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Press release from PR Newswire

Comerica Reports Fourth Quarter 2012 Net Income Of $130 Million

Wednesday, January 16, 2013

Comerica Reports Fourth Quarter 2012 Net Income Of $130 Million06:40 EST Wednesday, January 16, 201311 Percent Increase in Net Income From Third Quarter 2012 Reflects Loan and Fee Income Growth, Expense Control Full-Year 2012 Net Income of $521 Million Up 33 Percent From 2011 10 Million Shares Repurchased in 2012 Under the Share Repurchase Program 79 Percent of 2012 Net Income Returned to ShareholdersDALLAS, Jan. 16, 2013 /PRNewswire/ -- Comerica Incorporated (NYSE: CMA) today reported fourth quarter 2012 net income of $130 million, compared to $117 million for the third quarter 2012. Earnings per fully diluted share were 68 cents for the fourth quarter 2012, compared to 61 cents for the third quarter 2012.(Logo: http://photos.prnewswire.com/prnh/20010807/CMALOGO)Full-year 2012 net income was $521 million, an increase of $128 million, or 33 percent, compared to 2011. 2012 net income included restructuring expenses associated with the acquisition of Sterling Bancshares, Inc. (Sterling) of $35 million ($22 million, after tax), compared to $75 million ($47 million, after tax) for 2011. Earnings per fully diluted share were $2.67 for 2012, compared to $2.09 for 2011.(dollar amounts in millions, except per share data)4th Qtr '123rd Qtr '124th Qtr '11Net interest income (a)$424$427$444Provision for credit losses162218Noninterest income204197182Noninterest expenses (b)427449479Provision for income taxes553633Net income13011796Net income attributable to common shares12811695Diluted income per common share0.680.610.48Average diluted shares (in millions)188191197Tier 1 common capital ratio (d)10.11%(c)10.35%10.37%Tangible common equity ratio (d)9.7110.2510.27(a)Included accretion of the purchase discount on the acquired Sterling loan portfolio of $13 million ($8 million, after tax), $15 million ($9 million, after tax) and $26 million ($16 million, after tax) in the fourth quarter 2012, third quarter 2012 and fourth quarter 2011, respectively.(b)Included restructuring expenses of $2 million ($1 million, after tax), $25 million ($16 million, after tax) and $37 million ($23 million, after tax) in the fourth quarter 2012, third quarter 2012 and fourth quarter 2011, respectively, associated with the acquisition of Sterling.(c)December 31, 2012 ratio is estimated.(d)See Reconciliation of Non-GAAP Financial Measures."Loan and fee income growth combined with expense control contributed to our 11 percent increase in net income, when compared to the third quarter," said Ralph W. Babb Jr., chairman and chief executive officer. "In this slow growing national economy, we continue to benefit from our position in growth markets and industry expertise, which helped drive an increase in average total loans of $522 million, primarily reflecting an increase of $762 million, or 3 percent, in commercial loans. We continue to capitalize on opportunities by allocating resources to faster growing markets and segments."Average total deposits increased $1.4 billion in the fourth quarter to a record $51.3 billion, primarily reflecting an increase of $1.3 billion, or 6 percent, in noninterest-bearing deposits." "Excluding accretion, net interest income was stable in the fourth quarter, and noninterest income increased $7 million to $204 million, primarily due to increases in customer-driven categories. Credit quality continued to be strong and our capital position remains a source of strength to support our growth. We repurchased 3.1 million shares in the fourth quarter and 10.1 million shares for the full-year 2012 under our share repurchase program. Combined with dividends, we returned 79 percent of 2012 net income to shareholders."Looking ahead, we believe our focus on relationships, growth markets, industry expertise and expense management should assist us in increasing returns to shareholders and provide us the momentum that will not only carry us through an extended low-rate environment, but enable us to succeed in it, too."Fourth Quarter and Full-Year 2012 Overview Fourth Quarter 2012 Compared to Third Quarter 2012 Average total loans increased $522 million, or 1 percent, to $44.1 billion, primarily reflecting an increase of $762 million, or 3 percent, in commercial loans, partially offset by a decrease of $241 million, or 2 percent, in commercial real estate loans (commercial mortgage and real estate construction loans). The increase in commercial loans was primarily driven by increases in National Dealer Services, Energy, general Middle Market and Mortgage Banker Finance, partially offset by a decrease in Corporate. Period-end loans increased $1.9 billion, or 4 percent, to $46.1 billion, primarily reflecting an increase of $2.1 billion, or 7 percent, in commercial loans, partially offset by a decrease of $239 million, or 2 percent, in commercial real estate loans. Average total deposits increased $1.4 billion, to $51.3 billion, primarily reflecting an increase of $1.3 billion, or 6 percent, in noninterest-bearing deposits. Period-end deposits increased $2.2 billion, to $52.2 billion. Net interest income was $424 million in the fourth quarter 2012 compared to $427 million in the third quarter 2012. Excluding the $2 million decrease in the accretion of the purchase discount on the acquired Sterling loan portfolio, net interest income was stable. Strong credit quality continued in the fourth quarter 2012. Nonaccrual loans decreased $146 million, to $519 million at December 31, 2012. Net credit-related charge-offs decreased $6 million to $37 million, or 0.34 percent of average loans, in the fourth quarter 2012. The provision for credit losses was $16 million in the fourth quarter 2012 compared to $22 million in the third quarter 2012. Noninterest income increased $7 million to $204 million in the fourth quarter 2012 compared to $197 million for the third quarter 2012. The increase was primarily due to increases in customer driven categories. Noninterest expenses decreased $22 million to $427 million in the fourth quarter 2012, compared to $449 million in the third quarter 2012. Fourth quarter 2012 included final restructuring expenses of $2 million related to the Sterling acquisition, a decrease of $23 million compared to the third quarter 2012. Comerica repurchased 3.1 million shares of common stock under the share repurchase program in the fourth quarter 2012. Combined with the dividend, $121 million, or 93 percent of net income, was returned to shareholders in the fourth quarter. Full-Year 2012 Compared to Full-Year 2011Net income of $521 million for 2012 increased $128 million, or 33 percent, compared to 2011. Average total loans increased $3.2 billion, or 8 percent, to $43.3 billion in 2012, in part due to the acquisition of Sterling and reflecting an increase of $4.0 billion, or 18 percent, in commercial loans, partially offset by a decrease of $636 million in commercial real estate loans. The increase in commercial loans was primarily driven by increases in Energy, Mortgage Banker Finance, National Dealer Services, general Middle Market, Technology and Life Sciences, and Corporate. Period-end total loans increased $3.4 billion, or 8 percent, to $46.1 billion from year-end 2011 to year-end 2012. Average total deposits increased $5.8 billion, or 13 percent, to $49.5 billion in 2012, in part due to the acquisition of Sterling. Period-end total deposits increased $4.4 billion, or 9 percent. Net interest income increased $75 million, or 5 percent, primarily due to an increase in average earning assets of $5.4 billion and an $18 million increase in the accretion of the purchase discount on the acquired Sterling loan portfolio, partially offset by a decrease in yields. Credit quality improved significantly. The provision for credit losses declined $65 million to $79 million in 2012, compared to 2011. Net credit-related charge-offs decreased $158 million to $170 million. Noninterest income increased $26 million compared to 2011, primarily in customer-driven categories. Noninterest expenses decreased $14 million. 