<PAGE> 1
Form 10-K -- Comerica Incorporated and Subsidiaries
Securities and Exchange Commission
Washington, DC 20549
Form 10-k
Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of
1934 (Fee Required). For the fiscal year ended December 31, 1993.
Commission file number 1-10706
Comerica Incorporated
500 Woodward Avenue,
Detroit, Michigan 48226
313-222-4000
Incorporated in the State of Delaware, IRS Employer Identification No.
38-1998421.
Securities registered pursuant to Section 12(b) of the Act:
- - Common Stock, $5 par value
- - Rights to acquire Series C
Preferred Stock, no par value
These securities are registered on the New York Stock Exchange.
Securities registered pursuant to Section 12(g) of the Act:
- - 10 1/8 percent Subordinated
Debentures due in 1998
The registrant: (1) has filed all reports required to be filed by Section 13 or
15(d) of the Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to file such
reports), and (2) has been subject to such filing requirements for the past 90
days.
Disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not
contained herein, but will be contained in the definitive proxy or information
statements incorporated by reference in Part III of this Form 10-k or any
amendment to this Form 10-k.
At February 25, 1994, the registrant's common stock, $5 par value, held by
nonaffiliates had an aggregate market value of $2,839,967,862 based on the
closing price on the New York Stock Exchange on that date of $27.125 per share
and 104,699,276 shares of common stock held by nonaffiliates. For purposes of
this Form 10-k only, it has been assumed that all common shares held by the
Trust Department of Comerica affiliated banks and by the registrant's directors
and executive officers are held by affiliates.
At February 25, 1994, the registrant had outstanding 114,282,395 shares of its
common stock, $5 par value.
Documents Incorporated by Reference:
1. Parts I and II:
Items 1-8--Annual Report to Shareholders for the year ended December 31, 1993.
Item 9--Proxy Statement for the Annual Meeting of shareholders to be held May
20, 1994.
2. Part III:
Items 10-13--Proxy Statement for the Annual Meeting of Shareholders to be held
May 20, 1994.
<PAGE> 2
PART I
ITEM 1. BUSINESS
GENERAL
Comerica Incorporated ("Comerica" or the "Corporation") is a registered bank
holding company incorporated under the laws of the State of Delaware,
headquartered in Detroit, Michigan, and was formed in 1973 to acquire the
outstanding common stock of Comerica Bank (formerly Comerica Bank-Detroit), a
Michigan banking corporation ("Comerica Bank"). As of December 31, 1993,
Comerica owned directly or indirectly all the outstanding common stock (except
for directors' qualifying shares, where applicable) of eight banking and
forty-two non-banking subsidiaries. At December 31, 1993, Comerica had total
assets of approximately $30.3 billion, total deposits of approximately $20.9
billion, total loans (net of unearned income) of approximately $19.1 billion,
and shareholders' equity of approximately $2.2 billion. At December 31, 1993,
Comerica was the second largest bank holding company headquartered in Michigan
in terms of both total assets and total deposits.
BUSINESS STRATEGY
Comerica's business strategy focuses on five core businesses in four geographic
markets. Those businesses are corporate banking, consumer banking, private
banking, institutional trust and investment management, and international
finance and trade services. Corporate banking incorporates highly specialized
units servicing a full range of company sizes with both credit and non-credit
products. Consumer banking provides deposit, credit and fee-based products to
individuals needing financial services but whose income or wealth do not make
them prospects for private banking services. Private banking is oriented to
servicing the financial needs of the affluent market as defined by individual
net income or wealth. Institutional trust and investment management activities
involve providing companies, municipalities and other entities a wide spectrum
of investment management products and trust products such as master trust,
master custody, and corporate trust services, as well as administering and
serving as trustee for employee benefit plans. International finance and trade
services offer importers and exporters trade financing, letters of credit,
foreign exchange and international customhouse brokerage and freight forwarding
products. The core businesses are tailored to each of Comerica's four primary
geographic markets: the Midwest (currently Michigan and Illinois), Texas,
California and Florida. The Midwest is the only market in which all five core
businesses are currently pursued. In California and Texas the primary focus is
on corporate banking and private banking activities. In Florida the primary
focus is on private banking.
ACQUISITIONS
On July 17, 1992, Comerica entered into a Stock Purchase Agreement with
Hibernia Corporation, a Louisiana corporation and a registered bank holding
company, for the purchase of all of the issued and outstanding capital stock of
Hibernia National Bank in Texas, a national banking association ("Hibernia
Bank"). The transaction was closed on December 31, 1992, with Comerica paying a
purchase price of approximately $56 million in cash. The acquisition was
accounted for as a purchase. As of March 31, 1993, Hibernia Bank had total
assets of approximately $787 million. In May 1993, Hibernia Bank was merged
into Comerica Bank-Texas, a Texas chartered bank and a wholly owned subsidiary
of Comerica.
On September 24, 1992, Comerica entered into an Agreement and Plan of Merger
with Sugar Creek National Bank ("Sugar Creek") for the acquisition by Comerica
of Sugar Creek in exchange for Comerica common stock having a market value of
approximately $28 million. Sugar Creek was a national banking association with
offices in the Houston, Texas metropolitan area. The transaction was closed on
February 25, 1993 and was accounted for using the pooling-of-interests method.
