SECOND QUARTER 2021 NET INCOME OF $328 MILLION, $2.32 PER SHARE
Revenue Increased 5 Percent
Robust Growth in Fee-Generating Activity
Strong Credit Quality and Improved Economic Outlook Drove Reserve Release
Repurchased 5.9 Million, or 4 Percent, of Common Shares Under Program
Together With Dividends, Returned $542 Million to Shareholders
“Our second quarter results showed continuation of several positive trends," said Curt C. Farmer, Comerica Chairman, President and Chief Executive Officer. "This included strong deposit growth, robust fee income and excellent credit quality. Revenue increased and we remained focused on expense control as we supported our revenue generating activities. We saw solid loan growth in several business lines, led by General Middle Market, which was more than offset by declines in auto dealer floorplan and Mortgage Banker. Also, our pipeline again increased as customers ramped up with the economy re-opening. We repurchased 5.9 million shares, reducing our share count by over 4 percent. Our ROE of over 17 percent and ROA of 1.50 percent remain above our historical norm, despite the ultra-low rate environment. Our customers and colleagues across our markets are optimistic about the future and we expect economic metrics to remain strong the back half of the year.”
(dollar amounts in millions, except per share data)
2nd Qtr '21
1st Qtr '21
2nd Qtr '20
FINANCIAL RESULTS
Net interest income
$
465
$
443
$
471
Provision for credit losses
(135)
(182)
138
Noninterest income
284
270
247
Noninterest expenses (a)
463
447
434
Pre-tax income (a)
421
448
146
Provision for income taxes (a)
93
98
28
Net income (a)
$
328
$
350
$
118
Diluted earnings per common share (a)
$
2.32
$
2.43
$
0.84
Average loans
49,828
50,589
53,498
Average deposits
75,520
71,392
64,282
Return on average assets (a)
1.50
%
1.68
%
0.58
%
Return on average common shareholders' equity (a)
17.10
18.04
6.40
Net interest margin
2.29
2.29
2.50
Common equity Tier 1 capital ratio (b)
10.39
11.02
9.99
Tier 1 capital ratio (b)
10.97
11.62
10.58
Common equity ratio
8.53
8.99
8.78
Common shareholders' equity per share of common stock
$
56.28
$
55.58
$
53.28
Tangible common equity per share of common stock (c)
51.43
50.93
48.69
(a)Recast 2020 results. See Reconciliations of Previously Reported Balances.
(b)Estimated for June 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.
Second Quarter 2021 Compared to First Quarter 2021 Overview
Balance sheet items discussed in terms of average balances unless otherwise noted.
Loans decreased $761 million, or 2 percent, to $49.8 billion.
•Increases of $276 million in general Middle Market, $207 million in Environmental Services and $193 million in Commercial Real Estate were more than offset by decreases of $870 million in National Dealer Services and $287 million in Mortgage Banker Finance.
◦Average Paycheck Protection Program (PPP) loans decreased $117 million to $3.5 billion. Period-end PPP loans decreased $967 million to $2.8 billion, reflecting forgiveness of $1.1 billion.
◦Excluding the impact of PPP loans, period-end loans grew $613 million, driven by increases of $671 million in general Middle Market, $355 million in Environmental Services and $234 million in Commercial Real Estate, partially offset by a $484 million decrease in National Dealer Services.
•Average loan yields increased 16 basis points to 3.25 percent, reflecting a 14 basis point residual value adjustment in the leasing portfolio recorded in the first quarter.
Securities increased $509 million, or 3 percent, to $15.4 billion.
•Increase of $796 million in mortgage-backed securities resulting from deployment of excess liquidity, partially offset by a $287 million decrease in Treasury securities.
•Period-end securities increased $242 million to $15.8 billion, driven by $2.1 billion in purchases of mortgage-backed securities, partially offset by $1.1 billion in repayments of mortgage-backed securities and $750 million in maturities of Treasury securities.
•Average yield on securities decreased 7 basis points to 1.82 percent due to lower yields on reinvestments.
Deposits increased $4.1 billion, or 6 percent, to $75.5 billion.
•Nearly every business line experienced growth with an increase of $3.0 billion in noninterest-bearing deposits as customers continue to conserve cash.
•The average cost of interest-bearing deposits decreased 2 basis points to 6 basis points, continuing to reflect prudent management of relationship pricing in a lower rate environment.
Net interest income increased $22 million to $465 million.
•Increase primarily reflected residual value adjustments in the leasing portfolio made in the first quarter and an additional day in the second quarter.
Provision for credit losses increased $47 million to a benefit of $135 million.
•The allowance for credit losses decreased $124 million to $683 million at June 30, 2021, reflecting growing economic confidence, sustained improvements in economic forecasts and a reduction in criticized loans. As a percentage of total loans, the allowance for credit losses was 1.36 percent, or 1.44 percent excluding PPP loans.
•Net loan recoveries were $11 million, compared to net charge-offs of $3 million in the first quarter.
Noninterest income increased $14 million to $284 million.
•Increases of $13 million in card fees, $9 million in commercial lending fees, $7 million in fiduciary income and $3 million in deferred compensation asset returns (offset in other noninterest expenses), partially offset by decreases of $8 million in derivative income, $4 million in income from principal investing and warrants and $2 million in bank-owned life insurance.
Noninterest expenses increased $16 million to $463 million.
•Decrease of $5 million in salaries and benefits expense more than offset by increases of $7 million in outside processing fee expense, $5 million in litigation-related expenses and $3 million each in advertising expense and operational losses, as well as smaller increases in other categories.
◦The decrease in salaries and benefits expense was driven by seasonal decreases of $16 million in share-based compensation and $7 million in payroll taxes, partially offset by increases of $5 million in incentive compensation, $3 million each from annual merit increases, technology-related contract labor and deferred compensation expense (offset in other noninterest income) and smaller increases in other categories.
Capital position remained solid with a common equity Tier 1 capital ratio of 10.39 percent and a Tier 1 capital ratio of 10.97 percent.
