SECOND QUARTER 2023 NET INCOME OF $273 MILLION, $2.01 PER SHARE
Higher Fee Income, Broad-Based Loan Growth and Prudent Expense Management
Proven Discipline and Excellent Credit Quality with a Solid Capital Position
“Our second quarter results were strong with earnings per share of $2.01, record average loans and our second highest quarter of noninterest income in history,” said Curtis C. Farmer, Comerica Chairman and Chief Executive Officer.
“Customer deposits continued to normalize following the March banking industry disruption and stabilized in the second half of the quarter. Credit quality was excellent with another quarter of net recoveries, and noninterest expenses declined $16 million from the first quarter as we remained committed to running an efficient organization. Our capital position continued to be a source of strength as profitability outpaced loan growth, and our CET1 ratio increased to 10.31.
“With strategic actions and select investments, we are taking steps to further improve our attractive financial results over time and better position ourselves as a long-term banking partner to our customers.”
(dollar amounts in millions, except per share data)
2nd Qtr '23
1st Qtr '23
2nd Qtr '22
FINANCIAL RESULTS
Net interest income
$
621
$
708
$
561
Provision for credit losses
33
30
10
Noninterest income
303
282
268
Noninterest expenses
535
551
482
Pre-tax income
356
409
337
Provision for income taxes
83
85
76
Net income
$
273
$
324
$
261
Diluted earnings per common share
$
2.01
$
2.39
$
1.92
Average loans
55,368
53,468
50,027
Average deposits
64,332
67,833
77,589
Return on average assets
1.21
%
1.54
%
1.18
%
Return on average common shareholders' equity
19.38
24.20
16.72
Net interest margin
2.93
3.57
2.70
Efficiency ratio (a)
57.70
55.53
58.03
Common equity Tier 1 capital ratio (b)
10.31
10.12
9.72
Tier 1 capital ratio (b)
10.80
10.61
10.24
(a)Noninterest expenses as a percentage of the sum of net interest income and noninterest income excluding net gains (losses) from securities, a derivative contract tied to the conversion rate of Visa Class B shares and changes in the value of shares obtained through monetization of warrants.
(b)June 30, 2023 ratios are estimated.
Second Quarter 2023 Compared to First Quarter 2023 Overview
Balance sheet items discussed in terms of average balances unless otherwise noted.
Loans increased $1.9 billion to $55.4 billion.
•Broad-based growth in most lines of business, including increases of $527 million in Commercial Real Estate, $447 million in Corporate Banking, $400 million in National Dealer Services, $325 million in Mortgage Banker Finance and $140 million in Wealth Management.
◦Organic exit from Mortgage Banker Finance business is expected to be mostly complete by year-end 2023.
•Average yield on loans (including swaps) increased 29 basis points to 6.18%, primarily driven by higher short-term rates.
Securities decreased $901 million to $17.9 billion.
•Decrease driven by maturities and paydowns.
•Period-end unrealized losses on securities increased $212 million to $2.9 billion.
Deposits decreased $3.5 billion to $64.3 billion.
•Noninterest-bearing deposits decreased $5.7 billion, partially offset by an increase of $2.2 billion in interest-bearing deposits.
◦Decreases of $1.9 billion in general Middle Market (primarily Financial Institutions and California-based Middle Market lending), $1.2 billion in Retail Banking, $1.0 billion in Technology and Life Sciences, $861 million in Corporate Banking, $773 million in Wealth Management, $689 million in Energy and $564 million in Commercial Real Estate.
◦The above declines were partially offset by an increase of $4.2 billion in brokered time deposits, which are fully insured by the FDIC.
◦On a period-end basis, deposits increased $1.3 billion, reflecting a $3.4 billion increase in interest-bearing deposits, partially offset by a $2.1 billion decline in noninterest-bearing deposits.
•Uninsured deposits as calculated per regulatory guidance decreased $3.4 billion to $31.6 billion, or 47.9% of total deposits. Excluding affiliate deposits, uninsured deposits decreased $3.5 billion to $27.2 billion, or 41.2% of total deposits.
•The average cost of interest-bearing deposits increased 85 basis points to 237 basis points, mostly reflecting an increase in brokered and reciprocal deposits as well as relationship-focused pricing in a rising-rate environment.
Short-term borrowings increased $5.1 billion to $10.6 billion, while medium- and long-term debt increased $3.2 billion to $7.1 billion, reflecting the full impact of FHLB advances borrowed during the first quarter.
•Total liquidity capacity at period-end totaled $42.9 billion, including cash and available liquidity through the FHLB and the FRB discount window and Bank Term Funding Program.
Net interest income decreased $87 million to $621 million.
•The net benefit from higher short-term rates, loan growth and the impact of one additional day in the quarter was more than offset by an increase in borrowings and interest-bearing deposits.
Provision for credit losses increased $3 million to $33 million.
•The allowance for credit losses increased $35 million to $728 million at June 30, 2023, reflecting loan growth, the continuation of an uncertain economic outlook and credit migration. As a percentage of total loans, the allowance for credit losses was 1.31%, an increase of 5 basis points.
Noninterest income increased $21 million to $303 million.
•The increase in other noninterest income included a $6 million increase in FHLB stock dividends and a $5 million valuation reserve for assets held for sale recorded in the first quarter, while bank-owned life insurance and fiduciary income increased $4 million each and card fees grew by $3 million.
Noninterest expenses decreased $16 million to $535 million.
•Decreases of $20 million in salaries and benefits expense and $8 million in other noninterest expenses were partially offset by increases of $4 million in outside processing fee expense and $3 million each in FDIC insurance and software expense.
◦Salaries and benefits expense was impacted by seasonal decreases of $20 million in annual stock-based compensation and $6 million in payroll taxes, as well as a decrease of $3 million in incentive compensation, partially offset by increases of $4 million in merit-based salary increases and $3 million each in staff insurance expense and temporary labor.
◦The $8 million decrease in other noninterest expenses was primarily due to decreases of $9 million in certain modernization initiatives (mainly $8 million in contract termination and asset impairment costs included in the first quarter which did not repeat in the second quarter), $8 million in litigation-related expenses and $3 million in operational losses, partially offset by a $6 million refund related to a favorable state tax ruling received in the first quarter and a $5 million increase in legal fees.