At September 30, 1993, Sugar Creek had total assets of approximately $205
million. Sugar Creek merged into Comerica Bank-Texas in November 1993.
On November 4, 1992, Comerica entered into Agreements and Plans of
Reorganization and Merger with Nasher Financial Corporation, a Delaware
corporation ("Nasher"), and NorthPark National Corporation, a Delaware
corporation and a registered bank holding company ("NNC"), for the acquisition
by Comerica of those two companies in exchange for Comerica common stock having
a market value of approximately $79 million. Nasher's sole asset was
approximately 29 percent of the outstanding common stock of NNC. NNC owned
NorthPark National Bank of Dallas, a national banking association with one
office in the Dallas, Texas area. The transaction was closed on May 28, 1993
and was accounted for using the pooling-of-interests method. At June 30, 1993,
NNC had consolidated assets of approximately $696 million. In August 1993,
NorthPark National Bank of Dallas was merged into Comerica Bank-Texas.
On September 8, 1993, Comerica, Pacific Western Bancshares, Inc., a Delaware
Corporation and bank holding company ("PAC WEST"), Pacific Western Bank, a
California state
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Form 10-K Comerica Incorporated and Subsidiaries
chartered bank and wholly owned subsidiary of PAC WEST ("PWB"),
and Comerica California Incorporated, a California corporation, bank holding
company and wholly owned subsidiary of the Corporation ("COM CAL"), entered
into an Agreement and Plan of Reorganization and Merger providing for, among
other things, the merger of COM CAL into PAC WEST (the "Merger") with PAC WEST
being the surviving corporation under the charter and bylaws of COM CAL and the
name "Comerica California Incorporated." Subsequent to the Merger, PWB may, at
the Corporation's election, be merged into a subsidiary of Comerica. PAC WEST
shareholders will receive approximately 4,585,000 shares of Comerica common
stock. The transaction is subject to regulatory approval and is expected to be
completed in the spring of 1994. As of December 31, 1993, PAC WEST had total
assets of approximately $1 billion.
SUPERVISION AND REGULATION
Banks, bank holding companies and financial institutions are highly regulated
at both the state and federal level. As a bank holding company, Comerica is
subject to supervision and regulation by the Federal Reserve Board under the
Bank Holding Company Act of 1956, as amended (the "Act"). Under the Act, the
Corporation is prohibited, with certain exceptions, from acquiring or retaining
direct or indirect ownership or control of voting shares of any company which
is not a bank or bank holding company and from engaging in activities other
than those of banking or of managing or controlling banks, other than
subsidiary companies and activities which the Federal Reserve Board determines
to be so closely related to the business of banking as to be a proper incident
thereto.
Comerica Bank is chartered by the State of Michigan and is supervised and
regulated by the Financial Institutions Bureau of the State of Michigan.
Comerica Bank-Texas is chartered by the State of Texas and is supervised and
regulated by the Texas Department of Banking.
Comerica Bank-Midwest, N.A. is chartered under federal law and subject to
supervision and regulation by the Office of the Comptroller of the Currency.
Comerica Bank-California is chartered and regulated by the State of California.
Comerica Bank & Trust, FSB is chartered under federal law and subject to
supervision and regulation by the Office of Thrift Supervision. Comerica
Bank-Illinois is chartered by the State of Illinois and is regulated by the
State of Illinois Commissioner of Banks and Trust Companies.
Comerica Bank, Comerica Bank-Illinois and Comerica Bank-Midwest, N.A. are
members of the Federal Reserve System. State member banks are also regulated by
the Federal Reserve Bank and state non-member banks are also regulated by the
Federal Deposit Insurance Corporation. The deposits of all the banks are
insured by the Bank Insurance Fund (the "BIF") of the Federal Deposit Insurance
Corporation to the extent provided by law.
Comerica is a legal entity separate and distinct from its banking and
other subsidiaries. Most of Comerica's revenues result from dividends paid to
it by its bank subsidiaries. There are statutory and regulatory requirements
applicable to the payment of dividends by subsidiary banks to Comerica as well
as by Comerica to its shareholders.
Dividends
Each state bank subsidiary that is a member of the Federal Reserve System and
each national banking association is required by federal law to obtain the
prior approval of the Federal Reserve Board or the Office of the Comptroller of
the Currency, as the case may be, for the declaration and payment of dividends
if the total of all dividends declared by the board of directors of such bank
in any year will exceed the total of (i) such bank's net profits (as defined
and interpreted by regulation) for that year plus (ii) the retained net profits
(as defined and interpreted by regulation) for the preceding two years, less
any required transfers to surplus. In addition, these banks may only pay
dividends to the extent that retained net profits (including the portion
transferred to surplus) exceed bad debts (as defined by regulation).
Under the foregoing dividend restrictions, at January 1, 1994 Comerica's
subsidiary banks, without obtaining governmental approvals, could declare
aggregate dividends of approximately $273 million from retained net profits of
the preceding two years, plus an amount approximately equal to the net profits
(as measured under current regulations), if any, earned for the period from
January 1, 1994 through the date of declaration. Dividends paid to Comerica by
its subsidiary banks amounted to $311 million in 1993 and $60 million in 1992.
