Comerica Adjusts Fourth Quarter And Full Year 2015 Results

Revision Due to Recently Discovered Isolated Event Associated with Single Customer Loan

News provided by

Feb 16, 2016, 04:51 ET

DALLAS, Feb. 16, 2016 /PRNewswire/ -- Comerica Incorporated (NYSE: CMA) today announced that it is adjusting its fourth quarter and full year 2015 financial results, from those reported on January 19, 2016, as a result of recently discovered irregularities with a single customer loan relationship in the Retail Bank. Following the discovery, Comerica increased its provision for credit losses, recorded a charge-off for the amount in question, and decreased incentive compensation expense based on the revised results, effective as of December 31, 2015.

Comerica had approximately $26 million outstanding from an Arizona-based sales and appraisal company at December 31, 2015. Following an extensive analysis of the situation, Comerica has determined that there was significant doubt as to collectibility of the loan and, given the unique irregularities, it is believed to be an isolated incident.

Comerica Chairman and Chief Executive Officer Ralph W. Babb, Jr. said, "Our investigation is ongoing and we are assessing all circumstances surrounding this matter. We remain confident in our systems and processes and will vigorously prosecute all legal options available to us to recover on this isolated loss."

The adjustments will reduce Comerica's 2015 net income by $14 million after-tax, or 8 cents per share, from $535 million, or $2.92 per share, to $521 million, or $2.84 per share. Adjusted fourth quarter 2015 net income was $116 million, or 64 cents per share, compared to previously reported net income of $130 million, or 71 cents per share.

The following table summarizes the impact of the adjustments on the previously reported financial results.



		December 31, 2015
		Quarter Ended									Year Ended
(dollar amounts in millions, except per share data)	As Reported					As Adjusted				As Reported			As Adjusted

Provision for credit losses		$	35				$	60			$	122		$	147
Noninterest expenses		489					486				1,845			1,842
Salaries and benefits expense		265					262				1,012			1,009
Income before income taxes		179					157				772			750
Provision for income taxes		49					41				237			229
Net income		130					116				535			521
Net income attributable to common shares		129					115				529			515
Diluted income per common share		0.71					0.64				2.92			2.84
Total shareholders' equity at year end		7,574					7,560
Basel III common equity Tier 1 capital ratio		10.53		%	(a)		10.54		%
Tangible common equity ratio (b)		9.72		%			9.70		%

(a)	Estimated as of January 19,2016. Prior to the adjustments, the final Basel III common equity Tier 1 ratio would have been 10.56%.
(b)	See Reconciliation of Non-GAAP Financial Measures.

Comerica's Annual Report on Form 10-K will reflect these adjustments when it is filed with the U.S. Securities and Exchange Commission. The revisions primarily impacted the Retail Bank and Other Markets. Revised fourth quarter and full year 2015 financial information is included with this release.

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 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.

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 course," "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, 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 changes in general economic, political or industry conditions; changes in monetary and fiscal policies, including changes in interest rates; changes in regulation or oversight; Comerica's ability to maintain adequate sources of funding and liquidity; the effects of more stringent capital or liquidity requirements; declines or other changes in the businesses or industries of Comerica's customers, including the energy industry; operational difficulties, failure of technology infrastructure or information security incidents; reliance on other companies to provide certain key components of business infrastructure; factors impacting noninterest expenses which are beyond Comerica's control; changes in the financial markets, including fluctuations in interest rates and their impact on deposit pricing; changes in Comerica's credit rating; unfavorable developments concerning credit quality; the interdependence of financial service companies; the implementation of Comerica's strategies and business initiatives; 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; changes in customer behavior; any future strategic acquisitions or divestitures; management's ability to maintain and expand customer relationships; management's ability to retain key officers and employees; the impact of legal and regulatory proceedings or determinations; the effectiveness of methods of reducing risk exposures; the effects of terrorist activities and other hostilities; the effects of catastrophic events including, but not limited to, hurricanes, tornadoes, earthquakes, fires, droughts and floods; changes in accounting standards and the critical nature of Comerica's accounting policies. 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. In particular, please refer to "Item 1A. Risk Factors" beginning on page 12 of Comerica's Annual Report on Form 10-K for the year ended December 31, 2014. 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.



