THIRD QUARTER 2022 RECORD NET INCOME OF $351 MILLION, $2.60 PER SHARE
Earnings Per Share Increased 35% Over Second Quarter 2022
Record Revenue with Higher Interest Rates and Strong, Broad-Based Loan Growth
Continued Solid Expense Management and Excellent Credit Quality
"Our third quarter results were very strong. Earnings per share grew to an all-time high of $2.60, increasing 35% relative to the second quarter, driven by record revenue,” said Curtis C. Farmer, Comerica Chairman and Chief Executive Officer. “We produced significant operating leverage and further enhanced our efficiency ratio while absorbing performance-based compensation and modernization expenses. Loan growth was broad-based with balances increasing $1.1 billion, or over 2%. Deposit levels have trended downward as customers use funds in their businesses and we strategically manage our deposit costs. Our overall results reflect not only the benefit of rising interest rates, but also strategic investments to drive organic growth. We are better positioned to achieve sustainable success in any economic environment."
(dollar amounts in millions, except per share data)
3rd Qtr '22
2nd Qtr '22
3rd Qtr '21
FINANCIAL RESULTS
Net interest income
$
707
$
561
$
475
Provision for credit losses
28
10
(42)
Noninterest income
278
268
280
Noninterest expenses
502
482
465
Pre-tax income
455
337
332
Provision for income taxes
104
76
70
Net income
$
351
$
261
$
262
Diluted earnings per common share
$
2.60
$
1.92
$
1.90
Average loans
51,113
50,027
48,135
Average deposits
73,976
77,589
79,115
Return on average assets
1.63
%
1.18
%
1.14
%
Return on average common shareholders' equity
23.28
16.72
13.53
Net interest margin
3.50
2.70
2.23
Efficiency ratio (a)
50.75
58.03
61.13
Common equity Tier 1 capital ratio (b)
9.92
9.72
10.27
Tier 1 capital ratio (b)
10.44
10.24
10.85
(a)Noninterest expenses as a percentage of the sum of net interest income and noninterest income excluding a derivative contract tied to the conversion rate of Visa Class B shares and changes in the value of shares obtained through monetization of warrants.
(b)September 30, 2022 ratios are estimated.
Third Quarter 2022 Compared to Second Quarter 2022 Overview
Balance sheet items discussed in terms of average balances unless otherwise noted.
Loans increased $1.1 billion to $51.1 billion.
•Increases of $356 million in Commercial Real Estate, $220 million in National Dealer Services, $209 million in Environmental Services, $141 million in Wealth Management and $116 million in Corporate Banking, partially offset by a decrease of $161 million in Equity Fund Services.
•Average yield on loans (including swaps) increased 100 basis points to 4.64%, primarily driven by higher short-term rates.
Securities increased $1.5 billion to $20.5 billion.
•Increase in mortgage-backed securities reflected the full quarter impact of purchases made in the second quarter.
•Period-end unrealized losses on securities, included in accumulated other comprehensive loss, increased by $1.2 billion to $3.1 billion.
•Average yield on securities increased 16 basis points to 2.08% due to higher yields on purchases and reinvestments.
Deposits decreased $3.6 billion to $74.0 billion.
•Interest-bearing and noninterest-bearing deposits decreased $2.5 billion and $1.1 billion, respectively, due to strategic deposit management as well as customers utilizing balances to fund business activities.
•The average cost of interest-bearing deposits increased 15 basis points to 20 basis points, reflecting relationship-focused pricing.
Net interest income increased $146 million to $707 million.
•Driven by the benefit of higher short-term rates as well as growth in loan and securities balances.
•Net interest margin increased 80 basis points to 3.50%, driven by higher rates and a decrease in lower-yielding deposits held with the Federal Reserve Bank.
Provision for credit losses increased $18 million to $28 million.
•The allowance for credit losses increased $15 million to $624 million at September 30, 2022, reflecting loan growth, continued strong credit metrics and an uncertain economic environment. As a percentage of total loans, the allowance for credit losses was 1.21%, an increase of 3 basis points.
Noninterest income increased $10 million to $278 million.
•Increases of $11 million in deferred compensation asset returns (offset in noninterest expenses), $6 million in derivative income (mostly due to energy) and $2 million in brokerage fees, partially offset by decreases of $4 million in fiduciary income and $2 million in card fees. Fiduciary income was impacted by a seasonal decline in tax fees and reduced market performance, partially offset by higher money market rates.
Noninterest expenses increased $20 million to $502 million.
•Increases of $13 million in salaries and benefits expense, $4 million in occupancy expense and $2 million in outside processing fee expense. Other noninterest expenses included an increase of $5 million in impairment and loss on sale of assets as well as a $4 million favorable state tax ruling recorded in the second quarter, partially offset by decreases of $4 million each in litigation-related expenses and consulting fees.
◦Salaries and benefits expense included increases of $11 million in deferred compensation expense (offset in other noninterest income) and $3 million each in performance-based compensation and staff insurance, partially offset by a $2 million seasonal decrease in 401K expense.
◦For third quarter 2022, expenses for certain modernization initiatives related to transformation of the retail banking delivery model, alignment of corporate facilities and optimization of technology platforms totaled $7 million, comprised of transitional real estate costs (reported in occupancy expense), asset impairments and consulting fees (reported in other noninterest expenses) and contract labor (reported in salaries and benefits expense).
Common equity Tier 1 capital ratio of 9.92% and a Tier 1 capital ratio of 10.44%.
•Declared dividends of $89 million on common stock and $6 million on preferred stock.
•Issued $500 million of bank subordinated debt, which increases Tier 2 capital to support loan growth.
2
Third Quarter 2022 Compared to Third Quarter 2021 Overview
Balance sheet items discussed in terms of average balances.
