Net Credit-Related Charge-Offs Stable, Consistent with OutlookStrong Liquidity and Capital Levels$1.1 Billion Increase in Average Core DepositsExpenses Remain Well ControlledEPS Impact from Preferred Stock Dividends to U.S. Treasury (22 Cents)
Oct. 20, 2009 (PR Newswire) -- DALLAS, Oct. 20 /PRNewswire-FirstCall/ -- Comerica Incorporated (NYSE: CMA) today reported third quarter 2009 net income of $19 million, compared to $18 million for the second quarter 2009 and $28 million for the third quarter 2008. After preferred dividends of $34 million in each of the third and second quarters of 2009, the net loss applicable to common stock was $15 million, or $0.10 per diluted share, for the third quarter 2009, compared to a net loss applicable to common stock of $16 million, or $0.10 per diluted share, for the second quarter 2009 and net income applicable to common stock of $28 million, or $0.19 per diluted share, for the third quarter 2008. Third quarter 2009 included a $311 million provision for loan losses, compared to $312 million for the second quarter 2009 and $165 million for the third quarter 2008.
(Logo: http://www.newscom.com/cgi-bin/prnh/20010807/CMALOGO)
==========================================================================
(dollar amounts in millions, except per 3rd Qtr 2nd Qtr 3rd Qtr
share data) '09 '09 '08
--------------------------------------------------------------------------
Net interest income $385 $402 $466
Provision for loan losses 311 312 165
Noninterest income 315 298 240
Noninterest expenses 399 429 514
Net income 19 18 28
Preferred stock dividends to U.S. Treasury 34 34 -
Net income (loss) applicable to common stock (15) (16) 28
Diluted earnings (loss) per common share (0.10) (0.10) 0.19
Tier 1 capital ratio 12.18%(a) 11.58% 7.32%
Tangible common equity ratio (b) 7.96 7.55 7.60
Net interest margin (c) 2.68 2.73 3.11
(a) September 30, 2009 ratio is estimated.
(b) See Reconciliation of Non-GAAP Financial Measures.
(c) Excess liquidity, represented by average balances deposited with the
Federal Reserve Bank, reduced the net interest margin by 16 basis
points and 8 basis points in the third and second quarters of 2009,
respectively. Excluding excess liquidity, the net interest margin
would have been 2.84% and 2.81% in each respective period. Excess
liquidity had no impact on the net interest margin in the third
quarter 2008.
==========================================================================
"Our third quarter results were consistent with our prior outlook and reflect the many actions we have taken to position our company for the slow economic recovery now underway," said Ralph W. Babb Jr., chairman and chief executive officer. "These actions include the strengthening of our already strong liquidity and capital levels, the quick identification of problem loans, the building of our reserves credit by credit, and the careful management of expenses. Coupled with our strong focus on customers, we believe we are well positioned for the future, with confidence in our strategy and a dedicated workforce to deliver the results.
"In the third quarter 2009, loan demand continued to be weak and average core deposits continued to increase, as businesses and consumers remained cautious in this economic environment.
"The provision for loan losses was stable in the third quarter, with charge-offs similar to the second quarter, as expected. Our credit issues remain focused on residential real estate development."
Third Quarter 2009 Compared to Second Quarter 2009
-- Average earning assets decreased $2.0 billion, reflecting a $2.9 billion
decrease in average loans and a $0.9 billion increase in other earning
assets, primarily short-term investments. The decline in loans reflected
reduced demand from customers in a challenged economic environment. New
and renewed loan commitments totaled $11.8 billion in the third quarter
2009, an increase of $1.6 billion from the second quarter 2009.
-- Average core deposits, excluding the Financial Services Division,
increased $1.1 billion in the third quarter 2009, including an $835
million increase in noninterest-bearing deposits.