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)	2015			2015			2014			2015			2014
PER COMMON SHARE AND COMMON STOCK DATA
Diluted net income	$	0.64		$	0.74		$	0.80		$	2.84		$	3.16
Cash dividends declared	0.21			0.21			0.20			0.83			0.79

Average diluted shares (in thousands)	179,197			180,714			183,728			181,104			185,474
KEY RATIOS
Return on average common shareholders' equity	6.08		%	7.19		%	7.96		%	6.91		%	8.05		%
Return on average assets	0.64			0.76			0.86			0.74			0.89
Common equity tier 1 risk-based capital ratio (a)	10.54			10.51			n/a
Tier 1 common risk-based capital ratio (b)	n/a			n/a			10.50
Tier 1 risk-based capital ratio (a)	10.54			10.51			10.50
Total risk-based capital ratio (a)	12.69			12.82			12.51
Leverage ratio (a)	10.22			10.28			10.35
Tangible common equity ratio (b)	9.70			9.91			9.85
AVERAGE BALANCES
Commercial loans	31,219			31,900			30,391			31,501			29,715
Real estate construction loans	1,961			1,833			1,920			1,884			1,909
Commercial mortgage loans	8,842			8,691			8,609			8,697			8,706
Lease financing	750			788			818			783			834
International loans	1,402			1,401			1,455			1,441			1,376
Residential mortgage loans	1,896			1,882			1,821			1,878			1,778
Consumer loans	2,478			2,477			2,347			2,444			2,270
Total loans	48,548			48,972			47,361			48,628			46,588

Earning assets	66,818			66,191			64,453			65,129			61,560
Total assets	71,907			71,333			69,307			70,247			66,336

Noninterest-bearing deposits	29,627			28,623			27,504			28,087			25,019
Interest-bearing deposits	30,109			30,517			30,256			30,239			29,765
Total deposits	59,736			59,140			57,760			58,326			54,784

Common shareholders' equity	7,613			7,559			7,518			7,534			7,373
NET INTEREST INCOME (fully taxable equivalent basis)
Net interest income	$	434		$	423		$	416		$	1,693		$	1,659
Net interest margin	2.58		%	2.54		%	2.57		%	2.60		%	2.70		%
CREDIT QUALITY
Total nonperforming assets	$	391		$	381		$	300

Loans past due 90 days or more and still accruing	17			5			5

Net loan charge-offs	51			23			1			$	100		$	25

Allowance for loan losses	634			622			594
Allowance for credit losses on lending-related commitments	45			48			41
Total allowance for credit losses	679			670			635

Allowance for loan losses as a percentage of total loans	1.29		%	1.27		%	1.22		%
Net loan charge-offs as a percentage of average total loans	0.42			0.19			0.01			0.21		%	0.05		%
Nonperforming assets as a percentage of total loans and foreclosed property	0.80			0.78			0.62
Allowance for loan losses as a percentage of total nonperforming loans	167			169			205

(a)	Basel III rules became effective on January 1, 2015, with transitional provisions. All prior period data is based on Basel I rules.
(b)	See Reconciliation of Non-GAAP Financial Measures.
n/a - not applicable.



CONSOLIDATED BALANCE SHEETS
Comerica Incorporated and Subsidiaries

	December 31,		September 30,		December 31,
(in millions, except share data)	2015		2015		2014
	(unaudited)		(unaudited)
ASSETS
Cash and due from banks	$	1,157	$	1,101	$	1,026

Interest-bearing deposits with banks	4,990		6,099		5,045
Other short-term investments	113		107		99

Investment securities available-for-sale	10,519		8,749		8,116
Investment securities held-to-maturity	1,981		1,863		1,935

Commercial loans	31,659		31,777		31,520
Real estate construction loans	2,001		1,874		1,955
Commercial mortgage loans	8,977		8,787		8,604
Lease financing	724		751		805
International loans	1,368		1,382		1,496
Residential mortgage loans	1,870		1,880		1,831
Consumer loans	2,485		2,491		2,382
Total loans	49,084		48,942		48,593
Less allowance for loan losses	(634)		(622)		(594)
Net loans	48,450		48,320		47,999

Premises and equipment	550		541		532
Accrued income and other assets	4,117		4,232		4,434
Total assets	$	71,877	$	71,012	$	69,186

LIABILITIES AND SHAREHOLDERS' EQUITY
Noninterest-bearing deposits	$	30,839	$	28,697	$	27,224