Loans increased $3.0 billion, or 6%.
•Excluding the impact of a $1.6 billion decline in PPP loans, loans increased $4.6 billion, or 10%.
•Increases in Corporate Banking, general Middle Market, National Dealer Services, Environmental Services and Equity Fund Services, partially offset by decreases in Mortgage Banker Finance and Business Banking.
•Average yield on loans increased 125 basis points, primarily driven by the increase in short-term rates and higher loan balances, partially offset by the net impact of PPP loans.
Securities increased $4.6 billion, or 29%.
•Reflects investment of a portion of excess liquidity into mortgage-backed securities, partly offset by maturities of Treasury securities.
•Average yield on securities increased 32 basis points from higher yields on reinvestments.
Deposits decreased $5.1 billion, or 6%.
•Interest-bearing and noninterest-bearing deposits decreased $5.0 billion and $164 million, respectively, due to strategic deposit management and customers utilizing balances to fund business activities.
•The average cost of interest-bearing deposits increased 14 basis points, reflecting relationship-focused pricing.
Net interest income increased $232 million.
•Higher short-term rates and volume of earning assets, partially offset by the net impact of PPP loans.
Provision for credit losses increased to an expense of $28 million from a benefit of $42 million.
•The allowance for credit losses decreased $15 million from higher pandemic-driven balances, primarily due to continued strong credit quality and sustained improvements in the economic forecast. As a percentage of total loans, the allowance for credit losses decreased 12 basis points.
Noninterest income decreased $2 million.
•Increase in derivative income was more than offset by decreases in warrant-related income (included in other noninterest income), card fees (higher activity in 2021 from stimulus payments) and deferred compensation asset returns (offset in noninterest expenses).
Noninterest expenses increased $37 million.
•Increases in salaries and benefits expense, FDIC insurance expense, occupancy expense, operational losses and loss on sale of assets, partially offset by decreases in consulting fees and non-salary pension expense.
3
Net Interest Income
Balance sheet items presented and discussed in terms of average balances.
(dollar amounts in millions)
3rd Qtr '22
2nd Qtr '22
3rd Qtr '21
Net interest income
$
707
$
561
$
475
Net interest margin
3.50
%
2.70
%
2.23
%
Selected balances:
Total earning assets
$
77,012
$
80,093
$
84,788
Total loans
51,113
50,027
48,135
Total investment securities
20,540
19,029
15,969
Federal Reserve Bank deposits
4,967
10,409
20,176
Total deposits
73,976
77,589
79,115
Total noninterest-bearing deposits
41,820
42,918
41,984
Short-term borrowings
144
5
1
Medium- and long-term debt
2,827
2,656
2,864
Net interest income increased $146 million, and net interest margin increased 80 basis points compared to second quarter 2022. Amounts shown in parenthesis represent impact to net interest income and net interest margin, respectively.
•Interest income on loans increased $143 million and improved net interest margin by 65 basis points, driven by higher short-term rates (+$128 million, +64 basis points), higher loan balances (+$13 million, +2 basis points) and one additional day in the quarter (+$4 million), partially offset by other portfolio dynamics (-$2 million, -1 basis point).
•Interest income on investment securities increased $19 million and improved net interest margin by 1 basis point, due to portfolio growth of lower-yielding securities (+$15 million, -1 basis point) and higher rates (+$4 million, +2 basis points).
•Interest income on short-term investments increased $11 million and improved net interest margin by 26 basis points, reflecting higher short-term rates (+$43 million, +21 basis points), offset by a decrease of $5.4 billion in lower-yielding deposits with the Federal Reserve (-$32 million, +5 basis points).
•Interest expense on deposits increased $12 million and reduced net interest margin by 5 basis points, due to higher rates (-$13 million, -6 basis points), partly offset by lower average deposit balances (+$1 million, +1 basis point).
•Interest expense on debt increased $15 million and reduced net interest margin by 7 basis points, driven by higher rates (-$11 million, -5 basis points) and an increase in average debt from a third quarter issuance (-$4 million,-2 basis points).
The net impact of higher rates to the third quarter 2022 net interest income was an increase of $151 million and 76 basis points to the net interest margin.
4
Credit Quality
"Credit quality remained excellent in the third quarter with net charge-offs of only 10 basis points,” said Farmer. “Customers' financial positions remained strong overall and the percentage of criticized and nonaccrual loans are well below our historical averages. With heightened economic uncertainty, our allowance for credit losses increased modestly to 1.21%. With our proven approach to credit management, coupled with our reserve that covers nonaccrual loans 2.4 times, we believe we are well positioned to navigate economic stress."
(dollar amounts in millions)
3rd Qtr '22
2nd Qtr '22
3rd Qtr '21
Credit-related charge-offs
$
26
$
13
$
26
Recoveries
13
13
24
Net credit-related (recoveries) charge-offs
13
—
2
Net credit-related charge-offs/Average total loans
0.10
%
—
%
0.01
%
Provision for credit losses
$
28
$
10
$
(42)
Nonperforming loans
262
265
295
Nonperforming assets (NPAs)
262
266
296
NPAs/Total loans and foreclosed property
0.51
%
0.52
%
0.62
%
Loans past due 90 days or more and still accruing
$
72
$
12
$
12
Allowance for loan losses
576
563
609
Allowance for credit losses on lending-related commitments (a)
48
46
30
Total allowance for credit losses
624
609
639
Allowance for credit losses/Period-end total loans
1.21
%
1.18
%
1.33
%
Allowance for credit losses/Period-end total loans excluding PPP loans
1.21
1.19
1.35
Allowance for credit losses/Nonperforming loans
2.4x
2.3x
2.2x
(a) Included in accrued expenses and other liabilities on the Consolidated Balance Sheets.