•Returned a total of $542 million to common shareholders through share repurchases and dividends.
◦Repurchased $450 million of common stock (5.9 million shares) under the share repurchase program.
•Declared dividend of $5 million on preferred stock, payable July 1, 2021.
2
Second Quarter 2021 Compared to Second Quarter 2020 Overview
Balance sheet items discussed in terms of average balances.
Loans decreased $3.7 billion, or 7 percent.
•Increases in Equity Fund Services, Environmental Services and Entertainment Lending were more than offset by decreases in National Dealer Services, Energy, Technology and Life Sciences, Corporate Banking, general Middle Market and Mortgage Banker Finance.
•Average yield on loans was relatively stable.
Securities increased $2.8 billion, or 22 percent.
•Reflects actions taken in third quarter 2020 to invest $2.3 billion of excess liquidity in U.S. Treasury bonds and mortgage-backed securities.
•Average yield on securities decreased 59 basis points, reflecting lower rates and an increase in lower-yielding U.S. Treasury securities.
Deposits increased $11.2 billion, or 17 percent.
•Noninterest-bearing and interest-bearing deposits increased $7.7 billion and $3.6 billion, respectively, as customers continued to conserve cash, including funds from government stimulus programs.
•Interest-bearing deposit costs decreased 20 basis points, reflecting prudent management of relationship pricing in a low interest rate environment.
Net interest income decreased $6 million.
•Lower loan volumes partially offset by a decrease in deposit costs.
Provision for credit losses decreased $273 million.
•The allowance for credit losses decreased $383 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 63 basis points.
Noninterest income increased $37 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 card fees, commercial lending fees, fiduciary income, service charges on deposit accounts, deferred compensation asset returns (offset in noninterest expenses) and derivative income, partially offset by a decrease in securities trading income.
Noninterest expenses increased $29 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 litigation-related expenses, partially offset by decreases in pension expense (non-salary) and operational losses.
3
Net Interest Income
Balance sheet items presented and discussed in terms of average balances.
(dollar amounts in millions)
2nd Qtr '21
1st Qtr '21
2nd Qtr '20
Net interest income
$
465
$
443
$
471
Net interest margin
2.29
%
2.29
%
2.50
%
Selected balances:
Total earning assets
$
81,533
$
78,523
$
75,989
Total loans
49,828
50,589
53,498
Total investment securities
15,403
14,894
12,642
Federal Reserve Bank deposits
15,701
12,507
9,483
Total deposits
75,520
71,392
64,282
Total noninterest-bearing deposits
40,340
37,361
32,686
Short-term borrowings
2
3
882
Medium- and long-term debt
2,858
3,609
7,206
Net interest income increased $22 million, and net interest margin was stable compared to first quarter 2021.
•Interest income on loans increased $18 million and improved net interest margin by 8 basis points, primarily due to residual value adjustments on assets in the leasing portfolio recorded in the first quarter (+$17 million, +8 basis points), one additional day in the quarter (+$4 million) and the impact of higher fees, including from PPP forgiveness activity (+$2 million, +1 basis point), partially offset by lower loan balances (-$3 million). Other portfolio dynamics, which include the impact of nonaccrual activity as well as rate and pricing actions, decreased interest income on loans by $2 million and reduced net interest margin by 1 basis point.
•Interest income on investment securities increased $1 million and reduced net interest margin by 1 basis point due to higher balances (+$4 million) offset by the impact of lower average yields (-$3 million, -1 basis point).
•Interest income on short-term investments increased $1 million and reduced net interest margin by 8 basis points, due to an increase in lower-yielding deposits with the Federal Reserve Bank.
•Lower pay rates on deposits decreased interest expense by $2 million and improved net interest margin by 1 basis point.
4
Credit Quality
"Credit continued to improve from already strong levels with net recoveries of $11 million, the best performance in at least 20 years," said Farmer. "Also, criticized loans and nonperforming assets declined and remained below our historical norms, a true reflection of our conservative credit culture, diverse portfolio and expertise in the industries we serve. Our allowance remains healthy with a reserve ratio of 1.36 percent, or 1.44 percent excluding PPP loans. We expect economic growth over the remainder of the year, however, we remain vigilant given potential impacts on our customers from supply chain and labor constraints as well as COVID variants. We believe our portfolio will continue to perform well and the reserve ratio should move toward pre-pandemic levels over time."
(dollar amounts in millions)
2nd Qtr '21
1st Qtr '21
2nd Qtr '20
Credit-related charge-offs
$
8
$
16
$
57
Recoveries
19
13
7
Net credit-related (recoveries) charge-offs
(11)
3
50
Net credit-related charge-offs/Average total loans
(0.09)
%
0.03
%
0.37
%
Provision for credit losses
$
(135)
$
(182)
$
138
Nonperforming loans
319
316
271
Nonperforming assets (NPAs)
320
325
282
NPAs/Total loans and foreclosed property
0.64
%
0.64
%
0.53
%
Loans past due 90 days or more and still accruing
$
27
$
60
$
41
Allowance for loan losses
652
777
1,007
Allowance for credit losses on lending-related commitments (a)
31
30
59
Total allowance for credit losses
683
807
1,066
Allowance for credit losses/Period-end total loans
1.36
1.59
1.99
Allowance for credit losses/Period-end total loans excluding PPP loans
1.44
1.72
2.15
Allowance for credit losses/Nonperforming loans
2.1x
2.6x
3.9x
(a) Included in accrued expenses and other liabilities on the Consolidated Balance Sheets.
•The allowance for credit losses decreased $124 million to $683 million, or 1.36 percent of total loans, primarily reflecting a reduction in criticized loans, growing economic confidence and sustained improvements in economic forecasts. Excluding PPP loans, which are guaranteed by the Small Business Administration, allowance for credit losses totaled 1.44 percent of total loans.
•Criticized loans decreased $405 million to $2.2 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 $166 million in Energy and $104 million in general Middle Market.
•Nonperforming assets decreased $5 million to $320 million, or 0.64 percent of total loans and foreclosed property compared to 0.64 percent in first quarter 2021.