Money market and interest-bearing checking deposits	23,532		23,948		23,954
Savings deposits	1,898		1,853		1,752
Customer certificates of deposit	3,552		4,126		4,421
Foreign office time deposits	32		144		135
Total interest-bearing deposits	29,014		30,071		30,262
Total deposits	59,853		58,768		57,486

Short-term borrowings	23		109		116
Accrued expenses and other liabilities	1,383		1,413		1,507
Medium- and long-term debt	3,058		3,100		2,675
Total liabilities	64,317		63,390		61,784

Common stock - $5 par value:
Authorized - 325,000,000 shares
Issued - 228,164,824 shares	1,141		1,141		1,141
Capital surplus	2,173		2,165		2,188
Accumulated other comprehensive loss	(429)		(345)		(412)
Retained earnings	7,084		7,007		6,744
Less cost of common stock in treasury - 52,457,113 shares at 12/31/15; 51,010,418 shares at 9/30/15 and 49,146,225 shares at 12/31/14	(2,409)		(2,346)		(2,259)
Total shareholders' equity	7,560		7,622		7,402
Total liabilities and shareholders' equity	$	71,877	$	71,012	$	69,186



CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (unaudited)
Comerica Incorporated and Subsidiaries

	Three Months Ended				Years Ended
	December 31,				December 31,
(in millions, except per share data)	2015		2014		2015		2014
INTEREST INCOME
Interest and fees on loans	$	395	$	383	$	1,551	$	1,525
Interest on investment securities	56		51		216		211
Interest on short-term investments	6		4		17		14
Total interest income	457		438		1,784		1,750
INTEREST EXPENSE
Interest on deposits	10		12		43		45
Interest on medium- and long-term debt	14		11		52		50
Total interest expense	24		23		95		95
Net interest income	433		415		1,689		1,655
Provision for credit losses	60		2		147		27
Net interest income after provision for credit losses	373		413		1,542		1,628
NONINTEREST INCOME
Card fees	77		24		290		92
Service charges on deposit accounts	55		53		223		215
Fiduciary income	45		47		187		180
Commercial lending fees	30		29		99		98
Letter of credit fees	14		14		53		57
Bank-owned life insurance	11		8		40		39
Foreign exchange income	11		10		40		40
Brokerage fees	4		4		17		17
Net securities losses	—		—		(2)		—
Other noninterest income	23		36		103		130
Total noninterest income	270		225		1,050		868
NONINTEREST EXPENSES
Salaries and benefits expense	262		245		1,009		980
Outside processing fee expense	83		33		332		122
Net occupancy expense	41		46		159		171
Equipment expense	14		14		53		57
Software expense	26		23		99		95
FDIC insurance expense	10		8		37		33
Advertising expense	7		7		24		23
Litigation-related expense	—		—		(32)		4
Gain on debt redemption	—		—		—		(32)
Other noninterest expenses	43		43		161		173
Total noninterest expenses	486		419		1,842		1,626
Income before income taxes	157		219		750		870
Provision for income taxes	41		70		229		277
NET INCOME	116		149		521		593
Less income allocated to participating securities	1		1		6		7
Net income attributable to common shares	$	115	$	148	$	515	$	586
Earnings per common share:
Basic	$	0.65	$	0.83	$	2.93	$	3.28
Diluted	0.64		0.80		2.84		3.16

Comprehensive income	31		54		504		572

Cash dividends declared on common stock	37		36		148		143
Cash dividends declared per common share	0.21		0.20		0.83		0.79



CONSOLIDATED QUARTERLY STATEMENTS OF COMPREHENSIVE INCOME (unaudited)
Comerica Incorporated and Subsidiaries