2012 included Sterling-related merger and restructuring charges of $35 million, compared to $75 million in 2011. Salaries and employee benefits expense increased $43 million, primarily due to increased pension expense and the impact of Sterling. 10.1 million shares were repurchased in 2012, which, combined with dividends, returned 79 percent of 2012 net income to shareholders.Net Interest Income(dollar amounts in millions)4th Qtr '123rd Qtr '124th Qtr '11Net interest income$424$427$444Net interest margin2.87%2.96%3.19%Selected average balances:Total earning assets$59,276$57,801$55,676Total loans44,11943,59741,454Total investment securities10,2509,7919,781Federal Reserve Bank deposits (excess liquidity)4,6384,1604,216Total deposits51,29249,85747,779Total noninterest-bearing deposits22,75821,46919,176Net interest income of $424 million in the fourth quarter 2012 decreased $3 million compared to the third quarter 2012. An increase in loan volumes increased net interest income by $4 million. The continued shift in the loan portfolio mix reduced net interest income $4 million. The change in loan portfolio mix primarily reflected a decrease in higher-yielding commercial real estate loans, an increase in lower-yielding commercial loans, the maturity of higher-yielding fixed-rate loans and positive credit quality migration throughout the loan portfolio. A decline in LIBOR reduced net interest income $2 million. Accretion of the purchase discount on the acquired Sterling loan portfolio decreased $2 million to $13 million in the fourth quarter 2012, compared to $15 million in the third quarter 2012. Interest earned on investment securities available-for-sale decreased $2 million, primarily as a result of lower reinvestment yields on mortgage-backed investment securities, partially offset by an increase in volume. Funding costs decreased $1 million due to lower deposit rates. In addition, third quarter 2012 included a $2 million negative residual value adjustment to assets in the leasing portfolio. Average earning assets increased $1.5 billion in the fourth quarter 2012, compared to the third quarter 2012, primarily reflecting a $522 million increase in average loans, a $478 million increase in excess liquidity and a $459 million increase in average investment securities available-for-sale. Average deposits increased $1.4 billion in the fourth quarter 2012, compared to the third quarter 2012, primarily due to a $1.3 billion increase in average noninterest-bearing deposits. The rate paid on total average interest-bearing deposits decreased 2 basis points, to 22 basis points. The net interest margin of 2.87 percent decreased 9 basis points compared to the third quarter 2012. The net interest margin was negatively impacted by the continued shift in mix in the loan portfolio (4 basis points), lower yields on mortgage-backed securities (3 basis points), the decline in LIBOR (2 basis points), the increase in excess liquidity (2 basis points), and lower accretion on the acquired Sterling loan portfolio (1 basis point). The third quarter negative residual value adjustment (2 basis points) and lower funding costs (1 basis point) partially offset the decline.Noninterest IncomeNoninterest income increased $7 million to $204 million for the fourth quarter 2012 compared to $197 million for the third quarter 2012. The increase was primarily due to increases in customer driven categories, including increases in commercial lending fees of $3 million, customer derivative income of $3 million and fiduciary income of $3 million, partially offset by a decrease in letter of credit fees of $2 million. Noninterest ExpensesNoninterest expenses decreased $22 million to $427 million in the fourth quarter 2012, compared to $449 million in the third quarter 2012. The decrease was primarily due to decreases of $23 million in restructuring expenses, $4 million in legal fees and $2 million in employee benefits expense, partially offset by an increase of $4 million in severance expense. In addition, noninterest expenses were reduced by $6 million in the third quarter 2012 due to gains on sales of assets. Restructuring charges related to the Sterling acquisition are complete. Provision for Income TaxesThe provision for income taxes was $55 million in the fourth quarter 2012, compared to $36 million in the third quarter 2012. The $19 million increase in the provision for income taxes reflected the increase in income before income taxes, as well as adjustments for certain discrete state tax items totaling $5 million in the fourth quarter 2012. In addition, the third quarter 2012 provision for income taxes included a benefit of $4 million from interest on tax refunds, net of tax.Credit Quality"Credit quality continued to be strong in the fourth quarter, with lower nonaccrual loans, watch list loans and provision for credit losses," said Babb. "With net charge-offs of 34 basis points, we are well within our historically normal range. We have demonstrated throughout the cycle that we can effectively manage credit."(dollar amounts in millions)4th Qtr '123rd Qtr '124th Qtr '11Net credit-related charge-offs$37$43$60Net credit-related charge-offs/Average total loans0.34%0.39%0.57%Provision for credit losses$16$22$18Nonperforming loans (a)541692887Nonperforming assets (NPAs) (a)587755981NPAs/Total loans and foreclosed property1.27%1.71%2.29%Loans past due 90 days or more and still accruing$23$36$58Allowance for loan losses629647726Allowance for credit losses on lending-related commitments (b)323526Total allowance for credit losses661682752Allowance for loan losses/Period-end total loans1.37%1.46%1.70%Allowance for loan losses/Average total loans1.431.481.75Allowance for loan losses/Nonperforming loans1169482(a)Excludes loans acquired with credit impairment.