Comercia 3Q07 Presentation

8/14/2019 Comercia 3Q07 Presentation

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Third Quarter 2007 Financial Review

Comerica Incorporated

October 17, 2007


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Financial Results

6%$3993%$411$423Noninterest Expenses

18%$1952%$225$230Noninterest Income

200%$1525%$36$45Provision for Loan Losses

3.79%3.76%3.66%Net Interest Margin

0%$502-1%$509$503Net Interest Income15.00%15.41%14.24%

Return on Equity from continuing

operations

-3%

-4%

$1.20

$1.23

-6%

-6%

$1.25

$1.25

$1.17

$1.18

Diluted EPS from continuing operations

Diluted EPS

-10%$200-8%$196$181Net Income

Y - Y%Chg3Q06

Q - Q%Chg2Q073Q07

$ in millions, except per share data

Data has been restated to reflect the results of Munder Capital Management as a discontinued operation


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Third Quarter 2007 Results

* Loan growth figures exclude Financial Services Division; Analysis of 3Q07 compared to 2Q07

Annualized average loan growth of 4%*

Western: 6% Texas: 20%

Florida: 10% Midwest: (2)%

Net interest margin of 3.66%

Sound credit quality

Nonperforming assets of 0.59% of total loans and foreclosed property

Net credit-related charge-offs as a percentage of average total loans of 32 bps

Noninterest income continues positive trend

Expenses well controlled

Active capital management: 2 million shares repurchased


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$300

$350

$400

$450

$500

$550

3Q06 4Q06 1Q07 2Q07 3Q07

3.00%

3.50%

4.00%

4.50%

5.00%

5.50%

Net Interest Income Net Interest Margin

Net Interest Income

Net Interest Income of$503 million

Net Interest Margin of 3.66%

Increase in deposit rates due tomix shift

Higher wholesale funding

Maturing swaps (at a negativespread)

Growth in securities portfolio

Higher nonaccrual loans

$ in millions


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$3,000

$3,250

$3,500

$3,750

$4,000

$4,250

$4,500

3Q06 4Q06 1Q07 2Q07 3Q07

6.75%

7.00%

7.25%

7.50%

7.75%

8.00%

8.25%

Average Investment Securities Available-for-Sale

% of Average Earning Assets

Increasing Investment Securities Portfolio

Consists primarily of AAAmortgage backed Freddie Macand Fannie Mae securities

Average life of approximately

3.8 years

Increase in portfolio lowers netinterest margin

Assists us in managing interestrate risk

$ in millions


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Positive Trends in Noninterest Income

Growth in fee income:

Commercial lending fees

Letter of credit fees

Foreign exchange income

Brokerage fees

Investment banking fees

Positive impact of principal

investing and warrants of$5 million

3Q07 vs. 2Q07

$ in millions

* Excludes net loss on sale of businesses of $7 million in 3Q06

$0

$50

$100

$150

$200

$250

$300

3Q06* 4Q06 1Q07 2Q07 3Q07

Noninterest Income FSD Settlement Proceeds


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Other

Markets

$0.8B 2% Int'l

$2.1B 4%

Florida

$1.7B 3%

Midwest

$21.9B 45%

Western

$15.3B 32%

Texas

$6.9B 14%Other

Markets

$0.7B 2%Int'l

$2.0B 4%

Florida

$1.5B 3%

Midwest

$21.9B 48%

Western

$13.8B 30%

Texas

$6.1B 13%

Achieving Geographic Loan Growth

3Q07: $48.7 billion*3Q06: $46.0 billion*

*Excludes average Financial Services Division loans of $2.1B in 3Q06 and $1.2B in 3Q07Geography based on office of origination; Midwest includes: MI, OH, IL; Western includes: CA, AZ, NV, CO, WA

Year-over-Year Average Loan Outstandings up 6%*


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Global Corp

Banking$5.0B 11%

Commercial

Real Estate

$6.7B 14%Middle

Market

$15.6B 34%

Nat'l Dealer

Services

$4.9B 11%

SpecialtyBusinesses**

$4.2B 9%Personal

Banking

$2.2B 5%

Small

Business

Banking

$3.9B 8%

Private

Banking$3.5B 8%

PrivateBanking

$4.0B 8% Small

Business

Banking

$4.0B 8%

Personal

Banking

$2.1B 4%

SpecialtyBusinesses**

$4.9B 10%

Nat'l Dealer

Services

$5.0B 10%

Middle

Market

$16.3B 34%

Commercial

Real Estate

$6.8B 14%

Global Corp

Banking

$5.6B 12%

Balanced Line of Business Loan Portfolio

Year-over-Year Average Loan Outstandings up 6%*

* Excludes average Financial Services Division loans of $2.1B in 3Q06 and $1.2B in 3Q07

