COMERICA INCORPORATED
FOURTH QUARTER 2022 NET INCOME OF $350 MILLION, $2.58 PER SHARE
Record Revenue, Robust Loan Growth and Excellent Credit Quality
Maintained Expense Discipline while Supporting Growth Initiatives
"Today we reported record annual earnings per share of $8.47," said Curtis C. Farmer, Comerica Chairman and Chief Executive Officer. "We generated 8% growth in average loans, excluding PPP loan activity (3% growth with PPP), our highest rate of organic growth in well over a decade, as we expanded relationships and won new customers. Our revenue increased 19% to $3.5 billion, supporting strategic investments in our business while lowering our efficiency ratio to 56%. Credit quality remained excellent. In summary, a successful performance resulting in our ROE increasing to 18.6% and ROA to 1.3%.
"We ended the year strong with fourth quarter net income of $350 million or $2.58 per share. Average loans grew $1.3 billion, or over 2%, and we modestly increased reserves consistent with loan growth and the softening economic outlook. Average deposits decreased; however, we began to see positive trends resulting from pricing actions. Expenses reflected investments in our business that support our revenue-generating activities, and credit quality remained exceptional.
"Moving into 2023, we feel well-positioned to continue to deliver superior financial results with our strong business and geographic profile, loan momentum, reduced interest rate exposure and proven credit discipline. Delivering positive operating leverage remains a priority while we strategically invest to drive growth. Our customers and colleagues have proven their agility, and we remain committed to their success regardless of the economic environment."
| (dollar amounts in millions, except per share data) | 4th Qtr '22 | 3rd Qtr '22 | 2022 | 2021 | ||||
| FINANCIAL RESULTS | ||||||||
| Net interest income | $ | 742 | $ | 707 | $ | 2,466 | $ | 1,844 |
| Provision for credit losses | 33 | 28 | 60 | (384) | ||||
| Noninterest income | 278 | 278 | 1,068 | 1,123 | ||||
| Noninterest expenses | 541 | 502 | 1,998 | 1,861 | ||||
| Pre-tax income | 446 | 455 | 1,476 | 1,490 | ||||
| Provision for income taxes | 96 | 104 | 325 | 322 | ||||
| Net income | $ | 350 | $ | 351 | $ | 1,151 | $ | 1,168 |
| Diluted earnings per common share | $ | 2.58 | $ | 2.60 | $ | 8.47 | $ | 8.35 |
| Average loans | 52,375 | 51,113 | 50,460 | 49,083 | ||||
| Average deposits | 71,355 | 73,976 | 75,481 | 77,681 | ||||
| Return on average assets | 1.65 | % | 1.63 | % | 1.32 | % | 1.30 | % |
| Return on average common shareholders' equity | 27.92 | 23.28 | 18.63 | 15.15 | ||||
| Net interest margin | 3.74 | 3.50 | 3.02 | 2.21 | ||||
| Efficiency ratio (a) | 53.00 | 50.75 | 56.32 | 62.42 | ||||
| Common equity Tier 1 capital ratio (b) | 10.02 | 9.93 | 10.02 | 10.13 | ||||
| Tier 1 capital ratio (b) | 10.52 | 10.45 | 10.52 | 10.70 |
(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)December 31, 2022 ratios are estimated.
Fourth Quarter 2022 Compared to Third Quarter 2022 Overview
Balance sheet items discussed in terms of average balances unless otherwise noted.
Loans increased $1.3 billion to $52.4 billion.
•Increases of $879 million in Commercial Real Estate, $331 million in National Dealer Services, $193 million in Corporate Banking, $131 million in Wealth Management and $119 million in Entertainment Lending, partially offset by a decrease of $329 million in Mortgage Banker Finance.
•Average yield on loans (including swaps) increased 81 basis points to 5.45%, primarily driven by higher short-term rates.
Securities decreased $1.4 billion to $19.1 billion.
•Decrease driven by the full quarter impact of market valuation adjustments to the mortgage-backed securities portfolio made in the third quarter.
•Period-end unrealized losses on securities, included in accumulated other comprehensive loss, decreased $73 million to $3.0 billion.
•Average yield on securities increased 3 basis points to 2.11% as lower-yielding securities were paid down.
Deposits decreased $2.6 billion to $71.4 billion.
•Noninterest-bearing and interest-bearing deposits decreased $1.9 billion and $756 million, respectively, due to strategic deposit management as well as customers utilizing balances to fund business activities.
•The average cost of interest-bearing deposits increased 77 basis points to 97 basis points, reflecting relationship-focused pricing in a rising-rate environment.
Net interest income increased $35 million to $742 million.
•Driven by the benefit of higher short-term rates and loan growth, partially offset by lower deposits held with the Federal Reserve Bank as well as higher short-term borrowings.
•Net interest margin increased 24 basis points to 3.74%, driven by higher rates.
Provision for credit losses increased $5 million to $33 million.
•The allowance for credit losses increased $37 million to $661 million at December 31, 2022, reflecting loan growth and continued strong credit metrics as well as a modest deterioration in economic forecasts. As a percentage of total loans, the allowance for credit losses was 1.24%, an increase of 3 basis points.
Noninterest income of $278 million was stable.
•Increases of $9 million in deferred compensation asset returns (offset in noninterest expenses) and $8 million in risk management hedging income were more than offset by decreases of $12 million in derivative income (energy and interest rate), $3 million in service charges on deposit accounts and $3 million in fiduciary income. The increase in risk management hedging income (included in other noninterest income) related to an increase in price alignment (PA) income received for centrally cleared risk management positions.
Noninterest expenses increased $39 million to $541 million.
•Increases of $13 million in other noninterest expenses, $11 million in salaries and benefits expense, $9 million in occupancy expense and $5 million in advertising expense.
◦Other noninterest expenses included increases of $5 million in consulting fees and $3 million each in legal fees and travel and entertainment expense.
◦Salaries and benefits expense included increases of $9 million in deferred compensation expense (offset in other noninterest income), $8 million in severance related to modernization initiatives as well as $4 million in merit increases and staff additions, partially offset by decreases of $7 million in performance-based compensation and $4 million in contract labor.
◦Expenses for certain modernization initiatives increased $11 million to $18 million. These initiatives related to transformation of the retail banking delivery model, alignment of corporate facilities and optimization of technology platforms, comprised of transitional real estate costs (reported in occupancy expense), severance and contract labor (reported in salaries and benefits expense) and asset impairments (reported in other noninterest expenses).
Common equity Tier 1 capital ratio of 10.02% and a Tier 1 capital ratio of 10.52%.
•Declared dividends of $89 million on common stock and $6 million on preferred stock.
2
Full-Year 2022 Compared to Full-Year 2021 Overview
Balance sheet items discussed in terms of average balances unless otherwise noted.
Loans increased $1.4 billion, or 3%, to $50.5 billion.
•Excluding the impact of a $2.2 billion decline in PPP loans, loans increased $3.6 billion, or 8%.
•Increases of $1.1 billion in Corporate Banking, $749 million in general Middle Market, $564 million in Equity Fund Services, $408 million in Environmental Services, $284 million in National Dealer Services, $161 million in Commercial Real Estate and $158 million in Entertainment Lending, partially offset by decreases of $1.3 billion in Mortgage Banker Finance, $476 million in Business Banking and $319 million in Retail Banking.
•Average yield on loans increased 102 basis points to 4.27%, primarily driven by the increase in short-term rates and higher loan balances, partially offset by the net impact of PPP loans.
Securities increased $3.3 billion, or 21%, to $19.0 billion.
•Reflects investment of a portion of excess liquidity into mortgage-backed securities, partly offset by maturities of Treasury securities.
•Period-end unrealized losses on securities, included in accumulated other comprehensive loss, was $3.0 billion, compared to $130 million at the end of the previous year.
