THIRD QUARTER 2021 NET INCOME OF $262 MILLION, $1.90 PER SHARE
Solid Loan Performance Overshadowed by PPP Forgiveness
General Middle Market Loans Up 3 Percent Excluding PPP
Strong Deposit Growth and Credit Quality Continued
Repurchased $220 Million, or 3.0 Million Common Shares, Under Program
“We generated earnings of $1.90 per share and an ROE of 13.53 percent in the third quarter," said Curt C. Farmer, Comerica Chairman, President and Chief Executive Officer. "Solid loan growth in a number of business lines was overshadowed by headwinds from PPP loan forgiveness and reduced auto dealer loans due to supply constraints. We continued to drive strong deposit growth, robust fee income, and excellent credit quality. Revenue increased quarter over quarter and year over year, despite the low-rate environment. Our efficiency ratio was stable as we remained focused on managing expenses while supporting our revenue-generating activities. Also, we repurchased over 3 million shares, reducing our share count by over 2 percent. We expect economic metrics to remain relatively strong over the next year, which bodes well for growth.”
(dollar amounts in millions, except per share data)
3rd Qtr '21
2nd Qtr '21
3rd Qtr '20
FINANCIAL RESULTS
Net interest income
$
475
$
465
$
458
Provision for credit losses
(42)
(135)
5
Noninterest income
280
284
252
Noninterest expenses (a)
465
463
438
Pre-tax income (a)
332
421
267
Provision for income taxes (a)
70
93
50
Net income (a)
$
262
$
328
$
217
Diluted earnings per common share (a)
$
1.90
$
2.32
$
1.48
Average loans
48,135
49,828
52,013
Average deposits
79,115
75,520
68,763
Return on average assets (a)
1.14
%
1.50
%
1.02
%
Return on average common shareholders' equity (a)
13.53
17.10
11.14
Net interest margin
2.23
2.29
2.33
Common equity Tier 1 capital ratio (b)
10.21
10.35
10.25
Tier 1 capital ratio (b)
10.79
10.93
10.84
Common equity ratio
7.84
8.53
8.94
Common shareholders' equity per share of common stock
$
56.55
$
56.28
$
53.78
Tangible common equity per share of common stock (c)
51.61
51.43
49.20
(a)Recast 2020 results. See Reconciliations of Previously Reported Balances.
(b)Estimated for September 30, 2021. Ratios reflect deferral of CECL model impact as calculated per regulatory guidance.
(c)See Reconciliations of Non-GAAP Financial Measures and Regulatory Ratios.
Third Quarter 2021 Compared to Second Quarter 2021 Overview
Balance sheet items discussed in terms of average balances unless otherwise noted.
Loans decreased $1.7 billion to $48.1 billion, including a $1.8 billion decline to $1.7 billion in Paycheck Protection Program (PPP) loans driven by forgiveness activity.
•Decreases of $603 million in National Dealer Services, $424 million in Business Banking, $406 million in general Middle Market and $235 million in Retail Banking, partially offset by increases of $255 million in Equity Funds Services and $162 million in Environmental Services.
•Excluding the impact of PPP loans, average loans increased $106 million, primarily from increases of $357 million in general Middle Market, $255 million in Equity Funds Services and $192 million in Environmental Services, partially offset by a decrease of $498 million in National Dealer Services.
•Average loan yields increased 14 basis points to 3.39 percent, primarily driven by the net impact of PPP forgiveness activity.
Securities increased $566 million, or 4 percent, to $16.0 billion.
•Increase of $1.3 billion in mortgage-backed securities due to continued deployment of excess liquidity, partially offset by a $712 million decrease in Treasury securities related to maturities.
•Average yield on securities decreased 6 basis points to 1.76 percent due to lower yields on reinvestments.
Deposits increased $3.6 billion, or 5 percent, to $79.1 billion.
•Broad-based growth as interest-bearing and noninterest-bearing deposits increased $2.0 billion and $1.6 billion, respectively, due to customers' solid profitability and capital markets activity as well as the liquidity injected into the economy through fiscal and monetary actions.
•The average cost of interest-bearing deposits was stable at 6 basis points.
Net interest income increased $10 million to $475 million.
•Increase driven by an additional day in the third quarter, higher loan fees and the deployment of excess liquidity, partially offset by lower rates.
•Net interest margin decreased 6 basis points to 2.23 percent, primarily due to an increase in lower-yielding deposits held with the Federal Reserve Bank, partially offset by the net impact of PPP forgiveness.
Provision for credit losses increased $93 million to a benefit of $42 million.
•The allowance for credit losses decreased $44 million to $639 million at September 30, 2021, reflecting a reduction in criticized loans and sustained favorable economic forecasts. As a percentage of total loans, the allowance for credit losses was 1.33 percent, a decrease of 3 basis points.
•Net loan charge-offs were $2 million, or 0.01 percent of average loans.
Noninterest income decreased $4 million to $280 million.
•Increases of $7 million in warrant-related income, $4 million in commercial lending fees and $3 million each in bank-owned life insurance and service charges on deposit accounts were more than offset by decreases of $12 million in card fees, $6 million in deferred compensation asset returns (offset in other noninterest expenses) and smaller decreases in other categories.
Noninterest expenses increased $2 million to $465 million.
•Increases of $5 million in salaries and benefits expense, $4 million in consulting fees and smaller increases in other categories were partially offset by decreases of $6 million in outside processing fee expense and $5 million in litigation-related expenses.
◦The increase in salaries and benefits expense included an increase of $12 million in performance-based compensation partially offset by a decrease of $6 million in deferred compensation expense (offset in other noninterest income).
•Efficiency ratio remained stable at 62 percent.
Provision for income taxes decreased $23 million to $70 million.
•Included discrete tax benefits of $5 million related to annual federal filings and certain state matters.
Capital position remained solid with a common equity Tier 1 capital ratio of 10.21 percent and a Tier 1 capital ratio of 10.79 percent.
•Returned a total of $309 million to common shareholders through share repurchases and dividends.
◦Repurchased $220 million of common stock (3.0 million shares) under the share repurchase program.
◦Declared dividend of $6 million on preferred stock, payable October 1, 2021.
2
Third Quarter 2021 Compared to Third Quarter 2020 Overview
Balance sheet items discussed in terms of average balances unless otherwise noted.
Loans decreased $3.9 billion, or 7 percent, including a $2.1 billion decrease in PPP loans.
•Decreases in National Dealer Services, Mortgage Banker Finance, Energy, Business Banking, general Middle Market and Technology and Life Sciences more than offset an increase in Equity Fund Services.
◦Excluding a $768 million decline in PPP loans, general Middle Market loans increased by $212 million.
•Average yield on loans increased 26 basis points, primarily driven by the impact of PPP loan forgiveness.
Securities increased $2.1 billion, or 15 percent.
•Reflects investment of excess liquidity into mortgage-backed securities, partially offset by decreases in Treasury securities related to maturities.
•Noninterest-bearing and interest-bearing deposits increased $6.1 billion and $4.3 billion, respectively, due to customers' solid profitability and capital markets activity as well as the liquidity injected into the economy through fiscal and monetary actions.
•Interest-bearing deposit costs decreased 11 basis points, reflecting prudent management of relationship pricing in a low interest rate environment.
Net interest income increased $17 million.
•Higher loan fees driven by PPP loan forgiveness as well as a decrease in deposit costs.
Provision for credit losses decreased $47 million.
•The allowance for credit losses decreased $399 million, primarily reflecting the economy re-opening as well as improvements in the economic forecast and in the Energy portfolio since the onset of the pandemic last year. As a percentage of total loans, the allowance for credit losses decreased 65 basis points.
Noninterest income increased $28 million.