FIRREA
Recent banking legislation, including the Financial Institutions Reform and
Recovery and Enforcement Act of 1989 ("FIRREA") and the Federal Deposit
Insurance Corporation Improvement Act of 1991 ("FDICIA"), has broadened the
regulatory powers of the federal bank regulatory agencies. Under FIRREA, a
depository institution insured by the Federal Deposit Insurance Corporation
(the "FDIC") can be held liable for any loss incurred by, or reasonably
expected to be incurred by, the FDIC in connection with (i) the default of a
commonly controlled FDIC-insured depository institution, or (ii) any assistance
provided by the FDIC to any commonly controlled FDIC-insured depository
institution "in danger of default." "Default" is defined generally as the
appointment of a conservator or receiver and "in danger of default" is defined
generally as the existence of certain conditions indicating that a default is
likely to occur in the absence of regulatory assistance.
FDICIA
In December 1991, FDICIA was enacted, substantially revising the bank
regulatory and funding provisions of the Federal Deposit Insurance Act and
making revisions to several other federal banking statutes.
Among other things, FDICIA requires the federal banking agencies to take
"prompt corrective action" in respect of depository institutions that do not
meet minimum capital requirements. FDICIA establishes five capital tiers: "well
capitalized," "adequately capitalized," "undercapitalized," "significantly
undercapitalized" and "critically undercapitalized." A depository institution's
capital tier will depend upon where its capital levels are in relation to
various relevant capital measures, which will include a risk-based capital
measure and a leverage ratio capital measure, and certain other factors.
Regulations establishing the specific capital tiers have been issued in final
form. Under these regulations, for an institution to be well capitalized it
must have a total risk-based capital ratio of at least 10 percent, a Tier 1
risk-based capital ratio of at least 6 percent, a Tier 1 leverage ratio of at
least 5 percent, and not be subject to any specific capital order or directive.
For an institution to be adequately capitalized it must have a total risk-based
capital ratio of at least 8 percent, a Tier 1 risk-based capital ratio of at
least 4 percent, and a Tier 1 leverage ratio of at least 4 percent (and in some
cases 3 percent). Under these regulations, the banking subsidiaries of Comerica
would be considered to be well capitalized as of December 31, 1993.
FDICIA generally prohibits a depository institution from making any capital
distribution (including payment of a dividend) or paying any management fee to
its holding company if the depository institution would thereafter be
undercapitalized. Undercapitalized depository institutions are subject to
growth limitations and are required to submit a capital restoration plan. The
federal banking agencies may not accept a capital plan without determining,
among other things, that the plan is based on realistic assumptions and is
likely to succeed in restoring the depository institution's capital. In
addition, for a capital restoration plan to be acceptable, the depository
institution's parent holding company must guarantee that the institution will
comply with such capital restoration plan. The aggregate liability of the
parent holding company under the guaranty is limited to the lesser of (i) an
amount equal to 5 percent of the depository institution's total assets at the
time it became undercapitalized, and (ii) the amount that is necessary (or
would have been
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necessary) to bring the institution into compliance with all
capital standards applicable with respect to such institution as of the time it
fails to comply with the plan. If a depository institution fails to submit an
acceptable plan, it is treated as if it is significantly undercapitalized.
Loans to an undercapitalized institution from its Federal Reserve Bank are
generally restricted.
Significantly undercapitalized depository institutions may be subject to a
number of requirements and restrictions, including orders to sell sufficient
voting stock to become adequately capitalized, requirements to reduce total
assets and cessation of receipt of deposits from correspondent banks.
Critically undercapitalized institutions are subject to the appointment of a
receiver or conservator.
Under FDICIA, the FDIC is permitted to provide financial assistance to an
insured bank before appointment of a conservator or receiver only if (i) such
assistance would be the least costly method of meeting the FDIC's insurance
obligations, (ii) grounds for appointment of a conservator or a receiver exist
or are likely to exist, (iii) it is unlikely that the bank can meet all capital
standards without assistance and (iv) the bank's management has been competent,
has complied with applicable laws, regulations, rules and supervisory
directives and has not engaged in any insider dealing, speculative practice or
other abusive activity.
FDICIA directs that each federal banking agency prescribe standards for
depository institutions and depository institution holding companies relating
to internal controls, information systems, internal audit systems, loan
documentation, credit underwriting, interest rate exposure, asset growth,
compensation, a maximum ratio of classified assets to capital, minimum earnings
sufficient to absorb losses, a minimum ratio of market value to book value for
publicly traded shares and other standards as they deem appropriate. Because
most of such standards have not yet been established, management is unable to
assess their overall impact. However, it appears that the cost of compliance
will increase.
FDICIA also contains a variety of other provisions that may affect the
operations of depository institutions including new reporting requirements,
regulatory standards for real estate lending, "truth in savings" provisions,
the requirement that a depository institution give 90 days prior notice to
customers and regulatory authorities before closing any branch and a
prohibition on the acceptance or renewal of brokered deposits by depository
institutions that are not well capitalized or are adequately capitalized and
have not received a waiver from the FDIC. As of December 31, 1993, Comerica
Bank is well capitalized under regulations relating to the brokered deposit
prohibition and may accept brokered deposits without restrictions.
FDIC Insurance Assessments
Comerica's subsidiary banks are subject to FDIC deposit insurance assessments.
