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Press release from PR Newswire

Comerica Reports Second Quarter 2011 Net Income of $96 Million

Tuesday, July 19, 2011

Comerica Reports Second Quarter 2011 Net Income of $96 Million06:45 EDT Tuesday, July 19, 2011Commercial Loan Growth Driven by Middle Market, Global Corporate Banking and Specialty Businesses Pending Acquisition of Sterling Bancshares, Inc. (Sterling) Expected to Close July 28, 2011DALLAS, July 19, 2011 /PRNewswire/ -- Comerica Incorporated (NYSE: CMA) today reported second quarter 2011 net income of $96 million, a decrease of $7 million compared to $103 million for the first quarter 2011, primarily due to the impact of a federal income tax settlement. Second quarter 2011 also included $5 million of costs incurred in connection with the pending acquisition of Sterling. (Logo:  http://photos.prnewswire.com/prnh/20010807/CMALOGO)(dollar amounts in millions, except per share data)2nd Qtr '111st Qtr '112nd Qtr '10Net interest income$  391$  395$  422Provision for loan losses4749126Noninterest income202207194Noninterest expenses409415397Provision for income taxes413523Net income 9610370Net income attributable to common shares9510269Diluted income per common share0.530.570.39Tier 1 capital ratio10.53%(a) 10.35%10.64%Tangible common equity ratio (b)10.9010.4310.11Net interest margin 3.143.253.28(a) June 30, 2011 ratio is estimated.(b) See Reconciliation of Non-GAAP Financial Measures."Total average loans were down one percent and period-end loans were up modestly from March 31, 2011. We were pleased to see commercial loan growth in the second quarter, driven primarily by increases in Middle Market, Global Corporate Banking and Specialty Businesses, partially offset by a decrease in floor plan loans in National Dealer Services," said Ralph W. Babb Jr., chairman and chief executive officer.  "Commercial Real Estate declined, offsetting the commercial loan growth.  We expect the pace of decline in Commercial Real Estate to lessen in the second half of 2011 and National Dealer Services to rebound in the fourth quarter. Our core deposits continued to increase in the second quarter, which led to higher excess liquidity and a lower net interest margin.  Credit quality continued to improve and expenses were well controlled."We are excited about our pending acquisition of Sterling Bancshares, Inc., a strategically compelling transaction that significantly boosts our presence in the growing state of Texas.  Following the expiration of the required 15-day Department of Justice waiting period associated with the Federal Reserve Board's approval order, we expect the acquisition will close on July 28, 2011. Sterling's solid deposit base and well located branch network are expected to triple our Houston market share, provide us entry into the attractive San Antonio and Kerrville regions and complement our existing footprint in the Dallas-Fort Worth area. In short, it is a unique opportunity that provides us enhanced growth opportunities going forward."The Sterling integration plans remain on track.  We expect a smooth transition, given the size of the acquisition and our in-depth knowledge of the Texas market.  We look forward to welcoming Sterling customers and employees to Comerica as we begin this new chapter in our Texas banking history."Second Quarter 2011 Highlights Compared to First Quarter 2011Average loans increased in the Middle Market ($160 million; one percent), Global Corporate Banking ($136 million; 3 percent), and Specialty Businesses ($62 million; one percent) business lines.  These increases were more than offset by decreases in the Commercial Real Estate ($393 million; 9 percent) and National Dealer Services ($194 million; 5 percent) business lines, resulting in a decrease in average total loans of $377 million, or one percent.  Period-end loans increased $17 million from March 31, 2011 to June 30, 2011. Average core deposits increased $881 million in the second quarter 2011, with increases in all major markets, led by the Texas market. The net interest margin of 3.14 percent decreased 11 basis points compared to the first quarter 2011, primarily resulting from an increase in excess liquidity (represented by average balances deposited with the Federal Reserve Bank), and a decrease in loan pricing based on a decrease in LIBOR.Average earning assets increased $789 million in the second quarter 2011. Credit quality improvement continued in the second quarter 2011.  Net credit-related charge-offs decreased $11 million to $90 million.  Internal watch list loans declined $339 million to $4.8 billion and nonperforming assets decreased $60 million.  Noninterest expenses decreased $6 million to $409 million in the second quarter 2011, compared to the first quarter 2011.  Noninterest expenses included $5 million of costs incurred in connection with the pending Sterling acquisition in the second quarter 2011, which were more than offset by declines in numerous noninterest expense categories.The second quarter 2011 provision for income taxes included net after-tax charges of $8 million, which primarily reflected a $19 million charge related to a final settlement agreement with the Internal Revenue Service (IRS) involving repatriation of foreign earnings on a structured investment transaction, partially offset by a release of tax reserves of $9 million resulting from Comerica's planned participation in a recently enacted State of California voluntary compliance initiative.  Comerica has no other investment structures with uncertain tax positions.The estimated Tier 1 capital ratio increased 18 basis points, to 10.53 percent at June 30, 2011, from March 31, 2011.Net Interest Income and Net Interest Margin(dollar amounts in millions)2nd Qtr '111st Qtr '112nd Qtr '10Net interest income$             391$              395$                422Net interest margin 3.14%3.25%3.28%Selected average balances:Total earning assets$        50,136$         49,347$           51,835Total investment securities7,4077,3117,262Federal Reserve Bank deposits (excess liquidity) (a)3,3822,2973,719Total loans39,17439,55140,672Total core deposits (b)41,06740,18638,928Total noninterest-bearing deposits15,78615,45915,218(a) See Reconciliation of Non-GAAP Financial Measures.(b) Core deposits exclude other time deposits and foreign office time deposits.The $4 million decrease in net interest income in the second quarter 2011, when compared to the first quarter 2011, resulted primarily from a decline in the net interest margin, the first quarter 2011 maturities of interest rate swaps at positive spreads and a decrease in average loans, partially offset by one more day in the quarter. The net interest margin of 3.14 percent declined 11 basis points compared to the first quarter 2011.  The decline in the net interest margin primarily reflected the impact of an increase in excess liquidity (7 basis points), a decrease in loan pricing based on a decrease in LIBOR, and the first quarter 2011 maturities of interest rate swaps at positive spreads.Average earning assets increased $789 million, primarily due to increases of $1.1 billion in excess liquidity and $96 million in average investment securities available-for-sale, partially offset by a $377 million decrease in average loans.  Second quarter 2011 average core deposits increased $881 million compared to first quarter 2011, primarily reflecting increases in money market and NOW deposits ($410 million), noninterest-bearing deposits ($327 million) and customer certificates of deposit ($100 million). Noninterest IncomeNoninterest income was $202 million for the second quarter 2011, compared to $207 million for the first quarter 2011.  The $5 million decrease primarily resulted from a decrease in deferred compensation asset returns ($3 million) (offset by a decrease in deferred compensation plan costs in noninterest expense). Noninterest Expenses Noninterest expenses totaled $409 million in the second quarter 2011, a decrease of $6 million from the first quarter 2011. The decrease in noninterest expenses was primarily due to decreases in salaries expense ($3 million), FDIC insurance expense ($3 million), software expense ($3 million) and other real estate expense ($2 million), partially offset by certain pre-integration and transaction costs incurred in connection with the pending Sterling acquisition ($5 million).  