	Fourth		Third		Second		First		Fourth		Fourth Quarter 2015 Compared To:
	Quarter		Quarter		Quarter		Quarter		Quarter		Third Quarter 2015				Fourth Quarter 2014
(in millions, except per share data)	2015		2015		2015		2015		2014		Amount		Percent		Amount		Percent
INTEREST INCOME
Interest and fees on loans	$	395	$	390	$	388	$	378	$	383	$	5	1	%	$	12	3	%
Interest on investment securities	56		54		53		53		51		2		6		5		12
Interest on short-term investments	6		4		3		4		4		2		19		2		8
Total interest income	457		448		444		435		438		9		2		19		4
INTEREST EXPENSE
Interest on deposits	10		11		11		11		12		(1)		(3)		(2)		(7)
Interest on medium- and long-term debt	14		15		12		11		11		(1)		(6)		3		21
Total interest expense	24		26		23		22		23		(2)		(4)		1		7
Net interest income	433		422		421		413		415		$	11	3		$	18	4
Provision for credit losses	60		26		47		14		2		34		N/M		58		N/M
Net interest income after provision for credit losses	373		396		374		399		413		(23)		(6)		(40)		(10)
NONINTEREST INCOME
Card fees	77		74		72		67		24		3		3		53		N/M
Service charges on deposit accounts	55		57		56		55		53		(2)		(3)		2		4
Fiduciary income	45		47		48		47		47		(2)		(4)		(2)		(4)
Commercial lending fees	30		22		22		25		29		8		35		1		5
Letter of credit fees	14		13		13		13		14		1		2		—		—
Bank-owned life insurance	11		10		10		9		8		1		1		3		18
Foreign exchange income	11		10		9		10		10		1		5		1		11
Brokerage fees	4		5		4		4		4		(1)		(12)		—		—
Net securities losses	—		—		—		(2)		—		—		N/M		—		—
Other noninterest income	23		26		27		27		36		(3)		(7)		(13)		(33)
Total noninterest income	270		264		261		255		225		6		2		45		20
NONINTEREST EXPENSES
Salaries and benefits expense	262		243		251		253		245		19		8		17		7
Outside processing fee expense	83		86		86		77		33		(3)		(5)		50		N/M
Net occupancy expense	41		41		39		38		46		—		—		(5)		(10)
Equipment expense	14		13		13		13		14		1		1		—		—
Software expense	26		26		24		23		23		—		—		3		9
FDIC insurance expense	10		9		9		9		8		1		24		2		31
Advertising expense	7		6		5		6		7		1		13		—		—
Litigation-related expense	—		(3)		(30)		1		—		3		N/M		—		—
Other noninterest expenses	43		40		39		39		43		3		8		—		—
Total noninterest expenses	486		461		436		459		419		25		5		67		16
Income before income taxes	157		199		199		195		219		(42)		(21)		(62)		(29)
Provision for income taxes	41		63		64		61		70		(22)		(35)		(29)		(41)
NET INCOME	116		136		135		134		149		(20)		(15)		(33)		(23)
Less income allocated to participating securities	1		2		1		2		1		(1)		(14)		—		—
Net income attributable to common shares	$	115	$	134	$	134	$	132	$	148	$	(19)	(15)	%	$	(33)	(23)	%
Earnings per common share:
Basic	$	0.65	$	0.76	$	0.76	$	0.75	$	0.83	$	(0.11)	(14)	%	$	(0.18)	(22)	%
Diluted	0.64		0.74		0.73		0.73		0.80		(0.10)		(14)		(0.16)		(20)

Comprehensive income	31		187		109		176		54		(156)		(83)		(23)		(43)

Cash dividends declared on common stock	37		37		37		36		36		—		—		1		3
Cash dividends declared per common share	0.21		0.21		0.21		0.20		0.20		—		—		0.01		5

N/M - not meaningful



ANALYSIS OF THE ALLOWANCE FOR LOAN LOSSES (unaudited)
Comerica Incorporated and Subsidiaries

	2015												2014
(in millions)	4th Qtr			3rd Qtr			2nd Qtr			1st Qtr			4th Qtr

Balance at beginning of period	$	622		$	618		$	601		$	594		$	592

Loan charge-offs:
Commercial	73			30			17			19			8
Commercial mortgage	1			—			2			—			2
Lease financing	—			—			1			—			—
International	—			1			11			2			6
Residential mortgage	—			—			1			—			1
Consumer	2			3			3			2			3
Total loan charge-offs	76			34			35			23			20

Recoveries on loans previously charged-off:
Commercial	6			8			10			9			6
Real estate construction	—			—			1			—			2
Commercial mortgage	11			2			5			3			10
Residential mortgage	1			—			—			1			—
Consumer	7			1			1			2			1
Total recoveries	25			11			17			15			19
Net loan charge-offs	51			23			18			8			1
Provision for loan losses	63			28			35			16			4
Foreign currency translation adjustment	—			(1)			—			(1)			(1)
Balance at end of period	$	634		$	622		$	618		$	601		$	594

Allowance for loan losses as a percentage of total loans	1.29		%	1.27		%	1.24		%	1.22		%	1.22		%