On September 15, 1992, the FDIC approved the implementation of a transitional
risk-based deposit premium assessment system under which each depository
institution is placed in one of the nine assessment categories based on certain
capital and supervisory measures. The assessment rates under the transitional
system range from .23 percent to .31 percent depending upon the assessment
category into which the insured institution is placed. The transitional
assessment system became effective January 1, 1993.
On June 17, 1993, the FDIC adopted a permanent risk-based assessment system for
assessment periods beginning on and after January 1, 1994. The system retains
the transitional system without substantial modification. It is possible that
BIF assessments will be further increased and it is possible that there may be
special additional assessments in the future. A significant increase in the
assessment rate or a special additional assessment could have an adverse impact
on Comerica's results of operations.
COMPETITION
Banking is a highly competitive business. The Michigan banking subsidiary of
the Corporation competes primarily with Detroit and outstate Michigan banks for
loans, deposits and trust accounts. Through its offices in Arizona, California,
Colorado, Florida, Indiana, Illinois, Ohio and Texas, Comerica competes with
other financial institutions for various types of loans. Through its Florida
subsidiary, Comerica competes with many companies, including financial
institutions, for trust business.
At year-end 1993, Comerica Incorporated was the second largest bank holding
company located in Michigan in terms of total assets and deposits. Based on
legislation passed during 1985 that allows Michigan-based banks to acquire or
be acquired by banks in states with similar laws in effect, the Corporation
believes that the level of competition in Michigan will increase in the future.
Comerica's banking subsidiaries also face competition from other financial
intermediaries, including savings and loan associations, consumer finance
companies, leasing companies and credit unions.
EMPLOYEES
As of December 31, 1993, Comerica and its subsidiaries had 11,424 full-time and
1,763 part-time employees.
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Item 2. Properties
The executive offices of the Corporation are located in the Comerica Tower at
Detroit Center in Detroit, Michigan. Comerica and its subsidiaries occupies 15
floors of the building, which it leases through Comerica Bank from an
unaffiliated third party. This lease extends through January 2007.
As of December 31, 1993, Comerica Bank operated 360 offices within the State of
Michigan, of which 260 were owned and 100 were leased. Seven other banking
affiliates operate 107 offices in California, Florida, Illinois and Texas. The
affiliates own 34 of their offices and lease 73 offices. One banking affiliate
also operates from leased space in Toledo, Ohio.
In addition, the Corporation owns an operations and check processing center in
Livonia, Michigan and a ten-story building in the central business district of
Detroit that houses certain departments of the Corporation and Comerica Bank.
In 1983, Comerica entered into a sale/leaseback agreement with an unaffiliated
party covering an operations center which was built in Auburn Hills, Michigan,
and now is occupied by various departments of the Corporation and Comerica
Bank.
Item 5. Market for Corporation's Common Equity and Related Stockholder Matters
The common stock of Comerica Incorporated is traded on the New York Stock
Exchange (NYSE Trading Symbol: CMA). At January 31, 1994, there were
approximately 14,420 holders of the Corporation's common stock.
Quarterly cash dividends were declared during 1993 and 1992 totaling $1.07 and
$.96 per common share per year, respectively.
The following table sets forth, for the periods indicated, the high and low
sale prices per share of the Corporation's common stock as reported on the NYSE
Composite Transactions Tape for all quarters of 1993 and 1992. All of the
prices are adjusted for the January 4, 1993 two-for-one stock split.
<TABLE>
<CAPTION>
Dividend Dividend*
Quarter High Low Per Share Yield
<S> <C> <C> <C> <C>
1993
Fourth $29.000 $25.125 $.28 4.1%
Third 31.500 26.875 .28 3.8
Second 35.250 27.625 .26 3.3
First 33.375 28.750 .26 3.3
1992
Fourth 32.750 29.250 .26 3.3
Third 31.125 27.688 .24 3.2
Second 31.875 26.500 .24 3.2
First 30.250 26.250 .24 3.3
</TABLE>
* Dividend yield is calculated by annualizing the quarterly dividend per share
and dividing by an average of the high and low price in the quarter.
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FORM 10-K CROSS REFERENCE INDEX. Comerica Incorporated and Subsidiaries
Certain information required to be included in Form 10-k is also included in
the 1993 Annual Report to Shareholders or in the 1994 Proxy Statement used in
connection with the 1994 annual meeting of shareholders to be held on May 20,
1994. The following cross-reference index shows the page location in the 1993
Annual Report or the section of the 1994 Proxy Statement of only that
information which is to be incorporated by reference into Form 10-k. All other
sections of the 1993 Annual Report or the 1994 Proxy Statement are not required
in Form 10-k and should not be considered a part thereof.