Provision for Income TaxesThe second quarter 2011 provision for income taxes included net after-tax charges of $8 million, which primarily reflected a $19 million charge related to a final settlement agreement with the IRS involving repatriation of foreign earnings on a structured investment transaction, partially offset by a release of tax reserves of $9 million resulting from Comerica's planned participation in a recently enacted State of California voluntary compliance initiative.Credit Quality"Broad-based, steady improvement in credit quality continued in the second quarter," said Babb.  "This was the eighth consecutive quarter of decline in net charge offs, with an $11 million decrease.  We had strong recoveries of $35 million in the second quarter, up from $22 million in the first quarter.   Credit quality migration remains positive, as demonstrated by the $339 million decline in watch list loans, which provide our best early indicator of future credit quality, as well as the $60 million decline in nonperforming assets.  As a result of these overall improvements to our credit metrics, the provision for loan losses decreased to $47 million.  Also, of note, the results of the recently received Shared National Credit Exam are reflected in our second quarter credit metrics."Net credit-related charge-offs decreased $11 million to $90 million in the second quarter 2011, from $101 million in the first quarter 2011. The decrease in net credit-related charge-offs primarily reflected a decrease of $22 million in the Middle Market business line, partially offset by an increase of $9 million in the Private Banking business line.Internal watch list loans declined $339 million to $4.8 billion from March 31, 2011 to June 30, 2011.During the second quarter 2011, $163 million of loan relationships greater than $2 million were transferred to nonaccrual status, a decrease of $3 million from the first quarter 2011.  Of the transfers of loan relationships greater than $2 million to nonaccrual in the second quarter 2011, $76 million were from the Middle Market business line, primarily in the Midwest and Western markets, and $29 million were from the Commercial Real Estate business line, distributed across the Florida, Western and Other markets. Nonperforming assets decreased $60 million, compared to March 31, 2011, to $1.0 billion, or 2.66 percent of total loans and foreclosed property, at June 30, 2011.  The allowance for loan losses to total loans ratio was 2.06 percent and 2.17 percent at June 30, 2011 and March 31, 2011, respectively.(dollar amounts in millions)2nd Qtr '111st Qtr '112nd Qtr '10Net credit-related charge-offs$    90$  101$  146Net credit-related charge-offs/Average total loans0.92%1.03%1.44%Provision for loan losses$    47$    49$  126Provision for credit losses on lending-relatedcommitments(2)(3)-Total provision for credit losses4546126Nonperforming loans9741,0301,121Nonperforming assets (NPAs)1,0441,1041,214NPAs/Total loans and foreclosed property 2.66%2.81%2.98%Loans past due 90 days or more and still accruing$    64$    72$  115Allowance for loan losses806849967Allowance for credit losses on lending-related commitments (a)303244Total allowance for credit losses8368811,011Allowance for loan losses/Total loans2.06%2.17%2.38%Allowance for loan losses/Nonperforming loans838286(a) Included in "Accrued expenses and other liabilities" on the consolidated balance sheets.Balance Sheet and Capital ManagementTotal assets and common shareholders' equity were $54.1 billion and $6.0 billion, respectively, at June 30, 2011, compared to $55.0 billion and $5.9 billion, respectively, at March 31, 2011. There were approximately 177 million common shares outstanding at June 30, 2011.  Comerica did not repurchase any shares of common stock in the open market in the second quarter 2011 under the share repurchase program due to the pending Sterling acquisition.  Management expects to resume repurchases in the third quarter 2011.Comerica's tangible common equity ratio was 10.90 percent at June 30, 2011, an increase of 47 basis points from March 31, 2011. The estimated Tier 1 capital ratio increased 18 basis points, to 10.53 percent at June 30, 2011, from March 31, 2011.  Second-Half 2011 Outlook (Combined Comerica and Sterling Results) Compared to First-Half 2011 (Comerica Only Results)For the second half of 2011, management expects the following combined results, based on the incorporation of the projected results of Sterling operations from the expected acquisition closing date of July 28, 2011 through year-end 2011, compared to Comerica-only results for the first half of 2011, assuming a continuation of modest growth in the economy.  The acquisition is subject to customary closing conditions. The estimated purchase accounting impacts incorporated in this outlook are preliminary and may not be indicative of actual amounts that will be recorded as additional information becomes available and as additional analyses are performed.A mid-single digit increase in average loans due to the acquisition of Sterling loans at fair value.Average earning assets of approximately $52.5 billion, reflecting increases, primarily related to Sterling, in average loans and average investment securities available-for-sale, partially offset by a decrease in excess liquidity.  An average net interest margin of 3.35 percent to 3.40 percent, reflecting the benefit from the accretion of the purchase discount on the acquired Sterling loan portfolio ($35 million to $45 million; 13 basis points to 17 basis points), a reduction in excess liquidity, no increase in the Federal Funds rate, and LIBOR consistent with second quarter 2011 levels.Net credit-related charge-offs between $165 million and $185 million for the second half of 2011. The provision for credit losses is expected to be between $65 million and $85 million for the second half of 2011.A mid-single digit decline in noninterest income in the second half of 2011 compared to the first half of 2011, primarily due to the impact of regulatory changes, partially offset by the inclusion of Sterling.  Excluding merger and restructuring charges, a high single-digit increase in noninterest expenses in the second half of 2011 compared to the first half of 2011, primarily due to the addition of Sterling.Total merger and restructuring charges of approximately $80 million, after-tax, with about $25 million, after-tax, recognized in each of the third and fourth quarters of 2011, and the remainder recognized in 2012.Total acquisition synergies of approximately 35 percent of Sterling expenses, or about $56 million, with the majority realized in 2012.For the second half of 2011, income tax expense to approximate 36 percent of income before income taxes less approximately $33 million in tax benefits.Continue share repurchase program that, combined with dividend payments, results in a payout up to 50 percent of full-year earnings.Business SegmentsComerica's operations are strategically aligned into three major business segments: the Business Bank, the Retail Bank, and Wealth Management.  The Finance Division is also included as a segment. The financial results below are based on the internal business unit structure of the Corporation and methodologies in effect at June 30, 2011 and are presented on a fully taxable equivalent (FTE) basis. The accompanying narrative addresses second quarter 2011 results compared to first quarter 2011.The following table presents net income (loss) by business segment.