Net loan charge-offs as a percentage of average total loans	0.42			0.19			0.15			0.07			0.01


ANALYSIS OF THE ALLOWANCE FOR CREDIT LOSSES ON LENDING-RELATED COMMITMENTS (unaudited)
Comerica Incorporated and Subsidiaries

	2015												2014
(in millions)	4th Qtr			3rd Qtr			2nd Qtr			1st Qtr			4th Qtr

Balance at beginning of period	$	48		$	50		$	39		$	41		$	43
Less: Charge-offs on lending-related commitments (a)	—			—			1			—			—
Add: Provision for credit losses on lending-related commitments	(3)			(2)			12			(2)			(2)
Balance at end of period	$	45		$	48		$	50		$	39		$	41

Unfunded lending-related commitments sold	$	—		$	—		$	12		$	1		$	—

(a) Charge-offs result from the sale of unfunded lending-related commitments.



CONSOLIDATED STATISTICAL DATA (unaudited)
Comerica Incorporated and Subsidiaries

	December 31,			September 30,			June 30,			March 31,			December 31,
(in millions, except per share data)	2015			2015			2015			2015			2014

Commercial loans:
Floor plan	$	3,939		$	3,538		$	3,840		$	3,544		$	3,790
Other	27,720			28,239			28,883			28,547			27,730
Total commercial loans	31,659			31,777			32,723			32,091			31,520
Real estate construction loans	2,001			1,874			1,795			1,917			1,955
Commercial mortgage loans	8,977			8,787			8,674			8,558			8,604
Lease financing	724			751			786			792			805
International loans	1,368			1,382			1,420			1,433			1,496
Residential mortgage loans	1,870			1,880			1,865			1,859			1,831
Consumer loans:
Home equity	1,720			1,714			1,682			1,678			1,658
Other consumer	765			777			796			744			724
Total consumer loans	2,485			2,491			2,478			2,422			2,382
Total loans	$	49,084		$	48,942		$	49,741		$	49,072		$	48,593

Goodwill	$	635		$	635		$	635		$	635		$	635
Core deposit intangible	10			10			11			12			13
Other intangibles	4			4			4			3			2

Common equity tier 1 capital (a)	7,350			7,327			7,280			7,230			n/a
Tier 1 common capital (b)	n/a			n/a			n/a			n/a			7,169
Risk-weighted assets (a)	69,731			69,718			69,967			69,514			68,273

Common equity tier 1 risk-based capital ratio (a)	10.54		%	10.51		%	10.40		%	10.40		%	n/a
Tier 1 common risk-based capital ratio (b)	n/a			n/a			n/a			n/a			10.50		%
Tier 1 risk-based capital ratio (a)	10.54			10.51			10.40			10.40			10.50
Total risk-based capital ratio (a)	12.69			12.82			12.38			12.35			12.51
Leverage ratio (a)	10.22			10.28			10.56			10.53			10.35
Tangible common equity ratio (b)	9.70			9.91			9.92			9.97			9.85

Common shareholders' equity per share of common stock	$	43.03		$	43.02		$	42.18		$	42.12		$	41.35
Tangible common equity per share of common stock (b)	39.33			39.36			38.53			38.47			37.72
Market value per share for the quarter:
High	47.44			52.93			53.45			47.94			50.14
Low	39.52			40.01			44.38			40.09			42.73
Close	41.83			41.10			51.32			45.13			46.84

Quarterly ratios:
Return on average common shareholders' equity	6.08		%	7.19		%	7.21		%	7.20		%	7.96		%
Return on average assets	0.64			0.76			0.79			0.78			0.86
Efficiency ratio (c)	69.11			67.08			63.68			68.50			65.26

Number of banking centers	477			477			477			482			481

Number of employees - full time equivalent	8,880			8,941			8,901			8,831			8,876

(a)	Basel III rules became effective January 1, 2015, with transitional provisions. All prior period data is based on Basel I rules.
(b)	See Reconciliation of Non-GAAP Financial Measures.
(c)	Noninterest expenses as a percentage of the sum of net interest income (FTE) and noninterest income excluding net securities gains (losses).
n/a - not applicable.