-- The net interest margin of 2.68 percent decreased five basis points,
from 2.73 percent in the second quarter 2009. Excluding excess
liquidity, represented by average balances deposited with the Federal
Reserve Bank, the net interest margin would have been 2.84 percent, an
increase of 3 basis points from 2.81 percent in the second quarter 2009
that resulted primarily from improved loan spreads and lower core
deposit rates.
-- Net credit-related charge-offs were $239 million, or 2.14 percent of
average total loans, for the third quarter 2009, compared to $248
million, or 2.08 percent of average total loans, for the second quarter
2009. The provision for loan losses was $311 million for the third
quarter 2009, compared to $312 million for the second quarter 2009, and
the period-end allowance to total loans ratio increased to 2.19 percent
from 1.89 percent at June 30, 2009. Nonaccrual loans were charged down
41 percent as of September 30, 2009, compared to 39 percent as of June
30, 2009 and 32 percent one year ago.
-- Noninterest income increased $17 million, reflecting increases in
several fee categories. Also included in the third quarter 2009 was a
$7 million gain on the repurchase of debt and lower securities gains
($107 million in the third quarter 2009 compared to $113 million in the
second quarter 2009), primarily from sales of mortgage-backed government
agency securities. The second quarter 2009 included a $16 million loss
on the termination of certain leveraged leases and a $6 million gain on
the sale of Comerica's proprietary defined contribution plan
recordkeeping business.
-- Noninterest expenses decreased $30 million from the second quarter, due
to the second quarter 2009 industry-wide FDIC special assessment charge.
Year-to-date September 2009 noninterest expenses decreased 9 percent
from the same period in the prior year.
-- The provision for income taxes increased $30 million from the second
quarter, primarily due a benefit in the second quarter 2009 from a
change in the accounting method used to determine interim period
(quarterly) federal taxes. The third quarter 2009 provision for income
taxes was reduced by approximately $9 million after-tax, reflecting the
recognition of interest benefits related to certain anticipated federal
tax refunds.
-- The tangible common equity ratio was 7.96 percent at September 30, 2009,
an increase of 41 basis points from June 30, 2009. The estimated Tier 1
common ratio was 8.02 percent and the estimated Tier 1 capital ratio was
12.18 percent at September 30, 2009, increases of 36 basis points and 60
basis points, respectively, from June 30, 2009.
Net Interest Income and Net Interest Margin
==========================================================================
3rd Qtr 2nd Qtr 3rd Qtr
(dollar amounts in millions) '09 '09 '08
--------------------------------------------------------------------------
Net interest income $385 $402 $466
Net interest margin (a) 2.68% 2.73% 3.11%
Selected average balances:
Total earning assets $57,513 $59,522 $59,946
Total investment securities 9,070 9,786 8,146
Total loans 44,782 47,648 51,508
Total loans, excluding FSD loans
(primarily low-rate) 44,573 47,432 51,107
Total core deposits (b), excluding
FSD 34,165 33,059 31,441
Total noninterest-bearing deposits 13,225 12,546 10,646
Total noninterest-bearing deposits,
excluding FSD 11,967 11,132 9,104
(a) Excess liquidity, represented by average balances deposited with the
Federal Reserve Bank, reduced the net interest margin by 16 basis
points and 8 basis points in the third and second quarters of 2009,
respectively. Excluding excess liquidity, the net interest margin
would have been 2.84% and 2.81% in each respective period. Excess
liquidity had no impact on the third quarter 2008 net interest margin.
(b) Core deposits exclude other time deposits and foreign office time
deposits.
==========================================================================
-- The $17 million decrease in net interest income in the third quarter
2009, when compared to second quarter 2009, resulted primarily from
decreases in the net interest margin and loans, partially offset by the
impact of one more day ($4 million).
-- Third quarter 2009 average core deposits, excluding the Financial
Services Division, increased $1.1 billion compared to second quarter
2009, reflecting an $835 million increase in noninterest-bearing
deposits and a $790 million increase in money market and NOW deposits,
partially offset by a $512 million decrease in higher-cost customer
certificates of deposits.