•Average yield on securities increased 18 basis points to 1.97% from higher yields on purchases and reinvestments.
Deposits decreased $2.2 billion, or 3%, to $75.5 billion.
•Interest-bearing deposits decreased $2.8 billion due to strategic deposit management and customers utilizing balances to fund business activities, partially offset by a $577 million increase in noninterest-bearing deposits.
•The average cost of interest-bearing deposits increased 24 basis points to 30 basis points, reflecting relationship-focused pricing in a rising-rate environment.
Net interest income increased $622 million to $2.5 billion.
•Higher short-term rates and growth in loans and securities balances, partly offset the net impact of PPP loans.
•Net interest margin increased 81 basis points to 3.02%, driven by higher rates and a decrease in lower-yielding deposits held with the Federal Reserve Bank.
Provision for credit losses increased to an expense of $60 million from a benefit of $384 million.
•The allowance for credit losses increased $43 million, reflecting loan growth and continued strong credit metrics as well as a modest deterioration in economic forecasts. As a percentage of total loans, the allowance for credit losses decreased 2 basis points.
•Net loan charge-offs were $17 million, or 0.03% of average loans, compared to net recoveries of $10 million during 2021.
Noninterest income decreased $55 million to $1.1 billion.
•Decreases of $56 million in other noninterest income and $25 million in card fees, partially offset by increases of $10 million in derivative income, $7 million in brokerage fees and $5 million in commercial lending fees.
◦Other noninterest income included decreases of $32 million in deferred compensation asset returns (offset in noninterest expenses), $30 million in warrant-related income and $7 million in investment banking fees, partially offset by an $8 million increase in risk management hedging income related to an increase in PA income received for centrally cleared risk management positions.
Noninterest expenses increased $137 million to $2.0 billion, which included $38 million in expenses for certain modernization initiatives detailed above.
•Increases of $75 million in salaries and benefits expense, $23 million in operational losses, $14 million in occupancy expense, $10 million in travel and entertainment expense, $9 million each in FDIC insurance expense and consulting fees, as well as smaller increases in other categories, partially offset by decreases of $15 million in outside processing fee expense, $8 million in non-salary pension expense and $7 million in legal-related expenses.
◦The increase in salaries and benefits expense included increases of $28 million from annual merit increases, $24 million in performance-based compensation, $18 million in stock-based compensation, $16 million in contract labor and $11 million in severance, partially offset by a decrease of $32 million in deferred compensation expense (offset in other noninterest income).
Returned a total of $391 million to common shareholders.
•Declared dividends of $356 million on common stock and $23 million on preferred stock.
3
Net Interest Income
Balance sheet items presented and discussed in terms of average balances.
| (dollar amounts in millions) | 4th Qtr '22 | 3rd Qtr '22 | 2022 | 2021 | ||||
| Net interest income | $ | 742 | $ | 707 | $ | 2,466 | $ | 1,844 |
| Net interest margin | 3.74 | % | 3.50 | % | 3.02 | % | 2.21 | % |
| Selected balances: | ||||||||
| Total earning assets | $ | 75,538 | $ | 77,012 | $ | 79,025 | $ | 83,719 |
| Total loans | 52,375 | 51,113 | 50,460 | 49,083 | ||||
| Total investment securities | 19,129 | 20,540 | 19,015 | 15,724 | ||||
| Federal Reserve Bank deposits | 3,693 | 4,967 | 9,036 | 18,347 | ||||
| Total deposits | 71,355 | 73,976 | 75,481 | 77,681 | ||||
| Total noninterest-bearing deposits | 39,955 | 41,820 | 42,018 | 41,441 | ||||
| Short-term borrowings | 1,583 | 144 | 436 | 2 | ||||
| Medium- and long-term debt | 3,020 | 2,827 | 2,818 | 3,035 |
Net interest income increased $35 million, and net interest margin increased 24 basis points compared to third quarter 2022. Amounts shown in parenthesis represent the impacts to net interest income and net interest margin, respectively.
•Interest income on loans increased $122 million and improved net interest margin by 56 basis points, driven by higher short-term rates (+$102 million, +52 basis points), higher loan balances (+$19 million, +3 basis points) and other portfolio dynamics (+$1 million, +1 basis point).
•Interest income on investment securities decreased $1 million and improved net interest margin by 2 basis points due to ordinary shifts in the mix of the investment portfolio.
•Interest income on short-term investments increased $5 million and improved net interest margin by 11 basis points, reflecting higher short-term rates (+$24 million, +12 basis points), partially offset by a decrease of $1.3 billion in deposits with the Federal Reserve (-$19 million, -1 basis point).
•Interest expense on deposits increased $62 million and reduced net interest margin by 30 basis points, due to higher rates (-$63 million, -31 basis points), partially offset by lower average deposit balances (+$1 million, +1 basis point).
•Interest expense on debt increased $29 million and reduced net interest margin by 15 basis points, driven by higher rates (-$10 million, -5 basis points) and an increase in average debt, primarily from short-term borrowings (-$19 million,-10 basis points).
The net impact of higher rates to the fourth quarter 2022 net interest income was an increase of $53 million and 28 basis points to the net interest margin.
4
Credit Quality
"Credit quality remained excellent with $4 million in net recoveries in the fourth quarter and only 3 basis points in net charge-offs for the year," said Farmer. "Criticized (including nonaccrual) loans declined, remaining well below historical averages at 3% of total loans, and our coverage ratio increased. Customers continue to mitigate inflationary pressures where possible and remain optimistic about their ability to navigate the environment. A slightly more negative view of the economy increased our allowance for credit losses to 1.24% of total loans. With our relationship model and consistent approach to credit, we feel well-positioned to continue supporting our customers while maintaining a low risk profile."
| (dollar amounts in millions) | 4th Qtr '22 | 3rd Qtr '22 | 4th Qtr '21 | |||
| Credit-related charge-offs | $ | 11 | $ | 26 | $ | 20 |
| Recoveries | 15 | 13 | 24 | |||
| Net credit-related (recoveries) charge-offs | (4) | 13 | (4) | |||
| Net credit-related (recoveries) charge-offs/Average total loans | (0.03 | %) | 0.10 | % | (0.03 | %) |
| Provision for credit losses | $ | 33 | $ | 28 | $ | (25) |
| Nonperforming loans | 244 | 262 | 268 | |||
| Nonperforming assets (NPAs) | 244 | 262 | 269 | |||
| NPAs/Total loans and foreclosed property | 0.46 | % | 0.51 | % | 0.55 | % |
| Loans past due 90 days or more and still accruing | $ | 23 | $ | 72 | $ | 27 |
| Allowance for loan losses | 610 | 576 | 588 | |||
| Allowance for credit losses on lending-related commitments (a) | 51 | 48 | 30 | |||
| Total allowance for credit losses | 661 | 624 | 618 | |||
| Allowance for credit losses/Period-end total loans | 1.24 | % | 1.21 | % | 1.26 | % |
| Allowance for credit losses/Nonperforming loans | 2.7x | 2.4x | 2.3x |
(a) Included in accrued expenses and other liabilities on the Consolidated Balance Sheets.
•The allowance for credit losses increased $37 million to $661 million at December 31, 2022, or 1.24% of total loans, reflecting loan growth and continued strong credit metrics as well as a modest deterioration in economic forecasts.
•Criticized loans decreased $54 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 decrease in criticized loans was primarily driven by Corporate Banking, Environmental Services, Technology and Life Sciences as well as Energy, partially offset by increases in general Middle Market.
•Nonperforming assets decreased $18 million to $244 million, or 0.46% of total loans and foreclosed property, compared to 0.51% in third quarter 2022.
•Net recoveries totaled $4 million, compared to net charge-offs of $13 million in third 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 December 31, 2022. A discussion of business segment year-to-date results will be included in Comerica's December 31, 2022 Form 10-K.