Common equity Tier 1 capital ratio of 10.31% and a Tier 1 capital ratio of 10.80%.
•Declared dividends of $94 million on common stock and $5 million on preferred stock.
•Tangible common equity ratio was 5.06%; excluding the impact of accumulated other comprehensive loss, tangible common equity ratio was 9.22%.
See Reconciliations of Non-GAAP Financial Measures and Regulatory Ratios.
2
Net Interest Income
Balance sheet items presented and discussed in terms of average balances.
(dollar amounts in millions)
2nd Qtr '23
1st Qtr '23
2nd Qtr '22
Net interest income
$
621
$
708
$
561
Net interest margin
2.93
%
3.57
%
2.70
%
Selected balances:
Total earning assets
$
82,311
$
77,375
$
80,093
Total loans
55,368
53,468
50,027
Total investment securities
17,865
18,766
19,029
Federal Reserve Bank deposits
8,409
4,839
10,409
Total deposits
64,332
67,833
77,589
Total noninterest-bearing deposits
30,559
36,251
42,918
Short-term borrowings
10,568
5,454
5
Medium- and long-term debt
7,073
3,832
2,656
Net interest income decreased $87 million, and net interest margin decreased 64 basis points, compared to first quarter 2023. Amounts shown in parentheses represent the impacts to net interest income and net interest margin, respectively, with impacts of hedging strategy included with rate.
•Interest income on loans increased $75 million and improved net interest margin by 23 basis points, driven by higher short-term rates (+$40 million, +18 basis points), higher loan balances (+$32 million, +8 basis points) and one additional day in the quarter (+$8 million), partially offset by a decrease from other portfolio dynamics (-$5 million, -3 basis points).
•Interest income on investment securities decreased $5 million, while net interest margin remained stable due to lower rates (-$3 million, -1 basis point) and the impact of a decline in lower-yielding securities balances (-$2 million, +1 basis point).
•Interest income on short-term investments increased $55 million and improved net interest margin by 10 basis points, primarily reflecting an increase of $3.6 billion in deposits with the Federal Reserve (+$48 million, +7 basis points), higher short-term rates (+$6 million, +3 basis points) and one additional day in the quarter (+$1 million).
•Interest expense on deposits increased $83 million and reduced net interest margin by 38 basis points, reflecting higher average interest-bearing deposit balances as well as a shift in deposit mix (-$69 million, -32 basis points), higher rates (-$13 million, -6 basis points) and one additional day in the quarter (-$1 million).
•Interest expense on debt increased $129 million and reduced net interest margin by 59 basis points, primarily driven by a $5.2 billion increase in short-term FHLB advances (-$69 million, -32 basis points) and a $3.2 billion increase in medium- and long-term FHLB advances (-$38 million, -17 basis points), as well as higher rates (-$21 million, -10 basis points) and one additional day in the quarter (-$1 million).
The net impact of higher rates to second quarter 2023 net interest income was an increase of $9 million and 4 basis points to net interest margin.
3
Credit Quality
“With a third consecutive quarter of net recoveries, credit results remained excellent,” said Farmer. “Elevated interest rates continued to drive credit migration as we saw manageable increases in criticized loans (including nonperforming loans) to 4% of total loans, still below historical levels. This migration, along with loan growth and an uncertain economic outlook, drove a $33 million provision expense for the quarter, and allowance for credit losses increased moderately to 1.31% of total loans. Customers remain focused on conservatively managing their businesses and liquidity as they prepare for potential economic volatility. With our proven credit discipline and relationship approach, we feel well positioned to support our customers.”
(dollar amounts in millions)
2nd Qtr '23
1st Qtr '23
2nd Qtr '22
Credit-related charge-offs
$
11
$
12
$
13
Recoveries
13
14
13
Net credit-related (recoveries) charge-offs
(2)
(2)
—
Net credit-related (recoveries) charge-offs/Average total loans
(0.01
%)
(0.01
%)
—
%
Provision for credit losses
$
33
$
30
$
10
Nonperforming loans
186
221
265
Nonperforming assets (NPAs)
186
221
266
NPAs/Total loans and foreclosed property
0.33
%
0.40
%
0.52
%
Loans past due 90 days or more and still accruing
$
9
$
20
$
12
Allowance for loan losses
684
641
563
Allowance for credit losses on lending-related commitments (a)
44
52
46
Total allowance for credit losses
728
693
609
Allowance for credit losses/Period-end total loans
1.31
%
1.26
%
1.18
%
Allowance for credit losses/Nonperforming loans
3.9x
3.1x
2.3x
(a) Included in accrued expenses and other liabilities on the Consolidated Balance Sheets.
•The allowance for credit losses increased $35 million to $728 million at June 30, 2023, or 1.31% of total loans, reflecting loan growth, the continuation of an uncertain economic outlook and credit migration.
•Criticized loans increased $130 million to $2.0 billion, or 3.7% of total loans. Criticized loans are generally consistent with the Special Mention, Substandard and Doubtful categories defined by regulatory authorities.
◦The increase in criticized loans was primarily driven by general Middle Market.
•Nonperforming assets decreased $35 million to $186 million, or 0.33% of total loans and foreclosed property, compared to 0.40% in first quarter 2023.
•Net recoveries totaled $2 million, consistent with the first quarter 2023.
Strategic Lines of Business
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. For a summary of business segment quarterly results, see the Business Segment Financial Results tables included later in this press release. 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 structures of Comerica and methodologies in effect at June 30, 2023. A discussion of business segment year-to-date results will be included in Comerica’s Second Quarter 2023 Form 10-Q.
Conference Call and Webcast
Comerica will host a conference call to review second quarter 2023 financial results at 7 a.m. CT Friday, July 21, 2023. Interested parties may access the conference call by calling (877) 336-4440 or (409) 207-6984 (Event ID No. 4619582). The call and supplemental financial information, as well as a replay of the Webcast, can also be accessed via Comerica's "Investor Relations" page at www.comerica.com.