Effective January 1, 2021, the Corporation reported customer derivative income, previously a component of other noninterest income, and foreign exchange income as a combined item captioned by derivative income. See Reconciliations of Previously Reported Balances.
•Increases in commercial lending fees, derivative income, fiduciary income and service charges on deposit accounts, partially offset by a decrease in deferred compensation asset returns (offset in noninterest expenses).
Noninterest expenses increased $27 million.
Effective January 1, 2021, the Corporation adopted a change in accounting method for certain components of expense related to the defined benefit pension plan. See Reconciliations of Previously Reported Balances.
•Increases in salaries and benefits expense, outside processing fee expense and consultant fees, partially offset by a decrease in pension expense (non-salary).
3
Net Interest Income
Balance sheet items presented and discussed in terms of average balances.
(dollar amounts in millions)
3rd Qtr '21
2nd Qtr '21
3rd Qtr '20
Net interest income
$
475
$
465
$
458
Net interest margin
2.23
%
2.29
%
2.33
%
Selected balances:
Total earning assets
$
84,788
$
81,533
$
78,555
Total loans
48,135
49,828
52,013
Total investment securities
15,969
15,403
13,850
Federal Reserve Bank deposits
20,176
15,701
12,260
Total deposits
79,115
75,520
68,763
Total noninterest-bearing deposits
41,984
40,340
35,934
Medium- and long-term debt
2,864
2,858
5,940
Net interest income increased $10 million, and net interest margin decreased 6 basis points compared to second quarter 2021.
•Interest income on loans increased $7 million and improved net interest margin by 6 basis points, primarily due to the net impact of PPP activity (+$2 million, +5 basis points), one additional day in the quarter (+$4 million), higher fees (+$3 million, +2 basis points) and higher non-PPP loan balances (+$2 million), which were partially offset by lower short-term rates (-$4 million, -1 basis point).
◦PPP income for the third quarter totaled $34 million, or 16 basis points, including $26 million in net accelerated fees resulting from forgiveness and $8 million in interest and regular amortization of deferred net fees combined.
•Interest income on investment securities was stable, but reduced net interest margin by 2 basis points, as the net impact of yields (-$4 million, -2 basis points) was offset by portfolio growth (+$4 million).
•Interest income on short-term investments increased $3 million and reduced net interest margin by 10 basis points, reflecting an increase in lower-yielding deposits with the Federal Reserve (+$2 million, -11 basis points) and a 5 basis point increase in the yield (+$1 million, +1 basis point).
4
Credit Quality
"Credit quality was excellent in the third quarter with net charge-offs of only $2 million, and criticized loans have declined to well below our historic average level," said Farmer. “Our reserve ratio decreased slightly to 1.33 percent, which reflects the positive outlook for the economy and our portfolio. Overall, our customers quickly adapted and navigated a very challenging environment. However, we remain vigilant given potential stress on our customers from lingering pandemic effects including supply chain disruptions, labor constraints and inflation. We expect our portfolio will continue to perform well, and the reserve ratio should move toward pre-pandemic levels over time."
(dollar amounts in millions)
3rd Qtr '21
2nd Qtr '21
3rd Qtr '20
Credit-related charge-offs
$
26
$
8
$
53
Recoveries
24
19
20
Net credit-related (recoveries) charge-offs
2
(11)
33
Net credit-related charge-offs/Average total loans
0.01
%
(0.09)
%
0.26
%
Provision for credit losses
$
(42)
$
(135)
$
5
Nonperforming loans
295
319
325
Nonperforming assets (NPAs)
296
320
335
NPAs/Total loans and foreclosed property
0.62
%
0.64
%
0.64
%
Loans past due 90 days or more and still accruing
$
12
$
27
$
29
Allowance for loan losses
609
652
978
Allowance for credit losses on lending-related commitments (a)
30
31
60
Total allowance for credit losses
639
683
1,038
Allowance for credit losses/Period-end total loans
1.33
1.36
1.98
Allowance for credit losses/Period-end total loans excluding PPP loans
1.35
1.44
2.14
Allowance for credit losses/Nonperforming loans
2.2x
2.1x
3.2x
(a) Included in accrued expenses and other liabilities on the Consolidated Balance Sheets.
•The allowance for credit losses decreased $44 million to $639 million, or 1.33 percent of total loans, primarily reflecting a reduction in criticized loans, growing economic confidence and sustained favorable economic forecasts, although some level of uncertainty remains.
•Criticized loans decreased $358 million to $1.8 billion, or 4 percent of total loans. Criticized loans are generally consistent with the Special Mention, Substandard and Doubtful categories defined by regulatory authorities.
◦Criticized loans decreased in nearly all business lines, led by decreases of $262 million in general Middle Market and $75 million in Energy.
•Nonperforming assets decreased $24 million to $296 million, or 0.62 percent of total loans and foreclosed property compared to 0.64 percent in second quarter 2021.
◦Nonperforming assets in Energy decreased by $24 million.
◦Loans transferred to nonaccrual totaled $55 million, a decrease of $7 million.
•Net charge-offs totaled $2 million, compared to net recoveries of $11 million in second quarter 2021.
◦Energy net recoveries totaled $16 million, compared to $12 million.
5
Outlook
This outlook is based on management expectations for continued economic growth.
Fourth Quarter 2021 Compared to Third Quarter 2021
Average loans
•Non-PPP portfolio to have growth in general Middle Market and several other business lines, partly offset by a decline in Mortgage Banker Finance. This growth is expected to be more than offset by forgiveness of the bulk of PPP loans.
Average deposits
•Deposits to remain strong.
Net interest income
•Non-PPP portfolio to have lower loan fees from elevated levels mostly offset by loan growth; this is expected to be more than offset by lower PPP-related income.
Credit quality
•Strong credit quality continues.
Noninterest income
•Growth in several customer-related fee categories, more than offset by lower commercial loan fees and warrant and BOLI income.
Noninterest expenses
•Increases in seasonal expenses and technology investments, offset by lower compensation expense from elevated level.
Tax rate
•Income tax expense for full-year 2021 to be between 22 and 23 percent of pre-tax income, excluding discrete items.
Capital
•CET1 target of approximately 10 percent.
6
Strategic Lines of Business and Markets
Comerica's operations are strategically aligned into three major business segments: the Commercial Bank, the Retail Bank and Wealth Management. The Finance Division is also reported as a segment. Comerica also provides market segment results for three primary geographic markets: Michigan, California and Texas. In addition to the three primary geographic markets, Other Markets is also reported as a market segment. Other Markets includes Florida, Arizona, the International Finance division and businesses that have a significant presence outside of the three primary geographic markets. For a summary of business segment and geographic market quarterly results, see the Business Segment Financial Results and Market Segment Financial Results tables included later in this report. From time to time, Comerica may make reclassifications among the segments to reflect management's current view of the segments, and methodologies may be modified as the management accounting system is enhanced and changes occur in the organizational structure and/or product lines. The financial results provided are based on the internal business unit and geographic market structures of Comerica and methodologies in effect at September 30, 2021. A discussion of business segment and geographic market year-to-date results will be included in Comerica's Third Quarter 2021 Form 10-Q.
Conference Call and Webcast
Comerica will host a conference call to review third quarter 2021 financial results at 7 a.m. CT Wednesday, October 20, 2021. Interested parties may access the conference call by calling (800) 309-2262 or (706) 679-5261 (Event ID No. 6988106). The call and supplemental financial information can also be accessed via Comerica's "Investor Relations" page at www.comerica.com. A replay of the Webcast can be accessed via Comerica's “Investor Relations” page at www.comerica.com.
Comerica Incorporated is a financial services company headquartered in Dallas, Texas, and strategically aligned by three major business segments: The Commercial Bank, The Retail Bank and Wealth Management. Comerica focuses on relationships and helping people and businesses be successful. In addition to Texas, Comerica Bank locations can be found in Arizona, California, Florida and Michigan, with select businesses operating in several other states, as well as in Canada and Mexico.