Conference Call and Webcast
Comerica will host a conference call to review fourth quarter 2022 financial results at 7 a.m. CT Thursday, January 19, 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.
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 | Years Ended | |||||||||
| December 31, | September 30, | December 31, | December 31, | |||||||
| (in millions, except per share data) | 2022 | 2022 | 2021 | 2022 | 2021 | |||||
| PER COMMON SHARE AND COMMON STOCK DATA | ||||||||||
| Diluted earnings per common share | $ | 2.58 | $ | 2.60 | $ | 1.66 | $ | 8.47 | $ | 8.35 |
| Cash dividends declared | 0.68 | 0.68 | 0.68 | 2.72 | 2.72 | |||||
| Average diluted shares (in thousands) | 132,382 | 132,479 | 132,870 | 132,554 | 136,566 | |||||
| PERFORMANCE RATIOS | ||||||||||
| Return on average common shareholders' equity | 27.92 | % | 23.28 | % | 11.88 | % | 18.63 | % | 15.15 | % |
| Return on average assets | 1.65 | 1.63 | 0.93 | 1.32 | 1.30 | |||||
| Efficiency ratio (a) | 53.00 | 50.75 | 64.24 | 56.32 | 62.42 | |||||
| CAPITAL | ||||||||||
| Common equity tier 1 capital (b), (c) | $ | 7,884 | $ | 7,616 | $ | 7,064 | ||||
| Tier 1 capital (b), (c) | 8,278 | 8,010 | 7,458 | |||||||
| Risk-weighted assets (b) | 78,682 | 76,661 | 69,708 | |||||||
| Common equity tier 1 capital ratio (b), (c) | 10.02 | % | 9.93 | % | 10.13 | % | ||||
| Tier 1 capital ratio (b), (c) | 10.52 | 10.45 | 10.70 | |||||||
| Total capital ratio (b) | 12.48 | 12.41 | 12.35 | |||||||
| Leverage ratio (b) | 9.54 | 9.20 | 7.74 | |||||||
| Common shareholders' equity per share of common stock | $ | 36.55 | $ | 35.70 | $ | 57.41 | ||||
| Tangible common equity per share of common stock (c) | 31.62 | 30.77 | 52.46 | |||||||
| Common equity ratio | 5.60 | % | 5.55 | % | 7.93 | % | ||||
| Tangible common equity ratio (c) | 4.89 | 4.82 | 7.30 | |||||||
| AVERAGE BALANCES | ||||||||||
| Commercial loans | $ | 30,585 | $ | 30,573 | $ | 27,925 | $ | 29,846 | $ | 29,283 |
| Real estate construction loans | 2,978 | 2,457 | 2,968 | 2,607 | 3,609 | |||||
| Commercial mortgage loans | 12,752 | 12,180 | 11,212 | 12,135 | 10,610 | |||||
| Lease financing | 753 | 690 | 634 | 680 | 596 | |||||
| International loans | 1,227 | 1,234 | 1,177 | 1,246 | 1,063 | |||||
| Residential mortgage loans | 1,786 | 1,761 | 1,810 | 1,776 | 1,813 | |||||
| Consumer loans | 2,294 | 2,218 | 2,099 | 2,170 | 2,109 | |||||
| Total loans | 52,375 | 51,113 | 47,825 | 50,460 | 49,083 | |||||
| Earning assets | 75,538 | 77,012 | 89,898 | 79,025 | 83,719 | |||||
| Total assets | 83,808 | 85,422 | 96,692 | 87,272 | 90,152 | |||||
| Noninterest-bearing deposits | 39,955 | 41,820 | 45,980 | 42,018 | 41,441 | |||||
| Interest-bearing deposits | 31,400 | 32,156 | 38,557 | 33,463 | 36,240 | |||||
| Total deposits | 71,355 | 73,976 | 84,537 | 75,481 | 77,681 | |||||
| Common shareholders' equity | 4,887 | 5,897 | 7,408 | 6,057 | 7,559 | |||||
| Total shareholders' equity | 5,281 | 6,291 | 7,802 | 6,451 | 7,953 | |||||
| NET INTEREST INCOME | ||||||||||
| Net interest income | $ | 742 | $ | 707 | $ | 461 | $ | 2,466 | $ | 1,844 |
| Net interest margin | 3.74 | % | 3.50 | % | 2.04 | % | 3.02 | % | 2.21 | % |
| CREDIT QUALITY | ||||||||||
| Nonperforming assets | $ | 244 | $ | 262 | $ | 269 | ||||
| Loans past due 90 days or more and still accruing | 23 | 72 | 27 | |||||||
| Net credit-related charge-offs (recoveries) | (4) | 13 | (4) | $ | 17 | $ | (10) | |||
| Allowance for loan losses | 610 | 576 | 588 | |||||||
| Allowance for credit losses on lending-related commitments | 51 | 48 | 30 | |||||||
| Total allowance for credit losses | 661 | 624 | 618 | |||||||
| Allowance for credit losses as a percentage of total loans | 1.24 | % | 1.21 | % | 1.26 | % | ||||
| Net loan (recoveries) charge-offs as a percentage of average total loans | (0.03) | 0.10 | (0.03) | 0.03 | % | (0.02 | %) | |||
Nonperforming assets as a percentage of total loans and foreclosed property
| 0.46 | 0.51 | 0.55 | |||||||
| Allowance for credit losses as a multiple of total nonperforming loans | 2.7x | 2.4x | 2.3x | |||||||
| OTHER KEY INFORMATION | ||||||||||
| Number of banking centers | 410 | 410 | 433 | |||||||
| Number of employees - full time equivalent | 7,488 | 7,432 | 7,442 |
(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) December 31, 2022 ratios are estimated.
(c) See Reconciliations of Non-GAAP Financial Measures and Regulatory Ratios.