PARENT COMPANY ONLY BALANCE SHEETS (unaudited)
Comerica Incorporated

	December 31,		September 30,		December 31,
(in millions, except share data)	2015		2015		2014

ASSETS
Cash and due from subsidiary bank	$	4	$	5	$	—
Short-term investments with subsidiary bank	569		563		1,133
Other short-term investments	89		89		94
Investment in subsidiaries, principally banks	7,523		7,596		7,411
Premises and equipment	3		2		2
Other assets	137		138		138
Total assets	$	8,325	$	8,393	$	8,778

LIABILITIES AND SHAREHOLDERS' EQUITY
Medium- and long-term debt	$	608	$	618	$	1,208
Other liabilities	157		153		168
Total liabilities	765		771		1,376

Common stock - $5 par value:
Authorized - 325,000,000 shares
Issued - 228,164,824 shares	1,141		1,141		1,141
Capital surplus	2,173		2,165		2,188
Accumulated other comprehensive loss	(429)		(345)		(412)
Retained earnings	7,084		7,007		6,744
Less cost of common stock in treasury - 52,457,113 shares at 12/31/15; 51,010,418 shares at 9/30/15 and 49,146,225 shares at 12/31/14	(2,409)		(2,346)		(2,259)
Total shareholders' equity	7,560		7,622		7,402
Total liabilities and shareholders' equity	$	8,325	$	8,393	$	8,778



CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (unaudited)
Comerica Incorporated and Subsidiaries

						Accumulated
	Common Stock					Other						Total
	Shares			Capital		Comprehensive		Retained		Treasury		Shareholders'
(in millions, except per share data)	Outstanding	Amount		Surplus		Loss		Earnings		Stock		Equity

BALANCE AT DECEMBER 31, 2013	182.3	$	1,141	$	2,179	$	(391)	$	6,318	$	(2,097)	$	7,150
Net income	—	—		—		—		593		—		593
Other comprehensive loss, net of tax	—	—		—		(21)		—		—		(21)
Cash dividends declared on common stock ($0.79 per share)	—	—		—		—		(143)		—		(143)
Purchase of common stock	(5.4)	—		—		—		—		(260)		(260)
Net issuance of common stock under employee stock plans	2.1	—		(27)		—		(24)		96		45
Share-based compensation	—	—		38		—		—		—		38
Other	—	—		(2)		—		—		2		—
BALANCE AT DECEMBER 31, 2014	179.0	$	1,141	$	2,188	$	(412)	$	6,744	$	(2,259)	$	7,402
Net income	—	—		—		—		521		—		521
Other comprehensive loss, net of tax	—	—		—		(17)		—		—		(17)
Cash dividends declared on common stock ($0.83 per share)	—	—		—		—		(148)		—		(148)
Purchase of common stock	(5.3)	—		—		—		—		(240)		(240)
Purchase and retirement of warrants	—	—		(10)		—		—		—		(10)
Net issuance of common stock under employee stock plans	1.0	—		(22)		—		(11)		47		14
Net issuance of common stock for warrants	1.0	—		(21)		—		(22)		43		—
Share-based compensation	—	—		38		—		—		—		38
BALANCE AT DECEMBER 31, 2015	175.7	$	1,141	$	2,173	$	(429)	$	7,084	$	(2,409)	$	7,560



BUSINESS SEGMENT FINANCIAL RESULTS (unaudited)
Comerica Incorporated and Subsidiaries


(dollar amounts in millions)	Business			Retail			Wealth
Three Months Ended December 31, 2015	Bank			Bank			Management			Finance		Other		Total
Earnings summary:
Net interest income (expense) (FTE)	$	387		$	160		$	47		$	(162)	$	2	$	434
Provision for credit losses	41			23			(7)			—		3		60
Noninterest income	147			49			57			15		2		270
Noninterest expenses	208			191			81			2		4		486
Provision (benefit) for income taxes (FTE)	85			(4)			9			(47)		(1)		42
Net income (loss)	$	200		$	(1)		$	21		$	(102)	$	(2)	$	116
Net loan charge-offs (recoveries)	$	35		$	25		$	(9)		$	—	$	—	$	51

Selected average balances:
Assets	$	38,765		$	6,549		$	5,199		$	12,678	$	8,716	$	71,907
Loans	37,682			5,868			4,998			—		—		48,548
Deposits	31,738			23,262			4,355			120		261		59,736

Statistical data:
Return on average assets (a)	2.06		%	(0.03)		%	1.68		%	N/M		N/M		0.64		%
Efficiency ratio (b)	39.00			91.69			77.02			N/M		N/M		69.11