(dollar amounts in millions)2nd Qtr '111st Qtr '112nd Qtr '10Business Bank$ 17695%$ 16793%$ 13598%Retail Bank(3)(2)(2)(1)(3)(2)Wealth Management12714854185100%179100%137100%Finance(87)(76)(57)Other (a)(2)-(10)     Total$   96$ 103$   70(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)2nd Qtr '111st Qtr '112nd Qtr '10Net interest income (FTE)$          342$         341$          351Provision for loan losses61883Noninterest income797778Noninterest expenses158160157Net income 176167135Net credit-related charge-offs5473113Selected average balances:Assets29,89330,09130,609Loans29,38029,60930,353Deposits20,39620,08419,069Net interest margin 4.65%4.66%4.63%Average loans decreased $229 million, reflecting increases in Middle Market, Global Corporate Banking and Specialty Businesses, more than offset by decreases in Commercial Real Estate and National Dealer Services.Average deposits increased $312 million, primarily due to increases in Specialty Businesses and Global Corporate Banking, partially offset by a decrease in Middle Market.The net interest margin of 4.65 percent decreased one basis point, primarily due to a decrease in deposit spreads.The provision for loan losses decreased $12 million, primarily reflecting decreases in Middle Market and Commercial Real Estate, partially offset by increases in Global Corporate Banking and Specialty Businesses.Retail Bank (dollar amounts in millions)2nd Qtr '111st Qtr '112nd Qtr '10Net interest income (FTE)$          141$         139$          134Provision for loan losses242320Noninterest income464242Noninterest expenses162162160Net loss(3)(2)(3)Net credit-related charge-offs222322Selected average balances:Assets5,4535,5585,937Loans4,9995,1065,446Deposits17,73717,36016,930Net interest margin 3.22%3.25%3.17%Average loans decreased $107 million, reflecting declines across all markets and business lines. Average deposits increased $377 million, primarily due to increases in transaction and money market deposits, partially offset by a decrease in customer certificates of deposit.The net interest margin of 3.22 percent decreased three basis points, primarily due to a decrease in deposit spreads.Noninterest income increased $4 million, reflecting nominal increases in numerous categories.Wealth Management (dollar amounts in millions)2nd Qtr '111st Qtr '112nd Qtr '10Net interest income (FTE)$            48$           44$            45Provision for loan losses14819Noninterest income636461Noninterest expenses767879Net income 12145Net credit-related charge-offs14511Selected average balances:Assets4,7284,8094,903Loans4,7424,8074,840Deposits2,9782,8002,924Net interest margin 4.07%3.76%3.73%Average loans decreased $65 million. Average deposits increased $178 million, primarily reflecting increases in noninterest-bearing transaction accounts. The net interest margin of 4.07 percent increased 31 basis points, primarily due to increases in loan spreads and deposit balances.The provision for loan losses increased $6 million, due to an increase in Private Banking in the Western Market.Geographic Market SegmentsComerica 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 June 30, 2011 and are presented on a fully taxable equivalent (FTE) basis. The accompanying narrative addresses second quarter 2011 results compared to first quarter 2011.The following table presents net income (loss) by market segment.(dollar amounts in millions)2nd Qtr '111st Qtr '112nd Qtr '10Midwest $ 6234%$   5330%$ 6144%Western502751283828Texas331829162619Florida(5)(3)(4)(2)(8)(6)Other Markets3016382143International1581271612185100%179100%137100%Finance & Other Businesses (a)(89)(76)(67)     Total$ 96$ 103$ 70(a) Includes discontinued operations and items not directly associated with the geographic markets.Midwest Market(dollar amounts in millions)2nd Qtr '111st Qtr '112nd Qtr '10Net interest income (FTE)$          204$         203$          211Provision for loan losses153434Noninterest income10010097Noninterest expenses183188180Net income625361Net credit-related charge-offs374644Selected average balances:Assets14,26714,30714,626Loans14,05114,10414,592Deposits18,31918,23017,988Net interest margin 4.46%4.49%4.66%Average loans decreased $53 million, with increases in Middle Market and Global Corporate Banking more than offset by declines in most other business lines. Average deposits increased $89 million, primarily due to increases in Personal Banking, Small Business Banking, Commercial Real Estate and Middle Market, partially offset by decreases in Global Corporate Banking and Specialty Businesses.The net interest margin of 4.46 percent decreased three basis points, primarily due to decreases in deposit spreads and loan balances, partially offset by an increase in loan spreads.The provision for loan losses decreased $19 million, primarily reflecting decreases in Middle Market and Commercial Real Estate, partially offset by an increase in Global Corporate Banking.Noninterest expenses decreased $5 million, primarily due to decreases in other real estate expenses, net allocated corporate overhead expenses and FDIC insurance expense, partially offset by an increase in the provision for credit losses on lending-related commitments.Western Market (dollar amounts in millions)2nd Qtr '111st Qtr '112nd Qtr '10Net interest income (FTE)$          166$         164$          163Provision for loan losses201127Noninterest income373733Noninterest expenses108109110Net income505138Net credit-related charge-offs262647Selected average balances:Assets12,32912,59013,006Loans12,12112,38312,792Deposits12,45812,23511,951Net interest margin 5.35%5.37%5.13%Average loans decreased $262 million, primarily due to decreases in National Dealer Services, Commercial Real Estate and Private Banking, partially offset by increases in Middle Market and Global Corporate Banking. Average deposits increased $223 million, primarily due to increases in Specialty Businesses and Private Banking, partially offset by a decrease in Middle Market.The net interest margin of 5.35 percent decreased two basis points, primarily due to a decrease in loan balances.The provision for loan losses increased $9 million, primarily due to increases in Private Banking and Specialty Businesses.Texas Market (dollar amounts in millions)2nd Qtr '111st Qtr '112nd Qtr '10Net interest income (FTE)$            89$           87$            81Provision for loan losses(2)4(1)Noninterest income252323Noninterest expenses636165Net income 332926Total net credit-related charge-offs388Selected average balances:Assets7,0817,0316,652Loans6,8716,8246,428Deposits6,1755,7865,316Net interest margin 5.19%5.17%5.05%Average loans increased $47 million, primarily due to increases in Middle Market and Global Corporate Banking, partially offset by a decrease in Commercial Real Estate.Average deposits increased $389 million, reflecting increases across most business lines.The net interest margin of 5.19 percent increased two basis points, primarily due to increases in loan spreads and deposit balances, partially offset by a decrease in deposit spreads.The provision for loan losses decreased $6 million, with decreases across most business lines. Florida Market (dollar amounts in millions)2nd Qtr '111st Qtr '112nd Qtr '10Net interest income (FTE)$            12$           11$            12Provision for loan losses11817Noninterest income444Noninterest expenses121212Net loss(5)(4)(8)Net credit-related charge-offs1587Selected average balances:Assets1,5341,5531,576Loans1,5651,5801,575Deposits396367404Net interest margin 3.14%2.82%2.94%Average loans decreased $15 million, primarily due to decreases in Commercial Real Estate and National Dealer Services, partially offset by increases in Global Corporate Banking and Private Banking.Average deposits increased $29 million, primarily due to an increase in Private Banking.The net interest margin of 3.14 percent increased 32 basis points, primarily due to increases in loan spreads and deposit balances.The provision for loan losses increased $3 million, primarily due to increases in Middle Market, Commercial Real Estate and Private Banking. Conference Call and WebcastComerica will host a conference call to review second quarter 2011 financial results at 7 a.m. CT Tuesday, July 19, 2011. Interested parties may access the conference call by calling (800) 309-2262 or (706) 679-5261 (event ID No. 77355589). The call and supplemental financial information can also be accessed on the Internet at www.comerica.com.  