8
| CONSOLIDATED BALANCE SHEETS | ||||||
| Comerica Incorporated and Subsidiaries | ||||||
| December 31, | September 30, | December 31, | ||||
| (in millions, except share data) | 2022 | 2022 | 2021 | |||
| (unaudited) | (unaudited) | |||||
| ASSETS | ||||||
| Cash and due from banks | $ | 1,758 | $ | 1,735 | $ | 1,236 |
| Interest-bearing deposits with banks | 4,524 | 4,235 | 21,443 | |||
| Other short-term investments | 157 | 159 | 197 | |||
| Investment securities available-for-sale | 19,012 | 19,452 | 16,986 | |||
| Commercial loans | 30,909 | 30,713 | 29,366 | |||
| Real estate construction loans | 3,105 | 2,617 | 2,948 | |||
| Commercial mortgage loans | 13,306 | 12,438 | 11,255 | |||
| Lease financing | 760 | 713 | 640 | |||
| International loans | 1,197 | 1,216 | 1,208 | |||
| Residential mortgage loans | 1,814 | 1,753 | 1,771 | |||
| Consumer loans | 2,311 | 2,262 | 2,097 | |||
| Total loans | 53,402 | 51,712 | 49,285 | |||
| Allowance for loan losses | (610) | (576) | (588) | |||
| Net loans | 52,792 | 51,136 | 48,697 | |||
| Premises and equipment | 400 | 412 | 454 | |||
| Accrued income and other assets | 6,763 | 7,014 | 5,603 | |||
| Total assets | $ | 85,406 | $ | 84,143 | $ | 94,616 |
| LIABILITIES AND SHAREHOLDERS' EQUITY | ||||||
| Noninterest-bearing deposits | $ | 39,945 | $ | 42,296 | $ | 45,800 |
| Money market and interest-bearing checking deposits | 26,290 | 25,663 | 31,349 | |||
| Savings deposits | 3,225 | 3,375 | 3,167 | |||
| Customer certificates of deposit | 1,762 | 1,661 | 1,973 | |||
| Other time deposits | 124 | - | - | |||
| Foreign office time deposits | 51 | 21 | 50 | |||
| Total interest-bearing deposits | 31,452 | 30,720 | 36,539 | |||
| Total deposits | 71,397 | 73,016 | 82,339 | |||
| Short-term borrowings | 3,211 | 508 | - | |||
| Accrued expenses and other liabilities | 2,593 | 2,534 | 1,584 | |||
| Medium- and long-term debt | 3,024 | 3,016 | 2,796 | |||
| Total liabilities | 80,225 | 79,074 | 86,719 | |||
| 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 | |||
| Common stock - $5 par value: | ||||||
| Authorized - 325,000,000 shares | ||||||
| Issued - 228,164,824 shares | 1,141 | 1,141 | 1,141 | |||
| Capital surplus | 2,220 | 2,209 | 2,175 | |||
| Accumulated other comprehensive loss | (3,742) | (3,587) | (212) | |||
| Retained earnings | 11,258 | 11,005 | 10,494 | |||
Less cost of common stock in treasury - 97,197,962 shares at 12/31/22, 97,244,273 shares at 9/30/22 and 97,476,872 shares at 12/31/21
| (6,090) | (6,093) | (6,095) | |||
| Total shareholders' equity | 5,181 | 5,069 | 7,897 | |||
| Total liabilities and shareholders' equity | $ | 85,406 | $ | 84,143 | $ | 94,616 |
9
| CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME | ||||||||
| Comerica Incorporated and Subsidiaries | ||||||||
| Three Months Ended | Years Ended | |||||||
| December 31, | December 31, | |||||||
| (in millions, except per share data) | 2022 | 2021 | 2022 | 2021 | ||||
| (unaudited) | (unaudited) | (unaudited) | ||||||
| INTEREST INCOME | ||||||||
| Interest and fees on loans | $ | 719 | $ | 393 | $ | 2,153 | $ | 1,594 |
| Interest on investment securities | 118 | 71 | 414 | 280 | ||||
| Interest on short-term investments | 39 | 10 | 105 | 27 | ||||
| Total interest income | 876 | 474 | 2,672 | 1,901 | ||||
| INTEREST EXPENSE | ||||||||
| Interest on deposits | 78 | 5 | 102 | 22 | ||||
| Interest on short-term borrowings | 16 | - | 17 | - | ||||
| Interest on medium- and long-term debt | 40 | 8 | 87 | 35 | ||||
| Total interest expense | 134 | 13 | 206 | 57 | ||||
| Net interest income | 742 | 461 | 2,466 | 1,844 | ||||
| Provision for credit losses | 33 | (25) | 60 | (384) | ||||
| Net interest income after provision for credit losses | 709 | 486 | 2,406 | 2,228 | ||||
| NONINTEREST INCOME | ||||||||
| Card fees | 68 | 71 | 273 | 298 | ||||
| Fiduciary income | 55 | 60 | 233 | 231 | ||||
| Service charges on deposit accounts | 47 | 50 | 195 | 195 | ||||
| Commercial lending fees | 28 | 28 | 109 | 104 | ||||
| Derivative income | 23 | 27 | 109 | 99 | ||||
| Bank-owned life insurance | 10 | 11 | 47 | 43 | ||||
| Letter of credit fees | 10 | 10 | 38 | 40 | ||||
| Brokerage fees | 7 | 3 | 21 | 14 | ||||
| Other noninterest income | 30 | 29 | 43 | 99 | ||||
| Total noninterest income | 278 | 289 | 1,068 | 1,123 | ||||
| NONINTEREST EXPENSES | ||||||||
| Salaries and benefits expense | 318 | 292 | 1,208 | 1,133 | ||||
| Outside processing fee expense | 63 | 66 | 251 | 266 | ||||
| Occupancy expense | 53 | 44 | 175 | 161 | ||||
| Software expense | 41 | 38 | 161 | 155 | ||||
| Equipment expense | 14 | 12 | 50 | 50 | ||||
| Advertising expense | 14 | 10 | 38 | 35 | ||||
| FDIC insurance expense | 7 | 5 | 31 | 22 | ||||
| Other noninterest expenses | 31 | 19 | 84 | 39 | ||||
| Total noninterest expenses | 541 | 486 | 1,998 | 1,861 | ||||
| Income before income taxes | 446 | 289 | 1,476 | 1,490 | ||||
| Provision for income taxes | 96 | 61 | 325 | 322 | ||||
| NET INCOME | 350 | 228 | 1,151 | 1,168 | ||||
| Less: | ||||||||
| Income allocated to participating securities | 2 | 1 | 6 | 5 | ||||
| Preferred stock dividends | 6 | 6 | 23 | 23 | ||||
| Net income attributable to common shares | $ | 342 | $ | 221 | $ | 1,122 | $ | 1,140 |
| Earnings per common share: | ||||||||
| Basic | $ | 2.61 | $ | 1.69 | $ | 8.56 | $ | 8.45 |
| Diluted | 2.58 | 1.66 | 8.47 | 8.35 | ||||
| Comprehensive income (loss) | 195 | 223 | (2,379) | 892 | ||||
| Cash dividends declared on common stock | 89 | 89 | 356 | 365 | ||||
| Cash dividends declared per common share | 0.68 | 0.68 | 2.72 | 2.72 |
10
| CONSOLIDATED QUARTERLY STATEMENTS OF COMPREHENSIVE INCOME (unaudited) | ||||||||||||||||||
| Comerica Incorporated and Subsidiaries | ||||||||||||||||||
| Fourth | Third | Second | First | Fourth | Fourth Quarter 2022 Compared to: | |||||||||||||
| Quarter | Quarter | Quarter | Quarter | Quarter | Third Quarter 2022 | Fourth Quarter 2021 | ||||||||||||
| (in millions, except per share data) | 2022 | 2022 | 2022 | 2022 | 2021 | Amount | Percent | Amount | Percent | |||||||||