◦Nonperforming assets in Energy decreased by $41 million.
◦Loans transferred to nonaccrual totaled $62 million, a increase of $1 million compared to first quarter 2021.
•Net recoveries totaled $11 million, compared to net charge-offs of $3 million.
5
Outlook
This outlook is based on management expectations for continued economic growth.
Trends for Second Half of 2021 Relative to Second Quarter 2021
Average loans
•Solid loan growth in nearly all business lines (excluding PPP), more than offset by forgiveness of the bulk of PPP loans.
Average deposits
•Deposits to remain strong.
Net interest income
•Net interest income reflects benefit of higher loan volume (excluding PPP loans) and additional days, more than offset by the impact from lower PPP loans.
Credit quality
•Strong credit quality continues.
Noninterest income
•Growth in customer-related fees due to rebounding economic activity, more than offset by lower card fees (decrease in stimulus activity), fiduciary (annual tax preparation fees in second quarter) and deferred compensation from elevated levels.
Noninterest expenses
•Increases in seasonal expenses and technology investments, more than offset by lower litigation-related expenses and deferred compensation from elevated levels.
Tax rate
•Income tax expense for full-year 2021 to be between 22 and 23 percent of pre-tax income, excluding discrete items.
Capital
•Continue share repurchases; 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 June 30, 2021. A discussion of business segment and geographic market year-to-date results will be included in Comerica's Second Quarter 2021 Form 10-Q.
Conference Call and Webcast
Comerica will host a conference call to review second quarter 2021 financial results at 7 a.m. CT Wednesday, July 21, 2021. Interested parties may access the conference call by calling (800) 309-2262 or (706) 679-5261 (Event ID No. 6197067). 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
Six Months Ended
June 30,
March 31,
June 30,
June 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)
$
2.32
$
2.43
$
0.84
$
4.76
$
0.42
Cash dividends declared
0.68
0.68
0.68
1.36
1.36
Average diluted shares (in thousands)
138,070
141,072
139,453
139,566
140,529
PERFORMANCE RATIOS
Return on average common shareholders' equity (a)
17.10
%
18.04
%
6.40
%
17.57
%
1.61
%
Return on average assets (a)
1.50
1.68
0.58
1.59
0.15
Efficiency ratio (a), (b)
61.66
62.55
60.11
62.10
57.79
CAPITAL
Common equity tier 1 capital (c), (d)
$
7,004
$
7,236
$
6,698
Tier 1 capital (c), (d)
7,398
7,630
7,093
Risk-weighted assets (c)
67,410
65,649
67,052
Common equity tier 1 capital ratio (c), (d)
10.39
%
11.02
%
9.99
%
Tier 1 capital ratio (c), (d)
10.97
11.62
10.58
Total capital ratio (c)
13.00
13.86
12.95
Leverage ratio (c)
8.45
9.08
8.75
Common shareholders' equity per share of common stock
$
56.28
$
55.58
$
53.28
Tangible common equity per share of common stock (d)
51.43
50.93
48.69
Common equity ratio
8.53
%
8.99
%
8.78
%
Tangible common equity ratio (d)
7.85
8.30
8.08
AVERAGE BALANCES
Commercial loans
$
30,042
$
30,968
$
33,944
$
30,502
$
32,321
Real estate construction loans
4,191
4,137
3,887
4,164
3,725
Commercial mortgage loans
10,093
9,952
9,800
10,022
9,719
Lease financing
578
592
592
585
587
International loans
1,034
962
1,137
999
1,071
Residential mortgage loans
1,817
1,809
1,895
1,813
1,875
Consumer loans
2,073
2,169
2,243
2,121
2,253
Total loans
49,828
50,589
53,498
50,206
51,551
Earning assets
81,533
78,523
75,989
80,036
71,742
Total assets
87,860
84,559
81,644
86,218
77,454
Noninterest-bearing deposits
40,340
37,361
32,686
38,858
29,723
Interest-bearing deposits
35,180
34,031
31,596
34,609
30,801
Total deposits
75,520
71,392
64,282
73,467
60,524
Common shareholders' equity
7,563
7,746
7,436
7,654
7,437
Total shareholders' equity
7,957
8,140
7,592
8,048
7,515
NET INTEREST INCOME
Net interest income
$
465
$
443
$
471
$
908
$
984
Net interest margin
2.29
%
2.29
%
2.50
%
2.29
%
2.77
%
CREDIT QUALITY
Nonperforming assets
$
320
$
325
$
282
Loans past due 90 days or more and still accruing
27
60
41
Net credit-related charge-offs
(11)
3
50
$
(8)
134
Allowance for loan losses
652
777
1,007
Allowance for credit losses on lending-related commitments
31
30
59
Total allowance for credit losses
683
807
1,066
Allowance for credit losses as a percentage of total loans
1.36
%
1.59
%
1.99
%
Net loan (recoveries) charge-offs as a percentage of average total loans
(0.09)
0.03
0.37
(0.03
%)
0.52
%
Nonperforming assets as a percentage of total loans and foreclosed property
0.64
0.64
0.53
Allowance for credit losses as a multiple of total nonperforming loans
2.1x
2.6x
3.9x
OTHER KEY INFORMATION
Number of banking centers
431
434
434
Number of employees - full time equivalent
7,532
7,653
7,777
(a) See Reconciliations of Previously Reported Balances.
(b) Noninterest expenses as a percentage of the sum of net interest income and noninterest income excluding net gains from securities and a derivative contract tied to the conversion rate of Visa Class B shares.