A telephone replay will be available approximately two hours following the conference call through July 31, 2011. The conference call replay can be accessed by calling (800) 642-1687 or (706) 645-9291 (event ID No. 77355589). 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 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 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," "opportunity," "initiative," "outcome," "continue," "remain," "maintain," "trend," "objective," "pending," "looks forward" 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 and related credit and market conditions; changes in trade, monetary and fiscal policies, including the interest rate policies of the Federal Reserve Board; adverse conditions in the capital markets; the interdependence of financial service companies; changes in regulation or oversight, including the effects of recently enacted legislation, actions taken by or proposed by the U.S. Treasury, the Board of Governors of the Federal Reserve System, the Texas Department of Banking and the Federal Deposit Insurance Corporation, legislation or regulations enacted in the future, and the impact and expiration of such legislation and regulatory actions; unfavorable developments concerning credit quality; the proposed acquisition of Sterling Bancshares, Inc. ("Sterling"), or any future acquisitions; the effects of more stringent capital or liquidity requirements; 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 implementation of Comerica's strategies and business models, including the anticipated performance of any new banking centers; Comerica's ability to utilize technology to efficiently and effectively develop, market and deliver new products and services; operational difficulties or information security problems; changes in the financial markets, including fluctuations in interest rates and their impact on deposit pricing; the entry of new competitors in Comerica's markets; changes in customer borrowing, repayment, investment and deposit practices; 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; the effectiveness of methods of reducing risk exposures; the effects of war and other armed conflicts or acts of terrorism and the effects of catastrophic events including, but not limited to, hurricanes, tornadoes, earthquakes, fires, droughts and floods. 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 ("SEC"). In particular, please refer to "Item 1A. Risk Factors" beginning on page 16 of Comerica's Annual Report on Form 10-K for the year ended December 31, 2010. 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.Additional Information for ShareholdersIn connection with the proposed merger transaction, Comerica has filed with the SEC a Registration Statement on Form S-4 that includes a Proxy Statement of Sterling and a Prospectus of Comerica, and Sterling mailed the definitive Proxy Statement/Prospectus to its shareholders on or about April 6, 2011. Each of Comerica and Sterling may file other relevant documents concerning the proposed transaction. SHAREHOLDERS ARE URGED TO READ THE REGISTRATION STATEMENT AND THE DEFINITIVE PROXY STATEMENT/PROSPECTUS REGARDING THE MERGER AND ANY OTHER RELEVANT DOCUMENTS FILED WITH THE SEC, AS WELL AS ANY AMENDMENTS OR SUPPLEMENTS TO THOSE DOCUMENTS, BECAUSE THEY CONTAIN IMPORTANT INFORMATION. A free copy of the definitive Proxy Statement/Prospectus, as well as other filings containing information about Comerica and Sterling, may be obtained at the SEC's Internet site (http://www.sec.gov). You may be able to obtain these documents, free of charge, from Comerica at www.comerica.com under the tab "Investor Relations" and then under the heading "SEC Filings" or from Sterling by accessing Sterling's website at www.banksterling.com under the tab "Investor Relations" and then under the heading "SEC Filings." CONSOLIDATED FINANCIAL HIGHLIGHTS (unaudited)Comerica Incorporated and SubsidiariesThree Months EndedSix Months EndedJune 30,March 31,June 30,June 30,(in millions, except per share data)20112011201020112010PER COMMON SHARE AND COMMON STOCK DATADiluted net income (loss)$     0.53$     0.57$     0.39$     1.10$   (0.01)Cash dividends declared0.100.100.050.200.10Common shareholders' equity (at period end)34.1533.2532.85Average diluted shares (in thousands)177,602178,425178,432178,011165,100KEY RATIOSReturn on average common shareholders' equity6.41%7.08%4.89%6.74%(0.05)%Return on average assets0.700.770.500.730.43Tier 1 common capital ratio (a) (b)10.5310.359.81Tier 1 risk-based capital ratio (b)10.5310.3510.64Total risk-based capital ratio (b)14.8114.8015.03Leverage ratio (b)11.3911.3711.36Tangible common equity ratio (a)10.9010.4310.11AVERAGE BALANCES Commercial loans $ 21,677$ 21,496$ 20,910$ 21,586$ 20,961Real estate construction loans:      Commercial Real Estate business line (c)1,4861,7542,5371,6192,726      Other business lines (d)395425450410459Commercial mortgage loans:     Commercial Real Estate business line (c)1,9121,9781,9471,9451,896     Other business lines (d)7,7247,8128,4257,7688,484Residential mortgage loans 1,5251,5991,6071,5621,620Consumer loans 2,2432,2812,4482,2622,464Lease financing9589871,1089721,119International loans1,2541,2191,2401,2371,261Total loans39,17439,55140,67239,36140,990Earning assets50,13649,34751,83549,74352,385Total assets54,51753,77556,25854,14856,885Noninterest-bearing deposits15,78615,45915,21815,62314,923Interest-bearing core deposits25,28124,72723,71025,00523,165Total core deposits41,06740,18638,92840,62838,088Common shareholders' equity5,9725,8355,7085,9045,391Total shareholders' equity5,9725,8355,7085,9046,283NET INTEREST INCOMENet interest income (fully taxable equivalent basis) $      392$      396$      424$      788$      840Fully taxable equivalent adjustment11223Net interest margin (fully taxable equivalent basis)3.14%3.25%3.28%3.19%3.23%CREDIT QUALITYNonaccrual loans$      941$      996$   1,098Reduced-rate loans333423Total nonperforming loans9741,0301,121Foreclosed property707493Total nonperforming assets1,0441,1041,214Loans past due 90 days or more and still accruing6472115Gross loan charge-offs125123158$      248$      342Loan recoveries3522125723Net loan charge-offs90101146191319Lending-related commitment charge-offs-----Total net credit-related charge-offs90101146191319Allowance for loan losses806849967Allowance for credit losses on lending-related commitments303244Total allowance for credit losses8368811,011Allowance for loan losses as a percentage of total loans2.06%2.17%2.38%Net loan charge-offs as a percentage of average total loans0.921.031.440.97%1.56%Net credit-related charge-offs as a percentage of average total loans0.921.031.440.971.56Nonperforming assets as a percentage of total loans and foreclosed property2.662.812.98Allowance for loan losses as a percentage of total nonperforming loans838286(a) See Reconciliation of Non-GAAP Financial Measures.(b) June 30, 2011 ratios are estimated.(c) Primarily loans to real estate investors and developers.