<TABLE>
<CAPTION>
1994 1993
Proxy Annual
Statement Report
Section
----------------------------------------------------------------------------------------- ---------
<S> <C> <C>
Part I
Item 1. Business...................................................................................... 64
Item 2. Properties.................................................................................... 66
Item 3. Legal Proceedings............................................................................. 54
Item 4. Submission of Matters to a Vote of Security Holders--no matters were
voted upon by security holders in the fourth quarter of 1993
Part II
Item 5. Market for Registrant's Common Equity and Related Security Holder Matters..................... 66
Item 6. Selected Financial Data....................................................................... 21
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations......... 20
Item 8. Financial Statements and Supplementary Data:
Comerica Incorporated and Subsidiaries
Consolidated Balance Sheets................................................................. 38
Consolidated Statements of Income........................................................... 39
Consolidated Statements of Changes in Shareholders' Equity.................................. 40
Consolidated Statements of Cash Flows....................................................... 41
Notes to Consolidated Financial Statements.................................................... 42
Report of Independent Auditors................................................................ 60
Statistical Disclosure by Bank Holding Companies:
Analysis of Net Interest Income--FTE........................................................ 23
Rate-Volume Analysis--FTE................................................................... 27
Analysis of Investment Securities Portfolio--FTE............................................ 31
Analysis of Investment Securities and Loans................................................. 29
Allocation of The Allowance for Loan Losses................................................. 33
Loan Maturities and Interest Rate Sensitivity............................................... 29
Summary of Nonperforming Assets and Past Due Loans.......................................... 33
Cross-border Outstandings................................................................... 28
Analysis of The Allowance for Loan Losses................................................... 25
Maturity Distribution of Domestic Certificates of Deposit of $100,000 and Over.............. 31
Historical Review-Statistical Data.......................................................... 63
Item 9. Changes in and Disagreements with Accountants
on Accounting and Financial Disclosure .......................... Change in Independent
Accountants
Part III
Item 10. Directors and Executive Officers of the Registrant................... Election of Directors;
Executive Officers
of the Corporation
Item 11. Executive Compensation............................................... Compensation of
Executive Officers
Item 12. Security Ownership of Certain Beneficial Owners and Management....... Security Ownership of
Certain Beneficial Owners
and Management
Item 13. Certain Relationships and Related Transactions....................... Transactions of Directors,
Executive Officers and
Certain Beneficial Owners;
Election of Directors
</TABLE>
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FORM 10-K CROSS REFERENCE INDEX - Comerica Incorporated and Subsidiaries
<TABLE>
<CAPTION>
PART IV 1993
Exhibits, Financial Statement Schedules, and Reports on Form 8-k Annual
Report
<S> <C> <C>
Item 14. (a) The following documents are filed as a part of this report:
1. Financial Statements: The financial statements are filed as part of this report and
are listed under Item 8 in the Form 10-k Cross-reference Index on page 67.
2. All of the schedules for which provision is made in the applicable accounting
regulations of the Securities and Exchange Commission are either not required
under the related instruction, the required information is contained elsewhere
in the Form 10-k, or the schedules are inapplicable and therefore have
been omitted.
Exhibits:
Exhibit Document*
Number
3.1 Restated Certificate of Incorporation of Comerica Incorporated, as amended
3.2 Amended and restated bylaws of Comerica Incorporated
4. Rights Agreement between Comerica Incorporated and Comerica Bank**
10.1 Comerica Incorporated Long-term Incentive Plan***
10.2 Summary of Comerica Incorporated Annual Incentive Compensation Plan***
10.3 Comerica Incorporated Plan for Deferring the Payment of Directors Fees***
10.4 Comerica Incorporated Nonqualified Retirement Income Guaranty Plan****
10.5 Comerica Incorporated's Directors Retirement Plan*****
10.6 Manufacturers National Corporation's 1987 and 1989 Stock Option Plans
for Key Employees*****
10.7 Manufacturers National Corporation's Executive Incentive Plan*****
10.8 Manufacturers National Corporation's Key Employee Retention Plan*****
10.9 Form of Management Continuation Agreement between registrant and
listed officers, October 1987***
10.10 Form of Director Indemnification Agreement between Comerica Incorporated
and its directors, dated April 1987******
10.11 Employment Continuation Agreement with Eugene A. Miller*****
10.12 Employment Continuation Agreement with Gerald V. MacDonald*****
10.13 Comerica Incorporated Deferred Compensation Plan
11. Statement regarding Computation of Per Share Earnings 49
13. The required portions of the registrant's 1993 Annual Report to Shareholders
21. Subsidiaries of the Corporation
23.1 Consent of Ernst & Young
23.2 Consent of KPMG Peat Marwick
23.3 Opinion of KPMG Peat Marwick
(b) No reports on Form 8-k were filed by the Corporation during the last quarter of 1993.
Signatures 69
</TABLE>
* This copy of the 1993 Annual Report and Form 10-k does not
include any exhibits. Copies of the listed exhibits will be
furnished to shareholders upon request. Requests should be
directed to Comerica Incorporated, Corporate Secretary,
Comerica Tower at Detroit Center, Detroit, Michigan 48226-3391.
** Incorporated by reference from Registrant's Annual Report on
Form 10-k for the year ended December 31, 1987--Commission File
Number 0-7269.
*** Incorporated by reference from Registrant's Annual Report on
Form 10-k for the year ended December 31, 1991--Commission File
Number 0-7269.
**** Incorporated by reference from Registrant's Form 8-A
Registration Statement dated January 26, 1988--Commission File
Number 0-7269.
***** Incorporated by reference from Registrant's Annual Report on
Form 10-k for the year ended December 31, 1992--Commission File
Number 0-7269.
****** Incorporated by reference from Registrant's Annual Report on
Form 10-k for the year ended December 31, 1989--Commission File
Number 0-7269.