(b)Included in "Accrued expenses and other liabilities" on the consolidated balance sheets.Internal watch list loans continued the downward trend, declining $565 million in the fourth quarter 2012, to $3.1 billion at December 31, 2012. Nonperforming assets decreased $168 million to $587 million at December 31, 2012. During the fourth quarter 2012, $36 million of borrower relationships over $2 million were transferred to nonaccrual status, an increase of $1 million from the third quarter 2012. Balance Sheet and Capital ManagementTotal assets and common shareholders' equity were $65.4 billion and $6.9 billion, respectively, at December 31, 2012, compared to $63.3 billion and $7.1 billion, respectively, at September 30, 2012. There were approximately 188 million common shares outstanding at December 31, 2012. Comerica repurchased $93 million of common stock (3.1 million shares) under the share repurchase program during the fourth quarter 2012. Combined with the dividend of $0.15 per share in the fourth quarter 2012, share repurchases and dividends returned 93 percent of fourth quarter 2012 net income to shareholders. Common shareholders' equity also reflected a $160 million decline in accumulated other comprehensive income, net of tax, including temporary unrealized losses on investment securities available-for-sale of $49 million and a net decline of $111 million due to actuarial losses as a result of changes in defined benefit plan assumptions, net of amortization. For full-year 2012, share repurchases totaled $304 million (10.1 million shares), which, combined with dividends, returned 79 percent of 2012 net income to shareholders.Comerica's tangible common equity ratio was 9.71 percent at December 31, 2012, a decrease of 54 basis points from September 30, 2012. The estimated Tier 1 common capital ratio decreased 24 basis points, to 10.11 percent at December 31, 2012, from September 30, 2012. The estimated Tier 1 common ratio under fully phased-in Basel III (as proposed) was 9.1 percent at December 31, 2012.Full-Year 2013 OutlookFor 2013, management expects the following compared to 2012, assuming a continuation of the current slow growing economic environment:Continued growth in average loans at a slower pace, with economic uncertainty impacting demand and a continued focus on maintaining pricing and structure discipline in a competitive environment. Lower net interest income, reflecting both a decline of $40 million to $50 million in purchase accounting accretion and the effect of continued low rates. Loan growth should partially offset the impact of low rates on loans and securities. Provision for credit losses stable, reflecting loan growth offset by a decline in nonperforming loans and net charge-offs. Increase in customer-driven noninterest income, reflecting continued cross-sell initiatives and selective pricing adjustments. (Outlook does not include expectations for non-customer driven income). Lower noninterest expense, reflecting further cost savings due to tight expense control and no restructuring expenses. Income tax expense to approximate 36.5 percent of pre-tax income less approximately $66 million in tax benefits.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 reported as a segment. The financial results below are based on the internal business unit structure of the Corporation and methodologies in effect at December 31, 2012 and are presented on a fully taxable equivalent (FTE) basis. The accompanying narrative addresses fourth quarter 2012 results compared to third quarter 2012.The following table presents net income (loss) by business segment.(dollar amounts in millions)4th Qtr '123rd Qtr '124th Qtr '11Business Bank$21290%$21184%$20194%Retail Bank83108104Wealth Management16718852236100%239100%216100%Finance(105)(103)(94)Other (a)(1)(19)(26)    Total$130$117$96(a)  Includes items not directly associated with the three major business segments or the Finance Division.Business Bank(dollar amounts in millions)4th Qtr '123rd Qtr '124th Qtr '11Net interest income (FTE)$393$386$381Provision for credit losses815(6)Noninterest income797673Noninterest expenses149144162Net income212211201Net credit-related charge-offs262732Selected average balances:Assets35,36234,86332,151Loans34,32533,85631,260Deposits26,05125,14323,296Average loans increased $469 million, primarily reflecting increases in Middle Market and Mortgage Banker Finance, partially offset by decreases in Corporate and Commercial Real Estate. The increase in Middle Market was primarily due to increases in National Dealer Services, Energy and general Middle Market. Average deposits increased $908 million, primarily reflecting increases in Corporate, Middle Market and Mortgage Banker Finance. The increase in Middle Market was primarily due to an increase in the Financial Services Division. Net interest income increased $7 million, primarily due to a decrease in net funds transfer pricing (FTP) charges on loans and an increase in loan volume, partially offset by a decrease in accretion on the acquired Sterling loan portfolio. The provision for credit losses decreased $7 million, primarily reflecting decreases in Corporate and Commercial Real Estate, partially offset by an increase in Middle Market. The increase in Middle Market primarily reflected increases in the Environmental Services Group and general Middle Market. Noninterest income increased $3 million, primarily due to increases in commercial lending fees and customer derivative income, partially offset by a decrease in letter of credit fees. Noninterest expenses increased $5 million, primarily due to increases in salaries expenses and net allocated corporate overhead expenses, partially offset by a decrease in legal expenses. The increase in salaries primarily reflected increases in severance and business unit incentives. In addition, noninterest expenses were reduced in the third quarter due to gains on sales of assets.Retail Bank (dollar amounts in millions)4th Qtr '123rd Qtr '124th Qtr '11Net interest income (FTE)$156$161$176Provision for credit losses7615Noninterest income434135Noninterest expenses181181182Net income (loss)81010Net credit-related charge-offs61316Selected average balances:Assets5,9525,9646,250Loans5,2555,2655,571Deposits20,91020,68220,715Average loans decreased $10 million, primarily due to a decrease in Personal Banking.| Average deposits increased $228 million, primarily due to an increase in Small Business. Net interest income decreased $5 million, primarily due to a decrease in net FTP funding credits on deposits and lower accretion on the acquired Sterling loan portfolio. Noninterest income increased $2 million, primarily due to an increase in customer derivative income.Wealth Management (dollar amounts in millions)4th Qtr '123rd Qtr '124th Qtr '11Net interest income (FTE)$47$47$47Provision for credit losses2311Noninterest income656255Noninterest expenses847883Net income16185Net credit-related charge-offs5312Selected average balances:Assets4,6864,5664,672Loans4,5394,4764,623Deposits3,7983,6673,400Average loans increased $63 million, primarily due to an increase in Private Banking. | Average deposits increased $131 million, primarily due to increases in Private Banking. Noninterest income increased $3 million, primarily the result of increases in fiduciary income and net securities gains. Noninterest expenses increased $6 million, primarily as a result of an operational loss.The decrease in the net loss of $18 million in the Other segment primarily reflected the after-tax impact of the decrease in restructuring expenses in the fourth quarter 2012, compared to the third quarter 2012.Geographic Market SegmentsThe geographic market segments were realigned in the fourth quarter 2012 to reflect Comerica's three largest geographic markets: Michigan, California and Texas. Other Markets includes Florida, Arizona, the International Finance division and businesses that have a significant presence outside of the three primary geographic markets. The tables below present the geographic market results based on the methodologies in effect at December 31, 2012 and are presented on a fully taxable equivalent (FTE) basis. The accompanying narrative addresses fourth quarter 2012 results compared to third quarter 2012.The following table presents net income (loss) by market segment.