•The allowance for credit losses increased $15 million to $624 million at September 30, 2022, or 1.21% of total loans, reflecting loan growth, strong credit metrics and an uncertain economic environment.
•Criticized loans increased $92 million to $1.6 billion, or 3% 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 Technology and Life Sciences and Environmental Services, partially offset by decreases in Business Banking and Corporate Banking.
•Nonperforming assets decreased $4 million to $262 million, or 0.51% of total loans and foreclosed property, compared to 0.52% in second quarter 2022.
◦The decrease was primarily driven by Business Banking, Technology and Life Sciences and Entertainment, partially offset by increases in Residential Mortgage and Corporate Banking.
•Net charge-offs totaled $13 million, compared to no net charge-offs in second quarter 2022.
5
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 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 structures of Comerica and methodologies in effect at September 30, 2022. A discussion of business segment year-to-date results will be included in Comerica's Third Quarter 2022 Form 10-Q.
Conference Call and Webcast
Comerica will host a conference call to review third quarter 2022 financial results at 7 a.m. CT Wednesday, October 19, 2022. 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.
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.
6
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; 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, 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 (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, 2021. 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
7
CONSOLIDATED FINANCIAL HIGHLIGHTS (unaudited)
Comerica Incorporated and Subsidiaries
Three Months Ended
Nine Months Ended
September 30,
June 30,
September 30,
September 30,
(in millions, except per share data)
2022
2022
2021
2022
2021
PER COMMON SHARE AND COMMON STOCK DATA
Diluted earnings per common share
$
2.60
$
1.92
$
1.90
$
5.88
$
6.67
Cash dividends declared
0.68
0.68
0.68
2.04
2.04
Average diluted shares (in thousands)
132,479
132,446
134,322
132,614
137,800
PERFORMANCE RATIOS
Return on average common shareholders' equity
23.28
%
16.72
%
13.53
%
16.26
%
16.23
%
Return on average assets
1.63
1.18
1.14
1.21
1.43
Efficiency ratio (a)
50.75
58.03
61.13
57.67
61.80
CAPITAL
Common equity tier 1 capital (b), (c)
$
7,616
$
7,349
$
6,965
Tier 1 capital (b), (c)
8,010
7,743
7,359
Risk-weighted assets (b)
76,736
75,588
67,834
Common equity tier 1 capital ratio (b), (c)
9.92
%
9.72
%
10.27
%
Tier 1 capital ratio (b), (c)
10.44
10.24
10.85
Total capital ratio (b)
12.40
11.75
12.57
Leverage ratio (b)
9.20
8.62
8.07
Common shareholders' equity per share of common stock
$
35.70
$
46.19
$
56.55
Tangible common equity per share of common stock (c)
30.77
41.25
51.61
Common equity ratio
5.55
%
6.95
%
7.84
%
Tangible common equity ratio (c)
4.82
6.26
7.20
AVERAGE BALANCES
Commercial loans
$
30,573
$
29,918
$
28,244
$
29,597
$
29,741
Real estate construction loans
2,457
2,332
3,160
2,482
3,826
Commercial mortgage loans
12,180
11,947
11,165
11,927
10,408
Lease financing
690
642
580
656
583
International loans
1,234
1,303
1,075
1,252
1,024
Residential mortgage loans
1,761
1,773
1,816
1,773
1,814
Consumer loans
2,218
2,112
2,095
2,128
2,112
Total loans
51,113
50,027
48,135
49,815
49,508
Earning assets
77,012
80,093
84,788
80,201
81,637
Total assets
85,422
88,810
91,353
88,440
87,949
Noninterest-bearing deposits
41,820
42,918
41,984
42,713
39,912
Interest-bearing deposits
32,156
34,671
37,131
34,158
35,459
Total deposits
73,976
77,589
79,115
76,871
75,371
Common shareholders' equity
5,897
6,131
7,523
6,452
7,610
Total shareholders' equity
6,291
6,525
7,917
6,846
8,004
NET INTEREST INCOME
Net interest income
$
707
$
561
$
475
$
1,724
$
1,383
Net interest margin
3.50
%
2.70
%
2.23
%
2.78
%
2.27
%
CREDIT QUALITY
Nonperforming assets
$
262
$
266
$
296
Loans past due 90 days or more and still accruing
72
12
12
Net credit-related charge-offs (recoveries)
13
—
2
$
21
$
(6)
Allowance for loan losses
576
563
609
Allowance for credit losses on lending-related commitments
48
46
30
Total allowance for credit losses
624
609
639
Allowance for credit losses as a percentage of total loans
1.21
%
1.18
%
1.33
%
Net loan charge-offs (recoveries) as a percentage of average total loans
0.10
—
0.01
0.06
%
(0.02
%)
Nonperforming assets as a percentage of total loans and foreclosed property
0.51
0.52
0.62
Allowance for credit losses as a multiple of total nonperforming loans
2.4x
2.3x
2.2x
OTHER KEY INFORMATION
Number of banking centers
410
433
433
Number of employees - full time equivalent
7,432
7,436
7,459
(a) Noninterest expenses as a percentage of the sum of net interest income and noninterest income excluding a derivative contract tied to the conversion rate of Visa Class B shares and changes in the value of shares obtained through monetization of warrants.
(b) September 30, 2022 ratios are estimated.
(c) See Reconciliations of Non-GAAP Financial Measures and Regulatory Ratios.