This press release contains both financial measures based on accounting principles generally accepted in the United States (GAAP) and non-GAAP based financial measures, which are used where management believes it to be helpful in understanding Comerica's results of operations or financial position. Where non-GAAP financial measures are used, the comparable GAAP financial measure, as well as a reconciliation to the comparable GAAP financial measure, can be found in this press release. These disclosures should not be viewed as a substitute for operating results determined in accordance with GAAP, nor are they necessarily comparable to non-GAAP performance measures that may be presented by other companies.
7
Forward-looking Statements
Any statements in this news release that are not historical facts are forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. Words such as “anticipates,” “believes,” “contemplates,” “feels,” “expects,” “estimates,” “seeks,” “strives,” “plans,” “intends,” “outlook,” “forecast,” “position,” “target,” “mission,” “assume,” “achievable,” “potential,” “strategy,” “goal,” “aspiration,” “opportunity,” “initiative,” “outcome,” “continue,” “remain,” “maintain,” “on track,” “trend,” “objective,” “looks forward,” “projects,” “models” and variations of such words and similar expressions, or future or conditional verbs such as “will,” “would,” “should,” “could,” “might,” “can,” “may” or similar expressions, as they relate to Comerica or its management, are intended to identify forward-looking statements. These forward-looking statements are predicated on the beliefs and assumptions of Comerica's management based on information known to Comerica's management as of the date of this news release and do not purport to speak as of any other date. Forward-looking statements may include descriptions of plans and objectives of Comerica's management for future or past operations, products or services, and forecasts of Comerica's revenue, earnings or other measures of economic performance, including statements of profitability, business segments and subsidiaries as well as estimates of credit trends and global stability. Such statements reflect the view of Comerica's management as of this date with respect to future events and are subject to risks and uncertainties. Should one or more of these risks materialize or should underlying beliefs or assumptions prove incorrect, Comerica's actual results could differ materially from those discussed. Factors that could cause or contribute to such differences include credit risks (unfavorable developments concerning credit quality; declines or other changes in the businesses or industries of Comerica's customers, in particular the energy industry; and changes in customer behavior); market risks (changes in monetary and fiscal policies; fluctuations in interest rates and their impact on deposit pricing; and transitions away from LIBOR towards new interest rate benchmarks); liquidity risks (Comerica's ability to maintain adequate sources of funding and liquidity; reductions in Comerica's credit rating; and the interdependence of financial service companies); technology risks (cybersecurity risks and heightened legislative and regulatory focus on cybersecurity and data privacy); operational risks (operational, systems or infrastructure failures; reliance on other companies to provide certain key components of business infrastructure; the impact of legal and regulatory proceedings or determinations; losses due to fraud; and controls and procedures failures); compliance risks (changes in regulation or oversight; the effects of stringent capital requirements; and the impacts of future legislative, administrative or judicial changes to tax regulations); strategic risks (damage to Comerica's reputation; Comerica's ability to utilize technology to efficiently and effectively develop, market and deliver new products and services; competitive product and pricing pressures among financial institutions within Comerica's markets; the implementation of Comerica's strategies and business initiatives; management's ability to maintain and expand customer relationships; management's ability to retain key officers and employees; and any future strategic acquisitions or divestitures); and other general risks (impacts from the COVID-19 global pandemic; changes in general economic, political or industry conditions; the effectiveness of methods of reducing risk exposures; the effects of catastrophic events; changes in accounting standards and the critical nature of Comerica's accounting policies; and the volatility of Comerica’s stock price). Comerica cautions that the foregoing list of factors is not all-inclusive. For discussion of factors that may cause actual results to differ from expectations, please refer to our filings with the Securities and Exchange Commission. In particular, please refer to “Item 1A. Risk Factors” beginning on page 13 of Comerica's Annual Report on Form 10-K for the year ended December 31, 2020. Forward-looking statements speak only as of the date they are made. Comerica does not undertake to update forward-looking statements to reflect facts, circumstances, assumptions or events that occur after the date the forward-looking statements are made. For any forward-looking statements made in this news release or in any documents, Comerica claims the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995.
Media Contacts:
Investor Contacts:
Wendy Bridges
Darlene P. Persons
(214) 462-4443
(214) 462-6831
Louis H. Mora
Amanda Perkins
(214) 462-6669
(214) 462-6731
8
CONSOLIDATED FINANCIAL HIGHLIGHTS (unaudited)
Comerica Incorporated and Subsidiaries
Three Months Ended
Nine Months Ended
September 30,
June 30,
September 30,
September 30,
(in millions, except per share data)
2021
2021
2020
2021
2020
PER COMMON SHARE AND COMMON STOCK DATA
Diluted earnings per common share (a)
$
1.90
$
2.32
$
1.48
$
6.67
$
1.90
Cash dividends declared
0.68
0.68
0.68
2.04
2.04
Average diluted shares (in thousands)
134,322
138,070
139,673
137,800
140,243
PERFORMANCE RATIOS
Return on average common shareholders' equity (a)
13.53
%
17.10
%
11.14
%
16.23
%
4.81
%
Return on average assets (a)
1.14
1.50
1.02
1.43
0.46
Efficiency ratio (a), (b)
61.57
61.66
61.74
61.92
59.08
CAPITAL
Common equity tier 1 capital (c), (d)
$
6,965
$
7,004
$
6,805
Tier 1 capital (c), (d)
7,359
7,398
7,199
Risk-weighted assets (c)
68,193
67,685
66,405
Common equity tier 1 capital ratio (c), (d)
10.21
%
10.35
%
10.25
%
Tier 1 capital ratio (c), (d)
10.79
10.93
10.84
Total capital ratio (c)
12.51
12.95
13.12
Leverage ratio (c)
8.08
8.45
8.60
Common shareholders' equity per share of common stock
$
56.55
$
56.28
$
53.78
Tangible common equity per share of common stock (d)
51.61
51.43
49.20
Common equity ratio
7.84
%
8.53
%
8.94
%
Tangible common equity ratio (d)
7.20
7.85
8.24
AVERAGE BALANCES
Commercial loans
$
28,244
$
30,042
$
32,226
$
29,741
$
32,289
Real estate construction loans
3,160
4,191
4,037
3,826
3,830
Commercial mortgage loans
11,165
10,093
9,978
10,408
9,806
Lease financing
580
578
601
583
592
International loans
1,075
1,034
1,052
1,024
1,064
Residential mortgage loans
1,816
1,817
1,961
1,814
1,904
Consumer loans
2,095
2,073
2,158
2,112
2,221
Total loans
48,135
49,828
52,013
49,508
51,706
Earning assets
84,788
81,533
78,555
81,637
74,030
Total assets
91,353
87,860
84,268
87,949
79,742
Noninterest-bearing deposits
41,984
40,340
35,934
39,912
31,809
Interest-bearing deposits
37,131
35,180
32,829
35,459
31,482
Total deposits
79,115
75,520
68,763
75,371
63,291
Common shareholders' equity
7,523
7,563
7,439
7,610
7,438
Total shareholders' equity
7,917
7,957
7,834
8,004
7,622
NET INTEREST INCOME
Net interest income
$
475
$
465
$
458
$
1,383
$
1,442
Net interest margin
2.23
%
2.29
%
2.33
%
2.27
%
2.61
%
CREDIT QUALITY
Nonperforming assets
$
296
$
320
$
335
Loans past due 90 days or more and still accruing
12
27
29
Net credit-related charge-offs
2
(11)
33
$
(6)
$
167
Allowance for loan losses
609
652
978
Allowance for credit losses on lending-related commitments
30
31
60
Total allowance for credit losses
639
683
1,038
Allowance for credit losses as a percentage of total loans
1.33
%
1.36
%
1.98
%
Net loan charge-offs (recoveries) as a percentage of average total loans
0.01
(0.09)
0.26
(0.02
%)
0.43
%
Nonperforming assets as a percentage of total loans and foreclosed property
0.62
0.64
0.64
Allowance for credit losses as a multiple of total nonperforming loans
2.2x
2.1x
3.2x
OTHER KEY INFORMATION
Number of banking centers
433
431
433
Number of employees - full time equivalent
7,459
7,532
7,738
(a) See Reconciliations of Previously Reported Balances.