(dollar amounts in millions)4th Qtr '123rd Qtr '124th Qtr '11Michigan$7431%$7130%$5425%California642770296731Texas451945195526Other Markets532353224018236100%239100%216100%Finance & Other (a)(106)(122)(120)    Total$130$117$96(a) Includes items not directly associated with the geographic markets.Michigan Market(dollar amounts in millions)4th Qtr '123rd Qtr '124th Qtr '11Net interest income (FTE)$193$194$202Provision for credit losses(9)220Noninterest income989585Noninterest expenses183175185Net income747154Net credit-related charge-offs11232Selected average balances:Assets13,78213,78413,976Loans13,41513,47513,725Deposits20,01919,62819,076Average loans decreased $60 million, primarily due to decreases in Corporate, Personal Banking and Commercial Real Estate, partially offset by an increase in Middle Market, primarily in National Dealer Services. Average deposits increased $391 million, primarily due to increases in Corporate, Middle Market and Small Business. The provision for credit losses decreased $11 million, primarily due to a decrease in general Middle Market. Noninterest income increased $3 million, primarily reflecting increases in customer derivative income and commercial lending fees. Noninterest expenses increased $8 million, primarily due to an operational loss and third quarter 2012 gains on sales of assets that reduced noninterest expenses.California Market(dollar amounts in millions)4th Qtr '123rd Qtr '124th Qtr '11Net interest income (FTE)$180$178$166Provision for credit losses65(12)Noninterest income353432Noninterest expenses10098101Net income647067Net credit-related charge-offs12115Selected average balances:Assets13,55113,17311,959Loans13,27512,91511,743Deposits15,45714,96513,472Average loans increased $360 million, primarily due to an increase in Middle Market, primarily reflecting an increase in National Dealer Services. Average deposits increased $492 million, primarily due to increases in Middle Market and Private Banking. The increase in Middle Market was primarily due to an increase in general Middle Market. Net interest income increased $2 million, primarily due to an increase in average loan balances and a decrease in net FTP funding charges. The provision for loan losses increased $1 million, primarily due to an increase in Middle Market, partially offset by decreases in Commercial Real Estate and Corporate. Noninterest expenses increased $2 million, primarily due to nominal increases in several categories, partially offset by a decrease in legal expenses.Texas Market (dollar amounts in millions)4th Qtr '123rd Qtr '124th Qtr '11Net interest income (FTE)$138$139$158Provision for credit losses9108Noninterest income313026Noninterest expenses908989Net income454555Net credit-related charge-offs574Selected average balances:Assets10,55510,3279,712Loans9,8189,5858,952Deposits9,8099,94110,333Average loans increased $233 million, primarily due to an increase in Middle Market. The increase in Middle Market was primarily due to an increase in Energy. Average deposits decreased $132 million, primarily reflecting decreases in Middle Market and Corporate, partially offset by increases in Small Business and Personal Banking. Net interest income decreased $1 million, primarily due to a decrease in accretion on the acquired Sterling loan portfolio. The provision for credit losses decreased $1 million, primarily due to a decrease in Private Banking.Conference Call and WebcastComerica will host a conference call to review fourth quarter 2012 financial results at 7 a.m. CT Wednesday, January 16, 2013. Interested parties may access the conference call by calling (800) 309-2262 or (706) 679-5261 (event ID No. 80972031). The call and supplemental financial information can also be accessed via Comerica's "Investor Relations" page at www.comerica.com. A telephone replay will be available approximately two hours following the conference call through January 31, 2013. The conference call replay can be accessed by calling (855) 859-2056 or (404) 537-3406 (event ID No. 80972031). 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 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" 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 the interest rate policies of the Federal Reserve Board; volatility and disruptions in global capital and credit markets; changes in Comerica's credit rating; the interdependence of financial service companies; changes in regulation or oversight; unfavorable developments concerning credit quality; the acquisition of Sterling Bancshares, Inc., or any future acquisitions; the effects of more stringent capital or liquidity requirements; declines or other changes in the businesses or industries of Comerica's customers; the implementation of Comerica's strategies and business models, including the implementation of revenue enhancements and efficiency improvements; Comerica's ability to utilize technology to efficiently and effectively develop, market and deliver new products and services; operational difficulties, failure of technology infrastructure or information security incidents; changes in the financial markets, including fluctuations in interest rates and their impact on deposit pricing; competitive product and pricing pressures among financial institutions within Comerica's markets; changes in customer behavior; 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, 2011 and "Item 1A. Risk Factors" beginning on page 73 of Comerica's Quarterly Report on Form 10-Q for the quarter ended September 30, 2012. 