8
CONSOLIDATED BALANCE SHEETS
Comerica Incorporated and Subsidiaries
September 30,
June 30,
December 31,
September 30,
(in millions, except share data)
2022
2022
2021
2021
(unaudited)
(unaudited)
(unaudited)
ASSETS
Cash and due from banks
$
1,735
$
1,631
$
1,236
$
1,050
Interest-bearing deposits with banks
4,235
5,902
21,443
22,539
Other short-term investments
159
160
197
187
Investment securities available-for-sale
19,452
20,829
16,986
16,846
Commercial loans
30,713
31,259
29,366
28,355
Real estate construction loans
2,617
2,465
2,948
3,010
Commercial mortgage loans
12,438
11,855
11,255
11,215
Lease financing
713
653
640
569
International loans
1,216
1,291
1,208
1,131
Residential mortgage loans
1,753
1,753
1,771
1,813
Consumer loans
2,262
2,178
2,097
2,102
Total loans
51,712
51,454
49,285
48,195
Allowance for loan losses
(576)
(563)
(588)
(609)
Net loans
51,136
50,891
48,697
47,586
Premises and equipment
412
422
454
447
Accrued income and other assets
7,014
7,054
5,603
5,874
Total assets
$
84,143
$
86,889
$
94,616
$
94,529
LIABILITIES AND SHAREHOLDERS' EQUITY
Noninterest-bearing deposits
$
42,296
$
42,308
$
45,800
$
44,093
Money market and interest-bearing checking deposits
25,663
28,409
31,349
32,932
Savings deposits
3,375
3,342
3,167
3,125
Customer certificates of deposit
1,661
1,686
1,973
2,091
Foreign office time deposits
21
20
50
43
Total interest-bearing deposits
30,720
33,457
36,539
38,191
Total deposits
73,016
75,765
82,339
82,284
Short-term borrowings
508
—
—
—
Accrued expenses and other liabilities
2,534
2,059
1,584
1,605
Medium- and long-term debt
3,016
2,630
2,796
2,837
Total liabilities
79,074
80,454
86,719
86,726
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
2,209
2,204
2,175
2,170
Accumulated other comprehensive loss
(3,587)
(1,954)
(212)
(207)
Retained earnings
11,005
10,752
10,494
10,366
Less cost of common stock in treasury - 97,244,273 shares at 9/30/22, 97,387,508 shares at 6/30/22, 97,476,872 shares at 12/31/21 and 97,158,441 shares at 9/30/21
(6,093)
(6,102)
(6,095)
(6,061)
Total shareholders' equity
5,069
6,435
7,897
7,803
Total liabilities and shareholders' equity
$
84,143
$
86,889
$
94,616
$
94,529
9
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Comerica Incorporated and Subsidiaries
Three Months Ended
Nine Months Ended
September 30,
September 30,
(in millions, except per share data)
2022
2021
2022
2021
(unaudited)
(unaudited)
(unaudited)
(unaudited)
INTEREST INCOME
Interest and fees on loans
$
597
$
411
$
1,434
$
1,201
Interest on investment securities
119
70
296
209
Interest on short-term investments
34
8
66
17
Total interest income
750
489
1,796
1,427
INTEREST EXPENSE
Interest on deposits
16
5
24
17
Interest on short-term borrowings
1
—
1
—
Interest on medium- and long-term debt
26
9
47
27
Total interest expense
43
14
72
44
Net interest income
707
475
1,724
1,383
Provision for credit losses
28
(42)
27
(359)
Net interest income after provision for credit losses
679
517
1,697
1,742
NONINTEREST INCOME
Card fees
67
72
205
227
Fiduciary income
58
58
178
171
Service charges on deposit accounts
50
50
148
145
Derivative income
35
20
86
72
Commercial lending fees
29
31
81
76
Bank-owned life insurance
12
12
37
32
Letter of credit fees
10
10
28
30
Brokerage fees
6
3
14
11
Other noninterest income
11
24
13
70
Total noninterest income
278
280
790
834
NONINTEREST EXPENSES
Salaries and benefits expense
307
282
890
841
Outside processing fee expense
64
65
188
200
Occupancy expense
44
40
122
117
Software expense
40
40
120
117
Equipment expense
12
13
36
38
Advertising expense
9
10
24
25
FDIC insurance expense
8
4
24
17
Other noninterest expenses
18
11
53
20
Total noninterest expenses
502
465
1,457
1,375
Income before income taxes
455
332
1,030
1,201
Provision for income taxes
104
70
229
261
NET INCOME
351
262
801
940
Less:
Income allocated to participating securities
2
1
4
4
Preferred stock dividends
6
6
17
17
Net income attributable to common shares
$
343
$
255
$
780
$
919
Earnings per common share:
Basic
$
2.63
$
1.92
$
5.96
$
6.75
Diluted
2.60
1.90
5.88
6.67
Comprehensive (loss) income
(1,282)
175
(2,574)
669
Cash dividends declared on common stock
89
89
267
276
Cash dividends declared per common share
0.68
0.68
2.04
2.04
10
CONSOLIDATED QUARTERLY STATEMENTS OF COMPREHENSIVE INCOME (unaudited)
Comerica Incorporated and Subsidiaries
Third
Second
First
Fourth
Third
Third Quarter 2022 Compared to:
Quarter
Quarter
Quarter
Quarter
Quarter
Second Quarter 2022
Third Quarter 2021
(in millions, except per share data)
2022
2022
2022
2021
2021
Amount
Percent
Amount
Percent
INTEREST INCOME
Interest and fees on loans
$
597
$
454
$
383
$
393
$
411
$
143
32
%
$
186
45
%
Interest on investment securities
119
100
77
71
70
19
18
49
69
Interest on short-term investments
34
23
9
10
8
11
47
26
n/m
Total interest income
750
577
469
474
489
173
30
261
53
INTEREST EXPENSE
Interest on deposits
16
4
4
5
5
12
n/m
11
n/m
Interest on short-term borrowings
1
—
—
—
—
1
n/m
1
n/m
Interest on medium- and long-term debt
26
12
9
8
9
14
n/m
17
n/m