-- The net interest margin of 2.68 percent decreased five basis points,
compared to second quarter 2009, primarily from an increase in excess
liquidity, which more than offset improved loan spreads and lower core
deposit rates. The net interest margin was reduced by approximately 16
basis points in the third quarter 2009 from excess liquidity, which was
represented by $3.5 billion of average balances deposited with the
Federal Reserve Bank, compared to a reduction of eight basis points from
$1.8 billion of average balances in the second quarter 2009. Excess
liquidity resulted from strong core deposit growth and sales of
mortgage-backed government agency securities.
-- Total average Financial Services Division noninterest-bearing deposits
decreased $156 million from the second quarter 2009. This division
serves title and escrow companies that facilitate residential mortgage
transactions and benefits from customer deposits related to mortgage
escrow balances. Noninterest-bearing deposits decreased primarily due to
decreased mortgage refinancing activity.
Noninterest Income
Noninterest income was $315 million for the third quarter 2009, compared to $298 million for the second quarter 2009 and $240 million for the third quarter 2008. Several fee categories increased in the third quarter 2009, including service charges on deposit accounts ($5 million), commercial lending fees ($2 million) and letter of credit fees ($2 million). Noninterest income in the third quarter 2009 included net securities gains of $107 million, primarily from gains on sales of mortgage-backed government agency securities ($102 million) and on redemptions of auction-rate securities ($5 million), compared to net securities gains of $113 million in the second quarter 2009. Noninterest income in the third quarter 2009 also reflected a $7 million gain on the repurchase of debt, while the second quarter 2009 included a $6 million gain on the sale of Comerica's proprietary defined contribution plan recordkeeping business. The second quarter 2009 also included a $16 million loss on the termination of certain leveraged leases. Selected categories of noninterest income are highlighted in the following table.
==========================================================================
3rd Qtr 2nd Qtr 3rd Qtr
(in millions) '09 '09 '08
--------------------------------------------------------------------------
Net securities gains $107 $113 $27
Other noninterest income
Loss on termination of leveraged leases - (16) -
Net gain (loss) from principal investing and
warrants (1) (4) 1
Deferred compensation asset returns (a) 4 8 (6)
Gain on repurchase of debt 7 - -
Net gain on sale of business - 6 -
(a) Compensation deferred by Comerica officers is invested in stocks and
bonds to reflect the investment selections of the officers. Income
(loss) earned on these assets is reported in noninterest income and
the offsetting increase (decrease) in the liability is reported in
salaries expense.
==========================================================================
Noninterest Expenses
Noninterest expenses were $399 million for the third quarter 2009, compared to $429 million for the second quarter 2009 and $514 million for the third quarter 2008. The $30 million decrease in noninterest expenses in the third quarter 2009, compared to the second quarter 2009, was primarily due to the second quarter 2009 industry-wide FDIC special assessment charge ($29 million). Full-time equivalent staff decreased by approximately 100 employees from June 30, 2009 and 1,000 employees, or 9 percent, from September 30, 2008. Certain categories of noninterest expenses are highlighted in the table below.
==========================================================================
3rd Qtr 2nd Qtr 3rd Qtr
'09 '09 '08
--------------------------------------------------------------------------
Salaries
Regular salaries $142 $142 $155
Severance - (1) 2
Incentives (including commissions) 17 15 31
Deferred compensation plan costs 5 8 (6)
Share-based compensation 7 7 10
---- ---- ----
Total salaries 171 171 192
Employee benefits
Pension expense 14 14 5
Other benefits 37 39 41
---- ---- ----
Total employee benefits 51 53 46
FDIC insurance expense 15 45 5
Litigation and operational losses 3 3 105(a)
Provision for credit losses on
lending-related commitments 2 (4) 9
Other noninterest expenses
Other real estate expense 10 10 3
(a) Third quarter 2008 litigation and operational losses included a
$96 million charge related to an offer to repurchase auction-rate
securities from customers.