	Business			Retail			Wealth
Three Months Ended September 30, 2015	Bank			Bank			Management			Finance		Other		Total
Earnings summary:
Net interest income (expense) (FTE)	$	380		$	158		$	45		$	(162)	$	2	$	423
Provision for credit losses	30			2			(3)			—		(3)		26
Noninterest income	145			49			59			15		(4)		264
Noninterest expenses	202			185			74			2		(2)		461
Provision (benefit) for income taxes (FTE)	99			7			12			(56)		2		64
Net income (loss)	$	194		$	13		$	21		$	(93)	$	1	$	136
Net loan charge-offs (recoveries)	$	23		$	1		$	(1)		$	—	$	—	$	23

Selected average balances:
Assets	$	39,210		$	6,518		$	5,228		$	12,177	$	8,200	$	71,333
Loans	38,113			5,835			5,024			—		—		48,972
Deposits	31,397			23,079			4,188			212		264		59,140

Statistical data:
Return on average assets (a)	1.98		%	0.23		%	1.62		%	N/M		N/M		0.76		%
Efficiency ratio (b)	38.41			89.33			71.11			N/M		N/M		67.08

	Business			Retail			Wealth
Three Months Ended December 31, 2014	Bank			Bank			Management			Finance		Other		Total
Earnings summary:
Net interest income (expense) (FTE)	$	387		$	152		$	47		$	(177)	7		$	416
Provision for credit losses	8			(2)			(9)			—		5		2
Noninterest income	104			45			60			16		—		225
Noninterest expenses	148			182			80			3		6		419
Provision (benefit) for income taxes (FTE)	119			6			14			(64)		(4)		71
Net income (loss)	$	216		$	11		$	22		$	(100)	$	—	$	149
Net loan charge-offs (recoveries)	$	(1)		$	4		$	(2)		$	—	$	—	$	1

Selected average balances:
Assets	$	37,896		$	6,298		$	5,034		$	12,218	$	7,861	$	69,307
Loans	36,890			5,626			4,845			—		—		47,361
Deposits	30,897			22,301			4,094			195		273		57,760

Statistical data:
Return on average assets (a)	2.28		%	0.19		%	1.79		%	N/M		N/M		0.86		%
Efficiency ratio (b)	30.09			92.33			74.48			N/M		N/M		65.26

(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 (FTE) and noninterest income excluding net securities gains.

FTE - Fully Taxable Equivalent

N/M - Not Meaningful



MARKET SEGMENT FINANCIAL RESULTS (unaudited)
Comerica Incorporated and Subsidiaries


(dollar amounts in millions)										Other			Finance
Three Months Ended December 31, 2015	Michigan			California			Texas			Markets			& Other		Total
Earnings summary:
Net interest income (expense) (FTE)	$	183		$	193		$	131		$	87		$	(160)	$	434
Provision for credit losses	(12)			(7)			57			19			3		60
Noninterest income	82			41			32			98			17		270
Noninterest expenses	161			108			103			108			6		486
Provision (benefit) for income taxes (FTE)	33			43			6			8			(48)		42
Net income (loss)	$	83		$	90		$	(3)		$	50		$	(104)	$	116
Net loan charge-offs	$	(2)		$	1		$	33		$	19		$	—	$	51

Selected average balances:
Assets	$	13,601		$	17,297		$	11,474		$	8,141		$	21,394	$	71,907
Loans	12,986			17,033			10,893			7,636			—		48,548
Deposits	22,123			18,545			10,807			7,880			381		59,736

Statistical data:
Return on average assets (a)	1.43		%	1.83		%	(0.10)		%	2.36		%	N/M		0.64		%
Efficiency ratio (b)	61.06			46.17			62.94			58.11			N/M		69.11

										Other			Finance
Three Months Ended September 30, 2015	Michigan			California			Texas			Markets			& Other		Total
Earnings summary:
Net interest income (expense) (FTE)	$	180		$	187		$	129		$	87		$	(160)	$	423
Provision for credit losses	6			24			10			(11)			(3)		26
Noninterest income	85			38			34			96			11		264
Noninterest expenses	152			102			97			110			—		461
Provision (benefit) for income taxes (FTE)	36			37			20			25			(54)		64
Net income (loss)	$	71		$	62		$	36		$	59		$	(92)	$	136
Net loan charge-offs (recoveries)	$	9		$	10		$	4		$	—		$	—	$	23