(b) Noninterest expenses as a percentage of the sum of net interest income and noninterest income excluding a derivative contract tied to the conversion rate of Visa Class B shares.
(c) September 30, 2021 ratios are estimated. Ratios reflect deferral of CECL model impact as calculated per regulatory guidance.
(d) See Reconciliations of Non-GAAP Financial Measures and Regulatory Ratios.
9
CONSOLIDATED BALANCE SHEETS
Comerica Incorporated and Subsidiaries
September 30,
June 30,
December 31,
September 30,
(in millions, except share data)
2021
2021
2020
2020
(unaudited)
(unaudited)
(recast)
(unaudited)
ASSETS
Cash and due from banks
$
1,050
$
1,008
$
1,031
$
988
Interest-bearing deposits with banks
22,539
15,493
14,736
10,153
Other short-term investments
187
183
172
160
Investment securities available-for-sale
16,846
15,837
15,028
15,090
Commercial loans
28,355
30,207
32,753
32,604
Real estate construction loans
3,010
3,172
4,082
4,146
Commercial mortgage loans
11,215
11,334
9,912
10,002
Lease financing
569
589
594
601
International loans
1,131
1,036
926
923
Residential mortgage loans
1,813
1,807
1,830
1,927
Consumer loans
2,102
2,083
2,194
2,166
Total loans
48,195
50,228
52,291
52,369
Allowance for loan losses
(609)
(652)
(948)
(978)
Net loans
47,586
49,576
51,343
51,391
Premises and equipment
447
454
459
456
Accrued income and other assets
5,874
5,804
5,360
5,393
Total assets
$
94,529
$
88,355
$
88,129
$
83,631
LIABILITIES AND SHAREHOLDERS' EQUITY
Noninterest-bearing deposits
$
44,093
$
40,514
$
39,420
$
36,533
Money market and interest-bearing checking deposits
32,932
30,319
28,540
26,948
Savings deposits
3,125
3,095
2,710
2,588
Customer certificates of deposit
2,091
2,115
2,133
2,300
Foreign office time deposits
43
23
66
90
Total interest-bearing deposits
38,191
35,552
33,449
31,926
Total deposits
82,284
76,066
72,869
68,459
Short-term borrowings
—
—
—
10
Accrued expenses and other liabilities
1,605
1,504
1,482
1,534
Medium- and long-term debt
2,837
2,854
5,728
5,754
Total liabilities
86,726
80,424
80,079
75,757
Fixed-rate reset non-cumulative perpetual preferred stock, series A, no par value, $100,000 liquidation preference per share:
Authorized - 4,000 shares
Issued - 4,000 shares
394
394
394
394
Common stock - $5 par value:
Authorized - 325,000,000 shares
Issued - 228,164,824 shares
1,141
1,141
1,141
1,141
Capital surplus
2,170
2,163
2,185
2,179
Accumulated other comprehensive (loss) income (a)
(207)
(120)
64
18
Retained earnings (a)
10,366
10,202
9,727
9,609
Less cost of common stock in treasury - 97,158,441 shares at 9/30/21, 94,247,402 shares at 6/30/21, 88,997,430 shares at 12/31/20 and 89,095,470 shares at 9/30/20
(6,061)
(5,849)
(5,461)
(5,467)
Total shareholders' equity
7,803
7,931
8,050
7,874
Total liabilities and shareholders' equity
$
94,529
$
88,355
$
88,129
$
83,631
Recast 2020 results. See Reconciliations of Previously Reported Balances.
10
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Comerica Incorporated and Subsidiaries
Three Months Ended
Nine Months Ended
September 30,
September 30,
(in millions, except per share data)
2021
2020
2021
2020
(unaudited)
(unaudited)
(unaudited)
(unaudited)
INTEREST INCOME
Interest and fees on loans
$
411
$
408
$
1,201
$
1,359
Interest on investment securities
70
72
209
220
Interest on short-term investments
8
4
17
25
Total interest income
489
484
1,427
1,604
INTEREST EXPENSE
Interest on deposits
5
15
17
91
Interest on short-term borrowings
—
—
—
1
Interest on medium- and long-term debt
9
11
27
70
Total interest expense
14
26
44
162
Net interest income
475
458
1,383
1,442
Provision for credit losses
(42)
5
(359)
554
Net interest income after provision for credit losses
517
453
1,742
888
NONINTEREST INCOME
Card fees
72
71
227
198
Fiduciary income
58
51
171
157
Service charges on deposit accounts
50
47
145
138
Commercial lending fees
31
19
76
53
Derivative income (a)
20
9
72
48
Bank-owned life insurance
12
12
32
33
Letter of credit fees
10
9
30
27
Brokerage fees
3
5
11
17
Other noninterest income (a)
24
29
70
65
Total noninterest income
280
252
834
736
NONINTEREST EXPENSES
Salaries and benefits expense
282
257
841
748
Outside processing fee expense
65
58
200
177
Occupancy expense
40
40
117
114
Software expense
40
39
117
115
Equipment expense
13
12
38
36
Advertising expense
10
9
25
24
FDIC insurance expense
4
8
17
24
Other noninterest expenses (a)
11
15
20
51
Total noninterest expenses (a)
465
438
1,375
1,289
Income before income taxes (a)
332
267
1,201
335
Provision for income taxes (a)
70
50
261
59
NET INCOME (a)
262
217
940
276
Less:
Income allocated to participating securities
1
—
4
1
Preferred stock dividends
6
8
17
8
Net income attributable to common shares (a)
$
255
$
209
$
919
$
267
Earnings per common share:
Basic (a)
$
1.92
$
1.49
$
6.75
$
1.91
Diluted (a)
1.90
1.48
6.67
1.90
Comprehensive income
175
169
669
610
Cash dividends declared on common stock
89
94
276
284
Cash dividends declared per common share
0.68
0.68
2.04
2.04
(a)Recast 2020 results. See Reconciliations of Previously Reported Balances.