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 SubsidiariesThree Months EndedYears EndedDecember 31,September 30,December 31,December 31,(in millions, except per share data)20122012201120122011PER COMMON SHARE AND COMMON STOCK DATADiluted net income$0.68$0.61$0.48$2.67$2.09Cash dividends declared0.150.150.100.550.40Common shareholders' equity (at period end)36.8737.0134.80Tangible common equity (at period end) (a)33.3833.5631.42Average diluted shares (in thousands)187,954191,492196,729192,473186,168KEY RATIOSReturn on average common shareholders' equity7.36%6.67%5.51%7.43%6.18%Return on average assets0.810.740.630.830.69Tier 1 common capital ratio (a) (b)10.1110.3510.37Tier 1 risk-based capital ratio (b)10.1110.3510.41Total risk-based capital ratio (b)13.1113.6714.25Leverage ratio (b)10.5210.7310.92Tangible common equity ratio (a)9.7110.2510.27AVERAGE BALANCESCommercial loans$27,462$26,700$23,515$26,224$22,208Real estate construction loans:Commercial Real Estate business line (c)1,0339991,1891,0311,429Other business lines (d)266390430359414Total real estate construction loans1,2991,3891,6191,3901,843Commercial mortgage loans:Commercial Real Estate business line (c)1,9392,1402,5522,2592,217Other business lines (d)7,5807,5307,8367,5837,808Total commercial mortgage loans9,5199,67010,3889,84210,025Lease financing839852919864950International loans1,3141,3021,1281,2721,191Residential mortgage loans1,5251,4881,5911,5051,580Consumer loans2,1612,1962,2942,2092,278Total loans44,11943,59741,45443,30640,075Earning assets59,27657,80155,67657,48452,121Total assets64,55963,27661,04562,85556,917Noninterest-bearing deposits22,75821,46919,17621,00416,994Interest-bearing deposits28,53428,38828,60328,53626,768Total deposits51,29249,85747,77949,54043,762Common shareholders' equity7,0627,0456,9477,0126,351NET INTEREST INCOMENet interest income (fully taxable equivalent basis)$425$428$445$1,731$1,657Fully taxable equivalent adjustment11134Net interest margin (fully taxable equivalent basis)2.87%2.96%3.19%3.03%3.19%CREDIT QUALITYNonaccrual loans$519$665$860Reduced-rate loans222727Total nonperforming loans (e)541692887Foreclosed property466394Total nonperforming assets (e)587755981Loans past due 90 days or more and still accruing233658Gross loan charge-offs605985$245$423Loan recoveries2316257595Net loan charge-offs374360170328Allowance for loan losses629647726Allowance for credit losses on lending-related commitments323526Total allowance for credit losses661682752Allowance for loan losses as a percentage of total loans1.37%1.46%1.70%Net loan charge-offs as a percentage of average total loans (f)0.340.390.570.39%0.82%Nonperforming assets as a percentage of total loans and foreclosed property (e)1.271.712.29Allowance for loan losses as a percentage of total nonperforming loans1169482(a)See Reconciliation of Non-GAAP Financial Measures.(b)December 31, 2012 ratios are estimated.(c)Primarily loans to real estate investors and developers.(d)Primarily loans secured by owner-occupied real estate.(e)Excludes loans acquired with credit-impairment.(f)Lending-related commitment charge-offs were zero in all periods presented.CONSOLIDATED BALANCE SHEETSComerica Incorporated and SubsidiariesDecember 31,September 30,December 31,(in millions, except share data)201220122011(unaudited)(unaudited)ASSETSCash and due from banks$1,395$933$982Federal funds sold100??Interest-bearing deposits with banks3,0393,0052,574Other short-term investments125146149Investment securities available-for-sale10,29710,56910,104Commercial loans29,51327,46024,996Real estate construction loans1,2401,3921,533Commercial mortgage loans9,4729,55910,264Lease financing859837905International loans1,2931,2771,170Residential mortgage loans1,5271,4951,526Consumer loans2,1532,1742,285Total loans46,05744,19442,679Less allowance for loan losses(629)(647)(726)Net loans45,42843,54741,953Premises and equipment622625675Accrued income and other assets4,3534,4894,571Total assets$65,359$63,314$61,008LIABILITIES AND SHAREHOLDERS' EQUITYNoninterest-bearing deposits$23,279$21,753$19,764Money market and interest-bearing checking deposits21,28420,40720,311Savings deposits1,6061,5891,524Customer certificates of deposit5,5315,7425,808Foreign office time deposits502486348Total interest-bearing deposits28,92328,22427,991Total deposits52,20249,97747,755Short-term borrowings1106370Accrued expenses and other liabilities1,3851,4501,371Medium- and long-term debt4,7204,7404,944Total liabilities58,41756,23054,140Common stock - $5 par value:Authorized - 325,000,000 sharesIssued - 228,164,824 shares1,1411,1411,141Capital surplus2,1622,1532,170Accumulated other comprehensive loss(413)(253)(356)Retained earnings5,9315,8315,546Less cost of common stock in treasury - 39,889,610 shares at 12/31/12, 36,790,174 shares at 9/30/12 and 30,831,076 shares at 12/31/11(1,879)(1,788)(1,633)Total shareholders' equity6,9427,0846,868Total liabilities and shareholders' equity$65,359$63,314$61,008CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (unaudited)Comerica Incorporated and SubsidiariesThree Months EndedYears EndedDecember 31,December 31,(in millions, except per share data)2012201120122011INTEREST INCOMEInterest and fees on loans$398$415$1,617$1,564Interest on investment securities5563234233Interest on short-term investments331212Total interest income4564811,8631,809INTEREST EXPENSEInterest on deposits16217090Interest on medium- and long-term debt16166566Total interest expense3237135156Net interest income4244441,7281,653Provision for credit losses161879144Net interest income after provision for credit losses4084261,6491,509NONINTEREST INCOMEService charges on deposit accounts5252214208Fiduciary income4236158151Commercial lending fees25239687Letter of credit fees17187173Card fees12114758Foreign exchange income9103840Bank-owned life insurance9103937Brokerage fees551922Net securities gains (losses)1(4)1214Other noninterest income3221124102Total noninterest income204182818792NONINTEREST EXPENSESSalaries196205778770Employee benefits5952240205Total salaries and employee benefits2552571,018975Net occupancy expense4247163169Equipment expense15176566Outside processing fee expense2827107101Software expense23239088Merger and restructuring charges2373575FDIC insurance expense983843Advertising expense672728Other real estate expense33922Other noninterest expenses4453205204Total noninterest expenses4274791,7571,771Income before income taxes185129710530Provision for income taxes5533189137NET INCOME13096521393Less income allocated to participating securities2164Net income attributable to common shares$128$95$515$389Earnings per common share:Basic$0.68$0.48$2.68$2.11Diluted0.680.482.672.09Comprehensive income (loss)(30)(30)464426Cash dividends declared on common stock282010675Cash dividends declared per common share0.150.100.550.40CONSOLIDATED QUARTERLY STATEMENTS OF COMPREHENSIVE INCOME (unaudited)Comerica Incorporated and SubsidiariesFourthThirdSecondFirstFourthFourth Quarter 2012 Compared To:QuarterQuarterQuarterQuarterQuarterThird Quarter 2012Fourth Quarter 2011(in millions, except per share data)20122012201220122011AmountPercentAmountPercentINTEREST INCOMEInterest and fees on loans$398$400$408$411$415$(2)?%$(17)(4)%Interest on investment securities5557596363(2)(2)(8)(12)Interest on short-term investments33333????Total interest income456460470477481(4)(1)(25)(5)INTEREST EXPENSEInterest on deposits1617181921(1)(6)(5)(23)Interest on medium- and long-term debt1616171616????Total interest expense3233353537(1)(3)(5)(13)Net interest income424427435442444(3)?(20)(4)Provision for credit losses1622192218(6)(25)(2)(7)Net interest income after provision for credit losses40840541642042631(18)(4)NONINTEREST INCOMEService charges on deposit accounts5253535652(1)(2)??Fiduciary income423939383634614Commercial lending fees252224252331928Letter of credit fees1719181718(2)(8)(1)(10)Card fees1212121111??110Foreign exchange income99101010??