| INTEREST INCOME | ||||||||||||||||||
| Interest and fees on loans | $ | 719 | $ | 597 | $ | 454 | $ | 383 | $ | 393 | $ | 122 | 20 | % | $ | 326 | 83 | % |
| Interest on investment securities | 118 | 119 | 100 | 77 | 71 | (1) | - | 47 | 64 | |||||||||
| Interest on short-term investments | 39 | 34 | 23 | 9 | 10 | 5 | 13 | 29 | n/m | |||||||||
| Total interest income | 876 | 750 | 577 | 469 | 474 | 126 | 17 | 402 | 84 | |||||||||
| INTEREST EXPENSE | ||||||||||||||||||
| Interest on deposits | 78 | 16 | 4 | 4 | 5 | 62 | n/m | 73 | n/m | |||||||||
| Interest on short-term borrowings | 16 | 1 | - | - | - | 15 | n/m | 16 | n/m | |||||||||
| Interest on medium- and long-term debt | 40 | 26 | 12 | 9 | 8 | 14 | 57 | 32 | n/m | |||||||||
| Total interest expense | 134 | 43 | 16 | 13 | 13 | 91 | n/m | 121 | n/m | |||||||||
| Net interest income | 742 | 707 | 561 | 456 | 461 | 35 | 5 | 281 | 61 | |||||||||
| Provision for credit losses | 33 | 28 | 10 | (11) | (25) | 5 | 16 | 58 | n/m | |||||||||
Net interest income after provision
for credit losses
| 709 | 679 | 551 | 467 | 486 | 30 | 5 | 223 | 46 | |||||||||
| NONINTEREST INCOME | ||||||||||||||||||
| Card fees | 68 | 67 | 69 | 69 | 71 | 1 | 2 | (3) | (4) | |||||||||
| Fiduciary income | 55 | 58 | 62 | 58 | 60 | (3) | (6) | (5) | (9) | |||||||||
| Service charges on deposit accounts | 47 | 50 | 50 | 48 | 50 | (3) | (7) | (3) | (7) | |||||||||
| Commercial lending fees | 28 | 29 | 30 | 22 | 28 | (1) | (6) | - | - | |||||||||
| Derivative income | 23 | 35 | 29 | 22 | 27 | (12) | (35) | (4) | (12) | |||||||||
| Bank-owned life insurance | 10 | 12 | 12 | 13 | 11 | (2) | (17) | (1) | (6) | |||||||||
| Letter of credit fees | 10 | 10 | 9 | 9 | 10 | - | - | - | - | |||||||||
| Brokerage fees | 7 | 6 | 4 | 4 | 3 | 1 | 16 | 4 | n/m | |||||||||
| Other noninterest income | 30 | 11 | 3 | (1) | 29 | 19 | n/m | 1 | 6 | |||||||||
| Total noninterest income | 278 | 278 | 268 | 244 | 289 | - | - | (11) | (4) | |||||||||
| NONINTEREST EXPENSES | ||||||||||||||||||
| Salaries and benefits expense | 318 | 307 | 294 | 289 | 292 | 11 | 4 | 26 | 10 | |||||||||
| Outside processing fee expense | 63 | 64 | 62 | 62 | 66 | (1) | - | (3) | (4) | |||||||||
| Occupancy expense | 53 | 44 | 40 | 38 | 44 | 9 | 19 | 9 | 21 | |||||||||
| Software expense | 41 | 40 | 41 | 39 | 38 | 1 | - | 3 | 4 | |||||||||
| Equipment expense | 14 | 12 | 13 | 11 | 12 | 2 | 16 | 2 | 15 | |||||||||
| Advertising expense | 14 | 9 | 8 | 7 | 10 | 5 | 42 | 4 | 28 | |||||||||
| FDIC insurance expense | 7 | 8 | 8 | 8 | 5 | (1) | (1) | 2 | 57 | |||||||||
| Other noninterest expenses | 31 | 18 | 16 | 19 | 19 | 13 | 81 | 12 | 65 | |||||||||
| Total noninterest expenses | 541 | 502 | 482 | 473 | 486 | 39 | 8 | 55 | 11 | |||||||||
| Income before income taxes | 446 | 455 | 337 | 238 | 289 | (9) | (2) | 157 | 54 | |||||||||
| Provision for income taxes | 96 | 104 | 76 | 49 | 61 | (8) | (8) | 35 | 57 | |||||||||
| NET INCOME | 350 | 351 | 261 | 189 | 228 | (1) | (1) | 122 | 54 | |||||||||
| Less: | ||||||||||||||||||
| Income allocated to participating securities | 2 | 2 | 1 | 1 | 1 | - | - | 1 | 70 | |||||||||
| Preferred stock dividends | 6 | 6 | 5 | 6 | 6 | - | - | - | - | |||||||||
| Net income attributable to common shares | $ | 342 | $ | 343 | $ | 255 | $ | 182 | $ | 221 | $ | (1) | (1 | %) | $ | 121 | 55 | % |
| Earnings per common share: | ||||||||||||||||||
| Basic | $ | 2.61 | $ | 2.63 | $ | 1.94 | $ | 1.39 | $ | 1.69 | $ | (0.02) | (1 | %) | $ | 0.92 | 54 | % |
| Diluted | 2.58 | 2.60 | 1.92 | 1.37 | 1.66 | (0.02) | (1) | 0.92 | 55 | |||||||||
| Comprehensive income (loss) | 195 | (1,282) | (520) | (772) | 223 | 1,477 | n/m | (28) | (12) | |||||||||
| 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) | 4th Qtr | 3rd Qtr | 2nd Qtr | 1st Qtr | 4th Qtr | |||||
| Balance at beginning 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 | |||||
| Loan charge-offs: | ||||||||||
| Commercial | 10 | 25 | 13 | 15 | 14 | |||||
| Real estate construction | - | - | - | 1 | - | |||||
| Commercial mortgage | - | - | - | 1 | 2 | |||||
| International | - | - | - | - | 3 | |||||
| Consumer | 1 | 1 | - | 1 | 1 | |||||
| Total loan charge-offs | 11 | 26 | 13 | 18 | 20 | |||||
| Recoveries on loans previously charged-off: | ||||||||||
| Commercial | 13 | 12 | 12 | 8 | 23 | |||||
| Real estate construction | 1 | - | - | - | - | |||||
| Commercial mortgage | - | - | - | 1 | - | |||||
| Residential mortgage | - | 1 | - | - | 1 | |||||
| Consumer | 1 | - | 1 | 1 | - | |||||
| Total recoveries | 15 | 13 | 13 | 10 | 24 | |||||
| Net loan (recoveries) charge-offs | (4) | 13 | - | 8 | (4) | |||||
| Provision for credit losses: | ||||||||||
| Provision for loan losses | 30 | 26 | 9 | (26) | (25) | |||||
| Provision for credit losses on lending-related commitments | 3 | 2 | 1 | 15 | - | |||||
| Provision for credit losses | 33 | 28 | 10 | (11) | (25) | |||||
| Balance at end of period: | ||||||||||
| Allowance for loan losses | 610 | 576 | 563 | 554 | 588 | |||||
| Allowance for credit losses on lending-related commitments | 51 | 48 | 46 | 45 | 30 | |||||
| Allowance for credit losses | $ | 661 | $ | 624 | $ | 609 | $ | 599 | $ | 618 |
| Allowance for credit losses as a percentage of total loans | 1.24 | % | 1.21 | % | 1.18 | % | 1.21 | % | 1.26 | % |
| Net loan (recoveries) charge-offs as a percentage of average total loans | (0.03) | 0.10 | - | 0.06 | (0.03) |
12
| NONPERFORMING ASSETS (unaudited) | ||||||||||
| Comerica Incorporated and Subsidiaries | ||||||||||
| 2022 | 2021 | |||||||||
| (in millions) | 4th Qtr | 3rd Qtr | 2nd Qtr | 1st Qtr | 4th Qtr | |||||
| SUMMARY OF NONPERFORMING ASSETS AND PAST DUE LOANS | ||||||||||
| Nonaccrual loans: | ||||||||||
| Business loans: | ||||||||||
| Commercial | $ | 142 | $ | 154 | $ | 161 | $ | 163 | $ | 173 |
| Real estate construction | 3 | 4 | 4 | 4 | 6 | |||||
| Commercial mortgage | 23 | 25 | 29 | 27 | 32 | |||||
| International | 3 | 5 | 5 | 5 | 5 | |||||