11
CONSOLIDATED QUARTERLY STATEMENTS OF COMPREHENSIVE INCOME (unaudited)
Comerica Incorporated and Subsidiaries
Third
Second
First
Fourth
Third
Third Quarter 2021 Compared to:
Quarter
Quarter
Quarter
Quarter
Quarter
Second Quarter 2021
Third Quarter 2020
(in millions, except per share data)
2021
2021
2021
2020
2020
Amount
Percent
Amount
Percent
INTEREST INCOME
Interest and fees on loans
$
411
$
404
$
386
$
414
$
408
$
7
2
%
$
3
1
%
Interest on investment securities
70
70
69
71
72
—
—
(2)
(3)
Interest on short-term investments
8
5
4
4
4
3
78
4
n/m
Total interest income
489
479
459
489
484
10
2
5
1
INTEREST EXPENSE
Interest on deposits
5
5
7
10
15
—
—
(10)
(62)
Interest on medium- and long-term debt
9
9
9
10
11
—
—
(2)
(28)
Total interest expense
14
14
16
20
26
—
—
(12)
(47)
Net interest income
475
465
443
469
458
10
2
17
4
Provision for credit losses
(42)
(135)
(182)
(17)
5
93
(69)
(47)
n/m
Net interest income after provision
for credit losses
517
600
625
486
453
(83)
(14)
64
14
NONINTEREST INCOME
Card fees
72
84
71
72
71
(12)
(15)
1
2
Fiduciary income
58
60
53
52
51
(2)
(2)
7
14
Service charges on deposit accounts
50
47
48
47
47
3
4
3
7
Commercial lending fees
31
27
18
24
19
4
17
12
62
Derivative income (a)
20
22
30
19
9
(2)
(7)
11
n/m
Bank-owned life insurance
12
9
11
11
12
3
33
—
—
Letter of credit fees
10
10
10
10
9
—
—
1
8
Brokerage fees
3
4
4
4
5
(1)
8
(2)
(25)
Other noninterest income (a)
24
21
25
26
29
3
8
(5)
(19)
Total noninterest income
280
284
270
265
252
(4)
(2)
28
11
NONINTEREST EXPENSES
Salaries and benefits expense
282
277
282
271
257
5
2
25
10
Outside processing fee expense
65
71
64
65
58
(6)
(8)
7
11
Occupancy expense
40
38
39
42
40
2
7
—
—
Software expense
40
38
39
39
39
2
1
1
(1)
Equipment expense
13
13
12
13
12
—
—
1
6
Advertising expense
10
9
6
11
9
1
6
1
(3)
FDIC insurance expense
4
7
6
9
8
(3)
(29)
(4)
(42)
Other noninterest expenses (a)
11
10
(1)
15
15
1
18
(4)
(24)
Total noninterest expenses (a)
465
463
447
465
438
2
1
27
6
Income before income taxes (a)
332
421
448
286
267
(89)
(21)
65
25
Provision for income taxes (a)
70
93
98
65
50
(23)
(25)
20
41
NET INCOME (a)
262
328
350
221
217
(66)
(20)
45
21
Less:
Income allocated to participating securities
1
2
1
1
—
(1)
(13)
1
30
Preferred stock dividends
6
5
6
5
8
1
—
(2)
(28)
Net income attributable to common shares (a)
$
255
$
321
$
343
$
215
$
209
$
(66)
(20)
%
$
46
23
%
Earnings per common share:
Basic (a)
$
1.92
$
2.35
$
2.46
$
1.54
$
1.49
$
(0.43)
(18)
%
$
0.43
29
%
Diluted (a)
1.90
2.32
2.43
1.53
1.48
(0.42)
(18)
0.42
28
Comprehensive income
175
313
181
267
169
(138)
(44)
6
4
Cash dividends declared on common stock
89
92
95
94
94
(3)
(2)
(5)
(5)
Cash dividends declared per common share
0.68
0.68
0.68
0.68
0.68
—
—
—
—
(a)Recast 2020 results. See Reconciliations of Previously Reported Balances.
n/m - not meaningful
12
ANALYSIS OF THE ALLOWANCE FOR CREDIT LOSSES (unaudited)
Comerica Incorporated and Subsidiaries
2021
2020
(in millions)
3rd Qtr
2nd Qtr
1st Qtr
4th Qtr
3rd Qtr
Balance at beginning of period:
Allowance for loan losses
$
652
$
777
$
948
$
978
$
1,007
Allowance for credit losses on lending-related commitments
31
30
44
60
59
Allowance for credit losses
683
807
992
1,038
1,066
Loan charge-offs:
Commercial
24
7
14
37
53
Commercial mortgage
—
—
1
—
—
International
2
—
—
—
—
Consumer
—
1
1
2
—
Total loan charge-offs
26
8
16
39
53
Recoveries on loans previously charged-off:
Commercial
22
18
11
9
17
Commercial mortgage
—
—
1
—
1
International
—
1
—
—
—
Residential mortgage
1
—
—
—
—
Consumer
1
—
1
1
2
Total recoveries
24
19
13
10
20
Net loan charge-offs (recoveries)
2
(11)
3
29
33
Provision for credit losses:
Provision for loan losses
(41)
(136)
(168)
(1)
4
Provision for credit losses on lending-related commitments
(1)
1
(14)
(16)
1
Provision for credit losses
(42)
(135)
(182)
(17)
5
Balance at end of period:
Allowance for loan losses
609
652
777
948
978
Allowance for credit losses on lending-related commitments
30
31
30
44
60
Allowance for credit losses
$
639
$
683
$
807
$
992
$
1,038
Allowance for loan losses as a percentage of total loans
1.26
%
1.30
%
1.54
%
1.81
%
1.87
%
Allowance for loan losses as a percentage of total loans excluding PPP loans
1.29
1.37
1.66
1.94
2.01
Allowance for credit losses as a percentage of total loans
1.33
1.36
1.59
1.90
1.98
Allowance for credit losses as a percentage of total loans excluding PPP loans
1.35
1.44
1.72
2.03
2.14
Net loan charge-offs (recoveries) as a percentage of average total loans
0.01
(0.09)
0.03
0.22
0.26
13
NONPERFORMING ASSETS (unaudited)
Comerica Incorporated and Subsidiaries
2021
2020
(in millions)
3rd Qtr
2nd Qtr
1st Qtr
4th Qtr
3rd Qtr
SUMMARY OF NONPERFORMING ASSETS AND PAST DUE LOANS
Nonaccrual loans:
Business loans:
Commercial
$
200
$
221
$
230
$
252
$
241
Real estate construction
6
4
1
1
—
Commercial mortgage
30
31
34
29
20
Lease financing
—
—
1
1
1
International
8
—
—
—
—
Total nonaccrual business loans
244
256
266
283
262
Retail loans:
Residential mortgage
35
41
33
47
40
Consumer:
Home equity
12
14
15
17
20
Total nonaccrual retail loans
47
55
48
64
60
Total nonaccrual loans
291
311
314
347
322
Reduced-rate loans
4
8
2
3
3
Total nonperforming loans
295
319
316
350
325
Foreclosed property
1
—
8
8
10
Other repossessed assets
—
1
1
1
—
Total nonperforming assets
$
296
$
320
$
325
$
359
$
335
Nonperforming loans as a percentage of total loans
0.61
%
0.64
%
0.63
%
0.67
%
0.62
%
Nonperforming assets as a percentage of total loans and foreclosed property
0.62
0.64
0.64
0.69
0.64
Allowance for credit losses as a multiple of total nonperforming loans
2.2x
2.1x
2.6x
2.8x
3.2x
Loans past due 90 days or more and still accruing
$
12
$
27
$
60
$
45
$
29
ANALYSIS OF NONACCRUAL LOANS
Nonaccrual loans at beginning of period
$
311
$
314
$
347
$
322
$
267
Loans transferred to nonaccrual (a)
55
62
61
88
161
Nonaccrual loan gross charge-offs
(26)
(8)
(16)
(39)
(53)
Loans transferred to accrual status (a)
(8)
—
(17)
(3)
—
Nonaccrual loans sold
(9)
—
(25)
—
(14)
Payments/other (b)
(32)
(57)
(36)
(21)
(39)
Nonaccrual loans at end of period
$
291
$
311
$
314
$
347
$
322
(a)Based on an analysis of nonaccrual loans with book balances greater than $2 million.
(b)Includes net changes related to nonaccrual loans with balances less than or equal to $2 million, payments on nonaccrual loans with book balances greater than $2 million and transfers of nonaccrual loans to foreclosed property.