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FORM 10-K - Comerica Incorporated and Subsidiaries
SIGNATURES
Pursuant to the requirements of Section 13 and 15(d) of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned thereunto duly authorized in the City of Detroit,
State of Michigan on the 18th day of March, 1994.
COMERICA INCORPORATED
Eugene A. Miller
Chairman and Chief Executive Officer
Paul H. Martzowka
Executive Vice President and Chief Financial Officer
Arthur W. Hermann
Senior Vice President and Controller
(Chief Accounting Officer)
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed by the following persons in the capacities indicated on
March 18, 1994.
By Directors
E. Paul Casey
James F. Cordes
J. Philip DiNapoli
Max M. Fisher
John D. Lewis
Patricia Shontz Longe, Ph.D.
Wayne B. Lyon
Gerald V. MacDonald
Donald R. Mandich
Eugene A. Miller
Michael T. Monahan
Alfred A. Piergallini
Dean E. Richardson
Thomas F. Russell
Alan E. Schwartz
Howard F. Sims
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Ex. 3.1
STATE OF DELAWARE
LETTERHEAD
OFFICE OF SECRETARY OF STATE
_______________________
I, MICHAEL RATCHFORD, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO HEREBY
CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF MERGER OF
"MANUFACTURERS NATIONAL CORPORATION" MERGING WITH AND INTO "COMERICA
INCORPORATED" UNDER THE NAME OF "COMERICA INCORPORATED" AS RECEIVED AND FILED
IN THIS OFFICE THE EIGHTEENTH DAY OF JUNE, A.D. 1992, AT 8:30 O'CLOCK A.M.
* * * * * * * * * * * * *
<TABLE>
<S> <C>
/s/ Michael Rachford
DEPARTMENT OF STATE --------------------
OFFICE OF THE SECRETARY OF STATE SECRETARY OF STATE
DELAWARE (STATE SEAL) AUTHENTICATION: *3488359
DATE: 06/18/1992
</TABLE>
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STATE OF DELAWARE
SECRETARY OF STATE
DIVISION OF CORPORATIONS
FILED 08:30 AM 06/18/1992
921705007 - 786580
CERTIFICATE OF MERGER OF
MANUFACTURERS NATIONAL CORPORATION
INTO
COMERICA INCORPORATED
The undersigned corporation organized and existing under and by virtue of the
General Corporation Law of the State of Delaware DOES HEREBY CERTIFY:
FIRST: That the name and state of incorporation of each of the constituent
corporations of the merger is as follows:
Name: State of Incorporation:
- ----- -----------------------
Comerica Incorporated Delaware
Manufacturers National Corporation Delaware
SECOND: That an Agreement and Plan of Merger ("Merger Agreement"} between the
parties to the merger has been approved, adopted, certified, executed and
acknowledged by each of the constituent corporations in accordance with the
requirements of Section 251 of the General Corporation Law of the State of
Delaware.
THIRD: That Comerica Incorporated shall be the surviving corporation in the
merger and the name of the surviving corporation of the merger is "Comerica
Incorporated."
FOURTH: That, pursuant to the merger, the Restated Certificate of
Incorporation of the surviving corporation shall be amended to read in its
entirety as set forth in Attachment A to this Certificate of Merger.
FIFTH: That the executed Merger Agreement is on file at the principal place
of business of the surviving corporation. The address of the principal place
of business of the surviving corporation is 100 Renaissance Center, Detroit, MI
48243.
SIXTH: That a copy of the Merger Agreement will be furnished by the surviving
corporation, on request and without cost to any stockholder of any constituent
corporation.
IN WITNESS WHEREOF, the undersigned have executed this Certificate of Merger as
of the 18th day of June, 1992.
ATTEST: COMERICA INCORPORATED
_____________________ _____________________
By: Judith C. Lalka By: Eugene A. Miller
Its: Secretary Its: Chairman of the Board, President
and Chief Executive Officer
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<PAGE> 3
ATTACHMENT A
RESTATED CERTIFICATE OF INCORPORATION OF
COMERICA INCORPORATED
(THE "CORPORATION")
FIRST
The name of the Corporation is Comerica Incorporated.
SECOND
The address of the registered office in the State of Delaware is 1209 Orange
Street, in the City of Wilmington, County of New Castle. The name of the
registered agent at such address is The Corporation Trust Company.
THIRD
The nature of the business or purposes to be conducted or promoted is:
To engage in any lawful act or activity for which corporations may be organized
under the General Corporation Law of Delaware.
FOURTH
The total number of shares of all classes of stock which the Corporation shall
have authority to issue is 260,000,000 shares which shall be divided into two
classes as follows:
(a) 10,000,000 shares of Preferred Stock without par value (Preferred
Stock); and
(b) 250,000,000 shares of Common Stock of the par value of $5.00 per share
(Common Stock).
The designations and the powers, preferences and relative, participating,
optional or other special rights, and the qualifications, limitations or
restrictions of the above classes of stock shall be as follows:
PART I: PREFERRED STOCK
(a) Shares of Preferred Stock may be issued in one or more series at such
time or times and for such consideration or considerations as the Board of
Directors may determine.