==========================================================================
Credit Quality
"We are working hard to ensure we effectively manage credit, particularly in this economic environment," Babb said. "Early recognition of issues continues to be key. We have moved credits to our workout area at the first signs of significant stress. Over the past 15 months, we have reduced, by 46 percent, our exposure to residential real estate development, the main focus of our credit issues. As a result, we expect to see a modest reduction in net charge-offs in the fourth quarter."
-- The allowance to total loans ratio increased to 2.19 percent at
September 30, 2009, from 1.89 percent at June 30, 2009 and 1.38 percent
at September 30, 2008.
-- The provision for loan losses was relatively unchanged, as a decrease in
Other Markets offset increases in the Midwest, Western and Florida
markets.
-- Net credit-related charge-offs in the Commercial Real Estate business
line in the third quarter 2009 decreased to $91 million, from $108
million in the second quarter 2009. Commercial Real Estate net
credit-related charge-offs increased in the Western and Texas markets,
were stable in the Midwest market and decreased in Florida and Other
Markets.
-- Net credit-related charge-offs excluding the Commercial Real Estate
business line were $148 million in the third quarter 2009, or 1.53
percent of average non-Commercial Real Estate loans, compared to $140
million, or 1.35 percent, in the second quarter 2009.
-- Nonperforming assets increased $75 million to $1,305 million, or 2.99
percent of total loans and foreclosed property, at September 30, 2009.
Excluding the Commercial Real Estate business line, nonperforming assets
decreased $10 million compared to June 30, 2009.
-- During the third quarter 2009, $361 million of loan relationships
greater than $2 million were transferred to nonaccrual status, a
decrease of $58 million from the second quarter 2009. Of the transfers
of loan relationships greater than $2 million to nonaccrual in the third
quarter 2009, $211 million were in the Commercial Real Estate business
line, $89 million were in Middle Market and $29 million were in Leasing.
-- Nonaccrual loans were charged down 41 percent as of September 30, 2009,
compared to 39 percent as of June 30, 2009 and 32 percent one year ago.
-- Loans past due 90 days or more and still accruing were $161 million at
September 30, 2009, a decrease of $49 million compared to June 30, 2009.
==========================================================================
3rd Qtr 2nd Qtr 3rd Qtr
(dollar amounts in millions) '09 '09 '08
--------------------------------------------------------------------------
Net loan charge-offs $239 $248 $116
Net lending-related commitment charge-offs - - -
----- ----- -----
Total net credit-related charge-offs 239 248 116
Net loan charge-offs/Average total loans 2.14% 2.08% 0.90%
Net credit-related charge-offs/Average
total loans 2.14 2.08 0.90
Provision for loan losses $311 $312 $165
Provision for credit losses on lending-related
commitments 2 (4) 9
----- ----- -----
Total provision for credit losses 313 308 174
Nonperforming loans 1,196 1,130 863
Nonperforming assets (NPAs) 1,305 1,230 881
NPAs/Total loans and foreclosed property 2.99% 2.64% 1.71%
Loans past due 90 days or more and still
accruing $161 $210 $97
Allowance for loan losses 953 880 712
Allowance for credit losses on
lending-related commitments (a) 35 33 40
----- ----- -----
Total allowance for credit losses 988 913 752
Allowance for loan losses/Total loans 2.19% 1.89% 1.38%
Allowance for loan losses/Nonperforming
loans 80 78 82
(a) Included in "Accrued expenses and other liabilities" on the
consolidated balance sheets.
==========================================================================
Balance Sheet and Capital Management
Total assets and common shareholders' equity were $59.6 billion and $4.9 billion, respectively, at September 30, 2009, compared to $63.6 billion and $5.0 billion, respectively, at June 30, 2009. There were approximately 151 million common shares outstanding at September 30, 2009.