14
ANALYSIS OF NET INTEREST INCOME (unaudited)
Comerica Incorporated and Subsidiaries
Nine Months Ended
September 30, 2021
September 30, 2020
Average
Average
Average
Average
(dollar amounts in millions)
Balance
Interest
Rate
Balance
Interest
Rate
Commercial loans (a)
$
29,741
$
769
3.46
%
$
32,289
$
840
3.48
%
Real estate construction loans
3,826
97
3.37
3,830
112
3.90
Commercial mortgage loans
10,408
224
2.87
9,806
248
3.38
Lease financing (b)
583
(7)
(1.55)
592
15
3.30
International loans
1,024
24
3.17
1,064
30
3.73
Residential mortgage loans
1,814
41
3.05
1,904
50
3.52
Consumer loans
2,112
53
3.36
2,221
64
3.90
Total loans
49,508
1,201
3.24
51,706
1,359
3.51
Mortgage-backed securities (c)
11,221
163
1.95
9,686
168
2.36
U.S. Treasury securities (d)
4,205
46
1.49
3,258
52
2.18
Total investment securities
15,426
209
1.82
12,944
220
2.31
Interest-bearing deposits with banks
16,524
17
0.13
9,229
24
0.35
Other short-term investments
179
—
0.23
151
1
0.62
Total earning assets
81,637
1,427
2.34
74,030
1,604
2.91
Cash and due from banks
972
866
Allowance for loan losses
(770)
(876)
Accrued income and other assets
6,110
5,722
Total assets
$
87,949
$
79,742
Money market and interest-bearing checking deposits
$
30,300
14
0.06
$
26,220
65
0.33
Savings deposits
2,974
—
0.01
2,386
1
0.03
Customer certificates of deposit
2,137
3
0.22
2,764
25
1.18
Other time deposits
—
—
—
23
—
2.00
Foreign office time deposits
48
—
0.09
89
—
0.54
Total interest-bearing deposits
35,459
17
0.07
31,482
91
0.39
Short-term borrowings
2
—
—
418
1
0.32
Medium- and long-term debt
3,107
27
1.10
6,821
70
1.38
Total interest-bearing sources
38,568
44
0.15
38,721
162
0.56
Noninterest-bearing deposits
39,912
31,809
Accrued expenses and other liabilities
1,465
1,590
Shareholders' equity
8,004
7,622
Total liabilities and shareholders' equity
$
87,949
$
79,742
Net interest income/rate spread
$
1,383
2.19
$
1,442
2.35
Impact of net noninterest-bearing sources of funds
0.08
0.26
Net interest margin (as a percentage of average earning assets)
2.27
%
2.61
%
(a)Included PPP loans with average balances of $2.9 billion and $2.1 billion, interest income of $96 million and $36 million and average yields of 4.43% and 2.27% for the nine months ended September 30, 2021 and 2020, respectively.
(b)The nine months ended September 30, 2021 included residual value adjustments totaling $20 million, or a 6 basis point impact to average loan yield.
(c)Average balances included $109 million and $212 million of unrealized gains and losses for the years ended September 30, 2021 and 2020, respectively; yields calculated gross of these unrealized gains and losses.
(d)Average balances included $37 million and $94 million of unrealized gains and losses for the years ended September 30, 2021 and 2020, respectively; yields calculated gross of these unrealized gains and losses.
15
ANALYSIS OF NET INTEREST INCOME (unaudited)
Comerica Incorporated and Subsidiaries
Three Months Ended
September 30, 2021
June 30, 2021
September 30, 2020
Average
Average
Average
Average
Average
Average
(dollar amounts in millions)
Balance
Interest
Rate
Balance
Interest
Rate
Balance
Interest
Rate
Commercial loans (a)
$
28,244
$
262
3.67
%
$
30,042
$
255
3.38
%
$
32,226
$
255
3.15
%
Real estate construction loans
3,160
28
3.46
4,191
34
3.30
4,037
34
3.35
Commercial mortgage loans
11,165
82
2.90
10,093
72
2.87
9,978
71
2.85
Lease financing
580
1
1.12
578
4
2.82
601
5
2.94
International loans
1,075
8
3.13
1,034
8
3.21
1,052
9
3.25
Residential mortgage loans
1,816
13
2.92
1,817
14
3.09
1,961
16
3.41
Consumer loans
2,095
17
3.31
2,073
17
3.37
2,158
18
3.45
Total loans
48,135
411
3.39
49,828
404
3.25
52,013
408
3.13
Mortgage-backed securities (b)
12,331
58
1.89
11,053
53
1.94
9,759
54
2.28
U.S. Treasury securities (c)
3,638
12
1.32
4,350
17
1.53
4,091
18
1.77
Total investment securities
15,969
70
1.76
15,403
70
1.82
13,850
72
2.13
Interest-bearing deposits with banks
20,494
8
0.16
16,126
5
0.11
12,534
4
0.10
Other short-term investments
190
—
0.20
176
—
0.20
158
—
0.29
Total earning assets
84,788
489
2.30
81,533
479
2.36
78,555
484
2.47
Cash and due from banks
964
982
911
Allowance for loan losses
(644)
(755)
(1,002)
Accrued income and other assets
6,245
6,100
5,804
Total assets
$
91,353
$
87,860
$
84,268
Money market and interest-bearing checking deposits
$
31,865
4
0.05
$
29,993
4
0.06
$
27,671
8
0.12
Savings deposits
3,097
—
0.01
3,021
—
0.01
2,560
1
0.02
Customer certificates of deposit
2,128
1
0.20
2,126
1
0.22
2,495
6
0.87
Foreign office time deposits
41
—
0.08
40
—
0.10
103
—
0.10
Total interest-bearing deposits
37,131
5
0.06
35,180
5
0.06
32,829
15
0.17
Short-term borrowings
1
—
—
2
—
—
218
—
0.25
Medium- and long-term debt
2,864
9
1.16
2,858
9
1.18
5,940
11
0.78
Total interest-bearing sources
39,996
14
0.14
38,040
14
0.15
38,987
26
0.27
Noninterest-bearing deposits
41,984
40,340
35,934
Accrued expenses and other liabilities
1,456
1,523
1,513
Shareholders' equity
7,917
7,957
7,834
Total liabilities and shareholders' equity
$
91,353
$
87,860
$
84,268
Net interest income/rate spread
$
475
2.16
$
465
2.21
$
458
2.20
Impact of net noninterest-bearing sources of funds
0.07
0.08
0.13
Net interest margin (as a percentage of average earning assets)
2.23
%
2.29
%
2.33
%
(a)Included PPP loans with average balances of $1.7 billion, $3.5 billion and $3.8 billion, interest income of $34 million, $32 million and $22 million and average yields of 8.02%, 3.66% and 2.31% for the three months ended September 30, 2021, June 30, 2021 and September 30, 2020, respectively.
(b)Average balances included $78 million, $91 million and $254 million of unrealized gains and losses for the three months ended September 30, 2021, June 30, 2021 and September 30, 2020, respectively; yields calculated gross of these unrealized gains and losses.
(c)Average balances included $23 million, $33 million and $99 million of unrealized gains and losses for the three months ended September 30, 2021, June 30, 2021 and September 30, 2020, respectively; yields calculated gross of these unrealized gains and losses.