(b) The Board of Directors is expressly authorized at any time, and from
time to time, to provide for the issuance of shares of Preferred Stock in one
or more series, with
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<PAGE> 4
such voting powers, full or limited but not to exceed one vote per share, or
without voting powers, and with such designations, preferences and relative,
participating, optional or other special rights, and qualifications,
limitations or restriction thereof, as shall be stated and expressed in the
resolution or resolutions providing for the issue thereof adopted by the Board
of Directors, and as are not stated and expressed in this Restated Certificate
of Incorporation, or any amendment thereto, including (but without limiting the
generality of the foregoing) the following:
(i) The designation of such series and number of shares comprising such
series, which number may (except where otherwise provided by the Board of
Directors in creating such series) be increased or decreased (but not below
the number of shares then outstanding) from time to time by action of the
Board of Directors.
(ii) The dividend rate or rates on the shares of such series and the
preference or relation which such dividends shall bear to the dividends
payable on any other class of capital stock or on any other series of
Preferred Stock, the terms and conditions upon which and the periods in
respect of which dividends shall be payable, whether and upon what condition
such dividends shall be cumulative and, if cumulative, the date or dates from
which dividends shall accumulate.
(iii) Whether the shares of such series shall be redeemable, and, if
redeemable, whether redeemable for cash, property or rights, including
securities of any other corporations, at the option of either the holder or
the Corporation or upon the happening of a specified event, the limitations
and restrictions with respect to such redemption, the time or times when, the
price or prices or rate or rates at which, the adjustments with which and the
manner in which such shares shall be redeemable, including the manner of
selection shares of such series for redemption if less than all shares are to
be redeemed.
(iv) The rights to which the holders of shares of such series shall be
entitled, and the preferences, if any, over any other series (or of any other
series over such series), upon the voluntary or involuntary liquidation,
dissolution, distribution or winding up of the Corporation, which rights may
vary depending on whether such liquidation, dissolution, distribution or
winding up is voluntary or involuntary, and, if voluntary, may vary at
different dates.
(v) Whether the shares of such series shall be subject to the operation of
a purchase, retirement or sinking fund, and, if so, whether and upon what
conditions such purchase, retirement or sinking fund shall be cumulative or
noncumulative, the extent to which and the manner in which such fund shall be
applied to the purchase or redemption of the shares of such series for
retirement or to other corporate purposes and the terms and provisions
relative to the operation thereof.
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(vi) Whether the shares of such series shall be convertible into, or
exchangeable for, at the option of either the holder or the Corporation or
upon the happening of a specified event, shares of any other class or of any
other series of any class of capital stock of the Corporation, and, if so
convertible or exchangeable, the times, prices, rates, adjustments, and other
terms and conditions of such conversion or exchange.
(vii) The voting powers, full and/or limited, if any, of the shares of such
series, and whether and under what conditions the shares of such series
(alone or together with the shares of one or more other series having similar
Provisions) shall be entitled to vote separately as a single class, for the
election of one or more directors, or additional directors, of the
Corporation in case of dividend arrearages or other specified events, or upon
other matters.
(viii) Whether the issuance of any additional shares of such series, or of
any shares of any other series, shall be subject to restrictions as to
issuance, or as to the powers, preferences or rights of any such other
series.
(ix) Any other preferences, privileges and powers and relative,
participating, option or other special rights, and qualifications,
limitations or restrictions of such series, as the Board of Directors may
deem advisable and as shall not be inconsistent with the provisions of this
Restated Certificate of Incorporation.
(c) Unless and except to the extent otherwise required by law or provided in
the resolution or resolutions of the Board of Directors creating any series of
Preferred Stock pursuant to this Part I, the holders of the Preferred Stock
shall have no voting power with respect to any matter whatsoever. In no event
shall the Preferred Stock be entitled to more than one vote in respect of each
share of stock.
(d) Shares of Preferred Stock redeemed, converted, exchanged, purchased,
retired or surrendered to the Corporation, or which have been issued and
reacquired in any manner, may, upon compliance with any applicable provisions
of the General Corporation Law of the State of Delaware, be given the status of
authorized and unissued shares of Preferred Stock and may be reissued by the
Board of Directors as part of the series of which they were originally a part
or may be reclassified into and reissued as part of a new series or as a part
of any other series, all subject to the protective conditions or restrictions
of any outstanding series of Preferred Stock.
PART II: COMMON STOCK
(a) Except as otherwise required by law or by any amendment to this Restated
Certificate of Incorporation, each holder of Common Stock Shall have one vote
for each share of stock held by him of record on the books of the Corporation
on all matters voted upon by the stockholders.
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<PAGE> 6
(b) Subject to the preferential dividend rights, if any, applicable to
shares of Preferred Stock and subject to applicable requirements, if any, with
respect to the setting aside of sums for purchase, retirement or sinking funds
for Preferred Stock, the holders of Common Stock shall be entitled to receive,
to the extent permitted by law, such dividends as may be declared from time to
time by the Board of Directors.