Comerica's tangible common equity ratio was 7.96 percent at September 30, 2009. The third quarter 2009 estimated Tier 1 common, Tier 1 and total risk-based capital ratios were 8.02 percent, 12.18 percent and 16.75 percent, respectively.
2009 Outlook
-- Management continues to focus on developing new and expanding existing
customer relationships. While the economic recovery appears to be
underway, management expects subdued loan demand as loan growth
typically lags other economic indicators.
-- Management expects the fourth quarter 2009 net interest margin to
increase as a result of maturities of higher-cost certificates of
deposit and wholesale funding and a reduction in excess liquidity. The
target federal funds and short-term LIBOR rates are expected to remain
flat for the remainder of 2009.
-- Based on no significant deterioration of the economic environment,
management expects net credit-related charge-offs in the fourth quarter
2009 to improve modestly compared to third quarter 2009. The provision
for credit losses is expected to continue to exceed net charge-offs.
-- Management does not expect significant securities gains from the sale of
mortgage-backed government agency securities in the fourth quarter 2009.
-- Management expects a mid- to high-single digit decrease in full-year
2009 noninterest expenses, compared to full-year 2008, due to control of
discretionary expenses and workforce.
Business Segments
Comerica's continuing operations are strategically aligned into three major business segments: the Business Bank, the Retail Bank, and Wealth & Institutional Management. The Finance Division also is included as a segment. The financial results below are based on the internal business unit structure of the Corporation and methodologies in effect at September 30, 2009 and are presented on a fully taxable equivalent (FTE) basis. The accompanying narrative addresses third quarter 2009 results compared to second quarter 2009.
The following table presents net income (loss) by business segment.
==========================================================================
(dollar amounts in millions) 3rd Qtr '09 2nd Qtr '09 3rd Qtr '08
--------------------------------------------------------------------------
Business Bank $22 N/M% $5 N/M% $65 N/M%
Retail Bank (11) (54) (18) N/M 21 57
Wealth & Institutional
Management 10 48 15 N/M (51) N/M
--------------------------------------------------------------------------
21 100% 2 100% 35 100%
Finance (7) 8 (2)
Other (a) 5 8 (5)
--------------------------------------------------------------------------
Total $19 $18 $28
==========================================================================
N/M - Not Meaningful.
(a) Includes discontinued operations and items not directly associated
with the three major business segments or the Finance Division.
==========================================================================
Business Bank
==========================================================================
(dollar amounts in millions) 3rd Qtr '09 2nd Qtr '09 3rd Qtr '08
--------------------------------------------------------------------------
Net interest income (FTE) $346 $328 $323
Provision for loan losses 252 252 135
Noninterest income 72 50 75
Noninterest expenses 160 157 175
Net income 22 5 65
Net credit-related charge-offs 195 211 95
Selected average balances:
Assets 34,822 37,521 41,357
Loans 34,116 36,760 40,506
FSD loans 209 216 401
Deposits 15,735 14,827 14,933
FSD deposits 1,642 1,866 2,449
Net interest margin 4.01% 3.58% 3.18%
==========================================================================
-- Average loans decreased $2.6 billion, reflecting declines across all
markets and businesses.
-- Average deposits, excluding the Financial Services Division, increased
$1.1 billion, increasing in most businesses, but primarily in Middle
Market and Global Corporate.
-- The net interest margin of 4.01 percent increased 43 basis points,
primarily due to an increase in loan and deposit spreads and an increase
in noninterest-bearing deposits.
-- The provision for loan losses was unchanged. Increases in Middle Market
and Commercial Real Estate were offset by decreases, largely in Global
Corporate, Leasing and National Dealer Services.
-- Noninterest income increased $22 million, reflecting increases in
several fee categories and a $16 million second quarter 2009 loss on the
termination of certain leveraged leases.