Selected average balances:
Assets	$	13,856		$	17,060		$	11,578		$	8,462		$	20,377	$	71,333
Loans	13,223			16,789			10,997			7,963			—		48,972
Deposits	21,946			18,372			10,753			7,593			476		59,140

Statistical data:
Return on average assets (a)	1.23		%	1.27		%	1.16		%	2.82		%	N/M		0.76		%
Efficiency ratio (b)	57.49			45.28			59.54			59.86			N/M		67.08

										Other			Finance
Three Months Ended December 31, 2014	Michigan			California			Texas			Markets			& Other		Total
Earnings summary:
Net interest income (expense) (FTE)	$	173		$	192		$	139		$	82		$	(170)	$	416
Provision for credit losses	(19)			(10)			18			8			5		2
Noninterest income	89			37			38			45			16		225
Noninterest expenses	157			100			95			58			9		419
Provision (benefit) for income taxes (FTE)	45			55			24			15			(68)		71
Net income (loss)	$	79		$	84		$	40		$	46		$	(100)	$	149
Net loan charge-offs (recoveries)	$	(5)		$	1		$	2		$	3		$	—	$	1

Selected average balances:
Assets	$	13,605		$	16,035		$	12,003		$	7,585		$	20,079	$	69,307
Loans	13,142			15,777			11,327			7,115			—		47,361
Deposits	21,530			18,028			10,825			6,909			468		57,760

Statistical data:
Return on average assets (a)	1.41		%	1.77		%	1.32		%	2.42		%	N/M		0.86		%
Efficiency ratio (b)	59.92			43.61			53.62			45.47			N/M		65.26

(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 (FTE) and noninterest income excluding net securities gains.

FTE - Fully Taxable Equivalent

N/M - Not Meaningful



RECONCILIATION OF NON-GAAP FINANCIAL MEASURES (unaudited)
Comerica Incorporated and Subsidiaries

	December 31,			September 30,			June 30,			March 31,			December 31,
(dollar amounts in millions)	2015			2015			2015			2015			2014

Tier 1 Common Capital Ratio:
Tier 1 and Tier 1 common capital (a)	n/a			n/a			n/a			n/a			$	7,169

Risk-weighted assets (a)	n/a			n/a			n/a			n/a			68,269

Tier 1 and Tier 1 common risk-based capital ratio	n/a			n/a			n/a			n/a			10.50		%

Tangible Common Equity Ratio:
Common shareholders' equity	$	7,560		$	7,622		$	7,523		$	7,500		$	7,402
Less:
Goodwill	635			635			635			635			635
Other intangible assets	14			14			15			15			15
Tangible common equity	$	6,911		$	6,973		$	6,873		$	6,850		$	6,752

Total assets	$	71,877		$	71,012		$	69,945		$	69,333		$	69,186
Less:
Goodwill	635			635			635			635			635
Other intangible assets	14			14			15			15			15
Tangible assets	$	71,228		$	70,363		$	69,295		$	68,683		$	68,536

Common equity ratio	10.52		%	10.73		%	10.76		%	10.82		%	10.70		%
Tangible common equity ratio	9.70			9.91			9.92			9.97			9.85

Tangible Common Equity per Share of Common Stock:
Common shareholders' equity	$	7,560		$	7,622		$	7,523		$	7,500		$	7,402
Tangible common equity	6,911			6,973			6,873			6,850			6,752

Shares of common stock outstanding (in millions)	176			177			178			178			179

Common shareholders' equity per share of common stock	$	43.03		$	43.02		$	42.18		$	42.12		$	41.35
Tangible common equity per share of common stock	39.33			39.36			38.53			38.47			37.72

(a) Tier 1 capital and risk-weighted assets as defined by Basel I risk-based capital rules.

n/a - not applicable.

The Tier 1 common capital ratio removes preferred stock and qualifying trust preferred securities from Tier 1 capital as defined by and calculated in conformity with Basel I risk-based capital rules in effect through December 31, 2014. Effective January 1, 2015, regulatory capital components and risk-weighted assets are defined by and calculated in conformity with Basel III risk-based capital rules. The tangible common equity ratio removes preferred stock and the effect of intangible assets from capital and the effect of intangible assets from 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 these measurements are meaningful measures of capital adequacy used by investors, regulators, management and others to evaluate the adequacy of common equity and to compare against other companies in the industry.

SOURCE Comerica Incorporated