16
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (unaudited)
Comerica Incorporated and Subsidiaries
Accumulated
Nonredeemable
Common Stock
Other
Retained
Total
Preferred
Shares
Capital
Comprehensive
Earnings
Treasury
Shareholders'
(in millions, except per share data)
Stock
Outstanding
Amount
Surplus
Income (Loss) (a)
(a)
Stock
Equity
BALANCE AT JUNE 30, 2020
$
395
139.0
$
1,141
$
2,173
$
66
$
9,496
$
(5,469)
$
7,802
Net income
—
—
—
—
—
217
—
217
Other comprehensive loss, net of tax
—
—
—
—
(48)
—
—
(48)
Cash dividends declared on common stock ($0.68 per share)
—
—
—
—
—
(94)
—
(94)
Cash dividends declared on preferred stock
—
—
—
—
—
(8)
—
(8)
Issuance of preferred stock
(1)
—
—
—
—
—
—
(1)
Net issuance of common stock under employee stock plans
—
0.1
—
—
—
(2)
2
—
Share-based compensation
—
—
—
6
—
—
—
6
BALANCE AT SEPTEMBER 30, 2020
$
394
139.1
$
1,141
$
2,179
$
18
$
9,609
$
(5,467)
$
7,874
BALANCE AT JUNE 30, 2021
$
394
133.9
$
1,141
$
2,163
$
(120)
$
10,202
$
(5,849)
$
7,931
Net income
—
—
—
—
—
262
—
262
Other comprehensive loss, net of tax
—
—
—
—
(87)
—
—
(87)
Cash dividends declared on common stock ($0.68 per share)
—
—
—
—
—
(89)
—
(89)
Cash dividends declared on preferred stock
—
—
—
—
—
(6)
—
(6)
Purchase of common stock
—
(3.1)
—
—
—
—
(220)
(220)
Net issuance of common stock under employee stock plans
—
0.2
—
—
—
(3)
8
5
Share-based compensation
—
—
—
7
—
—
—
7
BALANCE AT SEPTEMBER 30, 2021
$
394
131.0
$
1,141
$
2,170
$
(207)
$
10,366
$
(6,061)
$
7,803
BALANCE AT DECEMBER 31, 2019
$
—
142.1
$
1,141
$
2,174
$
(316)
$
9,619
$
(5,291)
$
7,327
Cumulative effect of change in accounting principle
—
—
—
—
—
13
—
13
Net income
—
—
—
—
—
276
—
276
Other comprehensive income, net of tax
—
—
—
—
334
—
—
334
Cash dividends declared on common stock ($2.04 per share)
—
—
—
—
—
(284)
—
(284)
Cash dividends declared on preferred stock
—
—
—
—
—
(8)
—
(8)
Purchase of common stock
—
(3.4)
—
—
—
—
(194)
(194)
Issuance of preferred stock
394
—
—
—
—
—
—
394
Net issuance of common stock under employee stock plans
—
0.4
—
(13)
—
(7)
18
(2)
Share-based compensation
—
—
—
18
—
—
—
18
BALANCE AT SEPTEMBER 30, 2020
$
394
139.1
$
1,141
$
2,179
$
18
$
9,609
$
(5,467)
$
7,874
BALANCE AT DECEMBER 31, 2020
$
394
139.2
$
1,141
$
2,185
$
64
$
9,727
$
(5,461)
$
8,050
Net income
—
—
—
—
—
940
—
940
Other comprehensive loss, net of tax
—
—
—
—
(271)
—
—
(271)
Cash dividends declared on common stock ($2.04 per share)
—
—
—
—
—
(276)
—
(276)
Cash dividends declared on preferred stock
—
—
—
—
—
(17)
—
(17)
Purchase of common stock
—
(9.0)
—
(24)
—
—
(649)
(673)
Net issuance of common stock under employee stock plans
—
0.8
—
(27)
—
(8)
49
14
Share-based compensation
—
—
—
36
—
—
—
36
BALANCE AT SEPTEMBER 30, 2021
$
394
131.0
$
1,141
$
2,170
$
(207)
$
10,366
$
(6,061)
$
7,803
(a)See Reconciliations of Previously Reported Balances.
17
BUSINESS SEGMENT FINANCIAL RESULTS (unaudited)
Comerica Incorporated and Subsidiaries
(dollar amounts in millions)
Commercial
Retail
Wealth
Three Months Ended September 30, 2021
Bank
Bank
Management
Finance
Other
Total
Earnings summary:
Net interest income (expense)
$
407
$
149
$
40
$
(124)
$
3
$
475
Provision for credit losses
(25)
(5)
(13)
—
1
(42)
Noninterest income
169
32
69
10
—
280
Noninterest expenses
224
159
79
—
3
465
Provision (benefit) for income taxes
83
4
10
(27)
—
70
Net income (loss)
$
294
$
23
$
33
$
(87)
$
(1)
$
262
Net credit-related charge-offs (recoveries)
$
4
$
(1)
$
(1)
$
—
$
—
$
2
Selected average balances:
Assets
$
43,240
$
3,105
$
4,956
$
17,922
$
22,130
$
91,353
Loans
41,040
2,297
4,829
—
(31)
48,135
Deposits
46,632
26,088
5,209
977
209
79,115
Statistical data:
Return on average assets (a)
2.33
%
0.34
%
2.36
%
n/m
n/m
1.14
%
Efficiency ratio (b)
38.82
87.18
72.83
n/m
n/m
61.57
Commercial
Retail
Wealth
Three Months Ended June 30, 2021
Bank
Bank
Management
Finance
Other
Total
Earnings summary:
Net interest income (expense)
$
402
$
145
$
43
$
(127)
$
2
$
465
Provision for credit losses
(123)
(7)
(4)
—
(1)
(135)
Noninterest income
167
30
71
9
7
284
Noninterest expenses
204
173
77
1
8
463
Provision (benefit) for income taxes
111
1
9
(26)
(2)
93
Net income (loss)
$
377
$
8
$
32
$
(93)
$
4
$
328
Net credit-related (recoveries) charge-offs
$
(12)
$
1
$
—
$
—
$
—
$
(11)
Selected average balances:
Assets
$
44,283
$
3,395
$
5,063
$
17,461
$
17,658
$
87,860
Loans
42,350
2,533
4,936
—
9
49,828
Deposits
43,682
25,573
5,103
944
218
75,520
Statistical data:
Return on average assets (a)
3.21
%
0.12
%
2.40
%
n/m
n/m
1.50
%
Efficiency ratio (b)
35.95
98.06
66.85
n/m
n/m
61.66
Commercial
Retail
Wealth
Three Months Ended September 30, 2020
Bank
Bank
Management
Finance
Other
Total
Earnings summary:
Net interest income (expense)
$
412
$
128
$
42
$
(125)
$
1
$
458
Provision for credit losses
14
(2)
(7)
—
—
5
Noninterest income
135
28
64
16
9
252
Noninterest expenses (c)
203
151
74
—
10
438
Provision (benefit) for income taxes (c)
68
—
9
(26)
(1)
50
Net income (loss) (c)
$
262
$
7
$
30
$
(83)
$
1
$
217
Net credit-related charge-offs (recoveries)
$
35
$
(1)
$
(1)
$
—
$
—
$
33
Selected average balances:
Assets
$
45,638
$
3,489
$
5,197
$
15,909
$
14,035
$
84,268
Loans
44,250
2,680
5,094
—
(11)
52,013
Deposits
39,535
23,604
4,439
1,004
181
68,763
Statistical data:
Return on average assets (a), (c)
2.29
%
0.09
%
2.35
%
n/m
n/m
1.02
%
Efficiency ratio (b), (c)
37.12
96.36
70.03
n/m
n/m
61.74
(a)Return on average assets is calculated based on the greater of average assets or average liabilities and attributed equity.
(b)Noninterest expenses as a percentage of the sum of net interest income and noninterest income excluding a derivative contract tied to the conversion rate of Visa Class B shares.