(d) Primarily loans secured by owner-occupied real estate.CONSOLIDATED BALANCE SHEETS   Comerica Incorporated and Subsidiaries June 30,March 31,December 31,June 30,(in millions, except share data)2011201120102010(unaudited)(unaudited)(unaudited)ASSETSCash and due from banks$         987$         875$               668$         816Interest-bearing deposits with banks2,4793,5701,4153,409Other short-term investments124154141134Investment securities available-for-sale7,5377,4067,5607,188Commercial loans22,05221,36022,14521,151Real estate construction loans1,7282,0232,2532,774Commercial mortgage loans9,5799,6979,76710,318Residential mortgage loans1,4911,5501,6191,606Consumer loans2,2322,2622,3112,443Lease financing9499581,0091,084International loans1,1621,3261,1321,226Total loans39,19339,17640,23640,602Less allowance for loan losses(806)(849)(901)(967)Net loans38,38738,32739,33539,635Premises and equipment641637630634Customers' liability on acceptances outstanding1014924Accrued income and other assets3,9764,0343,9094,045Total assets$    54,141$    55,017$          53,667$    55,885LIABILITIES AND SHAREHOLDERS' EQUITYNoninterest-bearing deposits$    16,344$    16,357$          15,538$    15,769Money market and NOW deposits 18,03317,88817,62216,062Savings deposits1,4621,4571,3971,407Customer certificates of deposit5,5515,6725,4825,893Other time deposits---165Foreign office time deposits368499432484Total interest-bearing deposits25,41425,51624,93324,011Total deposits41,75841,87340,47139,780Short-term borrowings6761130200Acceptances outstanding1014924Accrued expenses and other liabilities1,0621,0761,1261,048Medium- and long-term debt5,2066,1166,1389,041Total liabilities48,10349,14047,87450,093Common stock - $5 par value:     Authorized - 325,000,000 shares     Issued - 203,878,110 shares1,0191,0191,0191,019Capital surplus1,4721,4641,4811,467Accumulated other comprehensive loss(308)(382)(389)(240)Retained earnings5,3955,3175,2475,124Less cost of common stock in treasury - 27,092,427 shares at 6/30/11, 27,103,941 shares      at 3/31/11, 27,342,518 shares at 12/31/10, and 27,561,412 shares at 6/30/10(1,540)(1,541)(1,565)(1,578)Total shareholders' equity6,0385,8775,7935,792Total liabilities and shareholders' equity$    54,141$    55,017$          53,667$    55,885CONSOLIDATED STATEMENTS OF INCOME (unaudited)Comerica Incorporated and SubsidiariesThree Months EndedSix Months EndedJune 30,June 30,(in millions, except per share data)2011201020112010INTEREST INCOMEInterest and fees on loans$  369$  412$  744$   824Interest on investment securities5961116122Interest on short-term investments3356Total interest income431476865952INTEREST EXPENSEInterest on deposits23294564Interest on medium- and long-term debt17253451Total interest expense405479115Net interest income391422786837Provision for loan losses4712696301Net interest income after provision for loan losses344296690536NONINTEREST INCOMEService charges on deposit accounts5152103108Fiduciary income39387877Commercial lending fees21224244Letter of credit fees 18193637Card fees15153028Foreign exchange income10101920Bank-owned life insurance991717Brokerage fees661212Net securities gains 4163Other noninterest income29226642Total noninterest income202194409388NONINTEREST EXPENSESSalaries185179373348Employee benefits504510089     Total salaries and employee benefits235224473437Net occupancy expense38397880Equipment expense17153232Outside processing fee expense25234946Software expense20224344FDIC insurance expense12162733Legal fees891717Advertising expense771415Other real estate expense651417Litigation and operational losses 5283Merger and restructuring charges5-5-Provision for credit losses on lending-related commitments(2)-(5)7Other noninterest expenses33356970Total noninterest expenses409397824801Income from continuing operations before income taxes13793275123Provision for income taxes41237618Income from continuing operations9670199105Income from discontinued operations, net of tax---17NET INCOME 9670199122Less:    Preferred stock dividends---123    Income allocated to participating securities112-Net income (loss) attributable to common shares$    95$    69$  197$      (1)Basic earnings per common share:      Income (loss) from continuing operations$ 0.54$ 0.40$ 1.12$ (0.11)      Net income (loss)0.540.401.12(0.01)Diluted earnings per common share:     Income (loss) from continuing operations0.530.391.10(0.11)     Net income (loss)0.530.391.10(0.01)Cash dividends declared on common stock1883518Cash dividends declared per common share0.100.050.200.10CONSOLIDATED QUARTERLY STATEMENTS OF INCOME (unaudited)Comerica Incorporated and SubsidiariesSecondFirstFourthThirdSecondSecond Quarter 2011 Compared To:QuarterQuarterQuarterQuarterQuarterFirst Quarter 2011Second Quarter 2010(in millions, except per share data)20112011201020102010AmountPercentAmountPercentINTEREST INCOMEInterest and fees on loans$    369$    375$    394$    399$    412$        (6)(1)%$       (43)(10)%Interest on investment securities595749556122(2)(4)Interest on short-term investments3222319-(12)Total interest income431434445456476(3)(1)(45)(9)INTEREST EXPENSEInterest on deposits23222427291(1)(6)(21)Interest on short-term borrowings--1---(46)-(77)Interest on medium- and long-term debt1717152525-4(8)(30)Total interest expense403940525411(14)(25)Net interest income391395405404422(4)(1)(31)(7)Provision for loan losses474957122126(2)(4)(79)(63)Net interest income after provision for loan losses344346348282296(2)(1)4816NONINTEREST INCOMEService charges on deposit accounts5152495152(1)(4)(1)(5)Fiduciary income3939393838-213Commercial lending fees2121292222-4(1)(1)Letter of credit fees 1818201919-(1)(1)(1)Card fees1515151515-7-6Foreign exchange income1091181017-(4)Bank-owned life insurance98149911-1Brokerage fees66766-(8)-(8)Net securities gains 42--12823 N/M Other noninterest income2937311822(8)(20)732Total noninterest income202207215186194(5)(2)84NONINTEREST EXPENSESSalaries 185188205187179(3)(1)63Employee benefits5050434745-(1)511     Total salaries and employee benefits235238248234224(3)(1)115Net occupancy expense3840424039(2)(3)(1)-Equipment expense17151615152525Outside processing fee expense25242723231528Software expense2023232222(3)(8)(2)(4)FDIC insurance expense1215151416(3)(16)(4)(24)Legal fees89999(1)-(1)-Advertising expense77877---(5)Other real estate expense68575(2)(35)19Litigation and operational losses 536222603 N/M Merger and restructuring charges5----5 N/M 5 N/M Provision for credit losses on lending-related commitments(2)(3)(3)(6)-121(2) N/M Other noninterest expenses3336413535(3)(11)(2)(8)Total noninterest expenses409415437402397(6)(1)123Income before income taxes1371381266693(1)(1)4448Provision for income taxes4135307236191881NET INCOME  96103965970(7)(7)2637Less:    Income allocated to participating securities111-1-(6)- N/M Net income (loss) attributable to common shares$      95$    102$      95$      59$      69$        (7)(7)%$         2636%Earnings per common share:     Basic$   0.54$   0.58$   0.54$   0.34$   0.40$   (0.04)(7)%$      0.1435%     Diluted0.530.570.530.330.39(0.04)(7)0.1436Cash dividends declared on common stock181718981-10 N/M Cash dividends declared per common share0.100.100.100.050.05--0.05 N/M N/M - Not meaningfulANALYSIS OF THE ALLOWANCE FOR LOAN LOSSES (unaudited)Comerica Incorporated and Subsidiaries20112010(in millions)2nd Qtr1st Qtr4th Qtr3rd Qtr2nd QtrBalance at beginning of period$    849$   901$   957$   967$    987Loan charge-offs:    Commercial6665433865    Real estate construction:        Commercial Real Estate business line (a)128344030        Other business lines (b)-1-1-          Total real estate construction129344130    Commercial mortgage:        Commercial Real Estate business line (a)8991612        Other business lines (b)2325344036          Total commercial mortgage3134435648    Residential mortgage72525    Consumer981579    Lease financing----1    International-5-1-        Total loan charge-offs125123140145158Recoveries on loans previously charged-off:    Commercial134774    Real estate construction52316    Commercial mortgage591021    Residential mortgage1-1--    Consumer11211    Lease financing6541-    International41-1-        Total recoveries3522271312Net loan charge-offs90101113132146Provision for loan losses474957122126Balance at end of period$    806$   849$   901$   957$    967Allowance for loan losses as a percentage of total loans2.06%2.17%2.24%2.38%2.38%Net loan charge-offs as a percentage of average total loans0.921.031.131.321.44Net credit-related charge-offs as a percentage of average total loans0.921.031.131.321.44(a) Primarily charge-offs of loans to real estate investors and developers.