** Specialty Businesses include: Entertainment, Energy, Leasing, and Technology and Life Sciences

3Q07: $48.7 billion*3Q06: $46.0 billion*


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Sound Credit Quality

0.42%

0.49% 0.49% 0.53%

0.59%

0.00%

0.25%

0.50%

0.75%

3Q06 4Q06 1Q07 2Q07 3Q07

0.32%

0.24%

0.16%0.19%**

0.06%

0.00%

0.15%

0.30%

0.45%

3Q06 4Q06 1Q07 2Q07 3Q07

1.06% 1.04% 1.04% 1.04% 1.03%

0.00%

0.50%

1.00%

1.50%

3Q06 4Q06 1Q07 2Q07 3Q07

251%

213% 214%195%

176%

0%

100%

200%

300%

3Q06 4Q06 1Q07 2Q07 3Q07

*Includes net loan charge-offs and net charge-offs on lending related commitments

** 7 basis points of this total is related to the sale of the manufactured housing portfolio

Nonperforming Assets to Total Loans and Foreclosed Property Net Credit-related* Charge-offs to Average Total Loans

Allowance for Loan Losses to Total Loans Allowance for Loan Losses to Nonperforming Assets


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Thorough Loan Loss Reserve Methodology

Slightly higher reserves Imprecision of risk rating

Slightly higher reserves New business migration risk

Increased MI CRE reserves Increased CA residential real

estate development reserves

Decreased other industry

segments due to betterperformance

Standard incremental

Increased commercial reserves

Increased reserves for homeequity lines

Standard and individual

Results:Analysis of Key Components:


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Commercial Real Estate Loan Portfolio

8% year-over-yearaverage loan growth

Adhere to conservativelending policies

Commercial Real Estatebusiness line:

Nonperforming loans of$128 million

Net loan charge-offs of$17 million

Primarily

Owner

OccupiedCommercial

Mortgages

$9.2B 63%

Real Estate

Construction*

$3.8B 27%

Commercial

Mortgages*

$1.4B 10%

3Q07: $14.4 billion

3Q07 averages in $billions

*Included in Commercial Real Estate line of business


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Other

Markets

$0.6B 11%

Florida$0.6B 11%

Western

$2.5B 45%

Michigan

$0.9B 16%

Texas

$0.9B 17%

Land Carry$0.9B 16%

Land

Development

$0.8B 14%Single Family

$1.8B 32%

Retail

$0.6B 11%

Multi-family

$0.5B 10%Commercial

$0.4B 6%

Office

$0.3B 6%

Other

$0.2B 5%

Commercial Real Estate Line of Business

September 30, 2007 Loan Outstandings: $5.5 billion*

By Project TypeBy Geography

Period-end balances in $billions; Geography reflects location of property; additional CRE information can be found in the appendix

* Excludes $1.3B in Commercial Real Estate line of business loans not secured by real estate


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Diversified Shared National Credit Relationships

Approx. 1,045 borrowers

20% of total outstanding

Industry diversification

mirrors total loan book

No nonaccrual loans

No net loan charge-offs

YTD 2007Other

Businesses

$0.5B 5%

Energy

Lending

$1.4B 14%

Nat'l Dealer

Services$0.5B 5%

Middle

Market

$2.1B 21%

CommercialReal Estate

$2.3B 23%Global Corp

Banking

$3.2B 32%

September 30, 2007: $10.0 billion

Period-end outstandings as of September 30, 2007


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Consumer Loan Portfolio

8% of total outstandings

No sub-prime mortgageprograms

2% of total nonaccrual

loans Net loan charge-offs

of $2 million

3Q07: $4.2 billion

3Q07 averages in $billions

Consumer Loans Home Equity

$1.6B 38%

Consumer Loans -Other

$0.7B 18%

ResidentialMortgage

Loans

$1.9B 44%


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Home Equity Portfolio

74% Home Equity Linesand 26% Home EquityLoans

Self-originated &relationship oriented

Avg. FICO score of 746at origination*

82% have CLTV 80%*

Average loan vintageis 3.0 years*

Geographic Breakdown

Midwest75%

Texas9%

Western14%

*Data on loans booked through our Consumer Loan Center which encompasses about 85% of our Home Equity Lines and Loans