-- Noninterest expenses increased $3 million, as a decline in FDIC
insurance expense, due to the industry-wide special assessment charge in
the second quarter 2009, was offset by an increase in the provision for
credit losses on lending related commitments.
Retail Bank
==========================================================================
(dollar amounts in millions) 3rd Qtr '09 2nd Qtr '09 3rd Qtr '08
--------------------------------------------------------------------------
Net interest income (FTE) $127 $128 $142
Provision for loan losses 42 42 33
Noninterest income 50 46 80
Noninterest expenses 154 167 161
Net income (loss) (11) (18) 21
Net credit-related charge-offs 34 29 17
Selected average balances:
Assets 6,445 6,693 7,046
Loans 5,904 6,115 6,362
Deposits 17,563 17,666 16,596
Net interest margin 2.87% 2.90% 3.41%
==========================================================================
-- Average loans decreased $211 million, across all businesses.
-- Average deposits decreased $103 million, reflecting a decrease in
higher-cost customer certificates of deposit, partially offset by an
increase in money market deposits.
-- The net interest margin of 2.87 percent declined three basis points,
primarily due to a decrease in loan balances.
-- Noninterest income increase $4 million, primarily due to an increase in
service charges on deposit accounts.
-- Noninterest expenses decreased $13 million, primarily due to the second
quarter 2009 industry-wide FDIC special assessment charge.
Wealth and Institutional Management
==========================================================================
(dollar amounts in millions) 3rd Qtr '09 2nd Qtr '09 3rd Qtr '08
--------------------------------------------------------------------------
Net interest income (FTE) $42 $40 $37
Provision for loan losses 20 13 7
Noninterest income 66 73 71
Noninterest expenses 73 77 180
Net income (loss) 10 15 (51)
Net credit-related charge-offs 10 8 4
Selected average balances:
Assets 4,856 4,965 4,759
Loans 4,760 4,776 4,624
Deposits 2,735 2,599 2,351
Net interest margin 3.48% 3.29% 3.18%
==========================================================================
-- Average loans declined $16 million.
-- Average deposits increased $136 million, primarily due to an increase in
noninterest-bearing, NOW and money market deposits.
-- The net interest margin of 3.48 percent increased 19 basis points,
primarily due to an increase in loan and deposit spreads and the benefit
provided by the increase in noninterest-bearing and NOW deposits.
-- Noninterest income decreased $7 million, primarily due the $6 million
second quarter 2009 gain on the sale of Comerica's proprietary defined
contribution plan recordkeeping business.
-- Noninterest expenses decreased $4 million, primarily due to the second
quarter 2009 industry-wide FDIC special assessment charge.
Geographic Market Segments
Comerica also provides market segment results for four primary geographic markets: Midwest, Western, Texas and Florida. In addition to the four primary geographic markets, Other Markets and International are also reported as market segments. The financial results below are based on methodologies in effect at September 30, 2009 and are presented on a fully taxable equivalent (FTE) basis. The accompanying narrative addresses third quarter 2009 results compared to second quarter 2009.
The following table presents net income (loss) by market segment.
==========================================================================
(dollar amounts in millions) 3rd Qtr '09 2nd Qtr '09 3rd Qtr '08
--------------------------------------------------------------------------
Midwest $(6) (34)% $- N/M% $51 N/M%
Western (7) (35) (7) N/M 9 25
Texas 7 36 5 N/M 13 36
Florida (12) (59) (8) N/M (1) (3)
Other Markets 29 N/M 6 N/M (44) N/M
International 10 46 6 N/M 7 21
--------------------------------------------------------------------------
21 100% 2 100% 35 100%
Finance & Other Businesses (a) (2) 16 (7)
--------------------------------------------------------------------------
Total $19 $18 $28
==========================================================================
N/M - Not Meaningful.
(a) Includes discontinued operations and items not directly associated
with the geographic markets.