(1)(13)Bank-owned life insurance910101010(1)(7)(1)(8)Brokerage fees55455????Net securities gains (losses)1?65(4)1N/M5N/MOther noninterest income3228352921451155Total noninterest income204197211206182742212NONINTEREST EXPENSESSalaries19619218920120543(9)(5)Employee benefits5961615952(2)(4)713Total salaries and employee benefits25525325026025721(2)(1)Net occupancy expense424040414724(5)(10)Equipment expense1517161717(2)(6)(2)(11)Outside processing fee expense28272626271716Software expense2323212323????Merger and restructuring charges2258?37(23)(94)(35)(95)FDIC insurance expense9910108??16Advertising expense67777(1)(16)(1)(15)Other real estate expense32?43136??Other noninterest expenses4446556053(2)(2)(9)(16)Total noninterest expenses427449433448479(22)(5)(52)(11)Income before income taxes18515319417812932205643Provision for income taxes553650483319502264NET INCOME1301171441309613113436Less income allocated to participating securities21211112182Net income attributable to common shares$128$116$142$129$95$1211%$3336%Earnings per common share:Basic$0.68$0.61$0.73$0.66$0.48$0.0711%$0.2042%Diluted0.680.610.730.660.480.07110.2042Comprehensive income (loss)(30)165169160(30)(195)N/M??Cash dividends declared on common stock2829292020(1)(1)843Cash dividends declared per common share0.150.150.150.100.10??0.0550N/M - Not MeaningfulANALYSIS OF THE ALLOWANCE FOR LOAN LOSSES (unaudited)Comerica Incorporated and Subsidiaries20122011(in millions)4th Qtr3rd Qtr2nd Qtr1st Qtr4th QtrBalance at beginning of period$647$667$704$726$767Loan charge-offs:Commercial4219262528Real estate construction:Commercial Real Estate business line (a)12224Other business lines (b)??1?1Total real estate construction12325Commercial mortgage:Commercial Real Estate business line (a)512161317Other business lines (b)613111324Total commercial mortgage1125272641International?1?22Residential mortgage26322Consumer46557Total loan charge-offs6059646285Recoveries on loans previously charged-off:Commercial13710911Real estate construction13114Commercial mortgage65439International1??1?Residential mortgage1??1?Consumer11421Total recoveries2316191725Net loan charge-offs3743454560Provision for loan losses192382319Balance at end of period$629$647$667$704$726Allowance for loan losses as a percentage of total loans1.37%1.46%1.52%1.64%1.70%Net loan charge-offs as a percentage of average total loans0.340.390.420.430.57(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 Subsidiaries20122011(in millions)4th Qtr3rd Qtr2nd Qtr1st Qtr4th QtrBalance at beginning of period$35$36$25$26$27Add: Provision for credit losses on lending-related commitments(3)(1)11(1)(1)Balance at end of period$32$35$36$25$26NONPERFORMING ASSETS (unaudited)Comerica Incorporated and Subsidiaries20122011(in millions)4th Qtr3rd Qtr2nd Qtr1st Qtr4th QtrSUMMARY OF NONPERFORMING ASSETS AND PAST DUE LOANSNonaccrual loans:Business loans:Commercial$103$154$175$205$237Real estate construction:Commercial Real Estate business line (a)3045607793Other business lines (b)36988Total real estate construction33516985101Commercial mortgage:Commercial Real Estate business line (a)94137155174159Other business lines (b)181219220275268Total commercial mortgage275356375449427Lease financing33445International???48Total nonaccrual business loans414564623747778Retail loans:Residential mortgage7069766971Consumer:Home equity31281695Other consumer44456Total consumer3532201411Total nonaccrual retail loans105101968382Total nonaccrual loans519665719830860Reduced-rate loans2227282627Total nonperforming loans (c)541692747856887Foreclosed property4663676794Total nonperforming assets (c)$587$755$814$923$981Nonperforming loans as a percentage of total loans1.17%1.57%1.70%1.99%2.08%Nonperforming assets as a percentage of total loansand foreclosed property1.271.711.852.142.29Allowance for loan losses as a percentage of total nonperforming loans11694898282Loans past due 90 days or more and still accruing$23$36$43$50$58ANALYSIS OF NONACCRUAL LOANSNonaccrual loans at beginning of period$665$719$830$860$929Loans transferred to nonaccrual (d)3635476999Nonaccrual business loan gross charge-offs (e)(54)(46)(56)(55)(76)Loans transferred to accrual status (d)??(41)??Nonaccrual business loans sold (f)(48)(20)(16)(7)(19)Payments/Other (g)(80)(23)(45)(37)(73)Nonaccrual loans at end of period$519$665$719$830$860(a) Primarily loans to real estate investors and developers.(b) Primarily loans secured by owner-occupied real estate.(c) Excludes loans acquired with credit impairment.(d) Based on an analysis of nonaccrual loans with book balances greater than $2 million.(e) Analysis of gross loan charge-offs:Nonaccrual business loans$54$46$56$55$76Performing watch list loans?1???Consumer and residential mortgage loans612879Total gross loan charge-offs$60$59$64$62$85(f) Analysis of loans sold:Nonaccrual business loans$48$20$16$7$19Performing watch list loans2442711?Total loans sold$72$62$23$18$19(g) 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 SubsidiariesYears EndedDecember 31, 2012December 31, 2011AverageAverageAverageAverage(dollar amounts in millions)BalanceInterestRateBalanceInterestRateCommercial loans$26,224$9033.44%$22,208$8203.69%Real estate construction loans1,390624.441,843804.37Commercial mortgage loans9,8424374.4410,0254244.23Lease financing864263.01950333.51International loans1,272473.731,191463.83Residential mortgage loans1,505684.551,580835.27Consumer loans2,209763.422,278803.50Total loans (a)43,3061,6193.7440,0751,5663.91Auction-rate securities available-for-sale27520.7947940.72Other investment securities available-for-sale9,6402332.487,6922313.06Total investment securities available-for-sale9,9152352.438,1712352.91Interest-bearing deposits with banks (b)4,129100.263,74690.24Other short-term investments13421.6512932.17Total earning assets57,4841,8663.2752,1211,8133.49Cash and due from banks983921Allowance for loan losses(693)(838)Accrued income and other assets5,0814,713Total assets$62,855$56,917Money market and interest-bearing checking deposits$20,629350.17$19,088470.25Savings deposits1,59310.061,55020.11Customer certificates of deposit5,902310.535,719390.68Foreign office and other time deposits41230.6341120.48Total interest-bearing deposits28,536700.2526,768900.33Short-term borrowings76?0.12138?0.13Medium- and long-term debt4,818651.365,519661.20Total interest-bearing sources33,4301350.4132,4251560.48Noninterest-bearing deposits21,00416,994Accrued expenses and other liabilities1,4091,147Total shareholders' equity7,0126,351Total liabilities and shareholders' equity$62,855$56,917Net interest income/rate spread (FTE)$1,7312.86$1,6573.01FTE adjustment$3$4Impact of net noninterest-bearing sources of funds0.170.18Net interest margin (as a percentage of average earning assets) (FTE) (a) (b)3.03%3.19%(a) Accretion of the purchase discount on the acquired loan portfolio of $71 million and $53 million in the 2012 and 2011, respectively, increased the net interest margin by 12 basis points and 10 basis points in the 2012 and 2011, respectively.