(c) June 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
June 30,
March 31,
December 31,
June 30,
(in millions, except share data)
2021
2021
2020
2020
(unaudited)
(unaudited)
(recast)
(unaudited)
ASSETS
Cash and due from banks
$
1,008
$
1,064
$
1,031
$
1,048
Interest-bearing deposits with banks
15,493
13,807
14,736
12,263
Other short-term investments
183
176
172
153
Investment securities available-for-sale
15,837
15,595
15,028
12,759
Commercial loans
30,207
30,886
32,753
33,826
Real estate construction loans
3,172
4,244
4,082
3,952
Commercial mortgage loans
11,334
9,993
9,912
9,925
Lease financing
589
577
594
589
International loans
1,036
990
926
1,104
Residential mortgage loans
1,807
1,799
1,830
1,886
Consumer loans
2,083
2,093
2,194
2,164
Total loans
50,228
50,582
52,291
53,446
Allowance for loan losses
(652)
(777)
(948)
(1,007)
Net loans
49,576
49,805
51,343
52,439
Premises and equipment
454
456
459
450
Accrued income and other assets
5,804
5,388
5,360
5,285
Total assets
$
88,355
$
86,291
$
88,129
$
84,397
LIABILITIES AND SHAREHOLDERS' EQUITY
Noninterest-bearing deposits
$
40,514
$
38,822
$
39,420
$
35,582
Money market and interest-bearing checking deposits
30,319
29,880
28,540
26,895
Savings deposits
3,095
2,934
2,710
2,500
Customer certificates of deposit
2,115
2,141
2,133
2,656
Foreign office time deposits
23
30
66
87
Total interest-bearing deposits
35,552
34,985
33,449
32,138
Total deposits
76,066
73,807
72,869
67,720
Short-term borrowings
—
—
—
752
Accrued expenses and other liabilities
1,504
1,480
1,482
1,602
Medium- and long-term debt
2,854
2,852
5,728
6,521
Total liabilities
80,424
78,139
80,079
76,595
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
395
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
2,163
2,183
2,185
2,173
Accumulated other comprehensive (loss) income (a)
(120)
(105)
64
66
Retained earnings (a)
10,202
9,975
9,727
9,496
Less cost of common stock in treasury - 94,247,402 shares at 6/30/21, 88,579,635 shares at 3/31/21, 88,997,430 shares at 12/31/20 and 89,124,560 shares at 6/30/20
(5,849)
(5,436)
(5,461)
(5,469)
Total shareholders' equity
7,931
8,152
8,050
7,802
Total liabilities and shareholders' equity
$
88,355
$
86,291
$
88,129
$
84,397
(a)Recast 2020 results. See Reconciliations of Previously Reported Balances.
10
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Comerica Incorporated and Subsidiaries
Three Months Ended
Six Months Ended
June 30,
June 30,
(in millions, except per share data)
2021
2020
2021
2020
(unaudited)
(unaudited)
(unaudited)
(unaudited)
INTEREST INCOME
Interest and fees on loans
$
404
$
434
$
790
$
951
Interest on investment securities
70
74
139
148
Interest on short-term investments
5
3
9
21
Total interest income
479
511
938
1,120
INTEREST EXPENSE
Interest on deposits
5
20
12
76
Interest on short-term borrowings
—
1
—
1
Interest on medium- and long-term debt
9
19
18
59
Total interest expense
14
40
30
136
Net interest income
465
471
908
984
Provision for credit losses
(135)
138
(317)
549
Net interest income after provision for credit losses
600
333
1,225
435
NONINTEREST INCOME
Card fees
84
68
155
127
Fiduciary income
60
52
113
106
Service charges on deposit accounts
47
42
95
91
Commercial lending fees
27
17
45
34
Derivative income (a)
22
19
52
39
Letter of credit fees
10
9
20
18
Bank-owned life insurance
9
9
20
21
Brokerage fees
4
5
8
12
Net securities gains
—
1
—
—
Other noninterest income (a)
21
25
46
36
Total noninterest income
284
247
554
484
NONINTEREST EXPENSES
Salaries and benefits expense
277
249
559
491
Outside processing fee expense
71
62
135
119
Occupancy expense
38
37
77
74
Software expense
38
39
77
76
Equipment expense
13
12
25
24
Advertising expense
9
8
15
15
FDIC insurance expense
7
8
13
16
Other noninterest expenses (a)
10
19
9
36
Total noninterest expenses (a)
463
434
910
851
Income before income taxes (a)
421
146
869
68
Provision for income taxes (a)
93
28
191
9
NET INCOME (a)
328
118
678
59
Less:
Income allocated to participating securities
2
1
3
1
Preferred stock dividends
5
—
11
—
Net income attributable to common shares (a)
$
321
$
117
$
664
$
58
Earnings per common share:
Basic (a)
$
2.35
$
0.85
$
4.81
$
0.42
Diluted (a)
2.32
0.84
4.76
0.42
Comprehensive income
313
97
494
441
Cash dividends declared on common stock
92
96
187
190
Cash dividends declared per common share
0.68
0.68
1.36
1.36
(a)Recast 2020 results. See Reconciliations of Previously Reported Balances.