==========================================================================
Midwest
==========================================================================
(dollar amounts in millions) 3rd Qtr '09 2nd Qtr '09 3rd Qtr '08
--------------------------------------------------------------------------
Net interest income (FTE) $209 $200 $197
Provision for loan losses 144 119 52
Noninterest income 107 92 142
Noninterest expenses 188 186 205
Net income (loss) (6) - 51
Net credit-related charge-offs 102 99 44
Selected average balances:
Assets 16,987 18,122 19,752
Loans 16,387 17,427 19,070
Deposits 17,395 17,166 15,857
Net interest margin 4.72% 4.56% 4.09%
==========================================================================
-- Average loans decreased $1.0 billion, reflecting declines in Middle
Market, Global Corporate and National Dealer Services.
-- Average deposits increased $229 million, due to increases in Global
Corporate, Small Business and Middle Market, partially offset by a
decline in Personal Banking of higher-cost customer certificates of
deposit.
-- The net interest margin of 4.72 percent increased 16 basis points,
primarily due to an increase in loan and deposit spreads and the benefit
provided by an increase in noninterest-bearing deposits.
-- The provision for loan losses increased $25 million, primarily due to an
increase in Middle Market, partially offset by a decrease in Leasing.
-- Noninterest income increased $15 million. Second quarter 2009 included a
$16 million loss on the termination of certain leveraged leases.
-- Noninterest expenses increased $2 million, reflecting an increase in the
provision for credit losses on lending-related commitments and nominal
increases in other expense categories, partially offset by a decline in
FDIC insurance expense, due to the second quarter 2009 industry-wide
FDIC special assessment charge.
Western Market
==========================================================================
(dollar amounts in millions) 3rd Qtr '09 2nd Qtr '09 3rd Qtr '08
--------------------------------------------------------------------------
Net interest income (FTE) $159 $154 $169
Provision for loan losses 101 90 82
Noninterest income 33 32 38
Noninterest expenses 106 113 112
Net income (loss) (7) (7) 9
Net credit-related charge-offs 95 70 51
Selected average balances:
Assets 14,114 14,901 16,633
Loans 13,923 14,684 16,387
FSD loans 209 216 401
Deposits 11,146 10,717 11,730
FSD deposits 1,469 1,678 2,255
Net interest margin 4.53% 4.20% 4.10%
==========================================================================
-- Average loans decreased $761 million, due to declines in National Dealer
Services, Middle Market, Global Corporate and Commercial Real Estate.
-- Average deposits, excluding the Financial Services Division, increased
$638 million, primarily due to increases in Middle Market, Technology
and Life Sciences and Private Banking. Financial Services Division
average deposits decreased $209 million.
-- The net interest margin of 4.53 percent increased 33 basis points,
primarily due to an increase in loan and deposit spreads and the benefit
provided by an increase in noninterest-bearing deposits.
-- The provision for loan losses increased $11 million, primarily due to an
increase in Commercial Real Estate, partially offset by a decrease in
Global Corporate.
-- Noninterest expenses decreased $7 million, primarily due to the second
quarter 2009 industry-wide FDIC special assessment charge.
Texas Market
==========================================================================
(dollar amounts in millions) 3rd Qtr '09 2nd Qtr '09 3rd Qtr '08
--------------------------------------------------------------------------
Net interest income (FTE) $77 $73 $73
Provision for loan losses 29 28 18
Noninterest income 22 21 27
Noninterest expenses 58 60 61
Net income 7 5 13
Total net credit-related charge-offs 22 11 9
Selected average balances:
Assets 7,444 7,798 7,945
Loans 7,221 7,547 7,691
Deposits 4,609 4,496 3,956
Net interest margin 4.22% 3.88% 3.76%
==========================================================================
-- Average loans decreased $326 million, primarily due to a decrease in
Energy Lending.
-- Average deposits increased $113 million, primarily due to an increase in
Middle Market.
-- The net interest margin of 4.22 percent increased 34 basis points,
primarily due to an increase in loan spreads and the benefit provided by
an increase in noninterest-bearing deposits.