(b) Excess liquidity, represented by average balances deposited with the Federal Reserve Bank, reduced the net interest margin by 21 basis points and 22 basis points in the 2012 and 2011, respectively.ANALYSIS OF NET INTEREST INCOME (FTE) (unaudited)Comerica Incorporated and SubsidiariesThree Months EndedDecember 31, 2012September 30, 2012December 31, 2011AverageAverageAverageAverageAverageAverage(dollar amounts in millions)BalanceInterestRateBalanceInterestRateBalanceInterestRateCommercial loans$27,462$2303.33%$26,700$2273.38%$23,515$2163.64%Real estate construction loans1,299154.321,389154.361,619215.26Commercial mortgage loans9,5191004.229,6701064.3410,3881194.54Lease financing83973.2785242.0491983.44International loans1,314123.731,302123.771,128103.63Residential mortgage loans1,525164.241,488174.671,591205.06Consumer loans2,161193.382,196193.442,294213.58Total loans (a)44,1193993.6043,5974003.6641,4544153.98Auction-rate securities available-for-sale216?0.8123410.9742610.64Other investment securities available-for-sale10,034552.259,557572.429,355622.74Total investment securities available-for-sale10,250552.229,791582.389,781632.64Interest-bearing deposits with banks (b)4,78520.254,27630.264,30830.24Other short-term investments12211.13137?1.8813312.26Total earning assets59,2764573.0857,8014613.1955,6764823.45Cash and due from banks1,030971959Allowance for loan losses(654)(673)(773)Accrued income and other assets4,9075,1775,183Total assets$64,559$63,276$61,045Money market and interest-bearing checking deposits$20,77090.16$20,49580.17$20,716120.21Savings deposits1,603?0.031,618?0.041,652?0.12Customer certificates of deposit5,63460.495,89480.525,87290.60Foreign office and other time deposits52710.6038110.71363?0.40Total interest-bearing deposits28,534160.2228,388170.2428,603210.29Short-term borrowings70?0.1289?0.12142?0.07Medium- and long-term debt4,735161.354,745161.354,976161.30Total interest-bearing sources33,339320.3833,222330.4033,721370.44Noninterest-bearing deposits22,75821,46919,176Accrued expenses and other liabilities1,4001,5401,201Total shareholders' equity7,0627,0456,947Total liabilities and shareholders' equity$64,559$63,276$61,045Net interest income/rate spread (FTE)$4252.70$4282.79$4453.01FTE adjustment$1$1$1Impact of net noninterest-bearing sources of funds0.170.170.18Net interest margin (as a percentage of average earning assets) (FTE) (a) (b)2.87%2.96%3.19%(a)  Accretion of the purchase discount on the acquired loan portfolio of $13 million, $15 million and $26 million in the fourth and third quarters of 2012 and the fourth quarter of 2011, respectively, increased the net interest margin by 9 basis points, 10 basis points and 19 basis points in the fourth and third quarters of 2012 and the fourth quarter of 2011, respectively.(b)   Excess liquidity, represented by average balances deposited with the Federal Reserve Bank, reduced the net interest margin by 22 basis points and by 21 basis points in the fourth and third quarters of 2012, respectively, and by 24 basis points in the fourth quarter of 2011.CONSOLIDATED STATISTICAL DATA (unaudited)Comerica Incorporated and SubsidiariesDecember 31,September 30,June 30,March 31,December 31,(in millions, except per share data)20122012201220122011Commercial loans:Floor plan$2,939$2,276$2,406$2,152$1,822Other26,57425,18424,61023,48823,174Total commercial loans29,51327,46027,01625,64024,996Real estate construction loans:Commercial Real Estate business line (a)1,0491,0039911,0551,103Other business lines (b)191389386387430Total real estate construction loans1,2401,3921,3771,4421,533Commercial mortgage loans:Commercial Real Estate business line (a)1,8732,0202,3152,5012,507Other business lines (b)7,5997,5397,5157,5787,757Total commercial mortgage loans9,4729,5599,83010,07910,264Lease financing859837858872905International loans1,2931,2771,2241,2561,170Residential mortgage loans1,5271,4951,4691,4851,526Consumer loans:Home equity1,5371,5701,5841,6121,655Other consumer616604634626630Total consumer loans2,1532,1742,2182,2382,285Total loans$46,057$44,194$43,992$43,012$42,679Goodwill$635$635$635$635$635Core deposit intangible2023252729Loan servicing rights22333Tier 1 common capital ratio (c) (d)10.11%10.35%10.38%10.27%10.37%Tier 1 risk-based capital ratio (d)10.1110.3510.3810.2710.41Total risk-based capital ratio (d)13.1113.6713.9013.9914.25Leverage ratio (d)10.5210.7310.9210.9410.92Tangible common equity ratio (c)9.7110.2510.2710.2110.27Common shareholders' equity per share of common stock$36.87$37.01$36.18$35.44$34.80Tangible common equity per share of common stock (c)33.3833.5632.7632.0631.42Market value per share for the quarter:High32.1433.3832.8834.0027.37Low27.7229.3227.8826.2521.53Close30.3431.0530.7132.3625.80Quarterly ratios:Return on average common shareholders' equity7.36%6.67%8.22%7.50%5.51%Return on average assets0.810.740.930.840.63Efficiency ratio68.0871.6867.5369.7075.97Number of banking centers489490493495494Number of employees - full time equivalent8,9679,0089,0149,1959,397(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)December 31, 2012 ratios are estimated.PARENT COMPANY ONLY BALANCE SHEETS (unaudited)Comerica IncorporatedDecember 31,September 30,December 31,(in millions, except share data)201220122011ASSETSCash and due from subsidiary bank$2$137Short-term investments with subsidiary bank431418411Other short-term investments888890Investment in subsidiaries, principally banks7,0457,2007,011Premises and equipment444Other assets150150177Total assets$7,720$7,873$7,700LIABILITIES AND SHAREHOLDERS' EQUITYMedium- and long-term debt$629$632$666Other liabilities149157166Total liabilities778789832Common stock - $5 par value:Authorized - 325,000,000 sharesIssued - 228,164,824 shares1,1411,1411,141Capital surplus2,1622,1532,170Accumulated other comprehensive loss(413)(253)(356)Retained earnings5,9315,8315,546Less cost of common stock in treasury - 39,889,610 shares at 12/31/12, 36,790,174 shares at 9/30/12 and 30,831,076 shares at 12/31/11(1,879)(1,788)(1,633)Total shareholders' equity6,9427,0846,868Total liabilities and shareholders' equity$7,720$7,873$7,700CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (unaudited)Comerica Incorporated and SubsidiariesAccumulatedCommon StockOtherTotalSharesCapitalComprehensiveRetainedTreasuryShareholders'(in millions, except per share data)OutstandingAmountSurplusLossEarningsStockEquityBALANCE AT DECEMBER 31, 2010176.5$1,019$1,481$(389)$5,247$(1,565)$5,793Net income????393?393Other comprehensive income, net of tax???33??33Cash dividends declared on common stock ($0.40 per share)????(75)?(75)Purchase of common stock(4.3)????(116)(116)Acquisition of Sterling Bancshares, Inc.24.3122681???803Net issuance of common stock under employee stock plans0.8?(29)?(19)48?Share-based compensation??37???37BALANCE AT DECEMBER 31, 2011197.3$1,141$2,170$(356)$5,546$(1,633)$6,868Net income????521?521Other comprehensive loss, net of tax???(57)??(57)Cash dividends declared on common stock ($0.55 per share)????(106)?(106)Purchase of common stock(10.2)????(308)(308)Net issuance of common stock under employee stock plans1.2?(46)?(30)63(13)Share-based compensation??37???37Other??1??