11
CONSOLIDATED QUARTERLY STATEMENTS OF COMPREHENSIVE INCOME (unaudited)
Comerica Incorporated and Subsidiaries
Second
First
Fourth
Third
Second
Second Quarter 2021 Compared to:
Quarter
Quarter
Quarter
Quarter
Quarter
First Quarter 2021
Second Quarter 2020
(in millions, except per share data)
2021
2021
2020
2020
2020
Amount
Percent
Amount
Percent
INTEREST INCOME
Interest and fees on loans
$
404
$
386
$
414
$
408
$
434
$
18
5
%
$
(30)
(7)
%
Interest on investment securities
70
69
71
72
74
1
1
(4)
(5)
Interest on short-term investments
5
4
4
4
3
1
34
2
60
Total interest income
479
459
489
484
511
20
4
(32)
(6)
INTEREST EXPENSE
Interest on deposits
5
7
10
15
20
(2)
(20)
(15)
(73)
Interest on short-term borrowings
—
—
—
—
1
—
—
(1)
n/m
Interest on medium- and long-term debt
9
9
10
11
19
—
—
(10)
(57)
Total interest expense
14
16
20
26
40
(2)
(12)
(26)
(66)
Net interest income
465
443
469
458
471
22
5
(6)
(1)
Provision for credit losses
(135)
(182)
(17)
5
138
47
(26)
(273)
n/m
Net interest income after provision
for credit losses
600
625
486
453
333
(25)
(4)
267
81
NONINTEREST INCOME
Card fees
84
71
72
71
68
13
19
16
23
Fiduciary income
60
53
52
51
52
7
11
8
15
Service charges on deposit accounts
47
48
47
47
42
(1)
(1)
5
13
Commercial lending fees
27
18
24
19
17
9
50
10
57
Derivative income (a)
22
30
19
9
19
(8)
(25)
3
15
Letter of credit fees
10
10
10
9
9
—
—
1
16
Bank-owned life insurance
9
11
11
12
9
(2)
(22)
—
—
Brokerage fees
4
4
4
5
5
—
—
(1)
(34)
Net securities gains
—
—
—
—
1
—
—
(1)
n/m
Other noninterest income (a)
21
25
26
29
25
(4)
(17)
(4)
(13)
Total noninterest income
284
270
265
252
247
14
5
37
15
NONINTEREST EXPENSES
Salaries and benefits expense
277
282
271
257
249
(5)
(1)
28
11
Outside processing fee expense
71
64
65
58
62
7
10
9
15
Occupancy expense
38
39
42
40
37
(1)
(1)
1
4
Software expense
38
39
39
39
39
(1)
1
(1)
1
Equipment expense
13
12
13
12
12
1
9
1
4
Advertising expense
9
6
11
9
8
3
38
1
18
FDIC insurance expense
7
6
9
8
8
1
1
(1)
(25)
Other noninterest expenses (a)
10
(1)
15
15
19
11
n/m
(9)
(46)
Total noninterest expenses (a)
463
447
465
438
434
16
4
29
7
Income before income taxes (a)
421
448
286
267
146
(27)
(6)
275
n/m
Provision for income taxes (a)
93
98
65
50
28
(5)
(6)
65
n/m
NET INCOME (a)
328
350
221
217
118
(22)
(6)
210
n/m
Less:
Income allocated to participating securities
2
1
1
—
1
1
(1)
1
n/m
Preferred stock dividends
5
6
5
8
—
(1)
(1)
5
n/m
Net income attributable to common shares (a)
$
321
$
343
$
215
$
209
$
117
$
(22)
(6)
%
$
204
n/m
Earnings per common share:
Basic (a)
$
2.35
$
2.46
$
1.54
$
1.49
$
0.85
$
(0.11)
(4)
%
$
1.50
n/m
Diluted (a)
2.32
2.43
1.53
1.48
0.84
(0.11)
(4)
1.48
n/m
Comprehensive income
313
181
267
169
97
132
73
216
n/m
Cash dividends declared on common stock
92
95
94
94
96
(3)
(3)
(4)
(4)
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)
2nd Qtr
1st Qtr
4th Qtr
3rd Qtr
2nd Qtr
Balance at beginning of period:
Allowance for loan losses
$
777
$
948
$
978
$
1,007
$
916
Allowance for credit losses on lending-related commitments
30
44
60
59
62
Allowance for credit losses
807
992
1,038
1,066
978
Loan charge-offs:
Commercial
7
14
37
53
55
Commercial mortgage
—
1
—
—
1
Consumer
1
1
2
—
1
Total loan charge-offs
8
16
39
53
57
Recoveries on loans previously charged-off:
Commercial
18
11
9
17
5
Commercial mortgage
—
1
—
1
1
International
1
—
—
—
—
Consumer
—
1
1
2
1
Total recoveries
19
13
10
20
7
Net loan (recoveries) charge-offs
(11)
3
29
33
50
Provision for credit losses:
Provision for loan losses
(136)
(168)
(1)
4
141
Provision for credit losses on lending-related commitments
1
(14)
(16)
1
(3)
Provision for credit losses
(135)
(182)
(17)
5
138
Balance at end 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
Allowance for loan losses as a percentage of total loans
1.30
%
1.54
%
1.81
%
1.87
%
1.88
%
Allowance for loan losses as a percentage of total loans excluding PPP loans
1.37
1.66
1.94
2.01
2.03
Allowance for credit losses as a percentage of total loans
1.36
1.59
1.90
1.98
1.99
Allowance for credit losses as a percentage of total loans excluding PPP loans
1.44
1.72
2.03
2.14
2.15
Net loan (recoveries) charge-offs as a percentage of average total loans
(0.09)
0.03
0.22
0.26
0.37
13
NONPERFORMING ASSETS (unaudited)
Comerica Incorporated and Subsidiaries
2021
2020
(in millions)
2nd Qtr
1st Qtr
4th Qtr
3rd Qtr
2nd Qtr
SUMMARY OF NONPERFORMING ASSETS AND PAST DUE LOANS
Nonaccrual loans:
Business loans:
Commercial
$
221
$
230
$
252
$
241
$
200
Real estate construction
4
1
1
—
—
Commercial mortgage
31
34
29
20
21
Lease financing
—
1
1
1
1
Total nonaccrual business loans
256
266
283
262
222
Retail loans:
Residential mortgage
41
33
47
40
24
Consumer:
Home equity
14
15
17
20
21
Total nonaccrual retail loans
55
48
64
60
45
Total nonaccrual loans
311
314
347
322
267
Reduced-rate loans
8
2
3
3
4
Total nonperforming loans
319
316
350
325
271
Foreclosed property
—
8
8
10
11
Other repossessed assets
1
1
1
—
—
Total nonperforming assets
$
320
$
325
$
359
$
335
$
282
Nonperforming loans as a percentage of total loans
0.64
%
0.63
%
0.67
%
0.62
%
0.51
%
Nonperforming assets as a percentage of total loans and foreclosed property
0.64
0.64
0.69
0.64
0.53
Allowance for credit losses as a multiple of total nonperforming loans
2.1x
2.6x
2.8x
3.2x
3.9x
Loans past due 90 days or more and still accruing
$
27
$
60
$
45
$
29
$
41
ANALYSIS OF NONACCRUAL LOANS
Nonaccrual loans at beginning of period
$
314
$
347
$
322
$
267
$
235
Loans transferred to nonaccrual (a)
62
61
88
161
96
Nonaccrual loan gross charge-offs