(b) Primarily charge-offs of loans secured by owner-occupied real estate.ANALYSIS OF THE ALLOWANCE FOR CREDIT LOSSES ON LENDING-RELATED COMMITMENTS (unaudited)Comerica Incorporated and Subsidiaries20112010(in millions)2nd Qtr1st Qtr4th Qtr3rd Qtr2nd QtrBalance at beginning of period$      32$     35$     38$     44$      44Add: Provision for credit losses on lending-related commitments(2)(3)(3)(6)-Balance at end of period$      30$     32$     35$     38$      44Unfunded lending-related commitments sold$        3$       2$       -$        -$        2NONPERFORMING ASSETS (unaudited)Comerica Incorporated and Subsidiaries20112010(in millions)2nd Qtr1st Qtr 4th Qtr 3rd Qtr 2nd Qtr SUMMARY OF NONPERFORMING ASSETS AND PAST DUE LOANSNonaccrual loans:Business loans:Commercial$    261$    226$     252$      258$      239Real estate construction:Commercial Real Estate business line (a)137195259362385Other business lines (b)23444Total real estate construction139198263366389Commercial mortgage:Commercial Real Estate business line (a)186197181153135Other business lines (b)269293302304257Total commercial mortgage455490483457392Lease financing6771011International74223Total nonaccrual business loans 8689251,0071,0931,034Retail loans:Residential mortgage6058555953Consumer:Home equity46557Other consumer971364Total consumer 1313181111Total nonaccrual retail loans7371737064Total nonaccrual loans9419961,0801,1631,098Reduced-rate loans3334432823Total nonperforming loans9741,0301,1231,1911,121Foreclosed property707411212093Total nonperforming assets$ 1,044$ 1,104$  1,235$   1,311$   1,214Nonperforming loans as a percentage of total loans2.49%2.63%2.79%2.96%2.76%Nonperforming assets as a percentage of total loans    and foreclosed property2.662.813.063.242.98Allowance for loan losses as a percentage    of total nonperforming loans         8382808086Loans past due 90 days or more and still accruing$      64$      72$       62$      104$      115ANALYSIS OF NONACCRUAL LOANSNonaccrual loans at beginning of period$    996$ 1,080$  1,163$   1,098$   1,145     Loans transferred to nonaccrual (c)163166180294199     Nonaccrual business loan gross charge-offs (d)(109)(111)(120)(136)(143)     Loans transferred to accrual status (c)-(4)(4)(10)-     Nonaccrual business loans sold (e)(9)(60)(41)(12)(47)     Payments/Other (f)(100)(75)(98)(71)(56)Nonaccrual loans at end of period$    941$    996$  1,080$   1,163$   1,098(a) Primarily loans to real estate investors and developers.(b) Primarily loans secured by owner-occupied real estate.(c) Based on an analysis of nonaccrual loans with book balances greater than $2 million.(d) Analysis of gross loan charge-offs:      Nonaccrual business loans$    109$    111$     120$      136$      143      Performing watch list loans-2--1      Consumer and residential mortgage loans161020914Total gross loan charge-offs$    125$    123$     140$      145$      158(e) Analysis of loans sold:      Nonaccrual business loans$        9$      60$       41$        12$        47      Performing watch list loans 63529715Total loans sold$      15$      95$       70$        19$        62(f) Includes net changes related to nonaccrual loans with balances less than $2 million, payments on nonaccrual loans with book balances greater than $2 million and transfers of nonaccrual loans to foreclosed property. Excludes business loan gross charge-offs and business nonaccrual loans sold.ANALYSIS OF NET INTEREST INCOME (FTE) (unaudited)Comerica Incorporated and SubsidiariesSix Months EndedJune 30, 2011June 30, 2010AverageAverageAverageAverage(dollar amounts in millions)BalanceInterestRateBalanceInterestRateCommercial loans $ 21,586$     3963.70%$ 20,961$     4113.95%Real estate construction loans2,029363.623,185483.03Commercial mortgage loans 9,7131913.9610,3802164.19Residential mortgage loans1,562425.371,620445.43Consumer loans2,262393.422,464443.57Lease financing 972173.561,119213.73International loans1,237243.831,261254.00Business loan swap income-1--17-Total loans 39,3617463.8240,9908264.06Auction-rate securities available-for-sale52720.8084751.06Other investment securities available-for-sale6,8321143.396,4751183.72Total investment securities available-for-sale 7,3591163.197,3221233.40Federal funds sold and securities purchased  under agreements to resell2-0.321-1.17Interest-bearing deposits with banks (a)2,89740.253,94450.25Other short-term investments12412.0512811.70Total earning assets49,7438673.5152,3859553.67Cash and due from banks878792Allowance for loan losses(883)(1,048)Accrued income and other assets4,4104,756Total assets$ 54,148$ 56,885Money market and NOW deposits$ 18,003230.26$ 15,709250.32Savings deposits 1,44310.091,407-0.07Customer certificates of deposit 5,559200.736,049300.97Total interest-bearing core deposits25,005440.3623,165550.48Other time deposits---58493.18Foreign office time deposits41310.50453-0.22Total interest-bearing deposits25,418450.3624,202640.54Short-term borrowings103-0.21241-0.19Medium- and long-term debt5,974341.1510,169510.99Total interest-bearing sources31,495790.5134,6121150.67Noninterest-bearing deposits 15,62314,923Accrued expenses and other liabilities1,1261,067Total shareholders' equity5,9046,283Total liabilities and shareholders' equity$ 54,148$ 56,885Net interest income/rate spread (FTE)$     7883.00$     8403.00FTE adjustment$         2$         3Impact of net noninterest-bearing  sources of funds0.190.23Net interest margin (as a percentage  of average earning assets) (FTE) (a)3.19%3.23%(a) Excess liquidity, represented by average balances deposited with the Federal Reserve Bank, reduced the net interest margin by 18 basis points and 24 basis points year-to-date in 2011 and 2010, respectively.  Excluding excess liquidity, the net interest margin would have been 3.37% in 2011 and 3.47% in 2010.  See Reconciliation of Non-GAAP Financial Measures.ANALYSIS OF NET INTEREST INCOME (FTE) (unaudited)Comerica Incorporated and SubsidiariesThree Months EndedJune 30, 2011March 31, 2011June 30, 2010AverageAverageAverageAverageAverageAverage(dollar amounts in millions)BalanceInterestRateBalanceInterestRateBalanceInterestRateCommercial loans $     21,677$        1963.65%$     21,496$        2003.76%$     20,910$        2063.95%Real estate construction loans1,881173.752,179193.512,987233.13Commercial mortgage loans9,636963.989,790953.9510,3721094.20Residential mortgage loans1,525215.501,599215.241,607225.44Consumer loans2,243203.422,281193.422,448223.56Lease financing95883.5098793.621,108103.72International loans1,254123.801,219123.871,240134.07Business loan swap income----1--9-Total loans39,1743703.7939,5513763.8540,6724144.07Auction-rate securities available-for-sale50010.7155410.8881631.19Other investment securities available-for-sale6,907583.406,757563.376,446583.71Total investment securities available-for-sale 7,407593.207,311573.177,262613.41Federal funds sold and securities purchased  under agreements to resell2-0.333-0.321-1.35Interest-bearing deposits with banks (a)3,43330.252,35410.263,76830.25Other short-term investments120-1.3912812.68132-1.65Total earning assets50,1364323.4649,3474353.5751,8354783.70Cash and due from banks872884795Allowance for loan losses(859)(908)(1,037)Accrued income and other assets4,3684,4524,665Total assets$     54,517$     53,775$     56,258Money market and NOW deposits$     18,207110.26$     17,797120.26$     16,354130.32Savings deposits 1,46510.091,421-0.091,429-0.07Customer certificates of deposit 5,609100.705,509100.765,927150.92Total interest-bearing core deposits25,281220.3524,727220.3623,710280.45Other time deposits------29512.14Foreign office time deposits41310.52412-0.49448-0.23Total interest-bearing deposits25,694230.3525,139220.3724,453290.47Short-term borrowings112-0.1494-0.31248-0.27Medium- and long-term debt5,821171.206,128171.109,571251.04Total interest-bearing sources31,627400.5131,361390.5134,272540.63Noninterest-bearing deposits 15,78615,45915,218Accrued expenses and other liabilities1,1321,1201,060Total shareholders' equity5,9725,8355,708Total liabilities and shareholders' equity$     54,517$     53,775$     56,258Net interest income/rate spread (FTE)$        3922.95$        3963.06$        4243.07FTE adjustment$            1$            1$            2Impact of net noninterest-bearing  sources of funds0.190.190.21Net interest margin (as a percentage  of average earning assets) (FTE) (a) 3.14%3.25%3.28%(a) Excess liquidity, represented by average balances deposited with the Federal Reserve Bank, reduced the net interest margin by 21 basis points and by 14 points in the second and first quarters of 2011, respectively and by 23 basis points in the second quarter of 2010.  