3Q07 averages in $billionsGeography based on office of origination

Florida2%

3Q07: $1.6 billion


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Automotive Manufacturer Exposure Declining

12/05 12/06 8/07

Exposure:

Dealer $ 6.6 $ 7.4 $ 7.5Other Automotive:

- Domestic Ownership $ 3.3 $ 2.9 $ 2.7

- Foreign Ownership 1.5 1.3 1.1

Total Other Automotive $ 4.8 $ 4.2 $ 3.8

(10)%

Outstandings:

Dealer $ 4.8 $ 5.6 $ 5.1

Other Automotive:

- Domestic Ownership $ 2.0 $ 1.7 $ 1.5- Foreign Ownership 0.7 0.5 0.4

Total Other Automotive $ 2.7 $ 2.2 $ 1.9

(13)%

$49 $46

$39

$20$17

$0

$20

$40

$60

Millions

3Q06 4Q06 1Q07 2Q07 3Q07

Other Automotive Nonaccrual Loans

$3 $2

$7

($6) ($0)

-$10

-$5

$0

$5

$10

Millio

ns

3Q06 4Q06 1Q07 2Q07 3Q07

Other Automotive Net Credit-related

Charge-offs (Recoveries)

Period-end in $ billions

Exposure includes committed and discretionary facilities (undrawn and outstanding)


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Deposits in a Competitive Environment

Total deposits of $41.1 billion

Mix shift to higher rate, longerterm deposits continues

Technology & Life Sciences,Entertainment, Small Business

Banking and Global CorporateBanking grew deposits

Annualized average deposits**increased (2Q07 vs 3Q07):

9% in Texas 5% in the West

3% in the Midwest

$ in billions

*Excludes Finance/Institutional CDs, Foreign Office Time Deposits, and Financial Services Division balances

**Excludes Financial Services Division balances

$0

$10

$20

$30

$40

3Q06 4Q06 1Q07 2Q07 3Q07

Money Market & NOW Savings Deposits

Customer CDs Noninterest-bearing

Average Core Deposits*


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Financial Services Division Data

3.95%

0.64%

$11

$2.1

$5.6

1.5

$4.1

3Q06

3.88%4.06%FSD Interest-bearing Deposits

0.52%0.71%FSD Loans (Primarily Low-rate)

Average Rates

$11$11Customer Services

Noninterest Expenses

$1.6$1.2Total Loans

$4.5$3.8Total Deposits

1.21.2Interest-bearing

$3.3$2.6Noninterest-bearing

Average Balance Sheet

2Q073Q07

Balance Sheet data in $billions; Noninterest Expense data in $millions

2007 Fourth Quarter Outlook:

Average noninterest-bearing deposits of about $1.8 billion are expected

Average loans are expected to fluctuate with the level of noninterest-bearing deposits


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New Banking Center Deposits

$0

$250

$500

$750

$1,000

$1,250

$1,500

$1,750

3/05 6/05 9/05 12/05 3/06 6/06 9/06 12/06 3/07 6/07 9/07

Month Ended

CAGR:

21%

Personal Bkg 33%

Business Bank 39%

Small Business 15%

WIM - 13%

Millions


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Relocation of Corporate Headquarters to Dallas

Smooth transition

On schedule

Under budget Accelerating growth in Texas

Expect to maintain leadership

position in Michigan


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2007 Full Year Outlook

% Change over 2006

Loan growth (excluding Financial Services Division) Mid to High single-digit

West Low double-digit Texas Low double-digit

Midwest Flat

Net interest margin in the high 3.60% range(4Q07 in the low 3.50% range)

Net credit-related charge-offs of about 25 bps*

(4Q07 net credit-related charge-offs consistent with the third quarter 2007)

Noninterest income High single-digit**(2006 adjusted base of $820 million)

Noninterest expenses Flat(2006 adjusted base of $1,669 million)

Active capital management

Open market share repurchases 10 million shares

Tier 1 common capital ratio 6.50-7.50%

Tier 1 risk-based capital ratio 7.25-8.25%

This outlook is provided as of October 17, 2007

*Provision for credit losses modestly in excess of credit-related net charge-offs