(8)
(16)
(39)
(53)
(57)
Loans transferred to accrual status (a)
—
(17)
(3)
—
—
Nonaccrual loans sold
—
(25)
—
(14)
—
Payments/other (b)
(57)
(36)
(21)
(39)
(7)
Nonaccrual loans at end of period
$
311
$
314
$
347
$
322
$
267
(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
Six Months Ended
June 30, 2021
June 30, 2020
Average
Average
Average
Average
(dollar amounts in millions)
Balance
Interest
Rate
Balance
Interest
Rate
Commercial loans (a)
$
30,502
$
507
3.36
%
$
32,321
$
585
3.64
%
Real estate construction loans
4,164
69
3.34
3,725
78
4.19
Commercial mortgage loans
10,022
142
2.86
9,719
177
3.66
Lease financing (b)
585
(8)
(2.87)
587
10
3.49
International loans
999
16
3.19
1,071
21
3.96
Residential mortgage loans
1,813
28
3.11
1,875
34
3.58
Consumer loans
2,121
36
3.39
2,253
46
4.12
Total loans
50,206
790
3.17
51,551
951
3.71
Mortgage-backed securities (c)
10,657
105
1.98
9,649
114
2.40
U.S. Treasury securities (d)
4,493
34
1.56
2,837
34
2.47
Total investment securities
15,150
139
1.86
12,486
148
2.42
Interest-bearing deposits with banks
14,507
9
0.11
7,558
20
0.55
Other short-term investments
173
—
0.24
147
1
0.80
Total earning assets
80,036
938
2.36
71,742
1,120
3.15
Cash and due from banks
976
843
Allowance for loan losses
(835)
(812)
Accrued income and other assets
6,041
5,681
Total assets
$
86,218
$
77,454
Money market and interest-bearing checking deposits
$
29,505
10
0.07
$
25,486
57
0.45
Savings deposits
2,911
—
0.02
2,298
—
0.04
Customer certificates of deposit
2,141
2
0.23
2,900
19
1.32
Other time deposits
—
—
—
35
—
2.00
Foreign office time deposits
52
—
0.09
82
—
0.82
Total interest-bearing deposits
34,609
12
0.07
30,801
76
0.50
Short-term borrowings
2
—
—
519
1
0.34
Medium- and long-term debt
3,232
18
1.07
7,266
59
1.63
Total interest-bearing sources
37,843
30
0.15
38,586
136
0.71
Noninterest-bearing deposits
38,858
29,723
Accrued expenses and other liabilities
1,469
1,630
Shareholders' equity
8,048
7,515
Total liabilities and shareholders' equity
$
86,218
$
77,454
Net interest income/rate spread
$
908
2.21
$
984
2.44
Impact of net noninterest-bearing sources of funds
0.08
0.33
Net interest margin (as a percentage of average earning assets)
2.29
%
2.77
%
(a)Included PPP loans with average balances of $3.5 billion and $1.3 billion, interest income of $62 million and $14 million and average yields of 3.57% and 2.21% for the six months ended June 30, 2021 and 2020, respectively.
(b)The six months ended June 30, 2021 included residual value adjustments totaling $17 million, or a 7 basis point impact to average loan yield.
(c)Average balances included $124 million and $191 million of unrealized gains and losses for the years ended June 30, 2021 and 2020, respectively; yields calculated gross of these unrealized gains and losses.
(d)Average balances included $45 million and $91 million of unrealized gains and losses for the years ended June 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
June 30, 2021
March 31, 2021
June 30, 2020
Average
Average
Average
Average
Average
Average
(dollar amounts in millions)
Balance
Interest
Rate
Balance
Interest
Rate
Balance
Interest
Rate
Commercial loans (a)
$
30,042
$
255
3.38
%
$
30,968
$
254
3.33
%
$
33,944
$
271
3.22
%
Real estate construction loans
4,191
34
3.30
4,137
34
3.37
3,887
35
3.60
Commercial mortgage loans
10,093
72
2.87
9,952
70
2.85
9,800
76
3.12
Lease financing (b)
578
4
2.82
592
(12)
(8.44)
592
5
3.34
International loans
1,034
8
3.21
962
8
3.17
1,137
10
3.51
Residential mortgage loans
1,817
14
3.09
1,809
14
3.13
1,895
17
3.49
Consumer loans
2,073
17
3.37
2,169
18
3.40
2,243
20
3.62
Total loans
49,828
404
3.25
50,589
386
3.09
53,498
434
3.26
Mortgage-backed securities (c)
11,053
53
1.94
10,257
51
2.03
9,785
57
2.39
U.S. Treasury securities (d)
4,350
17
1.53
4,637
18
1.58
2,857
17
2.47
Total investment securities
15,403
70
1.82
14,894
69
1.89
12,642
74
2.41
Interest-bearing deposits with banks
16,126
5
0.11
12,869
4
0.10
9,709
2
0.11
Other short-term investments
176
—
0.20
171
—
0.28
140
1
0.48
Total earning assets
81,533
479
2.36
78,523
459
2.37
75,989
511
2.71
Cash and due from banks
982
970
848
Allowance for loan losses
(755)
(915)
(932)
Accrued income and other assets
6,100
5,981
5,739
Total assets
$
87,860
$
84,559
$
81,644
Money market and interest-bearing checking deposits
$
29,993
4
0.06
$
29,012
6
0.08
$
26,320
12
0.18
Savings deposits
3,021
—
0.01
2,800
—
0.02
2,394
—
0.02
Customer certificates of deposit
2,126
1
0.22
2,155
1
0.24
2,801
8
1.21
Foreign office time deposits
40
—
0.10
64
—
0.09
81
—
0.34
Total interest-bearing deposits
35,180
5
0.06
34,031
7
0.08
31,596
20
0.26
Short-term borrowings
2
—
—
3
—
0.05
882
1
0.25
Medium- and long-term debt
2,858
9
1.18
3,609
9
0.99
7,206
19
1.09
Total interest-bearing sources
38,040
14
0.15
37,643
16
0.17
39,684
40
0.41
Noninterest-bearing deposits
40,340
37,361
32,686
Accrued expenses and other liabilities
1,523
1,415
1,682
Shareholders' equity
7,957
8,140
7,592
Total liabilities and shareholders' equity
$
87,860
$
84,559
$
81,644
Net interest income/rate spread
$
465
2.21
$
443
2.20
$
471
2.30
Impact of net noninterest-bearing sources of funds
0.08
0.09
0.20
Net interest margin (as a percentage of average earning assets)
2.29
%
2.29
%
2.50
%
(a)Included PPP loans with average balances of $3.5 billion, $3.6 billion and $2.6 billion, interest income of $32 million, $31 million and $14 million and average yields of 3.66%, 3.47% and 2.21% for the three months ended June 30, 2021 ,March 31, 2021 and June 30, 2020, respectively.