Excluding excess liquidity, the net interest margin would have been 3.35%, 3.39% and 3.51% in each respective period.  See Reconciliation of Non-GAAP Financial Measures.CONSOLIDATED STATISTICAL DATA (unaudited)Comerica Incorporated and SubsidiariesJune 30,March 31,December 31,September 30,June 30,(in millions, except per share data)20112011201020102010Commercial loans:     Floor plan$      1,478$        1,893$               2,017$                 1,693$      1,586     Other 20,57419,46720,12819,73919,565Total commercial loans22,05221,36022,14521,43221,151Real estate construction loans:     Commercial Real Estate business line (a)1,3431,6061,8262,0232,345     Other business lines (b)385417427421429Total real estate construction loans1,7282,0232,2532,4442,774Commercial mortgage loans:     Commercial Real Estate business line (a)1,9301,9181,9372,0912,035     Other business lines (b)7,6497,7797,8308,0898,283Total commercial mortgage loans9,5799,6979,76710,18010,318Residential mortgage loans1,4911,5501,6191,5861,606Consumer loans:     Home equity1,6221,6611,7041,7361,761     Other consumer610601607667682Total consumer loans2,2322,2622,3112,4032,443Lease financing9499581,0091,0531,084International loans1,1621,3261,1321,1821,226Total loans$    39,193$      39,176$             40,236$               40,280$    40,602Goodwill$         150$           150$                  150$                    150$         150Loan servicing rights44556Tier 1 common capital ratio (c) (d)10.53%10.35%10.13%9.96%9.81%Tier 1 risk-based capital ratio (d)10.5310.3510.139.9610.64Total risk-based capital ratio (d)14.8114.8014.5414.3715.03Leverage ratio (d)11.3911.3711.2610.9111.36Tangible common equity ratio (c)10.9010.4310.5410.3910.11Book value per common share$      34.15$        33.25$               32.82$                 33.19$      32.85Market value per share for the quarter:     High39.0043.5343.4440.2145.85     Low33.0836.2034.4333.1135.44     Close34.5736.7242.2437.1536.83Quarterly ratios:     Return on average common shareholders' equity6.41%7.08%6.53%4.07%4.89%     Return on average assets0.700.770.710.430.50     Efficiency ratio69.3369.0570.3867.8864.47Number of banking centers446445444441437Number of employees - full time equivalent8,9158,9559,0019,0759,107(a) Primarily loans to real estate investors and developers.(b) Primarily loans secured by owner-occupied real estate.(c) See Reconciliation of Non-GAAP Financial Measures.(d) June 30, 2011 ratios are estimated.PARENT COMPANY ONLY BALANCE SHEETS (unaudited)Comerica IncorporatedJune 30,December 31,June 30,(in millions, except share data)2011 2010 2010 ASSETSCash and due from subsidiary bank$          14$                     -$                   15Short-term investments with subsidiary bank413327659Other short-term investments908683Investment in subsidiaries, principally banks6,1225,9575,961Premises and equipment344Other assets162181190      Total assets$     6,804$             6,555$              6,912LIABILITIES AND SHAREHOLDERS' EQUITYMedium- and long-term debt$        635$                635$                 999Other liabilities131127121      Total liabilities7667621,120Common stock - $5 par value:    Authorized - 325,000,000 shares    Issued - 203,878,110 shares 1,0191,0191,019Capital surplus1,4721,4811,467Accumulated other comprehensive loss(308)(389)(240)Retained earnings5,3955,2475,124Less cost of common stock in treasury -  27,092,427 shares at 6/30/11, 27,342,518 shares   at 12/31/10, and 27,561,412 shares at 6/30/10(1,540)(1,565)(1,578)      Total shareholders' equity6,0385,7935,792      Total liabilities and shareholders' equity$     6,804$             6,555$              6,912CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (unaudited)Comerica Incorporated and SubsidiariesAccumulatedCommon StockOtherTotalPreferredShares CapitalComprehensiveRetainedTreasuryShareholders'(in millions, except per share data)StockOutstandingAmountSurplusLossEarningsStockEquityBALANCE AT DECEMBER 31, 2009$      2,151151.2$      894$     740$                   (336)$     5,161$            (1,581)$              7,029Net income-----122-122Other comprehensive income, net of tax----96--96Total comprehensive income218Cash dividends declared on preferred stock -----(38)-(38)Cash dividends declared on common stock ($0.10 per share)-----(18)-(18)Purchase of common stock------(4)(4)Issuance of common stock-25.1125724---849Redemption of preferred stock(2,250)------(2,250)Redemption discount accretion on preferred stock94----(94)--Accretion of discount on preferred stock5----(5)--Net issuance of common stock under employee stock plans---(5)-(4)6(3)Share-based compensation ---11---11Other    ---(3)--1(2)BALANCE AT JUNE 30, 2010$             -176.3$   1,019$  1,467$                   (240)$     5,124$            (1,578)$              5,792BALANCE AT DECEMBER 31, 2010$             -176.5$   1,019$  1,481$                   (389)$     5,247$            (1,565)$              5,793Net income-----199-199Other comprehensive income, net of tax----81--81Total comprehensive income280Cash dividends declared on common stock ($0.20 per share)-----(35)-(35)Purchase of common stock-(0.5)----(21)(21)Net issuance of common stock under employee stock plans-0.8-(30)-(16)46-Share-based compensation ---21---21BALANCE AT JUNE 30, 2011$             -176.8$   1,019$  1,472$                   (308)$     5,395$            (1,540)$              6,038BUSINESS SEGMENT FINANCIAL RESULTS (unaudited) Comerica Incorporated and Subsidiaries (dollar amounts in millions)Business  RetailWealthThree Months Ended June 30, 2011BankBankManagementFinanceOtherTotalEarnings summary:Net interest income (expense) (FTE)$        342$    141$               48$   (147)$        8$      392Provision for loan losses62414-347Noninterest income794663113202Noninterest expenses15816276310409Provision (benefit) for income taxes (FTE)8149(52)-42Net income (loss)$        176$      (3)$               12$     (87)$      (2)$        96Net credit-related charge-offs$          54$      22$               14$         -$         -$        90Selected average balances:Assets$   29,893$ 5,453$          4,728$ 9,406$ 5,037$ 54,517Loans29,3804,9994,74248539,174Deposits20,39617,7372,97823913041,480Statistical data:Return on average assets (a)2.35%(0.06)%1.03%N/MN/M0.70%Net interest margin (b)4.653.224.07N/MN/M3.14Efficiency ratio37.4186.4871.40N/MN/M69.33BusinessRetailWealthThree Months Ended March 31, 2011BankBankManagementFinanceOtherTotalEarnings summary:Net interest income (expense) (FTE)$        341$    139$               44$   (135)$        7$      396Provision for loan losses18238--49Noninterest income774264168207Noninterest expenses16016278312415Provision (benefit) for income taxes (FTE)73(2)8(46)336Net income (loss)$        167$      (2)$               14$     (76)$         -$      103Net credit-related charge-offs$          73$      23$                 5$         -$         -$      101Selected average balances:Assets$   30,091$ 5,558$          4,809$ 9,314$ 4,003$ 53,775Loans29,6095,1064,80722739,551Deposits20,08417,3602,80024910540,598Statistical data:Return on average assets (a)2.22%(0.05)%1.14%N/MN/M0.77%Net interest margin (b)4.663.253.76N/MN/M3.25Efficiency ratio38.1489.1974.38N/MN/M69.05Business  RetailWealthThree Months Ended June 30, 2010BankBankManagementFinanceOtherTotalEarnings summary:Net interest income (expense) (FTE)$        351$    134$               45$   (103)$      (3)$      424Provision for loan losses832019-4126Noninterest income78426113-194Noninterest expenses157160792(1)397Provision (benefit) for income taxes (FTE)54(1)3(35)425Net income (loss)$        135$      (3)$                 5$     (57)$    (10)$        70Net credit-related charge-offs$        113$      22$               11$         -$         -$      146Selected average balances:Assets$   30,609$ 5,937$          4,903$ 9,343$ 5,466$ 56,258Loans30,3535,4464,84036(3)40,672Deposits19,06916,9302,9246539539,671Statistical data:Return on average assets (a)1.75%(0.06)%0.43%N/MN/M0.50%Net interest margin (b)4.633.173.73N/MN/M3.28Efficiency ratio36.9289.1477.57N/MN/M64.47(a) Return on average assets is calculated based on the greater of average assets or average liabilities and attributed equity.