4
Comerica Incorporated is a financial services company headquartered in Dallas, Texas, and strategically aligned by three business segments: the Commercial Bank, the Retail Bank and Wealth Management. Comerica is one of the 25 largest U.S. commercial bank financial holding companies and focuses on building relationships and helping people and businesses be successful. Comerica provides more than 400 banking centers across the country with locations in Arizona, California, Florida, Michigan and Texas. Founded nearly 174 years ago in Detroit, Michigan, Comerica continues to expand into new regions, including its Southeast Market, based in North Carolina, and Mountain West Market in Colorado. Comerica has offices in 17 states and services 14 of the 15 largest U.S. metropolitan areas, as well as 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.
5
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 (changes in customer behavior; unfavorable developments concerning credit quality; and declines or other changes in the businesses or industries of Comerica's customers); 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, or changes in Comerica’s status with respect to existing regulations 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 (changes in general economic, political or industry conditions; negative effects from inflation; the effectiveness of methods of reducing risk exposures; the effects of catastrophic events, including pandemics; physical or transition risks related to climate change; changes in accounting standards; 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, 2022, as updated by "Item 1A. Risk Factors" beginning on page 60 of Comerica's Quarterly Report on Form 10-Q for the quarter ended March 31, 2023. 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:
Nicole Hogan
Kelly Gage
(214) 462-6657
(214) 462-6831
Louis H. Mora
Morgan Mathers
(214) 462-6669
(214) 462-6731
6
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)
2023
2023
2022
2023
2022
PER COMMON SHARE AND COMMON STOCK DATA
Diluted earnings per common share
$
2.01
$
2.39
$
1.92
$
4.40
$
3.29
Cash dividends declared
0.71
0.71
0.68
1.42
1.36
Average diluted shares (in thousands)
132,356
132,489
132,446
132,455
132,687
PERFORMANCE RATIOS
Return on average common shareholders' equity
19.38
%
24.20
%
16.72
%
21.73
%
13.13
%
Return on average assets
1.21
1.54
1.18
1.37
1.01
Efficiency ratio (a)
57.70
55.53
58.03
56.58
62.11
CAPITAL
Common equity tier 1 capital (b), (c)
$
8,311
$
8,124
$
7,349
Tier 1 capital (b), (c)
8,705
8,518
7,743
Risk-weighted assets (b)
80,592
80,251
75,588
Common equity tier 1 capital ratio (b), (c)
10.31
%
10.12
%
9.72
%
Tier 1 capital ratio (b), (c)
10.80
10.61
10.24
Total capital ratio (b)
12.79
12.57
11.75
Leverage ratio (b)
9.38
9.71
8.62
Common shareholders' equity per share of common stock
$
39.48
$
42.57
$
46.19
Tangible common equity per share of common stock (c)
34.59
37.68
41.25
Common equity ratio
5.73
%
6.15
%
6.95
%
Tangible common equity ratio (c)
5.06
5.48
6.26
AVERAGE BALANCES
Commercial loans
$
31,663
$
30,517
$
29,918
$
31,093
$
29,101
Real estate construction loans
3,708
3,345
2,332
3,528
2,494
Commercial mortgage loans
13,801
13,464
11,947
13,633
11,798
Lease financing
776
765
642
770
639
International loans
1,268
1,226
1,303
1,247
1,262
Residential mortgage loans
1,858
1,833
1,773
1,846
1,779
Consumer loans
2,294
2,318
2,112
2,306
2,082
Total loans
55,368
53,468
50,027
54,423
49,155
Earning assets
82,311
77,375
80,093
79,857
81,822
Total assets
90,355
85,138
88,810
87,761
89,974
Noninterest-bearing deposits
30,559
36,251
42,918
33,389
43,167
Interest-bearing deposits
33,773
31,582
34,671
32,683
35,175
Total deposits
64,332
67,833
77,589
66,072
78,342
Common shareholders' equity
5,544
5,334
6,131
5,440
6,734
Total shareholders' equity
5,938
5,728
6,525
5,834
7,128
NET INTEREST INCOME
Net interest income
$
621
$
708
$
561
$
1,329
$
1,017
Net interest margin
2.93
%
3.57
%
2.70
%
3.24
%
2.44
%
CREDIT QUALITY
Nonperforming assets
$
186
$
221
$
266
Loans past due 90 days or more and still accruing
9
20
12
Net credit-related (recoveries) charge-offs
(2)
(2)
—
$
(4)
$
8
Allowance for loan losses
684
641
563
Allowance for credit losses on lending-related commitments
44
52
46
Total allowance for credit losses
728
693
609
Allowance for credit losses as a percentage of total loans
1.31
%
1.26
%
1.18
%
Net loan (recoveries) charge-offs as a percentage of average total loans
(0.01)
(0.01)
—
(0.01
%)
0.03
%
Nonperforming assets as a percentage of total loans and foreclosed property
0.33
0.40
0.52
Allowance for credit losses as a multiple of total nonperforming loans
3.9x
3.1x
2.3x
OTHER KEY INFORMATION
Number of banking centers
409
410
433
Number of employees - full time equivalent
7,672
7,586
7,436
(a) Noninterest expenses as a percentage of the sum of net interest income and noninterest income excluding net gains (losses) from securities, a derivative contract tied to the conversion rate of Visa Class B shares and changes in the value of shares obtained through monetization of warrants.
(b) June 30, 2023 ratios are estimated.
(c) See Reconciliations of Non-GAAP Financial Measures and Regulatory Ratios.