| Total nonaccrual business loans | 171 | 188 | 199 | 199 | 216 | |||||
| Retail loans: | ||||||||||
| Residential mortgage | 53 | 56 | 49 | 53 | 36 | |||||
| Consumer: | ||||||||||
| Home equity | 15 | 14 | 13 | 14 | 12 | |||||
| Other consumer | 1 | 1 | 1 | 3 | - | |||||
| Total nonaccrual retail loans | 69 | 71 | 63 | 70 | 48 | |||||
| Total nonaccrual loans | 240 | 259 | 262 | 269 | 264 | |||||
| Reduced-rate loans | 4 | 3 | 3 | 4 | 4 | |||||
| Total nonperforming loans | 244 | 262 | 265 | 273 | 268 | |||||
| Foreclosed property | - | - | 1 | 1 | 1 | |||||
| Total nonperforming assets | $ | 244 | $ | 262 | $ | 266 | $ | 274 | $ | 269 |
| Nonperforming loans as a percentage of total loans | 0.46 | % | 0.51 | % | 0.52 | % | 0.55 | % | 0.54 | % |
Nonperforming assets as a percentage of total loans and foreclosed property
| 0.46 | 0.51 | 0.52 | 0.55 | 0.55 | |||||
| Allowance for credit losses as a multiple of total nonperforming loans | 2.7x | 2.4x | 2.3x | 2.2x | 2.3x | |||||
| Loans past due 90 days or more and still accruing | $ | 23 | $ | 72 | $ | 12 | $ | 26 | $ | 27 |
| ANALYSIS OF NONACCRUAL LOANS | ||||||||||
| Nonaccrual loans at beginning of period | $ | 259 | $ | 262 | $ | 269 | $ | 264 | $ | 291 |
| Loans transferred to nonaccrual (a) | 16 | 45 | 30 | 41 | 15 | |||||
| Nonaccrual loan gross charge-offs | (11) | (26) | (13) | (18) | (20) | |||||
| Loans transferred to accrual status (a) | (7) | - | - | (4) | - | |||||
| Nonaccrual loans sold | (2) | (4) | (9) | - | - | |||||
| Payments/other (b) | (15) | (18) | (15) | (14) | (22) | |||||
| Nonaccrual loans at end of period | $ | 240 | $ | 259 | $ | 262 | $ | 269 | $ | 264 |
(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 | ||||||||||||
| Years Ended | ||||||||||||
| December 31, 2022 | December 31, 2021 | |||||||||||
| Average | Average | Average | Average | |||||||||
| (dollar amounts in millions) | Balance | Interest | Rate | Balance | Interest | Rate | ||||||
| Commercial loans (a), (b) | $ | 29,846 | $ | 1,278 | 4.28 | % | $ | 29,283 | $ | 1,009 | 3.45 | % |
| Real estate construction loans | 2,607 | 132 | 5.07 | 3,609 | 123 | 3.40 | ||||||
| Commercial mortgage loans | 12,135 | 513 | 4.22 | 10,610 | 305 | 2.88 | ||||||
| Lease financing (c) | 680 | 21 | 3.12 | 596 | (2) | (0.37) | ||||||
| International loans | 1,246 | 56 | 4.46 | 1,063 | 33 | 3.14 | ||||||
| Residential mortgage loans | 1,776 | 56 | 3.16 | 1,813 | 55 | 3.04 | ||||||
| Consumer loans | 2,170 | 97 | 4.49 | 2,109 | 71 | 3.34 | ||||||
| Total loans | 50,460 | 2,153 | 4.27 | 49,083 | 1,594 | 3.25 | ||||||
| Mortgage-backed securities (d) | 16,199 | 385 | 2.14 | 11,747 | 224 | 1.92 | ||||||
| U.S. Treasury securities (e) | 2,816 | 29 | 0.98 | 3,977 | 56 | 1.42 | ||||||
| Total investment securities | 19,015 | 414 | 1.97 | 15,724 | 280 | 1.79 | ||||||
| Interest-bearing deposits with banks (f) | 9,376 | 104 | 1.02 | 18,729 | 27 | 0.14 | ||||||
| Other short-term investments | 174 | 1 | 0.81 | 183 | - | 0.22 | ||||||
| Total earning assets | 79,025 | 2,672 | 3.27 | 83,719 | 1,901 | 2.27 | ||||||
| Cash and due from banks | 1,481 | 1,006 | ||||||||||
| Allowance for loan losses | (569) | (729) | ||||||||||
| Accrued income and other assets | 7,335 | 6,156 | ||||||||||
| Total assets | $ | 87,272 | $ | 90,152 | ||||||||
| Money market and interest-bearing checking deposits (g) | $ | 28,347 | 94 | 0.33 | $ | 31,063 | 18 | 0.06 | ||||
| Savings deposits | 3,304 | 2 | 0.05 | 3,018 | - | 0.01 | ||||||
| Customer certificates of deposit | 1,756 | 5 | 0.30 | 2,110 | 4 | 0.21 | ||||||
| Other time deposits | 16 | 1 | 4.17 | - | - | - | ||||||
| Foreign office time deposits | 40 | - | 1.05 | 49 | - | 0.08 | ||||||
| Total interest-bearing deposits | 33,463 | 102 | 0.30 | 36,240 | 22 | 0.06 | ||||||
| Federal funds purchased | 82 | 3 | 3.28 | 2 | - | - | ||||||
| Other short-term borrowings | 354 | 14 | 4.08 | - | - | - | ||||||
| Medium- and long-term debt | 2,818 | 87 | 3.07 | 3,035 | 35 | 1.11 | ||||||
| Total interest-bearing sources | 36,717 | 206 | 0.56 | 39,277 | 57 | 0.14 | ||||||
| Noninterest-bearing deposits | 42,018 | 41,441 | ||||||||||
| Accrued expenses and other liabilities | 2,086 | 1,481 | ||||||||||
| Shareholders' equity | 6,451 | 7,953 | ||||||||||
| Total liabilities and shareholders' equity | $ | 87,272 | $ | 90,152 | ||||||||
| Net interest income/rate spread | $ | 2,466 | 2.71 | $ | 1,844 | 2.13 | ||||||
| Impact of net noninterest-bearing sources of funds | 0.31 | 0.08 | ||||||||||
| Net interest margin (as a percentage of average earning assets) | 3.02 | % | 2.21 | % |
(a)Interest income on commercial loans included $(25) million and $95 million of business loan swap (loss) income for the years ended December 31, 2022 and 2021, respectively.
(b)Included PPP loans with average balances of $147 million and $2.3 billion, interest income of $11 million and $111 million and average yields of 7.25% and 4.77% for the year ended December 31, 2022 and 2021, respectively.
(c)The year ended December 31, 2021 included residual value adjustments totaling $20 million, or a 4 basis point impact to average loan yield.
(d)Average balances included $(1.8) billion and $61 million of unrealized (losses) gains for the years ended December 31, 2022 and 2021, respectively; yields calculated gross of these unrealized gains and losses.
(e)Average balances included $(117) million and $27 million of unrealized (losses) gains for the years ended December 31, 2022 and 2021, respectively; yields calculated gross of these unrealized gains and losses.
(f)Average balances excluded $769 million and $375 million of collateral posted and netted against derivative liability positions for the years ended December 31, 2022 and 2021, respectively; yields calculated gross of derivative netting amounts.
(g)Average balances excluded $128 million and $156 million of collateral received and netted against derivative asset positions for the years ended December 31, 2022 and 2021, respectively; rates calculated gross of derivative netting amounts.