Total interest expense
43
16
13
13
14
27
n/m
29
n/m
Net interest income
707
561
456
461
475
146
26
232
49
Provision for credit losses
28
10
(11)
(25)
(42)
18
n/m
70
n/m
Net interest income after provision
for credit losses
679
551
467
486
517
128
23
162
31
NONINTEREST INCOME
Card fees
67
69
69
71
72
(2)
(3)
(5)
(7)
Fiduciary income
58
62
58
60
58
(4)
(5)
—
—
Service charges on deposit accounts
50
50
48
50
50
—
—
—
—
Derivative income
35
29
22
27
20
6
23
15
71
Commercial lending fees
29
30
22
28
31
(1)
—
(2)
(6)
Bank-owned life insurance
12
12
13
11
12
—
—
—
—
Letter of credit fees
10
9
9
10
10
1
2
—
—
Brokerage fees
6
4
4
3
3
2
29
3
58
Other noninterest income
11
3
(1)
29
24
8
n/m
(13)
(50)
Total noninterest income
278
268
244
289
280
10
4
(2)
—
NONINTEREST EXPENSES
Salaries and benefits expense
307
294
289
292
282
13
5
25
9
Outside processing fee expense
64
62
62
66
65
2
2
(1)
(2)
Occupancy expense
44
40
38
44
40
4
9
4
7
Software expense
40
41
39
38
40
(1)
—
—
—
Equipment expense
12
13
11
12
13
(1)
(3)
(1)
(6)
Advertising expense
9
8
7
10
10
1
10
(1)
(3)
FDIC insurance expense
8
8
8
5
4
—
—
4
74
Other noninterest expenses
18
16
19
19
11
2
5
7
53
Total noninterest expenses
502
482
473
486
465
20
4
37
8
Income before income taxes
455
337
238
289
332
118
35
123
37
Provision for income taxes
104
76
49
61
70
28
37
34
49
NET INCOME
351
261
189
228
262
90
35
89
34
Less:
Income allocated to participating securities
2
1
1
1
1
1
43
1
49
Preferred stock dividends
6
5
6
6
6
1
—
—
—
Net income attributable to common shares
$
343
$
255
$
182
$
221
$
255
$
88
35
%
$
88
35
%
Earnings per common share:
Basic
$
2.63
$
1.94
$
1.39
$
1.69
$
1.92
$
0.69
36
%
$
0.71
37
%
Diluted
2.60
1.92
1.37
1.66
1.90
0.68
35
0.70
37
Comprehensive (loss) income
(1,282)
(520)
(772)
223
175
(762)
n/m
(1,457)
n/m
Cash dividends declared on common stock
89
89
89
89
89
—
—
—
—
Cash dividends declared per common share
0.68
0.68
0.68
0.68
0.68
—
—
—
—
n/m - not meaningful
11
ANALYSIS OF THE ALLOWANCE FOR CREDIT LOSSES (unaudited)
Comerica Incorporated and Subsidiaries
2022
2021
(in millions)
3rd Qtr
2nd Qtr
1st Qtr
4th Qtr
3rd Qtr
Balance at beginning of period:
Allowance for loan losses
$
563
$
554
$
588
$
609
$
652
Allowance for credit losses on lending-related commitments
46
45
30
30
31
Allowance for credit losses
609
599
618
639
683
Loan charge-offs:
Commercial
25
13
15
14
24
Real estate construction
—
—
1
—
—
Commercial mortgage
—
—
1
2
—
International
—
—
—
3
2
Consumer
1
—
1
1
—
Total loan charge-offs
26
13
18
20
26
Recoveries on loans previously charged-off:
Commercial
12
12
8
23
22
Commercial mortgage
—
—
1
—
—
Residential mortgage
1
—
—
1
1
Consumer
—
1
1
—
1
Total recoveries
13
13
10
24
24
Net loan charge-offs (recoveries)
13
—
8
(4)
2
Provision for credit losses:
Provision for loan losses
26
9
(26)
(25)
(41)
Provision for credit losses on lending-related commitments
2
1
15
—
(1)
Provision for credit losses
28
10
(11)
(25)
(42)
Balance at end of period:
Allowance for loan losses
576
563
554
588
609
Allowance for credit losses on lending-related commitments
48
46
45
30
30
Allowance for credit losses
$
624
$
609
$
599
$
618
$
639
Allowance for credit losses as a percentage of total loans
1.21
%
1.18
%
1.21
%
1.26
%
1.33
%
Allowance for credit losses as a percentage of total loans excluding PPP loans
1.21
1.19
1.22
1.27
1.35
Net loan charge-offs (recoveries) as a percentage of average total loans
0.10
—
0.06
(0.03)
0.01
12
NONPERFORMING ASSETS (unaudited)
Comerica Incorporated and Subsidiaries
2022
2021
(in millions)
3rd Qtr
2nd Qtr
1st Qtr
4th Qtr
3rd Qtr
SUMMARY OF NONPERFORMING ASSETS AND PAST DUE LOANS
Nonaccrual loans:
Business loans:
Commercial
$
154
$
161
$
163
$
173
$
200
Real estate construction
4
4
4
6
6
Commercial mortgage
25
29
27
32
30
International
5
5
5
5
8
Total nonaccrual business loans
188
199
199
216
244
Retail loans:
Residential mortgage
56
49
53
36
35
Consumer:
Home equity
14
13
14
12
12
Other consumer
1
1
3
—
—
Total nonaccrual retail loans
71
63
70
48
47
Total nonaccrual loans
259
262
269
264
291
Reduced-rate loans
3
3
4
4
4
Total nonperforming loans
262
265
273
268
295
Foreclosed property
—
1
1
1
1
Total nonperforming assets
$
262
$
266
$
274
$
269
$
296
Nonperforming loans as a percentage of total loans
0.51
%
0.52
%
0.55
%
0.54
%
0.61
%
Nonperforming assets as a percentage of total loans and foreclosed property
0.51
0.52
0.55
0.55
0.62
Allowance for credit losses as a multiple of total nonperforming loans
2.4x
2.3x
2.2x
2.3x
2.2x
Loans past due 90 days or more and still accruing
$
72
$
12
$
26
$
27
$
12
ANALYSIS OF NONACCRUAL LOANS
Nonaccrual loans at beginning of period
$
262
$
269
$
264
$
291
$
311
Loans transferred to nonaccrual (a)
45
30
41
15
55
Nonaccrual loan gross charge-offs
(26)
(13)
(18)
(20)
(26)
Loans transferred to accrual status (a)
—
—
(4)
—
(8)
Nonaccrual loans sold
(4)
(9)
—
—
(9)
Payments/other (b)
(18)
(15)
(14)
(22)
(32)
Nonaccrual loans at end of period
$
259
$
262
$
269
$
264
$
291
(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.