7
CONSOLIDATED BALANCE SHEETS
Comerica Incorporated and Subsidiaries
June 30,
March 31,
December 31,
June 30,
(in millions, except share data)
2023
2023
2022
2022
(unaudited)
(unaudited)
(unaudited)
ASSETS
Cash and due from banks
$
1,413
$
1,563
$
1,758
$
1,631
Interest-bearing deposits with banks
8,810
9,171
4,524
5,902
Other short-term investments
389
354
157
160
Investment securities available-for-sale
17,415
18,295
19,012
20,829
Commercial loans
31,745
31,630
30,909
31,259
Real estate construction loans
3,983
3,567
3,105
2,465
Commercial mortgage loans
13,851
13,592
13,306
11,855
Lease financing
756
766
760
653
International loans
1,282
1,233
1,197
1,291
Residential mortgage loans
1,894
1,822
1,814
1,753
Consumer loans
2,253
2,316
2,311
2,178
Total loans
55,764
54,926
53,402
51,454
Allowance for loan losses
(684)
(641)
(610)
(563)
Net loans
55,080
54,285
52,792
50,891
Premises and equipment
397
399
400
422
Accrued income and other assets
7,257
7,060
6,763
7,054
Total assets
$
90,761
$
91,127
$
85,406
$
86,889
LIABILITIES AND SHAREHOLDERS' EQUITY
Noninterest-bearing deposits
$
31,067
$
33,173
$
39,945
$
42,308
Money market and interest-bearing checking deposits
24,397
24,323
26,290
28,409
Savings deposits
2,760
2,998
3,225
3,342
Customer certificates of deposit
2,630
2,077
1,762
1,686
Other time deposits
5,159
2,116
124
—
Foreign office time deposits
2
19
51
20
Total interest-bearing deposits
34,948
31,533
31,452
33,457
Total deposits
66,015
64,706
71,397
75,765
Short-term borrowings
9,558
11,016
3,211
—
Accrued expenses and other liabilities
2,632
2,327
2,593
2,059
Medium- and long-term debt
6,961
7,084
3,024
2,630
Total liabilities
85,166
85,133
80,225
80,454
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
2,212
2,209
2,220
2,204
Accumulated other comprehensive loss
(3,756)
(3,171)
(3,742)
(1,954)
Retained earnings
11,648
11,476
11,258
10,752
Less cost of common stock in treasury - 96,449,879 shares at 6/30/23, 96,631,155 shares at 3/31/23, 97,197,962 shares at 12/31/22 and 97,387,508 shares at 6/30/22
(6,044)
(6,055)
(6,090)
(6,102)
Total shareholders' equity
5,595
5,994
5,181
6,435
Total liabilities and shareholders' equity
$
90,761
$
91,127
$
85,406
$
86,889
8
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)
2023
2022
2023
2022
(unaudited)
(unaudited)
(unaudited)
(unaudited)
INTEREST INCOME
Interest and fees on loans
$
852
$
454
$
1,629
$
837
Interest on investment securities
108
100
221
177
Interest on short-term investments
114
23
173
32
Total interest income
1,074
577
2,023
1,046
INTEREST EXPENSE
Interest on deposits
201
4
319
8
Interest on short-term borrowings
142
—
208
—
Interest on medium- and long-term debt
110
12
167
21
Total interest expense
453
16
694
29
Net interest income
621
561
1,329
1,017
Provision for credit losses
33
10
63
(1)
Net interest income after provision for credit losses
588
551
1,266
1,018
NONINTEREST INCOME
Card fees
72
69
141
138
Fiduciary income
62
62
120
120
Service charges on deposit accounts
47
50
93
98
Capital markets income (a)
39
43
78
72
Commercial lending fees (a)
18
17
36
33
Bank-owned life insurance
14
12
24
25
Letter of credit fees
11
9
21
18
Brokerage fees
8
4
16
8
Other noninterest income (a)
32
2
56
—
Total noninterest income
303
268
585
512
NONINTEREST EXPENSES
Salaries and benefits expense
306
294
632
583
Outside processing fee expense
68
62
132
124
Software expense
43
41
83
80
Occupancy expense
41
40
82
78
FDIC insurance expense
16
8
29
16
Equipment expense
12
13
24
24
Advertising expense
10
8
18
15
Other noninterest expenses
39
16
86
35
Total noninterest expenses
535
482
1,086
955
Income before income taxes
356
337
765
575
Provision for income taxes
83
76
168
125
NET INCOME
273
261
597
450
Less:
Income allocated to participating securities
2
1
3
2
Preferred stock dividends
5
5
11
11
Net income attributable to common shares
$
266
$
255
$
583
$
437
Earnings per common share:
Basic
$
2.02
$
1.94
$
4.43
$
3.33
Diluted
2.01
1.92
4.40
3.29
Comprehensive (loss) income
(312)
(520)
583
(1,292)
Cash dividends declared on common stock
94
89
188
178
Cash dividends declared per common share
0.71
0.68
1.42
1.36
(a) Adjusted 2022 amounts. See Reconciliations of Previously Reported Balances.
9
CONSOLIDATED QUARTERLY STATEMENTS OF COMPREHENSIVE INCOME (unaudited)
Comerica Incorporated and Subsidiaries
Second
First
Fourth
Third
Second
Second Quarter 2023 Compared to:
Quarter
Quarter
Quarter
Quarter
Quarter
First Quarter 2023
Second Quarter 2022
(in millions, except per share data)
2023
2023
2022
2022
2022
Amount
Percent
Amount
Percent
INTEREST INCOME
Interest and fees on loans
$
852
$
777
$
719
$
597
$
454
$
75
10
%
$
398
88
%
Interest on investment securities
108
113
118
119
100
(5)
(4)
8
8
Interest on short-term investments
114
59
39
34
23
55
92
91
n/m
Total interest income
1,074
949
876
750
577
125
13
497
86
INTEREST EXPENSE
Interest on deposits
201
118
78
16
4
83
70
197
n/m
Interest on short-term borrowings
142
66
16
1
—
76
n/m
142
n/m
Interest on medium- and long-term debt
110
57
40
26
12
53
94
98
n/m
Total interest expense
453
241
134
43
16
212
88
437
n/m
Net interest income
621
708
742
707
561
(87)
(12)
60
11
Provision for credit losses