(b)The three months ended March 31, 2021 included residual value adjustments totaling $17 million, or a 14 basis point impact to average loan yield.
(c)Average balances included $91 million, $157 million and $278 million of unrealized gains and losses for the three months ended June 30, 2021, March 31, 2021 and June 30, 2020, respectively; yields calculated gross of these unrealized gains and losses.
(d)Average balances included $33 million, $56 million and $111 million of unrealized gains and losses for the three months ended June 30, 2021, March 31, 2021 and June 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 MARCH 31, 2020
$
—
139.0
$
1,141
$
2,168
$
87
$
9,476
$
(5,470)
$
7,402
Net income
—
—
—
—
—
118
—
118
Other comprehensive loss, net of tax
—
—
—
—
(21)
—
—
(21)
Cash dividends declared on common stock ($0.68 per share)
—
—
—
—
—
(96)
—
(96)
Purchase of common stock
—
—
—
—
—
—
1
1
Issuance of preferred stock
395
—
—
—
—
—
—
395
Net issuance of common stock under employee stock plans
—
—
—
1
—
(2)
—
(1)
Share-based compensation
—
—
—
4
—
—
—
4
BALANCE AT JUNE 30, 2020
$
395
139.0
$
1,141
$
2,173
$
66
$
9,496
$
(5,469)
$
7,802
BALANCE AT MARCH 31, 2021
$
394
139.6
$
1,141
$
2,183
$
(105)
$
9,975
$
(5,436)
$
8,152
Net income
—
—
—
—
—
328
—
328
Other comprehensive loss, net of tax
—
—
—
—
(15)
—
—
(15)
Cash dividends declared on common stock ($0.68 per share)
—
—
—
—
—
(92)
—
(92)
Cash dividends declared on preferred stock
—
—
—
—
—
(5)
—
(5)
Purchase of common stock
—
(5.8)
—
(24)
—
—
(426)
(450)
Net issuance of common stock under employee stock plans
—
0.1
—
(3)
—
(4)
13
6
Share-based compensation
—
—
—
7
—
—
—
7
BALANCE AT JUNE 30, 2021
$
394
133.9
$
1,141
$
2,163
$
(120)
$
10,202
$
(5,849)
$
7,931
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
—
—
—
—
—
59
—
59
Other comprehensive income, net of tax
—
—
—
—
382
—
—
382
Cash dividends declared on common stock ($1.36 per share)
—
—
—
—
—
(190)
—
(190)
Purchase of common stock
—
(3.4)
—
—
—
—
(194)
(194)
Issuance of preferred stock
395
—
—
—
—
—
—
395
Net issuance of common stock under employee stock plans
—
0.3
—
(13)
—
(5)
16
(2)
Share-based compensation
—
—
—
12
—
—
—
12
BALANCE AT JUNE 30, 2020
$
395
139.0
$
1,141
$
2,173
$
66
$
9,496
$
(5,469)
$
7,802
BALANCE AT DECEMBER 31, 2020
$
394
139.2
$
1,141
$
2,185
$
64
$
9,727
$
(5,461)
$
8,050
Net income
—
—
—
—
—
678
—
678
Other comprehensive loss, net of tax
—
—
—
—
(184)
—
—
(184)
Cash dividends declared on common stock ($1.36 per share)
—
—
—
—
—
(187)
—
(187)
Cash dividends declared on preferred stock
—
—
—
—
—
(11)
—
(11)
Purchase of common stock
—
(5.9)
—
(24)
—
—
(429)
(453)
Net issuance of common stock under employee stock plans
—
0.6
—
(27)
—
(5)
41
9
Share-based compensation
—
—
—
29
—
—
—
29
BALANCE AT JUNE 30, 2021
$
394
133.9
$
1,141
$
2,163
$
(120)
$
10,202
$
(5,849)
$
7,931
(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 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 March 31, 2021
Bank
Bank
Management
Finance
Other
Total
Earnings summary:
Net interest income (expense)
$
382
$
133
$
42
$
(117)
$
3
$
443
Provision for credit losses
(177)
6
(12)
—
1
(182)
Noninterest income
159
28
67
12
4
270
Noninterest expenses
215
149
76
—
7
447
Provision (benefit) for income taxes
113
—
10
(25)
—
98
Net income (loss)
$
390
$
6
$
35
$
(80)
$
(1)
$
350
Net credit-related charge-offs
$
2
$
1
$
—
$
—
$
—
$
3
Selected average balances:
Assets
$
44,448
$
3,463
$
5,162
$
16,959
$
14,527
$
84,559
Loans
42,904
2,620
5,059
—
6
50,589
Deposits
41,102
24,322
4,826
985
157
71,392
Statistical data:
Return on average assets (a)
3.56
%
0.11
%
2.72
%
n/m
n/m
1.68
%
Efficiency ratio (b)
39.67
91.68
69.84
n/m
n/m
62.55
Commercial
Retail
Wealth
Three Months Ended June 30, 2020
Bank
Bank
Management
Finance
Other
Total
Earnings summary:
Net interest income (expense)
$
402
$
120
$
40
$
(95)
$
4
$
471
Provision for credit losses
117
5
16
—
—
138
Noninterest income
144
24
66
11
2
247
Noninterest expenses (c)
203
153
73
1
4
434
Provision (benefit) for income taxes (c)
47
(3)
3
(20)
1
28
Net income (loss) (c)
$
179
$
(11)
$
14
$
(65)
$
1
$
118
Net credit-related charge-offs
$
48
$
1
$
1
$
—
$
—
$
50
Selected average balances:
Assets
$
47,392
$
3,306
$
5,191
$
14,500
$
11,255
$
81,644
Loans
45,914
2,479
5,077
—
28
53,498
Deposits
36,318
22,647
4,217
950
150
64,282
Statistical data:
Return on average assets (a), (c)
1.51
%
(0.17
%)
1.11
%
n/m
n/m
0.58
%
Efficiency ratio (b), (c)
37.18
105.07
68.18
n/m
n/m
60.11
(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 net gains from securities and 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 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 March 31, 2021
Michigan
California
Texas
Markets
& Other
Total
Earnings summary:
Net interest income (expense)
$
155
$
172
$
113
$
117
$
(114)
$
443
Provision for credit losses
(28)
(54)
(86)
(15)
1
(182)
Noninterest income
66
48
36
104
16
270
Noninterest expenses
136
104
88
112
7
447
Provision (benefit) for income taxes
22
40
31
30
(25)
98
Net income (loss)
$
91
$
130
$
116
$
94
$
(81)
$
350
Net credit-related charge-offs
$
—
$
1
$
2
$
—
$
—
$
3
Selected average balances:
Assets
$
12,868
$
18,030
$
10,640
$
11,537
$
31,484
$
84,559
Loans
12,311
17,895
10,148
10,231
4
50,589
Deposits
25,668
19,856
10,775
13,951
1,142
71,392
Statistical data:
Return on average assets (a)
1.40
%
2.52
%
3.88
%
2.54
%
n/m
1.68
%
Efficiency ratio (b)
61.24
47.10
58.91
50.71
n/m
62.55
Other
Finance
Three Months Ended June 30, 2020
Michigan
California
Texas
Markets
& Other
Total
Earnings summary:
Net interest income (expense)
$
161
$
169
$
115
$
117
$
(91)
$
471
Provision for credit losses
41
47
31
19
—
138
Noninterest income
64
34
30
106
13
247
Noninterest expenses (c)
138
98
89
104
5
434
Provision (benefit) for income taxes (c)
8
13
5
21
(19)
28
Net income (loss) (c)
$
38
$
45
$
20
$
79
$
(64)
$
118
Net credit-related charge-offs (recoveries)
$
1
$
(1)
$
46
$
4
$
—
$
50
Selected average balances:
Assets
$
13,617
$
18,403
$
11,555
$
12,345
$
25,724
$
81,644
Loans
13,092
18,249
11,162
10,998
(3)
53,498
Deposits
23,396
17,410
10,198
12,178
1,100
64,282
Statistical data:
Return on average assets (a), (c)
0.62
%
0.98
%
0.71
%
2.40
%
n/m
0.58
%
Efficiency ratio (b), (c)
61.00
48.08
61.06
46.21
n/m
60.11
(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 net gains from securities and 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
$
56.28
$
55.58
$
53.28
Tangible common equity per share of common stock
51.43
50.93
48.69
(a)June 30, 2021 ratios are estimated. Ratios reflect deferral of CECL model impact as calculated per regulatory guidance. The estimated deferred amount was zero at June 30, 2021, $26 million at March 31, 2021 and $91 million at June 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
Six Months Ended
December 31,
September 30,
June 30,
June 30,
(in millions, except per share data)
2020
2020
2020
2020
Other noninterest expenses:
As reported
$
23
$
23
$
25
$
50
Effect of accounting change
(8)
(8)
(6)
(14)
Recast other noninterest expense
$
15
$
15
$
19
$
36
Provision for income taxes:
As reported
$
63
$
48
$
27
$
6
Effect of accounting change
2
2
1
3
Recast provision for income taxes
$
65
$
50
$
28
$
9
Net income:
As reported
$
215
$
211
$
113
$
48
Effect of accounting change
6
6
5
11
Recast net income
$
221
$
217
$
118
$
59
Basic earnings per common share:
As reported
$
1.50
$
1.45
$
0.81
$
0.34
Effect of accounting change
0.04
0.04
0.04
0.08
Recast basic earnings per common share
$
1.54
$
1.49
$
0.85
$
0.42
Diluted earnings per common share:
As reported
$
1.49
$
1.44
$
0.80
$
0.34
Effect of accounting change
0.04
0.04
0.04
0.08
Recast diluted earnings per common share
$
1.53
$
1.48
$
0.84
$
0.42
Consolidated Balance Sheets
December 31,
June 30,
March 31,
December 31,
(in millions)
2020
2020
2020
2019
Accumulated other comprehensive income (loss):
As reported
$
168
$
158
$
174
$
(235)
Effect of accounting change
(104)
(92)
(87)
(81)
Recast accumulated other comprehensive income (loss)
$
64
$
66
$
87
$
(316)
Retained earnings:
As reported
$
9,623
$
9,404
$
9,389
$
9,538
Effect of accounting change
104
$
92
87
81
Recast retained earnings
$
9,727
$
9,496
$
9,476
$
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
Six Months Ended
December 31,
September 30,
June 30,
June 30,
(in millions)
2020
2020
2020
2020
Foreign exchange income (as reported)
$
11
$
9
$
9
$
20
Customer derivative income (a)
8
—
10
19
Derivative income
$
19
$
9
$
19
$
39
Other noninterest income (as reported)
$
34
$
29
$
35
$
55
Less: Customer derivative income (a)
8
—
10
19
Other noninterest income (as adjusted)
$
26
$
29
$
25
$
36
(a)Previously reported as a component of other noninterest income.
