.15 per share) - (22) - (22) Purchase of common stock - - (1) (1) Accretion of discount on preferred stock - (16) - - Net issuance of common stock under employee stock plans - (34) 43 (4) Share-based compensation - - - 25 Other - - 1 5 -------------------------------------------------------------------------- BALANCE AT SEPTEMBER 30, 2009 $(361) $5,205 $(1,586) $7,035 ========================================================================== BUSINESS SEGMENT FINANCIAL RESULTS (unaudited) Comerica Incorporated and Subsidiaries ========================================================================== (dollar amounts in millions) Wealth & Three Months Ended September Business Retail Institutional 30, 2009 Bank Bank Management -------------------------------------------------------------------------- Earnings summary: Net interest income (expense) (FTE) $346 $127 $42 Provision for loan losses 252 42 20 Noninterest income 72 50 66 Noninterest expenses 160 154 73 Provision (benefit) for income taxes (FTE) (16) (8) 5 Income from discontinued operations, net of tax - - - -------------------------------- Net income (loss) $22 $(11) $10 ================================ Net credit-related charge-offs $195 $34 $10 Selected average balances: Assets $34,822 $6,445 $4,856 Loans 34,116 5,904 4,760 Deposits 15,735 17,563 2,735 Liabilities 16,002 17,532 2,725 Attributed equity 3,464 629 373 Statistical data: Return on average assets (a) 0.24% (0.24)% 0.80% Return on average attributed equity 2.45 (6.92) 10.40 Net interest margin (b) 4.01 2.87 3.48 Efficiency ratio 38.35 86.86 70.84 ========================================================================== ========================================================================== (dollar amounts in millions) Three Months Ended September 30, 2009 Finance Other Total -------------------------------------------------------------------------- Earnings summary: Net interest income (expense) (FTE) $(136) $8 $387 Provision for loan losses - (3) 311 Noninterest income 121 6 315 Noninterest expenses 3 9 399 Provision (benefit) for income taxes (FTE) (11) 3 (27) Income from discontinued operations, net of tax - - - -------------------------------- Net income (loss) $(7) $5 $19 ================================ Net credit-related charge-offs $- $- $239 Selected average balances: Assets $11,426 $4,399 $61,948 Loans 2 - 44,782 Deposits 3,969 38 40,040 Liabilities 18,361 263 54,883 Attributed equity 959 1,640 7,065 Statistical data: Return on average assets (a) N/M N/M 0.12% Return on average attributed equity N/M N/M (1.27) Net interest margin (b) N/M N/M 2.68 Efficiency ratio N/M N/M 67.14 ========================================================================== (a) Return on average assets is calculated based on the greater of average assets or average liabilities and attributed equity. (b) Net interest margin is calculated based on the greater of average earning assets or average deposits and purchased funds. FTE - Fully Taxable Equivalent N/M - Not Meaningful ========================================================================== ========================================================================== Wealth & Three Months Ended June 30, Business Retail Institutional 2009 Bank Bank Management -------------------------------------------------------------------------- Earnings summary: Net interest income (expense) (FTE) $328 $128 $40 Provision for loan losses 252 42 13 Noninterest income 50 46 73 Noninterest expenses 157 167 77 Provision (benefit) for income taxes (FTE) (36) (17) 8 Income from discontinued operations, net of tax - - - -------------------------------- Net income (loss) $5 $(18) $15 ================================ Net credit-related charge-offs $211 $29 $8 Selected average balances: Assets $37,521 $6,693 $4,965 Loans 36,760 6,115 4,776 Deposits 14,827 17,666 2,599 Liabilities 15,110 17,639 2,593 Attributed equity 3,353 648 373 Statistical data: Return on average assets (a) 0.05% (0.40)% 1.21% Return on average attributed equity 0.58 (11.41) 16.11 Net interest margin (b) 3.58 2.90 3.29 Efficiency ratio 41.79 95.00 69.77 ========================================================================== ========================================================================== Three Months Ended June 30, 2009 Finance Other Total -------------------------------------------------------------------------- Earnings summary: Net interest income (expense) (FTE) $(101) $9 $404 Provision for loan losses - 5 312 Noninterest income 124 5 298 Noninterest expenses 7 21 429 Provision (benefit) for income taxes (FTE) 8 (20) (57) Income from discontinued operations, net of tax - - - -------------------------------- Net income (loss) $8 $8 $18 ================================ Net credit-related charge-offs $- $- $248 Selected average balances: Assets $12,320 $2,757 $64,256 Loans 3 (6) 47,648 Deposits 5,669 22 40,783 Liabilities 21,484 277 57,103 Attributed equity 1,140 1,639 7,153 Statistical data: Return on average assets (a) N/M N/M 0.11% Return on average attributed equity N/M N/M (1.25) Net interest margin (b) N/M N/M 2.73 Efficiency ratio N/M N/M 72.75 ========================================================================== (a) Return on average assets is calculated based on the greater of average assets or average liabilities and attributed equity. (b) Net interest margin is calculated based on the greater of average earning assets or average deposits and purchased funds. FTE - Fully Taxable Equivalent N/M - Not Meaningful ========================================================================== ========================================================================== Wealth & Three Months Ended September Business Retail Institutional 30, 2008 Bank Bank Management -------------------------------------------------------------------------- Earnings summary: Net interest income (expense) (FTE) $323 $142 $37 Provision for loan losses 135 33 7 Noninterest income 75 80 71 Noninterest expenses 175 161 180 Provision (benefit) for income taxes (FTE) 23 7 (28) Income from discontinued operations, net of tax - - - -------------------------------- Net income (loss) $65 $21 $(51) ================================ Net credit-related charge-offs $95 $17 $4 Selected average balances: Assets $41,357 $7,046 $4,759 Loans 40,506 6,362 4,624 Deposits 14,933 16,596 2,351 Liabilities 15,633 16,583 2,359 Attributed equity 3,318 656 340 Statistical data: Return on average assets (a) 0.64% 0.48% (4.29)% Return on average attributed equity 7.98 12.53 (60.04) Net interest margin (b) 3.18 3.41 3.18 Efficiency ratio 43.92 82.39 N/M ========================================================================== ========================================================================== Three Months Ended September 30, 2008 Finance Other Total -------------------------------------------------------------------------- Earnings summary: Net interest income (expense) (FTE) $(26) $(9) $467 Provision for loan losses - (10) 165 Noninterest income 20 (6) 240 Noninterest expenses 3 (5) 514 Provision (benefit) for income taxes (FTE) (7) 6 1 Income from discontinued operations, net of tax - 1 1 -------------------------------- Net income (loss) $(2) $(5) $28 ================================ Net credit-related charge-offs $- $- $116 Selected average balances: Assets $10,096 $1,605 $64,863 Loans (3) 19 51,508 Deposits 5,588 445 39,913 Liabilities 24,359 854 59,788 Attributed equity 878 (117) 5,075 Statistical data: Return on average assets (a) N/M N/M 0.18% Return on average attributed equity N/M N/M 2.25 Net interest margin (b) N/M N/M 3.11 Efficiency ratio N/M N/M 75.53 ========================================================================== (a) Return on average assets is calculated based on the greater of average assets or average liabilities and attributed equity. (b) Net interest margin is calculated based on the greater of average earning assets or average deposits and purchased funds. FTE - Fully Taxable Equivalent N/M - Not Meaningful ========================================================================== MARKET SEGMENT FINANCIAL RESULTS (unaudited) Comerica Incorporated and Subsidiaries ========================================================================== (dollar amounts in millions) Three Months Ended September 30, 2009 Midwest Western Texas Florida -------------------------------------------------------------------------- Earnings summary: Net interest income (expense) (FTE) $209 $159 $77 $11 Provision for loan losses 144 101 29 24 Noninterest income 107 33 22 3 Noninterest expenses 188 106 58 10 Provision (benefit) for income taxes (FTE) (10) (8) 5 (8) Income from discontinued operations, net of tax - - - - --------------------------------------------- Net income (loss) $(6) $(7) $7 $(12) ============================================= Net credit-related charge-offs $102 $95 $22 $9 Selected average balances: Assets $16,987 $14,114 $7,444 $1,673 Loans 16,387 13,923 7,221 1,674 Deposits 17,395 11,146 4,609 327 Liabilities 17,667 11,060 4,618 317 Attributed equity 1,577 1,393 722 180 Statistical data: Return on average assets (a) (0.14)% (0.20)% 0.39% (2.81)% Return on average attributed equity (1.74) (1.99) 4.01 (26.20) Net interest margin (b) 4.72 4.53 4.22 2.70 Efficiency ratio 59.58 54.96 59.18 70.34 ========================================================================== ========================================================================== (dollar