14
| ANALYSIS OF NET INTEREST INCOME (unaudited) | ||||||||||||||||||
| Comerica Incorporated and Subsidiaries | ||||||||||||||||||
| Three Months Ended | ||||||||||||||||||
| December 31, 2022 | September 30, 2022 | December 31, 2021 | ||||||||||||||||
| Average | Average | Average | Average | Average | Average | |||||||||||||
| (dollar amounts in millions) | Balance | Interest | Rate | Balance | Interest | Rate | Balance | Interest | Rate | |||||||||
| Commercial loans (a), (b) | $ | 30,585 | $ | 402 | 5.21 | % | $ | 30,573 | $ | 362 | 4.69 | % | $ | 27,925 | $ | 240 | 3.42 | % |
| Real estate construction loans | 2,978 | 51 | 6.83 | 2,457 | 33 | 5.44 | 2,968 | 26 | 3.52 | |||||||||
| Commercial mortgage loans | 12,752 | 189 | 5.86 | 12,180 | 141 | 4.59 | 11,212 | 81 | 2.89 | |||||||||
| Lease financing | 753 | 8 | 4.35 | 690 | 4 | 2.10 | 634 | 5 | 2.89 | |||||||||
| International loans | 1,227 | 20 | 6.22 | 1,234 | 15 | 4.89 | 1,177 | 9 | 3.06 | |||||||||
| Residential mortgage loans | 1,786 | 15 | 3.52 | 1,761 | 16 | 3.47 | 1,810 | 14 | 3.02 | |||||||||
| Consumer loans | 2,294 | 34 | 5.88 | 2,218 | 26 | 4.77 | 2,099 | 18 | 3.29 | |||||||||
| Total loans | 52,375 | 719 | 5.45 | 51,113 | 597 | 4.64 | 47,825 | 393 | 3.26 | |||||||||
| Mortgage-backed securities (c) | 16,373 | 111 | 2.28 | 17,752 | 111 | 2.25 | 13,303 | 61 | 1.85 | |||||||||
| U.S. Treasury securities (d) | 2,756 | 7 | 0.97 | 2,788 | 8 | 0.97 | 3,303 | 10 | 1.18 | |||||||||
| Total investment securities | 19,129 | 118 | 2.11 | 20,540 | 119 | 2.08 | 16,606 | 71 | 1.71 | |||||||||
| Interest-bearing deposits with banks (e) | 3,868 | 39 | 3.82 | 5,194 | 33 | 2.12 | 25,271 | 10 | 0.15 | |||||||||
| Other short-term investments | 166 | - | 1.52 | 165 | 1 | 0.96 | 196 | - | 0.21 | |||||||||
| Total earning assets | 75,538 | 876 | 4.41 | 77,012 | 750 | 3.71 | 89,898 | 474 | 2.10 | |||||||||
| Cash and due from banks | 1,528 | 1,529 | 1,105 | |||||||||||||||
| Allowance for loan losses | (576) | (563) | (605) | |||||||||||||||
| Accrued income and other assets | 7,318 | 7,444 | 6,294 | |||||||||||||||
| Total assets | $ | 83,808 | $ | 85,422 | $ | 96,692 | ||||||||||||
| Money market and interest-bearing checking deposits (f) | $ | 26,301 | 73 | 1.09 | $ | 27,125 | 15 | 0.22 | $ | 33,326 | 4 | 0.05 | ||||||
| Savings deposits | 3,306 | 1 | 0.13 | 3,365 | 1 | 0.05 | 3,148 | - | 0.01 | |||||||||
| Customer certificates of deposit | 1,700 | 3 | 0.65 | 1,632 | - | 0.21 | 2,032 | 1 | 0.19 | |||||||||
| Other time deposits | 62 | 1 | 4.21 | - | - | - | - | - | - | |||||||||
| Foreign office time deposits | 31 | - | 2.81 | 34 | - | 1.42 | 51 | - | 0.07 | |||||||||
| Total interest-bearing deposits | 31,400 | 78 | 0.97 | 32,156 | 16 | 0.20 | 38,557 | 5 | 0.05 | |||||||||
| Federal funds purchased | 241 | 2 | 3.59 | 79 | 1 | 2.50 | 2 | - | - | |||||||||
| Other short-term borrowings | 1,342 | 14 | 4.14 | 65 | - | 3.04 | - | - | - | |||||||||
| Medium- and long-term debt | 3,020 | 40 | 5.28 | 2,827 | 26 | 3.60 | 2,819 | 8 | 1.17 | |||||||||
| Total interest-bearing sources | 36,003 | 134 | 1.47 | 35,127 | 43 | 0.48 | 41,378 | 13 | 0.13 | |||||||||
| Noninterest-bearing deposits | 39,955 | 41,820 | 45,980 | |||||||||||||||
| Accrued expenses and other liabilities | 2,569 | 2,184 | 1,532 | |||||||||||||||
| Shareholders' equity | 5,281 | 6,291 | 7,802 | |||||||||||||||
| Total liabilities and shareholders' equity | $ | 83,808 | $ | 85,422 | $ | 96,692 | ||||||||||||
| Net interest income/rate spread | $ | 742 | 2.94 | $ | 707 | 3.23 | $ | 461 | 1.97 | |||||||||
| Impact of net noninterest-bearing sources of funds | 0.80 | 0.27 | 0.07 | |||||||||||||||
| Net interest margin (as a percentage of average earning assets) | 3.74 | % | 3.50 | % | 2.04 | % |
(a)Interest income on commercial loans included $(70) million, $(2) million and $23 million of business loan swap (loss) income for the three months ended December 31, 2022, September 30, 2022 and December 31, 2021, respectively.
(b)Included PPP loans with average balances of $40 million, $67 million and $689 million, interest income of $1 million, $1 million and $16 million and average yields of 3.52%, 7.71% and 8.97% for the three months ended December 31, 2022, September 30, 2022 and December 31, 2021, respectively.
(c)Average balances included $3.0 billion, $2.0 billion and $80 million of unrealized losses for the three months ended December 31, 2022, September 30, 2022 and December 31, 2021, respectively; yields calculated gross of these unrealized losses.
(d)Average balances included $157 million, $134 million and $6 million of unrealized losses for the three months ended December 31, 2022, September 30, 2022 and December 31, 2021, respectively; yields calculated gross of these unrealized losses.
(e)Average balances excluded $96 million, $1.1 billion and $558 million of collateral posted and netted against derivative liability positions for the three months ended December 31, 2022, September 30, 2022 and December 31, 2021, respectively; yields calculated gross of derivative netting amounts.
(f)Average balances excluded $183 million, $189 million and $165 million of collateral received and netted against derivative asset positions for the three months ended December 31, 2022, September 30, 2022 and December 31, 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) Income | Earnings | Stock | Equity | |||||||
| BALANCE AT SEPTEMBER 30, 2021 | $ | 394 | 131.0 | $ | 1,141 | $ | 2,170 | $ | (207) | $ | 10,366 | $ | (6,061) | $ | 7,803 |
| Net income | - | - | - | - | - | 228 | - | 228 | |||||||
| Other comprehensive loss, net of tax | - | - | - | - | (5) | - | - | (5) | |||||||
| Cash dividends declared on common stock ($0.68 per share) | - | - | - | - | - | (89) | - | (89) | |||||||
| Cash dividends declared on preferred stock | - | - | - | - | - | (6) | - | (6) | |||||||
| Purchase of common stock | - | (0.5) | - | - | - | - | (50) | (50) | |||||||
| Net issuance of common stock under employee stock plans | - | 0.2 | - | - | - | (5) | 16 | 11 | |||||||
| Share-based compensation | - | - | - | 5 | - | - | - | 5 | |||||||
| BALANCE AT DECEMBER 31, 2021 | $ | 394 | 130.7 | $ | 1,141 | $ | 2,175 | $ | (212) | $ | 10,494 | $ | (6,095) | $ | 7,897 |
| BALANCE AT SEPTEMBER 30, 2022 | $ | 394 | 130.9 | $ | 1,141 | $ | 2,209 | $ | (3,587) | $ | 11,005 | $ | (6,093) | $ | 5,069 |
| Net income | - | - | - | - | - | 350 | - | 350 | |||||||
| Other comprehensive loss, net of tax | - | - | - | - | (155) | - | - | (155) | |||||||
| 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 | - | (1) | - | (2) | 3 | - | |||||||
| Share-based compensation | - | - | - | 12 | - | - | - | 12 | |||||||