13
ANALYSIS OF NET INTEREST INCOME (unaudited)
Comerica Incorporated and Subsidiaries
Nine Months Ended
September 30, 2022
September 30, 2021
Average
Average
Average
Average
(dollar amounts in millions)
Balance
Interest
Rate
Balance
Interest
Rate
Commercial loans (a), (b)
$
29,597
$
876
3.96
%
$
29,741
$
769
3.46
%
Real estate construction loans
2,482
81
4.36
3,826
97
3.37
Commercial mortgage loans
11,927
324
3.63
10,408
224
2.87
Lease financing (c)
656
13
2.65
583
(7)
(1.55)
International loans
1,252
36
3.88
1,024
24
3.17
Residential mortgage loans
1,773
41
3.05
1,814
41
3.05
Consumer loans
2,128
63
3.98
2,112
53
3.36
Total loans
49,815
1,434
3.85
49,508
1,201
3.24
Mortgage-backed securities (d)
16,140
274
2.08
11,221
163
1.95
U.S. Treasury securities (e)
2,837
22
0.98
4,205
46
1.49
Total investment securities
18,977
296
1.93
15,426
209
1.82
Interest-bearing deposits with banks (f)
11,232
65
0.71
16,524
17
0.13
Other short-term investments
177
1
0.59
179
—
0.23
Total earning assets
80,201
1,796
2.90
81,637
1,427
2.34
Cash and due from banks
1,466
972
Allowance for loan losses
(566)
(770)
Accrued income and other assets
7,339
6,110
Total assets
$
88,440
$
87,949
Money market and interest-bearing checking deposits (g)
$
29,036
21
0.10
$
30,300
14
0.06
Savings deposits
3,303
1
0.03
2,974
—
0.01
Customer certificates of deposit
1,775
2
0.19
2,137
3
0.22
Foreign office time deposits
44
—
0.63
48
—
0.09
Total interest-bearing deposits
34,158
24
0.10
35,459
17
0.07
Federal funds purchased
28
1
2.37
2
—
—
Other short-term borrowings
22
—
3.04
—
—
—
Medium- and long-term debt
2,750
47
2.26
3,107
27
1.10
Total interest-bearing sources
36,958
72
0.26
38,568
44
0.15
Noninterest-bearing deposits
42,713
39,912
Accrued expenses and other liabilities
1,923
1,465
Shareholders' equity
6,846
8,004
Total liabilities and shareholders' equity
$
88,440
$
87,949
Net interest income/rate spread
$
1,724
2.64
$
1,383
2.19
Impact of net noninterest-bearing sources of funds
0.14
0.08
Net interest margin (as a percentage of average earning assets)
2.78
%
2.27
%
(a)Interest income on commercial loans included $45 million and $72 million of business loan swap income for the nine months ended September 30, 2022 and 2021, respectively.
(b)Included PPP loans with average balances of $183 million and $2.9 billion, interest income of $10 million and $96 million and average yields of 7.53% and 4.43% for the nine months ended September 30, 2022 and 2021, respectively.
(c)The nine months ended September 30, 2021 included residual value adjustments totaling $20 million, or a 6 basis point impact to average loan yield.
(d)Average balances included $(1.4) billion and $109 million of unrealized (losses) gains for the nine months ended September 30, 2022 and 2021, respectively; yields calculated gross of these unrealized gains and losses.
(e)Average balances included $(103) million and $37 million of unrealized (losses) gains for the nine months ended September 30, 2022 and 2021, respectively; yields calculated gross of these unrealized gains and losses.
(f)Average balances excluded $1.1 billion and $313 million of collateral posted and netted against derivative liability positions for the nine months ended September 30, 2022 and 2021, yields calculated gross of derivative netting amounts.
(g)Average balances excluded $163 million and $153 million of collateral received and netted against derivative asset positions for the nine months ended September 30, 2022 and 2021, rates calculated gross of derivative netting amounts.