33
30
33
28
10
3
14
23
n/m
Net interest income after provision
for credit losses
588
678
709
679
551
(90)
(13)
37
7
NONINTEREST INCOME
Card fees
72
69
68
67
69
3
4
3
4
Fiduciary income
62
58
55
58
62
4
6
—
—
Service charges on deposit accounts
47
46
47
50
50
1
—
(3)
(8)
Capital markets income (a)
39
39
34
48
43
—
—
(4)
(9)
Commercial lending fees (a)
18
18
18
17
17
—
—
1
11
Bank-owned life insurance
14
10
10
12
12
4
45
2
18
Letter of credit fees
11
10
10
10
9
1
7
2
18
Brokerage fees
8
8
7
6
4
—
—
4
75
Other noninterest income (a)
32
24
29
10
2
8
31
30
n/m
Total noninterest income
303
282
278
278
268
21
7
35
13
NONINTEREST EXPENSES
Salaries and benefits expense
306
326
318
307
294
(20)
(6)
12
4
Outside processing fee expense
68
64
63
64
62
4
7
6
9
Software expense
43
40
41
40
41
3
5
2
4
Occupancy expense
41
41
53
44
40
—
—
1
2
FDIC insurance expense
16
13
7
8
8
3
19
8
90
Equipment expense
12
12
14
12
13
—
—
(1)
—
Advertising expense
10
8
14
9
8
2
18
2
17
Other noninterest expenses
39
47
31
18
16
(8)
(17)
23
n/m
Total noninterest expenses
535
551
541
502
482
(16)
(3)
53
11
Income before income taxes
356
409
446
455
337
(53)
(13)
19
6
Provision for income taxes
83
85
96
104
76
(2)
(4)
7
9
NET INCOME
273
324
350
351
261
(51)
(16)
12
5
Less:
Income allocated to participating securities
2
1
2
2
1
1
—
1
3
Preferred stock dividends
5
6
6
6
5
(1)
—
—
—
Net income attributable to common shares
$
266
$
317
$
342
$
343
$
255
$
(51)
(16
%)
$
11
5
%
Earnings per common share:
Basic
$
2.02
$
2.41
$
2.61
$
2.63
$
1.94
$
(0.39)
(16
%)
$
0.08
4
%
Diluted
2.01
2.39
2.58
2.60
1.92
(0.38)
(16)
0.09
5
Comprehensive (loss) income
(312)
895
195
(1,282)
(520)
(1,207)
n/m
208
(40)
Cash dividends declared on common stock
94
94
89
89
89
—
—
5
5
Cash dividends declared per common share
0.71
0.71
0.68
0.68
0.68
—
—
0.03
4
(a) Adjusted 2022 amounts. See Reconciliations of Previously Reported Balances.
n/m - not meaningful
10
ANALYSIS OF THE ALLOWANCE FOR CREDIT LOSSES (unaudited)
Comerica Incorporated and Subsidiaries
2023
2022
(in millions)
2nd Qtr
1st Qtr
4th Qtr
3rd Qtr
2nd Qtr
Balance at beginning of period:
Allowance for loan losses
$
641
$
610
$
576
$
563
$
554
Allowance for credit losses on lending-related commitments
52
51
48
46
45
Allowance for credit losses
693
661
624
609
599
Loan charge-offs:
Commercial
9
11
10
25
13
International
1
—
—
—
—
Consumer
1
1
1
1
—
Total loan charge-offs
11
12
11
26
13
Recoveries on loans previously charged-off:
Commercial
12
13
13
12
12
Real estate construction
—
—
1
—
—
Commercial mortgage
1
—
—
—
—
Residential mortgage
—
—
—
1
—
Consumer
—
1
1
—
1
Total recoveries
13
14
15
13
13
Net loan (recoveries) charge-offs
(2)
(2)
(4)
13
—
Provision for credit losses:
Provision for loan losses
41
29
30
26
9
Provision for credit losses on lending-related commitments
(8)
1
3
2
1
Provision for credit losses
33
30
33
28
10
Balance at end of period:
Allowance for loan losses
684
641
610
576
563
Allowance for credit losses on lending-related commitments
44
52
51
48
46
Allowance for credit losses
$
728
$
693
$
661
$
624
$
609
Allowance for credit losses as a percentage of total loans
1.31
%
1.26
%
1.24
%
1.21
%
1.18
%
Net loan (recoveries) charge-offs as a percentage of average total loans
(0.01)
(0.01)
(0.03)
0.10
—
11
NONPERFORMING ASSETS (unaudited)
Comerica Incorporated and Subsidiaries
2023
2022
(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
$
93
$
134
$
142
$
154
$
161
Real estate construction
2
3
3
4
4
Commercial mortgage
37
24
23
25
29
International
4
3
3
5
5
Total nonaccrual business loans
136
164
171
188
199
Retail loans:
Residential mortgage
33
39
53
56
49
Consumer:
Home equity
17
18
15
14
13
Other consumer
—
—
1
1
1
Total nonaccrual retail loans
50
57
69
71
63
Total nonaccrual loans
186
221
240
259
262
Reduced-rate loans
n/a
n/a
4
3
3
Total nonperforming loans
186
221
244
262
265
Foreclosed property
—
—
—
—
1
Total nonperforming assets
$
186
$
221
$
244
$
262
$
266
Nonperforming loans as a percentage of total loans
0.33
%
0.40
%
0.46
%
0.51
%
0.52
%
Nonperforming assets as a percentage of total loans and foreclosed property
0.33
0.40
0.46
0.51
0.52
Allowance for credit losses as a multiple of total nonperforming loans
3.9x
3.1x
2.7x
2.4x
2.3x
Loans past due 90 days or more and still accruing
$
9
$
20
$
23
$
72
$
12
ANALYSIS OF NONACCRUAL LOANS
Nonaccrual loans at beginning of period
$
221
$
240
$
259
$
262
$
269
Loans transferred to nonaccrual (a)
17
9
16
45
30
Nonaccrual loan gross charge-offs
(11)
(12)
(11)
(26)
(13)
Loans transferred to accrual status (a)
—
(7)
(7)
—
—
Nonaccrual loans sold
(3)
(1)
(2)
(4)
(9)
Payments/other (b)
(38)
(8)
(15)
(18)
(15)
Nonaccrual loans at end of period
$
186
$
221
$
240
$
259
$
262
(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.
n/a Reduced-rate loans represented troubled debt restructurings (TDRs) which have been renegotiated to less than the original contractual rates. Effective January 1, 2023, the Corporation prospectively adopted the provisions of Accounting Standards Update No. 2022-02, "Financial Instruments - Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures," which eliminated the accounting for TDRs.