-- Noninterest expenses decreased $2 million, primarily due to the second
quarter 2009 industry-wide FDIC special assessment charge.
Florida Market
==========================================================================
(dollar amounts in millions) 3rd Qtr '09 2nd Qtr '09 3rd Qtr '08
--------------------------------------------------------------------------
Net interest income (FTE) $11 $11 $12
Provision for loan losses 24 20 7
Noninterest income 3 3 4
Noninterest expenses 10 9 10
Net loss (12) (8) (1)
Net credit-related charge-offs 9 23 3
Selected average balances:
Assets 1,673 1,820 1,900
Loans 1,674 1,820 1,900
Deposits 327 331 262
Net interest margin 2.70% 2.44% 2.54%
==========================================================================
-- Average loans decreased $146 million, primarily due to a decrease in
National Dealer Services.
-- Average deposits decreased $4 million, primarily due to a decrease in
Commercial Real Estate.
-- The net interest margin of 2.70 percent increased 26 basis points,
primarily due to an increase in loan spreads.
-- The provision for loan losses increased $4 million, primarily due to an
increase in Private Banking, partially offset by a decrease in
Commercial Real Estate.
Conference Call and Webcast
Comerica will host a conference call to review third quarter 2009 financial results at 7 a.m. CT Tuesday, October 20, 2009. Interested parties may access the conference call by calling (800) 309-2262 or (706) 679-5261 (event ID No. 31081979). The call and supplemental financial information can also be accessed on the Internet at www.comerica.com. A replay will be available approximately two hours following the conference call through October 31, 2009. The conference call replay can be accessed by calling (800) 642-1687 or (706) 645-9291 (event ID No. 31081979). 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 Business Bank, the Retail Bank, and Wealth & Institutional 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, China 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 the reconcilement 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.
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," "feels," "expects," "estimates," "seeks," "strives," "plans," "intends," "outlook," "forecast," "position," "target," "mission," "assume," "achievable," "potential," "strategy," "goal," "aspiration," "outcome," "continue," "remain," "maintain," "trend," "objective" 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, 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 are further economic downturns, changes in the pace of an economic recovery and related changes in employment levels, changes in real estate values, fuel prices, energy costs or other events that could affect customer income levels or general economic conditions, changes related to the headquarters relocation or to its underlying assumptions, the effects of recently enacted legislation, such as the Emergency Economic Stabilization Act of 2008 and the American Recovery and Reinvestment Act of 2009, and actions taken by the U.S. Department of Treasury, the Board of Governors of the Federal Reserve System, the Texas Department of Banking and the Federal Deposit Insurance Corporation, the effects of war and other armed conflicts or acts of terrorism, the effects of natural disasters including, but not limited to, hurricanes, tornadoes, earthquakes, fires, droughts and floods, the disruption of private or public utilities, the implementation of Comerica's strategies and business models, management's ability to maintain and expand customer relationships, changes in customer borrowing, repayment, investment and deposit practices, management's ability to retain key officers and employees, changes in the accounting treatment of any particular item, the impact of regulatory examinations, declines or other changes in the businesses or industries in which Comerica has a concentration of loans, including, but not limited to, the automotive production industry and the real estate business lines, the anticipated performance of any new banking centers, the entry of new competitors in Comerica's markets, changes in the level of fee income, changes in applicable laws and regulations, including those concerning taxes, banking, securities and insurance, changes in trade, monetary and fiscal policies, including the interest rate policies of the Board of Governors of the Federal Reserve System, fluctuations in inflation or interest rates, changes in general economic, political or industry conditions and related credit and market conditions, the interdependence of financial service companies and adverse conditions in the stock market. Comerica cautions that the foregoing list of factors is not exclusive. For discussion of factors that may cause actual results to differ from expectations, please refer to our filings with the Securities and Exchange Commission. 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.