14
ANALYSIS OF NET INTEREST INCOME (unaudited)
Comerica Incorporated and Subsidiaries
Three Months Ended
September 30, 2022
June 30, 2022
September 30, 2021
Average
Average
Average
Average
Average
Average
(dollar amounts in millions)
Balance
Interest
Rate
Balance
Interest
Rate
Balance
Interest
Rate
Commercial loans (a), (b)
$
30,573
$
362
4.69
%
$
29,918
$
282
3.77
%
$
28,244
$
262
3.67
%
Real estate construction loans
2,457
33
5.44
2,332
24
4.05
3,160
28
3.46
Commercial mortgage loans
12,180
141
4.59
11,947
99
3.33
11,165
82
2.90
Lease financing
690
4
2.10
642
4
3.01
580
1
1.12
International loans
1,234
15
4.89
1,303
12
3.66
1,075
8
3.13
Residential mortgage loans
1,761
16
3.47
1,773
14
3.16
1,816
13
2.92
Consumer loans
2,218
26
4.77
2,112
19
3.64
2,095
17
3.31
Total loans
51,113
597
4.64
50,027
454
3.64
48,135
411
3.39
Mortgage-backed securities (c)
17,752
111
2.25
16,218
93
2.07
12,331
58
1.89
U.S. Treasury securities (d)
2,788
8
0.97
2,811
7
0.98
3,638
12
1.32
Total investment securities
20,540
119
2.08
19,029
100
1.92
15,969
70
1.76
Interest-bearing deposits with banks (e)
5,194
33
2.12
10,861
23
0.75
20,494
8
0.16
Other short-term investments
165
1
0.96
176
—
0.66
190
—
0.20
Total earning assets
77,012
750
3.71
80,093
577
2.79
84,788
489
2.30
Cash and due from banks
1,529
1,421
964
Allowance for loan losses
(563)
(555)
(644)
Accrued income and other assets
7,444
7,851
6,245
Total assets
$
85,422
$
88,810
$
91,353
Money market and interest-bearing checking deposits (f)
$
27,125
15
0.22
$
29,513
3
0.05
$
31,865
4
0.05
Savings deposits
3,365
1
0.05
3,330
—
0.02
3,097
—
0.01
Customer certificates of deposit
1,632
—
0.21
1,774
1
0.18
2,128
1
0.20
Other time deposits
—
—
—
1
—
0.30
—
—
—
Foreign office time deposits
34
—
1.42
53
—
0.54
41
—
0.08
Total interest-bearing deposits
32,156
16
0.20
34,671
4
0.05
37,131
5
0.06
Federal funds purchased
79
1
2.50
5
—
0.64
1
—
0.07
Other short-term borrowings
65
—
3.04
—
—
—
—
—
—
Medium- and long-term debt
2,827
26
3.60
2,656
12
1.85
2,864
9
1.16
Total interest-bearing sources
35,127
43
0.48
37,332
16
0.19
39,996
14
0.14
Noninterest-bearing deposits
41,820
42,918
41,984
Accrued expenses and other liabilities
2,184
2,035
1,456
Shareholders' equity
6,291
6,525
7,917
Total liabilities and shareholders' equity
$
85,422
$
88,810
$
91,353
Net interest income/rate spread
$
707
3.23
$
561
2.60
$
475
2.16
Impact of net noninterest-bearing sources of funds
0.27
0.10
0.07
Net interest margin (as a percentage of average earning assets)
3.50
%
2.70
%
2.23
%
(a)Interest income on commercial loans included $(2) million, $25 million and $24 million of business loan swap (loss) income for the three months ended September 30, 2022, June 30, 2022 and September 30, 2021, respectively.
(b)Included PPP loans with average balances of $67 million, $149 million and $1.7 billion, interest income of $1 million, $4 million and $34 million and average yields of 7.71%, 9.63% and 8.02% for the three months ended September 30, 2022, June 30, 2022 and September 30, 2021, respectively.
(c)Average balances included $(2.0) billion, $(1.7) billion and $78 million of unrealized (losses) gains for the three months ended September 30, 2022, June 30, 2022 and September 30, 2021, respectively; yields calculated gross of these unrealized gains and losses.
(d)Average balances included $(134) million, $(118) million and $23 million of unrealized (losses) gains for the three months ended September 30, 2022, June 30, 2022 and September 30, 2021, respectively; yields calculated gross of these unrealized gains and losses.
(e)Average balances excluded $1.1 billion, $1.4 billion and $531 million of collateral posted and netted against derivative liability positions for the three months ended September 30, 2022, June 30, 2022 and September 30, 2021, respectively; yields calculated gross of derivative netting amounts.
(f)Average balances excluded $189 million, $131 million and $142 million of collateral received and netted against derivative asset positions for the three months ended September 30, 2022, June 30, 2022 and September 30, 2021, respectively; rates calculated gross of derivative netting amounts.