(c)See Reconciliations of Previously Reported Balances.
n/m - not meaningful
18
MARKET SEGMENT FINANCIAL RESULTS (unaudited)
Comerica Incorporated and Subsidiaries
(dollar amounts in millions)
Other
Finance
Three Months Ended September 30, 2021
Michigan
California
Texas
Markets
& Other
Total
Earnings summary:
Net interest income (expense)
$
180
$
180
$
117
$
119
$
(121)
$
475
Provision for credit losses
(12)
1
(30)
(2)
1
(42)
Noninterest income
70
40
42
118
10
280
Noninterest expenses
144
105
95
118
3
465
Provision (benefit) for income taxes
23
26
20
28
(27)
70
Net income (loss)
$
95
$
88
$
74
$
93
$
(88)
$
262
Net credit-related charge-offs (recoveries)
$
4
$
5
$
(9)
$
2
$
—
$
2
Selected average balances:
Assets
$
12,063
$
17,213
$
10,303
$
11,717
$
40,057
$
91,353
Loans
11,445
17,042
9,650
10,024
(26)
48,135
Deposits
27,735
23,112
11,377
15,705
1,186
79,115
Statistical data:
Return on average assets (a)
1.33
%
1.44
%
2.37
%
2.11
%
n/m
1.14
%
Efficiency ratio (b)
57.15
47.99
59.33
50.07
n/m
61.57
Other
Finance
Three Months Ended June 30, 2021
Michigan
California
Texas
Markets
& Other
Total
Earnings summary:
Net interest income (expense)
$
178
$
174
$
114
$
124
$
(125)
$
465
Provision for credit losses
(26)
(24)
(77)
(7)
(1)
(135)
Noninterest income
72
41
35
120
16
284
Noninterest expenses
136
116
91
111
9
463
Provision (benefit) for income taxes
29
29
29
34
(28)
93
Net income (loss)
$
111
$
94
$
106
$
106
$
(89)
$
328
Net credit-related charge-offs (recoveries)
$
1
$
—
$
(12)
$
—
$
—
$
(11)
Selected average balances:
Assets
$
12,830
$
17,679
$
10,615
$
11,614
$
35,122
$
87,860
Loans
12,245
17,515
10,008
10,048
12
49,828
Deposits
26,709
20,582
11,153
15,914
1,162
75,520
Statistical data:
Return on average assets (a)
1.62
%
1.75
%
3.35
%
2.51
%
n/m
1.50
%
Efficiency ratio (b)
54.18
53.63
61.35
45.41
n/m
61.66
Other
Finance
Three Months Ended September 30, 2020
Michigan
California
Texas
Markets
& Other
Total
Earnings summary:
Net interest income (expense)
$
167
$
173
$
118
$
124
$
(124)
$
458
Provision for credit losses
18
15
(25)
(3)
—
5
Noninterest income
66
31
28
102
25
252
Noninterest expenses (c)
138
97
88
105
10
438
Provision (benefit) for income taxes (c)
13
21
17
26
(27)
50
Net income (loss) (c)
$
64
$
71
$
66
$
98
$
(82)
$
217
Net credit-related charge-offs
$
6
$
14
$
11
$
2
$
—
$
33
Selected average balances:
Assets
$
13,232
$
17,886
$
11,339
$
11,867
$
29,944
$
84,268
Loans
12,681
17,771
10,911
10,661
(11)
52,013
Deposits
24,685
18,868
10,649
13,376
1,185
68,763
Statistical data:
Return on average assets (a), (c)
0.99
%
1.44
%
2.17
%
2.67
%
n/m
1.02
%
Efficiency ratio (b), (c)
58.79
47.54
60.32
46.87
n/m
61.74
(a)Return on average assets is calculated based on the greater of average assets or average liabilities and attributed equity.
(b)Noninterest expenses as a percentage of the sum of net interest income and noninterest income excluding a derivative contract tied to the conversion rate of Visa Class B shares.
(c)See Reconciliations of Previously Reported Balances.
n/m - not meaningful
19
RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES AND REGULATORY RATIOS (unaudited)
Comerica Incorporated and Subsidiaries
Comerica believes non-GAAP measures are meaningful because they reflect adjustments commonly made by management, investors, regulators and analysts to evaluate the adequacy of common equity and our performance trends. Tangible common equity is used by Comerica to measure the quality of capital and the return relative to balance sheet risk.
Common equity tier 1 capital ratio removes preferred stock from the Tier 1 capital ratio as defined by and calculated in conformity with bank regulations. The tangible common equity ratio removes the effect of intangible assets from capital and total assets. Tangible common equity per share of common stock removes the effect of intangible assets from common shareholders' equity per share of common stock.
Common shareholders' equity per share of common stock
$
56.55
$
56.28
$
53.78
Tangible common equity per share of common stock
51.61
51.43
49.20
(a)September 30, 2021 ratios are estimated. Ratios reflect deferral of CECL model impact as calculated per regulatory guidance. The deferred amounts were zero at both September 30, 2021 (estimated) and June 30, 2021 and $83 million at September 30, 2020.
(b)In first quarter 2021, the Corporation acquired $13 million in intangible assets to be amortized over ten years.
20
RECONCILIATIONS OF PREVIOUSLY REPORTED BALANCES (unaudited)
Comerica Incorporated and Subsidiaries
Defined Benefit Plan Accounting Method Change
Effective January 1, 2021, the Corporation elected to change the accounting methodology for determining the market-related value of assets for certain classes of assets in the qualified defined benefit pension plan. The change in accounting methodology is applied retrospectively to all prior periods presented in the consolidated financial statements. The following table reconciles the impact of the change to the qualified defined benefit plan on the Corporation's previously reported consolidated financial statements.
Consolidated Statements of Comprehensive Income
Three Months Ended
Nine Months Ended
December 31,
September 30,
September 30,
(in millions, except per share data)
2020
2020
2020
Other noninterest expenses:
As reported
$
23
$
23
$
73
Effect of accounting change
(8)
(8)
(22)
Recast other noninterest expense
$
15
$
15
$
51
Provision for income taxes:
As reported
$
63
$
48
$
54
Effect of accounting change
2
2
5
Recast provision for income taxes
$
65
$
50
$
59
Net income:
As reported
$
215
$
211
$
259
Effect of accounting change
6
6
17
Recast net income
$
221
$
217
$
276
Basic earnings per common share:
As reported
$
1.50
$
1.45
$
1.79
Effect of accounting change
0.04
0.04
0.12
Recast basic earnings per common share
$
1.54
$
1.49
$
1.91
Diluted earnings per common share:
As reported
$
1.49
$
1.44
$
1.78
Effect of accounting change
0.04
0.04
0.12
Recast diluted earnings per common share
$
1.53
$
1.48
$
1.90
Consolidated Balance Sheets
December 31,
September 30,
June 30,
December 31,
(in millions)
2020
2020
2020
2019
Accumulated other comprehensive income (loss):
As reported
$
168
$
116
$
158
$
(235)
Effect of accounting change
(104)
(98)
(92)
(81)
Recast accumulated other comprehensive income (loss)
$
64
$
18
$
66
$
(316)
Retained earnings:
As reported
$
9,623
$
9,511
$
9,404
$
9,538
Effect of accounting change
104
98
$
92
81
Recast retained earnings
$
9,727
$
9,609
$
9,496
$
9,619
21
RECONCILIATIONS OF PREVIOUSLY REPORTED BALANCES (unaudited)
Comerica Incorporated and Subsidiaries
Change in Presentation of Customer Derivative Income and Foreign Exchange Income
Beginning with the first quarter 2021, the Corporation reported customer derivative income, previously a component of other noninterest income, and foreign exchange income as a combined item captioned derivative income on the Consolidated Statements of Comprehensive Income. Prior periods have been adjusted to conform to this presentation. The changes in presentation did not impact total noninterest income. The table below reconciles amounts previously reported to the new presentation.
Three Months Ended
Nine Months Ended
December 31,
September 30,
September 30,
(in millions)
2020
2020
2020
Foreign exchange income (as reported)
$
11
$
9
$
29
Customer derivative income (a)
8
—
19
Derivative income
$
19
$
9
$
48
Other noninterest income (as reported)
$
34
$
29
$
84
Less: Customer derivative income (a)
8
—
19
Other noninterest income (as adjusted)
$
26
$
29
$
65
(a)Previously reported as a component of other noninterest income.