12
ANALYSIS OF NET INTEREST INCOME (unaudited)
Comerica Incorporated and Subsidiaries
Six Months Ended
June 30, 2023
June 30, 2022
Average
Average
Average
Average
(dollar amounts in millions)
Balance
Interest
Rate
Balance
Interest
Rate
Commercial loans (a)
$
31,093
$
847
5.50
%
$
29,101
$
514
3.56
%
Real estate construction loans
3,528
138
7.90
2,494
48
3.82
Commercial mortgage loans
13,633
466
6.90
11,798
183
3.13
Lease financing (b)
770
14
3.58
639
9
2.95
International loans
1,247
48
7.85
1,262
21
3.38
Residential mortgage loans
1,846
31
3.35
1,779
25
2.83
Consumer loans
2,306
85
7.43
2,082
37
3.55
Total loans
54,423
1,629
6.04
49,155
837
3.43
Mortgage-backed securities (c)
16,200
214
2.28
15,321
163
1.99
U.S. Treasury securities (d)
2,113
7
0.63
2,862
14
0.99
Total investment securities
18,313
221
2.10
18,183
177
1.83
Interest-bearing deposits with banks (e)
6,839
168
4.95
14,302
32
0.41
Other short-term investments
282
5
3.27
182
—
0.42
Total earning assets
79,857
2,023
4.94
81,822
1,046
2.51
Cash and due from banks
1,313
1,434
Allowance for loan losses
(626)
(568)
Accrued income and other assets
7,217
7,286
Total assets
$
87,761
$
89,974
Money market and interest-bearing checking deposits (f)
$
25,253
241
1.92
$
30,008
6
0.05
Savings deposits
3,011
3
0.19
3,272
—
0.02
Customer certificates of deposit
2,092
18
1.81
1,847
2
0.18
Other time deposits
2,294
56
4.94
—
—
—
Foreign office time deposits
33
1
3.81
48
—
0.34
Total interest-bearing deposits
32,683
319
1.96
35,175
8
0.05
Federal funds purchased
46
1
4.60
3
—
0.56
Other short-term borrowings
7,979
207
5.23
—
—
—
Medium- and long-term debt
5,462
167
6.12
2,711
21
1.55
Total interest-bearing sources
46,170
694
3.02
37,889
29
0.16
Noninterest-bearing deposits
33,389
43,167
Accrued expenses and other liabilities
2,368
1,790
Shareholders' equity
5,834
7,128
Total liabilities and shareholders' equity
$
87,761
$
89,974
Net interest income/rate spread
$
1,329
1.92
$
1,017
2.35
Impact of net noninterest-bearing sources of funds
1.32
0.09
Net interest margin (as a percentage of average earning assets)
3.24
%
2.44
%
(a)Interest income on commercial loans included $(269) million and $47 million of business loan swap (expense) income for the six months ended June 30, 2023 and 2022, respectively.
(b)The six months ended June 30, 2023 included residual value adjustments totaling $6 million, or a 3 basis point impact to average loan yield.
(c)Average balances included $2.6 billion and $1.1 billion of unrealized losses for the six months ended June 30, 2023 and 2022, respectively; yields calculated gross of these unrealized gains and losses.
(d)Average balances included $126 million and $88 million of unrealized losses for the six months ended June 30, 2023 and 2022, respectively; yields calculated gross of these unrealized gains and losses.
(e)Average balances excluded $27 million and $1.0 billion of collateral posted and netted against derivative liability positions for the six months ended June 30, 2023 and 2022, respectively; yields calculated gross of derivative netting amounts.
(f)Average balances excluded $98 million and $82 million of collateral received and netted against derivative asset positions for the six months ended June 30, 2023 and 2022, respectively; rates calculated gross of derivative netting amounts.
13
ANALYSIS OF NET INTEREST INCOME (unaudited)
Comerica Incorporated and Subsidiaries
Three Months Ended
June 30, 2023
March 31, 2023
June 30, 2022
Average
Average
Average
Average
Average
Average
(dollar amounts in millions)
Balance
Interest
Rate
Balance
Interest
Rate
Balance
Interest
Rate
Commercial loans (a)
$
31,663
$
437
5.54
%
$
30,517
$
410
5.44
%
$
29,918
$
282
3.77
%
Real estate construction loans
3,708
75
8.11
3,345
63
7.66
2,332
24
4.05
Commercial mortgage loans
13,801
245
7.12
13,464
221
6.67
11,947
99
3.33
Lease financing (b)
776
10
5.21
765
4
1.93
642
4
3.01
International loans
1,268
24
7.80
1,226
24
7.91
1,303
12
3.66
Residential mortgage loans
1,858
16
3.40
1,833
15
3.29
1,773
14
3.16
Consumer loans
2,294
45
7.78
2,318
40
7.07
2,112
19
3.64
Total loans
55,368
852
6.18
53,468
777
5.89
50,027
454
3.64
Mortgage-backed securities (c)
16,004
106
2.28
16,397
108
2.28
16,218
93
2.07
U.S. Treasury securities (d)
1,861
2
0.44
2,369
5
0.79
2,811
7
0.98
Total investment securities
17,865
108
2.10
18,766
113
2.10
19,029
100
1.92
Interest-bearing deposits with banks (e)
8,701
110
5.11
4,955
58
4.66
10,861
23
0.75
Other short-term investments
377
4
3.75
186
1
2.28
176
—
0.66
Total earning assets
82,311
1,074
5.07
77,375
949
4.79
80,093
577
2.79
Cash and due from banks
1,163
1,465
1,421
Allowance for loan losses
(642)
(611)
(555)
Accrued income and other assets
7,523
6,909
7,851
Total assets
$
90,355
$
85,138
$
88,810
Money market and interest-bearing checking deposits (f)
$
24,177
132
2.17
$
26,340
109
1.68
$
29,513
3
0.05
Savings deposits
2,877
2
0.21
3,147
1
0.18
3,330
—
0.02
Customer certificates of deposit
2,306
12
2.20
1,875
6
1.31
1,774
1
0.18
Other time deposits
4,395
54
4.98
171
2
3.74
1
—
0.30
Foreign office time deposits
18
1
4.03
49
—
3.72
53
—
0.54
Total interest-bearing deposits
33,773
201
2.37
31,582
118
1.52
34,671
4
0.05
Federal funds purchased
9
—
5.00
83
1
4.56
5
—
0.64
Other short-term borrowings
10,559
142
5.39
5,371
65
4.92
—
—
—
Medium- and long-term debt
7,073
110
6.24
3,832
57
5.94
2,656
12
1.85
Total interest-bearing sources
51,414
453
3.52
40,868
241
2.39
37,332
16
0.19
Noninterest-bearing deposits
30,559
36,251
42,918
Accrued expenses and other liabilities
2,444
2,291
2,035
Shareholders' equity
5,938
5,728
6,525
Total liabilities and shareholders' equity
$
90,355
$
85,138
$
88,810
Net interest income/rate spread
$
621
1.55
$
708
2.40
$
561
2.60
Impact of net noninterest-bearing sources of funds
1.38
1.17
0.10
Net interest margin (as a percentage of average earning assets)
2.93
%
3.57
%
2.70
%
(a)Interest income on commercial loans included $(150) million, $(119) million and $25 million of business loan swap (expense) income for the three months ended June 30, 2023, March 31, 2023 and June 30, 2022, respectively.