amounts in millions) Finance Three Months Ended Other & Other September 30, 2009 Markets International Businesses Total -------------------------------------------------------------------------- Earnings summary: Net interest income (expense) (FTE) $39 $20 $(128) $387 Provision for loan losses 10 6 (3) 311 Noninterest income 14 9 127 315 Noninterest expenses 17 8 12 399 Provision (benefit) for income taxes (FTE) (3) 5 (8) (27) Income from discontinued operations, net of tax - - - - --------------------------------------------- Net income (loss) $29 $10 $(2) $19 ============================================= Net credit-related charge-offs $10 $1 $- $239 Selected average balances: Assets $3,997 $1,908 $15,825 $61,948 Loans 3,683 1,892 2 44,782 Deposits 1,696 860 4,007 40,040 Liabilities 1,748 849 18,624 54,883 Attributed equity 418 176 2,599 7,065 Statistical data: Return on average assets (a) 2.92% 1.94% N/M 0.12% Return on average attributed equity 27.91 21.01 N/M (1.27) Net interest margin (b) 4.24 4.08 N/M 2.68 Efficiency ratio 34.57 28.39 N/M 67.14 ========================================================================== (a) Return on average assets is calculated based on the greater of average assets or average liabilities and attributed equity. (b) Net interest margin is calculated based on the greater of average earning assets or average deposits and purchased funds. FTE - Fully Taxable Equivalent N/M - Not Meaningful ========================================================================== ========================================================================== Three Months Ended June 30, 2009 Midwest Western Texas Florida -------------------------------------------------------------------------- Earnings summary: Net interest income (expense) (FTE) $200 $154 $73 $11 Provision for loan losses 119 90 28 20 Noninterest income 92 32 21 3 Noninterest expenses 186 113 60 9 Provision (benefit) for income taxes (FTE) (13) (10) 1 (7) Income from discontinued operations, net of tax - - - - --------------------------------------------- Net income (loss) $- $(7) $5 $(8) ============================================= Net credit-related charge-offs $99 $70 $11 $23 Selected average balances: Assets $18,122 $14,901 $7,798 $1,820 Loans 17,427 14,684 7,547 1,820 Deposits 17,166 10,717 4,496 331 Liabilities 17,461 10,625 4,505 321 Attributed equity 1,568 1,358 694 182 Statistical data: Return on average assets (a) 0.01% (0.19)% 0.23% (1.78)% Return on average attributed equity 0.10 (2.13) 2.63 (17.76) Net interest margin (b) 4.56 4.20 3.88 2.44 Efficiency ratio 63.68 60.67 63.98 66.24 ========================================================================== ========================================================================== Three Months Finance Ended June 30, Other & Other 2009 Markets International Businesses Total -------------------------------------------------------------------------- Earnings summary: Net interest income (expense) (FTE) $41 $17 $(92) $404 Provision for loan losses 43 7 5 312 Noninterest income 13 8 129 298 Noninterest expenses 25 8 28 429 Provision (benefit) for income taxes (FTE) (20) 4 (12) (57) Income from discontinued operations, net of tax - - - - --------------------------------------------- Net income (loss) $6 $6 $16 $18 ============================================= Net credit-related charge-offs $42 $3 $- $248 Selected average balances: Assets $4,488 $2,050 $15,077 $64,256 Loans 4,157 2,016 (3) 47,648 Deposits 1,582 800 5,691 40,783 Liabilities 1,643 787 21,761 57,103 Attributed equity 415 157 2,779 7,153 Statistical data: Return on average assets (a) 0.53% 1.13% N/M 0.11% Return on average attributed equity 5.77 14.71 N/M (1.25) Net interest margin (b) 4.00 3.27 N/M 2.73 Efficiency ratio 48.44 30.99 N/M 72.75 ========================================================================== (a) Return on average assets is calculated based on the greater of average assets or average liabilities and attributed equity. (b) Net interest margin is calculated based on the greater of average earning assets or average deposits and purchased funds. FTE - Fully Taxable Equivalent N/M - Not Meaningful ========================================================================== ========================================================================== Three Months Ended September 30, 2008 Midwest Western Texas Florida -------------------------------------------------------------------------- Earnings summary: Net interest income (expense) (FTE) $197 $169 $73 $12 Provision for loan losses 52 82 18 7 Noninterest income 142 38 27 4 Noninterest expenses 205 112 61 10 Provision (benefit) for income taxes (FTE) 31 4 8 - Income from discontinued operations, net of tax - - - - --------------------------------------------- Net income (loss) $51 $9 $13 $(1) ============================================= Net credit-related charge-offs $44 $51 $9 $3 Selected average balances: Assets $19,752 $16,633 $7,945 $1,900 Loans 19,070 16,387 7,691 1,900 Deposits 15,857 11,730 3,956 262 Liabilities 16,475 11,698 3,973 258 Attributed equity 1,631 1,367 623 131 Statistical data: Return on average assets (a) 1.05% 0.21% 0.65% (0.24)% Return on average attributed equity 12.69 2.60 8.22 (3.46) Net interest margin (b) 4.09 4.10 3.76 2.54 Efficiency ratio 64.42 54.75 63.16 67.06 ========================================================================== ========================================================================== Finance Three Months Ended Other & Other September 30, 2008 Markets International Businesses Total -------------------------------------------------------------------------- Earnings summary: Net interest income (expense) (FTE) $36 $15 $(35) $467 Provision for loan losses 15 1 (10) 165 Noninterest income 7 8 14 240 Noninterest expenses 117 11 (2) 514 Provision (benefit) for income taxes (FTE) (45) 4 (1) 1 Income from discontinued operations, net of tax - - 1 1 --------------------------------------------- Net income (loss) $(44) $7 $(7) $28 ============================================= Net credit-related charge-offs $9 $- $- $116 Selected average balances: Assets $4,561 $2,371 $11,701 $64,863 Loans 4,189 2,255 16 51,508 Deposits 1,299 776 6,033 39,913 Liabilities 1,396 775 25,213 59,788 Attributed equity 406 156 761 5,075 Statistical data: Return on average assets (a) (3.86)% 1.25% N/M 0.18% Return on average attributed equity (43.37) 18.99 N/M 2.25 Net interest margin (b) 3.48 2.65 N/M 3.11 Efficiency ratio N/M 43.62 N/M 75.53 ========================================================================== (a) Return on average assets is calculated based on the greater of average assets or average liabilities and attributed equity. (b) Net interest margin is calculated based on the greater of average earning assets or average deposits and purchased funds. FTE - Fully Taxable Equivalent N/M - Not Meaningful ========================================================================== RECONCILIATION OF NON-GAAP FINANCIAL MEASURES (unaudited) Comerica Incorporated and Subsidiaries ========================================================================== September June March December September (dollar amounts in 30, 30, 31, 31, 30, millions) 2009 2009 2009 2008 2008 -------------------------------------------------------------------------- Tier 1 capital(a)(b) $7,735 $7,774 $7,760 $7,805 $5,576 Less: Fixed rate cumulative perpetual preferred stock 2,145 2,140 2,134 2,129 - Trust preferred securities 495 495 495 495 495 -------------------------------------------------------------------------- Tier 1 common capital(b) $5,095 $5,139 $5,131 $5,181 $5,081 ========================================================================== Risk-weighted assets(a)(b) $63,518 $67,124 $70,135 $73,207 $76,156 Tier 1 common capital ratio(b) 8.02% 7.66% 7.32% 7.08% 6.67% ========================================================================== Total shareholders' equity $7,035 $7,093 $7,183 $7,152 $5,100 Less: Fixed rate cumulative perpetual preferred stock 2,145 2,140 2,134 2,129 - Goodwill 150 150 150 150 150 Other intangible assets 8 10 11 12 12 -------------------------------------------------------------------------- Tangible common equity $4,732 $4,793 $4,888 $4,861 $4,938 ========================================================================== Total assets $59,590 $63,630 $67,370 $67,548 $65,153 Less: Goodwill 150 150 150 150 150 Other intangible assets 8 10 11 12 12 -------------------------------------------------------------------------- Tangible assets $59,432 $63,470 $67,209 $67,386 $64,991 ========================================================================== Tangible common equity ratio 7.96% 7.55% 7.27% 7.21% 7.60% ========================================================================== (a) Tier 1 capital and risk-weighted assets as defined by regulation. (b) September 30, 2009 Tier 1 capital and risk-weighted assets are estimated. ========================================================================== http://www.newscom.com/cgi-bin/prnh/20010807/CMALOGO http://photoarchive.ap.org/ DATASOURCE: Comerica Incorporated CONTACT: Media, Wayne J. Mielke, +1-214-462-4463, or Investors, Darlene P. Persons, +1-214-462-6831, or Walter Galloway, +1-214-462-6834, all of Comerica Incorporated Web Site: http://www.comerica.com/

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