(b) Net interest margin is calculated based on the greater of average earning assets or average deposits and purchased funds.FTE - Fully Taxable EquivalentN/M - Not MeaningfulMARKET SEGMENT FINANCIAL RESULTS (unaudited) Comerica Incorporated and Subsidiaries (dollar amounts in millions)Three Months Ended June 30, 2011MidwestWesternTexasFloridaOther MarketsInternationalFinance& OtherBusinessesTotalEarnings summary:Net interest income (expense) (FTE)$      204$      166$      89$      12$       41$                19$        (139)$      392Provision for loan losses1520(2)115(5)347Noninterest income1003725413914202Noninterest expenses183108631221913409Provision (benefit) for income taxes (FTE)442520(2)(2)9(52)42Net income (loss)$        62$        50$      33$      (5)$       30$                15$          (89)$        96Net credit-related charge-offs (recoveries)$        37$        26$        3$      15$       11$                (2)$              -$        90Selected average balances:Assets$ 14,267$ 12,329$ 7,081$ 1,534$  3,101$           1,762$     14,443$ 54,517Loans14,05112,1216,8711,5652,8231,6905339,174Deposits18,31912,4586,1753962,4511,31236941,480Statistical data:Return on average assets (a)1.28%1.48%1.84%(1.29)%3.89%3.33% N/M 0.70%Net interest margin (b)4.465.355.193.145.884.40 N/M 3.14Efficiency ratio60.3053.1955.1677.6240.4733.16 N/M 69.33Three Months Ended March 31, 2011MidwestWesternTexasFloridaOther MarketsInternationalFinance& OtherBusinessesTotalEarnings summary:Net interest income (expense) (FTE)$      203$      164$      87$      11$       41$                18$        (128)$      396Provision for loan losses341148(7)(1)-49Noninterest income1003723411824207Noninterest expenses188109611221915415Provision (benefit) for income taxes (FTE)283016(1)-6(43)36Net income (loss)$        53$        51$      29$      (4)$       38$                12$          (76)$      103Net credit-related charge-offs$        46$        26$        8$        8$         9$                  4$              -$      101Selected average balances:Assets$ 14,307$ 12,590$ 7,031$ 1,553$  3,242$           1,735$     13,317$ 53,775Loans14,10412,3836,8241,5802,9601,6712939,551Deposits18,23012,2355,7863672,2981,32835440,598Statistical data:Return on average assets (a)1.08%1.54%1.65%(0.93)%4.70%2.79% N/M 0.77%Net interest margin (b)4.495.375.172.825.734.34 N/M 3.25Efficiency ratio61.9954.3655.3980.0842.3834.62 N/M 69.05Three Months Ended June 30, 2010MidwestWesternTexasFloridaOther MarketsInternationalFinance& OtherBusinessesTotalEarnings summary:Net interest income (expense) (FTE)$      211$      163$      81$      12$       44$                19$        (106)$      424Provision for loan losses3427(1)1750(5)4126Noninterest income973323415913194Noninterest expenses18011065122181397Provision (benefit) for income taxes (FTE)332114(5)(16)9(31)25Net income (loss)$        61$        38$      26$      (8)$         4$                16$          (67)$        70Net credit-related charge-offs $        44$        47$        8$        7$       40$                  -$              -$      146Selected average balances:Assets$ 14,626$ 13,006$ 6,652$ 1,576$  3,934$           1,655$     14,809$ 56,258Loans14,59212,7926,4281,5753,6611,5913340,672Deposits17,98811,9515,3164042,2121,05274839,671Statistical data:Return on average assets (a)1.25%1.15%1.54%(2.18)%0.46%3.90% N/M 0.50%Net interest margin (b)4.665.135.052.944.914.62 N/M 3.28Efficiency ratio58.1656.1562.3876.9038.2630.48 N/M 64.47(a) Return on average assets is calculated based on the greater of average assets or average liabilities and attributed equity.(b) Net interest margin is calculated based on the greater of average earning assets or average deposits and purchased funds.FTE - Fully Taxable Equivalent N/M - Not MeaningfulRECONCILIATION OF NON-GAAP FINANCIAL MEASURES (unaudited)Comerica Incorporated and SubsidiariesSix Months Ended June 30,(dollar amounts in millions)20112010Impact of Excess Liquidity on Net Interest Margin (FTE):Net interest income (FTE)$            788$            840Less:Interest earned on excess liquidity (a)35Net interest income (FTE), excluding excess liquidity$            785$            835Average earning assets$       49,743$       52,385Less:Average net unrealized gains on investment securities available-for-sale4871Average earning assets for net interest margin (FTE)49,69552,314Less:Excess liquidity (a)2,8433,905Average earning assets for net interest margin (FTE), excluding excess liquidity$       46,852$       48,409Net interest margin (FTE)3.19%3.23%Net interest margin (FTE), excluding excess liquidity3.373.47Impact of excess liquidity on net interest margin (FTE)(0.18)(0.24)201120102nd Qtr1st Qtr4th Qtr3rd Qtr2nd QtrImpact of Excess Liquidity on Net Interest Margin (FTE):Net interest income (FTE)$      392$      396$      406$      405$      424Less:Interest earned on excess liquidity (a)21122Net interest income (FTE), excluding excess liquidity$      390$      395$      405$      403$      422Average earning assets$ 50,136$ 49,347$ 49,102$ 50,189$ 51,835Less:Average net unrealized gains on investment securities available-for-sale742213918080Average earning assets for net interest margin (FTE)50,06249,32548,96350,00951,755Less:Excess liquidity (a)3,3822,2971,7932,9833,719Average earning assets for net interest margin (FTE), excluding excess liquidity$ 46,680$ 47,028$ 47,170$ 47,026$ 48,036Net interest margin (FTE)3.14%3.25%3.29%3.23%3.28%Net interest margin (FTE), excluding excess liquidity3.353.393.413.423.51Impact of excess liquidity on net interest margin (FTE)(0.21)(0.14)(0.12)(0.19)(0.23)(a) Excess liquidity represented by interest earned on and average balances deposited with the FRB.The net interest margin (FTE), excluding excess liquidity, removes interest earned on balances deposited with the FRB from net interest income (FTE) and average balances deposited with the FRB from average earning assets from the numerator and denominator of the net interest margin (FTE) ratio, respectively. Comerica believes this measurement provides meaningful information to investors, regulators, management and others of the impact on net interest income and net interest margin resulting from Comerica's short-term investment in low yielding instruments.RECONCILIATION OF NON-GAAP FINANCIAL MEASURES (unaudited)Comerica Incorporated and SubsidiariesJune 30,March 31,December 31,September 30,June 30,20112011201020102010Tier 1 Common Capital Ratio:Tier 1 capital (a) (b) $   6,193$   6,107$   6,027$   5,940$   6,371Less:Trust preferred securities----495Tier 1 common capital (b) $   6,193$   6,107$   6,027$   5,940$   5,876Risk-weighted assets (a) (b) $ 58,790$ 58,998$ 59,506$ 59,608$ 59,877Tier 1 capital ratio (b)10.53%10.35%10.13%9.96%10.64%Tier 1 common capital ratio (b)10.5310.3510.139.969.81Tangible Common Equity Ratio:Total common shareholders' equity$   6,038$   5,877$   5,793$   5,857$   5,792Less:Goodwill150150150150150Other intangible assets45666Tangible common equity$   5,884$   5,722$   5,637$   5,701$   5,636Total assets$ 54,141$ 55,017$ 53,667$ 55,004$ 55,885Less:Goodwill150150150150150Other intangible assets45666Tangible assets$ 53,987$ 54,862$ 53,511$ 54,848$ 55,729Common equity ratio11.15%10.68%10.80%10.65%10.36%Tangible common equity ratio 10.9010.4310.5410.3910.11(a) Tier 1 capital and risk-weighted assets as defined by regulation.(b) June 30, 2011 Tier 1 capital and risk-weighted assets are estimated.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 bank regulations.  The tangible common equity removes preferred stock and the effect of intangible assets from capital and the effect of intangible assets from total assets.  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 IncorporatedFor further information: Media, Wayne J. Mielke, +1-214-462-4463, or Investors, Darlene P. Persons, +1-214-462-6831, or Tracy Fralick, +1-214-462-6834, all of Comerica Incorporated