(b)The three months ended March 31, 2023 included residual value adjustments totaling $6 million, or a 5 basis point impact to average loan yield.
(c)Average balances included $2.7 billion, $2.6 billion and $1.7 billion of unrealized losses for the three months ended June 30, 2023, March 31, 2023 and June 30, 2022, respectively; yields calculated gross of these unrealized losses.
(d)Average balances included $117 million, $135 million and $118 million of unrealized losses for the three months ended June 30, 2023, March 31, 2023 and June 30, 2022, respectively; yields calculated gross of these unrealized losses.
(e)Average balances included $46 million, excluded $101 million and excluded $1.4 billion of collateral posted and netted against derivative liability positions for the three months ended June 30, 2023, March 31, 2023 and June 30, 2022, respectively; yields calculated gross of derivative netting amounts.
(f)Average balances excluded $231 million, $35 million and $131 million of collateral received and netted against derivative asset positions for the three months ended June 30, 2023, March 31, 2023 and June 30, 2022, respectively; rates calculated gross of derivative netting amounts.
14
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (unaudited)
Comerica Incorporated and Subsidiaries
Accumulated Other Comprehensive Loss
Nonredeemable Preferred Stock
Common Stock
Total Shareholders' Equity
Shares Outstanding
Amount
Capital Surplus
Retained Earnings
Treasury Stock
(in millions, except per share data)
BALANCE AT MARCH 31, 2022
$
394
130.7
$
1,141
$
2,194
$
(1,173)
$
10,585
$
(6,105)
$
7,036
Net income
—
—
—
—
—
261
—
261
Other comprehensive loss, net of tax
—
—
—
—
(781)
—
—
(781)
Cash dividends declared on common stock ($0.68 per share)
—
—
—
—
—
(89)
—
(89)
Cash dividends declared on preferred stock
—
—
—
—
—
(5)
—
(5)
Net issuance of common stock under employee stock plans
—
0.1
—
(1)
—
—
3
2
Share-based compensation
—
—
—
11
—
—
—
11
BALANCE AT JUNE 30, 2022
$
394
130.8
$
1,141
$
2,204
$
(1,954)
$
10,752
$
(6,102)
$
6,435
BALANCE AT MARCH 31, 2023
$
394
131.5
$
1,141
$
2,209
$
(3,171)
$
11,476
$
(6,055)
$
5,994
Net income
—
—
—
—
—
273
—
273
Other comprehensive loss, net of tax
—
—
—
—
(585)
—
—
(585)
Cash dividends declared on common stock ($0.71 per share)
—
—
—
—
—
(94)
—
(94)
Cash dividends declared on preferred stock
—
—
—
—
—
(5)
—
(5)
Net issuance of common stock under employee stock plans
—
0.2
—
(4)
—
(2)
11
5
Share-based compensation
—
—
—
7
—
—
—
7
BALANCE AT JUNE 30, 2023
$
394
131.7
$
1,141
$
2,212
$
(3,756)
$
11,648
$
(6,044)
$
5,595
BALANCE AT DECEMBER 31, 2021
$
394
130.7
$
1,141
$
2,175
$
(212)
$
10,494
$
(6,095)
$
7,897
Net income
—
—
—
—
—
450
—
450
Other comprehensive loss, net of tax
—
—
—
—
(1,742)
—
—
(1,742)
Cash dividends declared on common stock ($1.36 per share)
—
—
—
—
—
(178)
—
(178)
Cash dividends declared on preferred stock
—
—
—
—
—
(11)
—
(11)
Purchase of common stock
—
(0.4)
—
—
—
—
(36)
(36)
Net issuance of common stock under employee stock plans
—
0.5
—
(10)
—
(3)
29
16
Share-based compensation
—
—
—
39
—
—
—
39
BALANCE AT JUNE 30, 2022
$
394
130.8
$
1,141
$
2,204
$
(1,954)
$
10,752
$
(6,102)
$
6,435
BALANCE AT DECEMBER 31, 2022
$
394
131.0
$
1,141
$
2,220
$
(3,742)
$
11,258
$
(6,090)
$
5,181
Net income
—
—
—
—
—
597
—
597
Other comprehensive loss, net of tax
—
—
—
—
(14)
—
—
(14)
Cash dividends declared on common stock ($1.42 per share)
—
—
—
—
—
(188)
—
(188)
Cash dividends declared on preferred stock
—
—
—
—
—
(11)
—
(11)
Net issuance of common stock under employee stock plans
—
0.7
—
(43)
—
(8)
46
(5)
Share-based compensation
—
—
—
35
—
—
—
35
BALANCE AT JUNE 30, 2023
$
394
131.7
$
1,141
$
2,212
$
(3,756)
$
11,648
$
(6,044)
$
5,595
15
BUSINESS SEGMENT FINANCIAL RESULTS (unaudited)
Comerica Incorporated and Subsidiaries
(dollar amounts in millions)
Commercial
Retail
Wealth
Three Months Ended June 30, 2023
Bank
Bank
Management
Finance
Other
Total
Earnings summary:
Net interest income (expense)
$
496
$
214
$
51
$
(165)
$
25
$
621
Provision for credit losses
33
(4)
2
—
2
33
Noninterest income
158
29
83
29
4
303
Noninterest expenses
248
171
89
2
25
535
Provision (benefit) for income taxes
90
18
10
(35)
—
83
Net income (loss)
$
283
$
58
$
33
$
(103)
$
2
$
273
Net credit-related (recoveries) charge-offs
$
(3)
$
—
$
1
$
—
$
—
$
(2)
Selected average balances:
Assets
$
51,548
$
2,930
$
5,625
$
20,046
$
10,206
$
90,355
Loans
47,813
2,214
5,341
—
—
55,368
Deposits
31,030
24,002
3,943
4,980
377
64,332
Statistical data:
Return on average assets (a)
2.21
%
0.94
%
2.31
%
n/m
n/m
1.21
%
Efficiency ratio (b)
37.91
69.73
66.23
n/m
n/m
57.70
Commercial
Retail
Wealth
Three Months Ended March 31, 2023
Bank
Bank
Management
Finance
Other
Total
Earnings summary:
Net interest income (expense)
$
531
$
222
$
58
$
(123)
$
20
$
708
Provision for credit losses
26
6
(2)
—
—
30
Noninterest income
153
28
73
23
5
282
Noninterest expenses
251
165
106
1
28
551
Provision (benefit) for income taxes
87
19
6
(25)
(2)
85
Net income (loss)
$
320
$
60
$
21
$
(76)
$
(1)
$
324
Net credit-related (recoveries) charge-offs
$
(2)
$
—
$
—
$
—
$
—
$
(2)
Selected average balances:
Assets
$
50,162
$
2,916
$
5,347
$
20,089
$
6,624
$
85,138
Loans
46,065
2,203
5,200
—
—
53,468
Deposits
36,767
25,156
4,716
830
364
67,833
Statistical data:
Return on average assets (a)
2.57
%
0.96
%
1.62
%
n/m
n/m
1.54
%
Efficiency ratio (b)
36.74
65.43
81.17
n/m
n/m
55.53
Commercial
Retail
Wealth
Three Months Ended June 30, 2022
Bank
Bank
Management
Finance
Other
Total
Earnings summary:
Net interest income (expense)
$
398
$
147
$
47
$
(33)
$
2
$
561
Provision for credit losses
8
(2)
4
—
—
10
Noninterest income
160
32
77
13
(14)
268
Noninterest expenses
237
173
89
—
(17)
482
Provision (benefit) for income taxes
70
2
7
(7)
4
76
Net income (loss)
$
243
$
6
$
24
$
(13)
$
1
$
261
Net credit-related charge-offs (recoveries)
$
2
$
(1)
$
(1)
$
—
$
—
$
—
Selected average balances:
Assets
$
47,596
$
2,768
$
4,963
$
21,078
$
12,405
$
88,810
Loans
43,169
2,015
4,832
—
11
50,027
Deposits
43,738
27,145
5,966
520
220
77,589
Statistical data:
Return on average assets (a)
2.00
%
0.09
%
1.53
%
n/m
n/m
1.18
%
Efficiency ratio (b)
42.35
96.12
71.69
n/m
n/m
58.03
(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 (losses) from securities, a derivative contract tied to the conversion rate of Visa Class B shares and changes in the value of shares obtained through monetization of warrants.
n/m - not meaningful
16
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. Comerica believes that the presentation of tangible common equity adjusted for the impact of accumulated other comprehensive loss provides a greater understanding of ongoing operations and enhances comparability with prior periods.
Common shareholders' equity per share of common stock
$
39.48
$
42.57
$
46.19
Tangible common equity per share of common stock
34.59
37.68
41.25
Impact of Accumulated Other Comprehensive Loss to Tangible Common Equity:
Accumulated other comprehensive loss (AOCI)
$
(3,756)
$
(3,171)
$
(1,954)
Tangible common equity, excluding AOCI
8,314
8,127
7,350
Tangible common equity ratio, excluding AOCI
9.22
%
8.98
%
8.52
%
Tangible common equity per share of common stock, excluding AOCI
$
63.11
$
61.78
$
56.19
(a)June 30, 2023 ratios are estimated.
17
Total uninsured deposits as calculated per regulatory guidance and reported on schedule RC-O of Comerica Bank’s Call Report include affiliate deposits, which by definition have a different risk profile than other uninsured deposits. The amounts presented below remove affiliate deposits from the total uninsured deposits number. Comerica believes that the presentation of uninsured deposits adjusted for the impact of affiliate deposits provides enhanced clarity of uninsured deposits at risk.
June 30,
March 31,
June 30,
(dollar amounts in millions)
2023
2023
2022
Uninsured Deposits:
Total uninsured deposits, as calculated per regulatory guidelines
$
31,627
$
35,007
$
50,229
Less:
Affiliate deposits
(4,412)
(4,329)
(4,056)
Total uninsured deposits, excluding affiliate deposits
$
27,215
$
30,678
$
46,173
RECONCILIATIONS OF PREVIOUSLY REPORTED BALANCES (unaudited)
Comerica Incorporated and Subsidiaries
Beginning with first quarter 2023, Comerica reported derivative income, syndication agent fees (previously a component of commercial lending fees) and investment banking fees (previously a component of other noninterest income) as a combined item captioned by capital markets income on the Consolidated Statements of Comprehensive Income. In addition to the reclassified revenue categories, merger and acquisition advisory fees were included in capital markets income (insignificant in previous periods) beginning with first quarter 2023. Prior periods have been adjusted to conform to this presentation, and the changes in presentation do 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)
2022
2022
2022
2022
Derivative income (as reported)
$
23
$
35
$
29
$
51
Syndication agent fees (a)
10
12
13
19
Investment banking fees (b)
1
1
1
2
Capital markets income
$
34
$
48
$
43
$
72
Commercial lending fees (as reported)
28
29
30
52
Less: Syndication agent fees (a)
10
12
13
19
Commercial lending fees (as adjusted)
$
18
$
17
$
17
$
33
Other noninterest income (as reported)
30
11
3
2
Less: Investment banking fees (b)
1
1
1
2
Other noninterest income (as adjusted)
$
29
$
10
$
2
$
—
(a)Previously reported as a component of commercial lending fees.
(b)Previously reported as a component of other noninterest income.