**excluding Financial Services Division-related lawsuit settlement and loss on the sale of the Mexican bank charter in 2006


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Questions and Answers

Ralph Babb, Chairman and CEO

Beth Acton, EVP and Chief Financial Officer

Dale Greene, EVP and Chief Credit Officer

and

Darlene Persons, Director of Investor Relations


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AppendixAppendix


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Business Segment Contribution to Net Income

$594$567TOTAL

6(5)Other*

(14)3Finance

100%602100%569

8501057Wealth & InstitutionalManagement

1911718100Retail Bank

73%$43572%$412Business Bank

%YTD 9/06%YTD 9/07

$ in millions* Includes discontinued operations and items not directly associated with the three major business segments or the Finance Division


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Market Segment Contribution to Net Income

213214Other Markets

21118Florida

3219031175Western

$594$567TOTAL

(8)(2)Finance and Other*

100%602100%569

426739International

11651267Texas

49%$29747%$266Midwest

%YTD 9/06%YTD 9/07

$ in millions* Includes discontinued operations and items not directly associated with the geographic markets


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Loan Momentum Continues in Growth Markets

11%0.70%0.80.8Other Markets

6%2.00%2.12.1International

10%1.53%1.61.7Florida

4%$48.10%$49.8$49.9TOTAL6%$46.01%$48.2$48.7> EXCLUDING FSD

13%6.15%6.66.9Texas

4%

11%

15.9

13.8

-1%

1%

16.7

15.1

16.5

15.3

Western

> Excluding FSD

0%$21.9-1%$22.0$21.9Midwest

Y Y%Chg3Q06

Q Q%Chg2Q073Q07

Average loans in $billions; % change based on full dollar amountsGeography based on location of loan office

Western includes: CA, AZ, NV, CO, WA


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Diverse Line of Business Loan Growth

4%6%

$48.1$46.0

0%1%

$49.8$48.2

$49.9$48.7

TOTAL> EXCLUDING FSD

12%$3.53%$3.9$4.0SUBTOTAL WEALTH &INSTITUTIONAL MANAGEMENT

12%3.53%3.94.0Private Banking

1%$6.10%$6.1$6.1SUBTOTAL RETAIL BANK

-6%2.20%2.12.1Personal Banking

5%3.90%4.04.0Small Business Banking

3%$38.50%$39.8$39.8SUBTOTAL BUSINESS BANK

-4%16%

6.34.2

-3%4%

6.34.7

6.14.9

Specialty Businesses*> Excluding FSD

2%4.9-5%5.35.0National Dealer Services

12%5.03%5.45.6Global Corporate Banking

2%6.72%6.76.8Commercial Real Estate

4%$15.61%$16.1$16.3Middle Market

Y Y%Change3Q06

Q Q%Change2Q073Q07

Average loans in $billions; % change based on full dollar amount* Specialty Businesses includes: Entertainment, Energy, FSD, Leasing and TLS


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Third Quarter 2007 Average Loans Detail

$0.8

$--

--

$--

--

--

$0.8

0.4

0.4

---

--$--

OtherMarkets

$1.7

$0.5

0.5

$--

--

--

$1.2

0.0

0.5

--

0.5$0.2

Florida

$49.9$2.1$6.9$16.5$21.9TOTAL

$4.0$--$0.5$1.2$1.8SUBTOTAL WEALTH &INSTITUTIONAL MANAGEMENT

4.0--0.51.21.8Private Banking

$6.1$--$1.1$1.0$4.0SUBTOTAL RETAIL BANK

2.1--0.10.11.9Personal Banking

4.0--1.00.92.1Small Business Banking

$39.8$2.1$5.3$14.3$16.1SUBTOTAL BUSINESS BANK

6.1--1.92.51.3Specialty Businesses*

5.0--0.23.30.6National Dealer Services

5.62.10.31.02.2Global Corporate Banking

6.8--1.12.72.5Commercial Real Estate$16.3$--$1.8$4.8$9.5Middle Market

TOTALInternationalTexasWesternMidwest

$ in billions; geography based on office of origination.* Specialty Businesses includes: Entertainment, Energy, FSD, Leasing and TLS

30


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Real Estate Construction Loans:


0.30.00.10.10.00.1Multi-family

0.20.00.00.00.10.1Multi-use

0.20.10.00.00.00.1Commercial

0.2------0.00.2Land Carry

$0.4

0.0

0.1

0.0

$0.2

OtherMarkets

$4.1$0.5$0.7$0.4$2.1TOTAL

0.2--0.10.00.1Office

0.50.00.20.10.1Retail

0.80.10.20.10.4Land Development

$1.7$0.3$0.1$0.1$1.0Single Family

TOTALFloridaTexasMichiganWestern

3Q07 period-end $ in billionsGeography reflects location of property

31


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Commercial Mortgage Loans:


0.10.10.00.00.00.0Single Family

0.10.0--0.00.10.0Office

0.20.0--0.00.10.1Commercial

0.20.00.00.10.10.0Multi-family

$0.2

0.1

$0.0

OtherMarkets

$1.4$0.1$0.2$0.5$0.4TOTAL

0.10.00.00.00.0Retail

$0.7$0.1$0.1$0.2$0.3Land Carry

TOTALFloridaTexasMichiganWestern

3Q07 period-end $ in billionsGeography reflects location of property

32


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Line of Business Deposits

$41.9$36.3

5.6

$2.3

2.3

$16.8

12.9

3.9

$17.2$11.6

8.52.9

0.1

3.2

1.2

$4.2

3Q06

1%-2%5.85.7Finance/Other2

-2%3%

-1%0%

$41.7$37.2

$41.1$37.3

TOTAL> EXCLUDING FSD

4%4%$2.3$2.4SUBTOTAL WEALTH &INSTITUTIONAL MANAGEMENT

4%4%2.32.4Private Banking

2%0%$17.2$17.1SUBTOTAL RETAIL BANK

2%-1%13.313.2Personal Banking

2%2%3.93.9Small Business Banking

-7%4%

-3%2%

$16.4$11.9

$15.9$12.1

SUBTOTAL BUSINESS BANK>Excluding FSD

-12%25%

-7%5%

8.03.5

7.43.6

Specialty Businesses1

> Excluding FSD

12%8%0.10.1National Dealer Services

6%1%3.33.4Global Corporate Banking

-14%8%1.01.0Commercial Real Estate

-6%-2%$4.0$4.0Middle Market

Y Y%Change

Q Q%Change2Q073Q07

Average deposits in $billions; % change based on full dollar amount

1 Specialty Businesses includes: Entertainment, Energy, FSD, Leasing and TLS2 Finance/Other includes Institutional CDs: 3Q07 - $5.2B; 2Q07 - $5.5B; 3Q06 - $5.2B

33


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Third Quarter 2007 Average Deposits Detail

$0.5

--

$0.0

0.0

$--

--

--$0.5

0.5

0.0

--

--

$--

OtherMarkets

$1.1

--

$--

--

$--

--

--$1.1

--

--

1.1

--

$--

International

5.7------5.7Finance/Other2

$41.1$0.3$3.9$13.0$22.3TOTAL

$2.4$0.2$0.3$1.2$0.7SUBTOTAL WEALTH &INSTITUTIONAL MANAGEMENT

2.40.20.31.20.7Private Banking

$17.1$--$2.6$1.9$12.6SUBTOTAL RETAIL BANK

13.2--1.60.910.7Personal Banking

3.9--1.01.01.9Small Business Banking$15.9$0.1$1.0$9.9$3.3SUBTOTAL BUSINESS BANK

7.40.00.56.20.2Specialty Businesses1

0.10.00.00.10.0National Dealer Services

3.4--0.20.41.7Global Corporate Banking

1.00.10.10.20.6Commercial Real Estate

$4.0$0.0$0.2$3.0$0.8Middle Market

TOTALFloridaTexasWesternMidwest

$ in billions1 Specialty Businesses includes: Entertainment, Energy, FSD, Leasing and TLS2 Finance/Other includes $5.2B in Institutional CDs; included in Finance Division segment

34


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Investing to Accelerate Growth and Balance:

Banking Center Expansion

Plan to open about 30 new banking centers in 2007 with over 90% inhigh growth markets

Deposits at new banking centers are ahead of expectations

Total9/07

2004-2006

YTD9/07

Full Year2007

Location of NewBanking Centers

60

7

3

17

4

29

30

2

0

12

3

13

50Arizona

40313Total

2412Michigan

90Florida

736Texas

755California

Comercia 3Q07 Presentation

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Transcript of Comercia 3Q07 Presentation