(1)?BALANCE AT DECEMBER 31, 2012188.3$1,141$2,162$(413)$5,931$(1,879)$6,942BUSINESS SEGMENT FINANCIAL RESULTS (unaudited)Comerica Incorporated and Subsidiaries(dollar amounts in millions)BusinessRetailWealthThree Months Ended December 31, 2012BankBankManagementFinanceOtherTotalEarnings summary:Net interest income (expense) (FTE)$393$156$47$(181)$10$425Provision for credit losses872?(1)16Noninterest income794365152204Noninterest expenses14918184310427Provision (benefit) for income taxes (FTE)103310(64)456Net income (loss)$212$8$16$(105)$(1)$130Net credit-related charge-offs$26$6$5??$37Selected average balances:Assets$35,362$5,952$4,686$12,439$6,120$64,559Loans34,3255,2554,539??44,119Deposits26,05120,9103,79832021351,292Statistical data:Return on average assets (a)2.41%0.14%1.35%N/MN/M0.81%Efficiency ratio31.4990.6876.96N/MN/M68.08BusinessRetailWealthThree Months Ended September 30, 2012BankBankManagementFinanceOtherTotalEarnings summary:Net interest income (expense) (FTE)$386$161$47$(176)$10$428Provision for credit losses1563?(2)22Noninterest income764162144197Noninterest expenses14418178343449Provision (benefit) for income taxes (FTE)92510(62)(8)37Net income (loss)$211$10$18$(103)$(19)$117Net credit-related charge-offs$27$13$3??$43Selected average balances:Assets$34,863$5,964$4,566$12,166$5,717$63,276Loans33,8565,2654,476??43,597Deposits25,14320,6823,66719317249,857Statistical data:Return on average assets (a)2.42%0.18%1.61%N/MN/M0.74%Efficiency ratio31.2389.3971.14N/MN/M71.68BusinessRetailWealthThree Months Ended December 31, 2011BankBankManagementFinanceOtherTotalEarnings summary:Net interest income (expense) (FTE)$381$176$47$(169)10$445Provision for credit losses(6)1511?(1)19Noninterest income733555181182Noninterest expenses16218283348478Provision (benefit) for income taxes (FTE)9743(60)(10)34Net income (loss)$201$10$5$(94)$(26)$96Net credit-related charge-offs$32$16$12??$60Selected average balances:Assets$32,151$6,250$4,672$11,959$6,013$61,045Loans31,2605,5714,623??41,454Deposits23,29620,7153,40020016847,779Statistical data:Return on average assets (a)2.50%0.18%0.45%N/MN/M0.63%Efficiency ratio35.8784.5282.18N/MN/M75.97(a)Return on average assets is calculated based on the greater of average assets or average liabilities and attributed equity.FTE - Fully Taxable EquivalentN/M - Not MeaningfulMARKET SEGMENT FINANCIAL RESULTS (unaudited)Comerica Incorporated and Subsidiaries(dollar amounts in millions)OtherFinanceThree Months Ended December 31, 2012MichiganCaliforniaTexasMarkets& OtherTotalEarnings summary:Net interest income (expense) (FTE)$193$180$138$85$(171)$425Provision for credit losses(9)6911(1)16Noninterest income9835312317204Noninterest expenses183100904113427Provision (benefit) for income taxes (FTE)4345253(60)56Net income (loss)$74$64$45$53$(106)$130Net credit-related charge-offs$1$12$5$19?$37Selected average balances:Assets$13,782$13,551$10,555$8,112$18,559$64,559Loans13,41513,2759,8187,611?44,119Deposits20,01915,4579,8095,47453351,292Statistical data:Return on average assets (a)1.40%1.56%1.63%2.65%N/M0.81%Efficiency ratio62.7746.4753.3838.84N/M68.08OtherFinanceThree Months Ended September 30, 2012MichiganCaliforniaTexasMarkets& OtherTotalEarnings summary:Net interest income (expense) (FTE)$194$178$139$83$(166)$428Provision for credit losses25107(2)22Noninterest income9534302018197Noninterest expenses17598894146449Provision (benefit) for income taxes (FTE)4139252(70)37Net income (loss)$71$70$45$53$(122)$117Net credit-related charge-offs$12$11$7$13?$43Selected average balances:Assets$13,784$13,173$10,327$8,109$17,883$63,276Loans13,47512,9159,5857,622?43,597Deposits19,62814,9659,9414,95836549,857Statistical data:Return on average assets (a)1.38%1.75%1.61%2.64%N/M0.74%Efficiency ratio60.4046.1352.5040.00N/M71.68OtherFinanceThree Months Ended December 31, 2011MichiganCaliforniaTexasMarkets& OtherTotalEarnings summary:Net interest income (expense) (FTE)$202$166$158$78$(159)$445Provision for credit losses20(12)84(1)19Noninterest income8532262019182Noninterest expenses185101895251478Provision (benefit) for income taxes (FTE)2842322(70)34Net income (loss)$54$67$55$40$(120)$96Net credit-related charge-offs$32$5$4$19?$60Selected average balances:Assets$13,976$11,959$9,712$7,426$17,972$61,045Loans13,72511,7438,9527,034?41,454Deposits19,07613,47210,3334,53036847,779Statistical data:Return on average assets (a)1.07%1.86%1.92%2.14%N/M0.63%Efficiency ratio63.8451.1848.2353.73N/M75.97(a)Return on average assets is calculated based on the greater of average assets or average liabilities and attributed equity.FTE - Fully Taxable EquivalentN/M - Not MeaningfulRECONCILIATION OF NON-GAAP FINANCIAL MEASURES (unaudited)Comerica Incorporated and SubsidiariesDecember 31,September 30,June 30,March 31,December 31,(dollar amounts in millions)20122012201220122011Tier 1 Common Capital Ratio:Tier 1 capital (a) (b)$6,705$6,685$6,676$6,647$6,582Less:Trust preferred securities????25Tier 1 common capital (b)$6,705$6,685$6,676$6,647$6,557Risk-weighted assets (a) (b)$66,312$64,568$64,312$64,742$63,244Tier 1 risk-based capital ratio (b)10.11%10.35%10.38%10.27%10.41%Tier 1 common capital ratio (b)10.1110.3510.3810.2710.37Basel III Tier 1 Common Capital Ratio:Tier 1 common capital (b)$6,705Basel III proposed adjustments (c)(452)Basel III Tier 1 common capital (c)$6,253Risk-weighted assets (a) (b)$66,312Basel III proposed adjustments (c)2,410Basel III risk-weighted assets (c)$68,722Tier 1 common capital ratio (b)10.1%Basel III Tier 1 common capital ratio (c)9.1Tangible Common Equity Ratio:Common shareholders' equity$6,942$7,084$7,028$6,985$6,868Less:Goodwill635635635635635Other intangible assets2225283032Tangible common equity$6,285$6,424$6,365$6,320$6,201Total assets$65,359$63,314$62,650$62,593$61,008Less:Goodwill635635635635635Other intangible assets2225283032Tangible assets$64,702$62,654$61,987$61,928$60,341Common equity ratio10.62%11.19%11.22%11.16%11.26%Tangible common equity ratio9.7110.2510.2710.2110.27Tangible Common Equity per Share of Common Stock:Common shareholders' equity$6,942$7,084$7,028$6,985$6,868Tangible common equity6,2856,4246,3656,3206,201Shares of common stock outstanding (in millions)188191194197197Common shareholders' equity per share of common stock$36.87$37.01$36.18$35.44$34.80Tangible common equity per share of common stock33.3833.5632.7632.0631.42(a)  Tier 1 capital and risk-weighted assets as defined by regulation.(b)   December 31, 2012 Tier 1 capital and risk-weighted assets are estimated.(c)   December 31, 2012 Basel III Tier 1 common capital and risk-weighted assets are estimated based on the proposed rules for the U.S. adoption of the Basel III regulatory capital framework issued in June 2012.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 Basel III Tier 1 common capital ratio further adjusts Tier 1 common capital and risk-weighted assets to account for the proposed changes issued in the U.S. banking regulators proposed rules for the U.S. adoption of the Basel III regulatory capital framework issued in June 2012. 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 IncorporatedFor further information: Media, Wayne J. Mielke, (214) 462-4463, or Investor Contacts, Darlene P. Persons, (214) 462-6831, or Brittany L. Butler, (214) 462-6834