| BALANCE AT DECEMBER 31, 2022 | $ | 394 | 131.0 | $ | 1,141 | $ | 2,220 | $ | (3,742) | $ | 11,258 | $ | (6,090) | $ | 5,181 |
| BALANCE AT DECEMBER 31, 2020 | $ | 394 | 139.2 | $ | 1,141 | $ | 2,185 | $ | 64 | $ | 9,727 | $ | (5,461) | $ | 8,050 |
| Net income | - | - | - | - | - | 1,168 | - | 1,168 | |||||||
| Other comprehensive loss, net of tax | - | - | - | - | (276) | - | - | (276) | |||||||
| Cash dividends declared on common stock ($2.72 per share) | - | - | - | - | - | (365) | - | (365) | |||||||
| Cash dividends declared on preferred stock | - | - | - | - | - | (23) | - | (23) | |||||||
| Purchase of common stock | - | (9.5) | - | (24) | - | - | (699) | (723) | |||||||
| Net issuance of common stock under employee stock plans | - | 1.0 | - | (27) | - | (13) | 65 | 25 | |||||||
| Share-based compensation | - | - | - | 41 | - | - | - | 41 | |||||||
| BALANCE AT DECEMBER 31, 2021 | $ | 394 | 130.7 | $ | 1,141 | $ | 2,175 | $ | (212) | $ | 10,494 | $ | (6,095) | $ | 7,897 |
| Net income | - | - | - | - | - | 1,151 | - | 1,151 | |||||||
| Other comprehensive loss, net of tax | - | - | - | - | (3,530) | - | - | (3,530) | |||||||
| Cash dividends declared on common stock ($2.72 per share) | - | - | - | - | - | (356) | - | (356) | |||||||
| Cash dividends declared on preferred stock | - | - | - | - | - | (23) | - | (23) | |||||||
| Purchase of common stock | - | (0.4) | - | - | - | - | (36) | (36) | |||||||
| Net issuance of common stock under employee stock plans | - | 0.7 | - | (15) | - | (8) | 41 | 18 | |||||||
| Share-based compensation | - | - | - | 60 | - | - | - | 60 | |||||||
| BALANCE AT DECEMBER 31, 2022 | $ | 394 | 131.0 | $ | 1,141 | $ | 2,220 | $ | (3,742) | $ | 11,258 | $ | (6,090) | $ | 5,181 |
16
| BUSINESS SEGMENT FINANCIAL RESULTS (unaudited) | ||||||||||||
| Comerica Incorporated and Subsidiaries | ||||||||||||
| (dollar amounts in millions) | Commercial | Retail | Wealth | |||||||||
| Three Months Ended December 31, 2022 | Bank | Bank | Management | Finance | Other | Total | ||||||
| Earnings summary: | ||||||||||||
| Net interest income (expense) | $ | 521 | $ | 216 | $ | 61 | $ | (69) | $ | 13 | $ | 742 |
| Provision for credit losses | 31 | 4 | (2) | - | - | 33 | ||||||
| Noninterest income | 146 | 33 | 72 | 22 | 5 | 278 | ||||||
| Noninterest expenses | 250 | 182 | 89 | 1 | 19 | 541 | ||||||
| Provision (benefit) for income taxes | 84 | 13 | 10 | (12) | 1 | 96 | ||||||
| Net income (loss) | $ | 302 | $ | 50 | $ | 36 | $ | (36) | $ | (2) | $ | 350 |
| Net credit-related (recoveries) charge-offs | $ | (4) | $ | - | $ | (1) | $ | - | $ | 1 | $ | (4) |
| Selected average balances: | ||||||||||||
| Assets | $ | 49,641 | $ | 2,878 | $ | 5,230 | $ | 20,264 | $ | 5,795 | $ | 83,808 |
| Loans | 45,122 | 2,155 | 5,104 | - | (6) | 52,375 | ||||||
| Deposits | 39,173 | 26,027 | 5,198 | 782 | 175 | 71,355 | ||||||
| Statistical data: | ||||||||||||
| Return on average assets (a) | 2.41 | % | 0.71 | % | 2.55 | % | n/m | n/m | 1.65 | % | ||
| Efficiency ratio (b) | 37.53 | 73.38 | 66.84 | n/m | n/m | 53.00 | ||||||
| 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 December 31, 2021 | Bank | Bank | Management | Finance | Other | Total | ||||||
| Earnings summary: | ||||||||||||
| Net interest income (expense) | $ | 385 | $ | 138 | $ | 41 | $ | (103) | $ | - | $ | 461 |
| Provision for credit losses | (21) | 1 | (3) | - | (2) | (25) | ||||||
| Noninterest income | 168 | 33 | 72 | 10 | 6 | 289 | ||||||
| Noninterest expenses | 229 | 164 | 85 | - | 8 | 486 | ||||||
| Provision (benefit) for income taxes | 77 | - | 7 | (22) | (1) | 61 | ||||||
| Net income (loss) | $ | 268 | $ | 6 | $ | 24 | $ | (71) | $ | 1 | $ | 228 |
| Net credit-related (recoveries) charge-offs | $ | (6) | $ | 1 | $ | 1 | $ | - | $ | - | $ | (4) |
| Selected average balances: | ||||||||||||
| Assets | $ | 43,684 | $ | 2,898 | $ | 4,935 | $ | 18,460 | $ | 26,715 | $ | 96,692 |
| Loans | 40,960 | 2,084 | 4,794 | - | (13) | 47,825 | ||||||
| Deposits | 50,821 | 26,714 | 5,724 | 954 | 324 | 84,537 | ||||||
| Statistical data: | ||||||||||||
| Return on average assets (a) | 1.95 | % | 0.07 | % | 1.61 | % | n/m | n/m | 0.93 | % | ||
| Efficiency ratio (b) | 41.19 | 95.17 | 74.64 | n/m | n/m | 64.24 |
(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.
| December 31, | September 30, | December 31, | ||||
| (dollar amounts in millions) | 2022 | 2022 | 2021 | |||
| Common Equity Tier 1 Capital (a): | ||||||
| Tier 1 capital | $ | 8,278 | $ | 8,010 | $ | 7,458 |
| Less: | ||||||
| Fixed-rate reset non-cumulative perpetual preferred stock | 394 | 394 | 394 | |||
| Common equity tier 1 capital | $ | 7,884 | $ | 7,616 | $ | 7,064 |
| Risk-weighted assets | $ | 78,682 | $ | 76,661 | $ | 69,708 |
| Tier 1 capital ratio | 10.52 | % | 10.45 | % | 10.70 | % |
| Common equity tier 1 capital ratio | 10.02 | 9.93 | 10.13 | |||
| Tangible Common Equity: | ||||||
| Total shareholders' equity | $ | 5,181 | $ | 5,069 | $ | 7,897 |
| Less: | ||||||
| Fixed-rate reset non-cumulative perpetual preferred stock | 394 | 394 | 394 | |||
| Common shareholders' equity | $ | 4,787 | $ | 4,675 | $ | 7,503 |
| Less: | ||||||
| Goodwill | 635 | 635 | 635 | |||
| Other intangible assets | 9 | 10 | 11 | |||
| Tangible common equity | $ | 4,143 | $ | 4,030 | $ | 6,857 |
| Total assets | $ | 85,406 | $ | 84,143 | $ | 94,616 |
| Less: | ||||||
| Goodwill | 635 | 635 | 635 | |||
| Other intangible assets | 9 | 10 | 11 | |||
| Tangible assets | $ | 84,762 | $ | 83,498 | $ | 93,970 |
| Common equity ratio | 5.60 | % | 5.55 | % | 7.93 | % |
| Tangible common equity ratio | 4.89 | 4.82 | 7.30 | |||
| Tangible Common Equity per Share of Common Stock: | ||||||
| Common shareholders' equity | $ | 4,787 | $ | 4,675 | $ | 7,503 |
| Tangible common equity | 4,143 | 4,030 | 6,857 | |||
| Shares of common stock outstanding (in millions) | 131 | 131 | 131 | |||
| Common shareholders' equity per share of common stock | $ | 36.55 | $ | 35.70 | $ | 57.41 |
| Tangible common equity per share of common stock | 31.62 | 30.77 | 52.46 | |||
| Impact of Accumulated Other Comprehensive Loss to Tangible Common Equity: | ||||||
| Accumulated other comprehensive loss (AOCI) | $ | (3,742) | $ | (3,587) | $ | (212) |
| Tangible common equity, excluding AOCI | 7,885 | 7,617 | 7,069 | |||
| Tangible common equity ratio, excluding AOCI | 9.30 | % | 9.12 | % | 7.52 | % |
| Tangible common equity per share of common stock, excluding AOCI | $ | 60.19 | $ | 58.17 | $ | 54.08 |
(a)December 31, 2022 ratios are estimated.
18
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Comerica Inc. published this content on 19 January 2023 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 19 January 2023 11:40:03 UTC.