15
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (unaudited)
Comerica Incorporated and Subsidiaries
Accumulated
Nonredeemable
Common Stock
Other
Total
Preferred
Shares
Capital
Comprehensive
Retained
Treasury
Shareholders'
(in millions, except per share data)
Stock
Outstanding
Amount
Surplus
Loss
Earnings
Stock
Equity
BALANCE AT JUNE 30, 2021
$
394
133.9
$
1,141
$
2,163
$
(120)
$
10,202
$
(5,849)
$
7,931
Net income
—
—
—
—
—
262
—
262
Other comprehensive loss, net of tax
—
—
—
—
(87)
—
—
(87)
Cash dividends declared on common stock ($0.68 per share)
—
—
—
—
—
(89)
—
(89)
Cash dividends declared on preferred stock
—
—
—
—
—
(6)
—
(6)
Purchase of common stock
—
(3.1)
—
—
—
—
(220)
(220)
Net issuance of common stock under employee stock plans
—
0.2
—
—
—
(3)
8
5
Share-based compensation
—
—
—
7
—
—
—
7
BALANCE AT SEPTEMBER 30, 2021
$
394
131.0
$
1,141
$
2,170
$
(207)
$
10,366
$
(6,061)
$
7,803
BALANCE AT JUNE 30, 2022
$
394
130.8
$
1,141
$
2,204
$
(1,954)
$
10,752
$
(6,102)
$
6,435
Net income
—
—
—
—
—
351
—
351
Other comprehensive loss, net of tax
—
—
—
—
(1,633)
—
—
(1,633)
Cash dividends declared on common stock ($0.68 per share)
—
—
—
—
—
(89)
—
(89)
Cash dividends declared on preferred stock
—
—
—
—
—
(6)
—
(6)
Net issuance of common stock under employee stock plans
—
0.1
—
(4)
—
(3)
9
2
Share-based compensation
—
—
—
9
—
—
—
9
BALANCE AT SEPTEMBER 30, 2022
$
394
130.9
$
1,141
$
2,209
$
(3,587)
$
11,005
$
(6,093)
$
5,069
BALANCE AT DECEMBER 31, 2020
$
394
139.2
$
1,141
$
2,185
$
64
$
9,727
$
(5,461)
$
8,050
Net income
—
—
—
—
—
940
—
940
Other comprehensive loss, net of tax
—
—
—
—
(271)
—
—
(271)
Cash dividends declared on common stock ($2.04 per share)
—
—
—
—
—
(276)
—
(276)
Cash dividends declared on preferred stock
—
—
—
—
—
(17)
—
(17)
Purchase of common stock
—
(9.0)
—
(24)
—
—
(649)
(673)
Net issuance of common stock under employee stock plans
—
0.8
—
(27)
—
(8)
49
14
Share-based compensation
—
—
—
36
—
—
—
36
BALANCE AT SEPTEMBER 30, 2021
$
394
131.0
$
1,141
$
2,170
$
(207)
$
10,366
$
(6,061)
$
7,803
BALANCE AT DECEMBER 31, 2021
$
394
130.7
$
1,141
$
2,175
$
(212)
$
10,494
$
(6,095)
$
7,897
Net income
—
—
—
—
—
801
—
801
Other comprehensive loss, net of tax
—
—
—
—
(3,375)
—
—
(3,375)
Cash dividends declared on common stock ($2.04 per share)
—
—
—
—
—
(267)
—
(267)
Cash dividends declared on preferred stock
—
—
—
—
—
(17)
—
(17)
Purchase of common stock
—
(0.4)
—
—
—
—
(36)
(36)
Net issuance of common stock under employee stock plans
—
0.6
—
(14)
—
(6)
38
18
Share-based compensation
—
—
—
48
—
—
—
48
BALANCE AT SEPTEMBER 30, 2022
$
394
130.9
$
1,141
$
2,209
$
(3,587)
$
11,005
$
(6,093)
$
5,069
16
BUSINESS SEGMENT FINANCIAL RESULTS (unaudited)
Comerica Incorporated and Subsidiaries
(dollar amounts in millions)
Commercial
Retail
Wealth
Three Months Ended September 30, 2022
Bank
Bank
Management
Finance
Other
Total
Earnings summary:
Net interest income (expense)
$
478
$
188
$
55
$
(22)
$
8
$
707
Provision for credit losses
16
2
5
—
5
28
Noninterest income
169
29
77
6
(3)
278
Noninterest expenses
242
170
87
—
3
502
Provision (benefit) for income taxes
94
11
10
(6)
(5)
104
Net income (loss)
$
295
$
34
$
30
$
(10)
$
2
$
351
Net credit-related charge-offs
$
6
$
—
$
—
$
—
$
7
$
13
Selected average balances:
Assets
$
48,323
$
2,799
$
5,097
$
22,133
$
7,070
$
85,422
Loans
44,043
2,066
4,973
—
31
51,113
Deposits
41,471
26,665
5,293
383
164
73,976
Statistical data:
Return on average assets (a)
2.42
%
0.51
%
2.08
%
n/m
n/m
1.63
%
Efficiency ratio (b)
37.54
76.81
65.92
n/m
n/m
50.75
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
12
(13)
268
Noninterest expenses
236
173
89
—
(16)
482
Provision (benefit) for income taxes
70
2
7
(7)
4
76
Net income (loss)
$
244
$
6
$
24
$
(14)
$
1
$
261
Net credit-related charge-offs (recoveries)
$
2
$
(1)
$
(1)
$
—
$
—
$
—
Selected average balances:
Assets
$
47,595
$
2,769
$
4,963
$
21,071
$
12,412
$
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
%
1.52
%
n/m
n/m
1.18
%
Efficiency ratio (b)
42.32
95.87
71.82
n/m
n/m
58.03
Commercial
Retail
Wealth
Three Months Ended September 30, 2021
Bank
Bank
Management
Finance
Other
Total
Earnings summary:
Net interest income (expense)
$
406
$
149
$
40
$
(124)
$
4
$
475
Provision for credit losses
(25)
(5)
(13)
—
1
(42)
Noninterest income
169
32
69
10
—
280
Noninterest expenses
223
159
79
—
4
465
Provision (benefit) for income taxes
83
4
10
(27)
—
70
Net income (loss)
$
294
$
23
$
33
$
(87)
$
(1)
$
262
Net credit-related charge-offs (recoveries)
$
4
$
(1)
$
(1)
$
—
$
—
$
2
Selected average balances:
Assets
$
43,366
$
3,105
$
4,956
$
17,922
$
22,004
$
91,353
Loans
41,037
2,297
4,829
—
(28)
48,135
Deposits
46,641
26,088
5,209
977
200
79,115
Statistical data:
Return on average assets (a)
2.33
%
0.34
%
2.36
%
n/m
n/m
1.14
%
Efficiency ratio (b)
38.40
87.18
72.83
n/m
n/m
61.13
(a)Return on average assets is calculated based on the greater of average assets or average liabilities and attributed equity.
(b)Noninterest expenses as a percentage of the sum of net interest income and noninterest income excluding a derivative contract tied to the conversion rate of Visa Class B shares and changes in the value of shares obtained through monetization of warrants.
n/m - not meaningful
17
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.