(c) In the event of the voluntary or involuntary liquidation, dissolution,
distribution of assets or winding up of the Corporation, after distribution in
full of the preferential amounts, if any, to be distributed to the holders of
shares of Preferred Stock, holders of Common Stock shall be entitled to receive
all of the remaining assets of the Corporation of whatever kind available for
distribution to stockholders ratably in proportion to the number of shares of
Common Stock held by them respectively. The Board of Directors may distribute
in kind to the holders of Common Stock such remaining assets of the Corporation
or may sell, transfer or otherwise dispose of all or any part of such remaining
assets to any other corporation, trust or entity, or any combination thereof,
and may sell all or any part of the consideration so received and distribute
any balance thereof in kind to holders of Common Stock. The merger or
consolidation of the Corporation into or with any other corporation, or the
merger of any other corporation into it, or any purchase or redemption of
shares of stock of the Corporation of any class, shall not be deemed to be a
dissolution, liquidation of winding up of the Corporation for the purposes of
this paragraph.
(d) Such numbers of shares of Common Stock as may from time to time be
required for such purpose shall be reserved for issuance (i) upon conversion of
any shares of Preferred Stock or any obligation of the Corporation convertible
into shares of Common Stock which is at the time outstanding or issuable upon
exercise of any options or warrants at the time outstanding and (ii) upon
exercise of any options, warrants or rights at the time outstanding to purchase
shares of Common Stock.
FIFTH
The Corporation is to have perpetual existence.
SIXTH
The business and affairs of the Corporation shall be managed by or under the
direction of a Board of Directors, the exact number of directors to be
determined from time to time by resolution adopted by affirmative vote of a
majority of the entire Board of Directors. The directors shall be divided into
three classes designated Class I, Class II, and Class III. Each class shall
consist, as nearly as may be possible, of one-third of the total number of
directors constituting the entire Board of Directors. At each annual meeting
of shareholders, successors to the class of directors whose term express at the
annual meeting shall be elected for a three-year term. If the number of
directors is changed, any increase or
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<PAGE> 7
decrease shall be apportioned among the classes so as to maintain the number of
directors in each class as nearly equal as possible, and any additional
director of any class elected to fill a vacancy resulting from an increase in
such class shall hold office for a term that shall coincide with the remaining
term of that class, but in no case will a decrease in the number of directors
shorten the term of any incumbent director. A director shall hold office until
the annual meeting for the year in which his or her term expires and until his
or her successor shall be elected and shall qualify, subject, however, to prior
death, resignation, retirement, disqualification or removal from office. Until
June 18, 1995, vacancies on the Board of Directors may be filled, and
nominations of persons on behalf of the Corporation will be made in accordance
with Article III, Section 12 of the Corporation's Bylaws. Thereafter, any
vacancy on the Board of Directors that results from an increase in the number
of directors may be filled by a majority of the Board of Directors then in
office, and any other vacancy occurring in the Board of Directors may be filled
by a majority of the directors then in office, although less than a quorum, or
by a sole remaining director. Any director elected to fill a vacancy not
resulting from an increase in the number of directors shall have the same
remaining term as that of his or her predecessor.
Notwithstanding the foregoing, whenever the holders of any one or more classes
or series of preferred stock issued by the Corporation shall have the right,
voting separately by class or series, to elect directors at an annual or
special meeting of Shareholders, the election, term of office, filling of
vacancies and other features of such directorships shall be governed by the
terms of this Restated Certificate of Incorporation applicable thereto, and
such directors so elected shall not be divided into classes pursuant to this
Article Sixth unless expressly provided by such terms.
Any amendment, change or repeal of this Article Sixth or any other amendment or
change of this Restated Certificate of Incorporation which will have the effect
of modifying or permitting circumvention of this Article Sixth, shall require
the favorable vote, at a meeting of the Shareholders of the Corporation, of the
holders of at least 75% of the then outstanding shares of capital stock of the
Corporation entitled to vote; provided, however, that such 75% vote shall not
be required for any such amendment, change or repeal recommended to
Shareholders by the affirmative vote of not less than three-fourths of the
Board of Directors then in office, and such amendment, change, or repeal so
recommended shall require only the vote, if any, required under the applicable
provision of the General Corporation Law of the State of Delaware.
SEVENTH
The directors shall have the power to make, alter, amend, change, add to or
repeal the Bylaws of the Corporation not inconsistent with the provisions of
this Restated Certificate of Incorporation. The affirmative vote of the
holders of not less than 75% of the outstanding shares of capital stock of the
Corporation entitled to vote shall be required for the approval and adoption of
any amendment, alteration, change, addition to or repeal of
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<PAGE> 8
Article II, Section (5) and Article III, Section (12) of the Bylaws of the
Corporation proposed by any Shareholder of the Corporation.
Any amendment, change or repeal of this Article Seventh, or any other amendment
of this Restated Certificate of Incorporation which will have the effect of
modifying or permitting circumvention of this Article Seventh, shall require
the favorable vote, at a meeting of the Shareholders of the Corporation, of the
holders of at least 75% of the then outstanding shares of capital stock of the
Corporation entitled to vote; provided, however, that such 75% vote shall not
be required for any such amendment, change or repeal recommended to
Shareholders by the affirmative vote of not less than three-fourths of the
Board of Directors, and such amendment, change, or repeal so recommended shall
require only the vote, if any, required under the applicable provision of the
General Corporation Law of the State of Delaware.
EIGHTH
I. The affirmative vote of (a) the holders of not less than 75% of the
outstanding shares of capital stock of the Corporation entitled to vote and (b)
the holders of not less than a majority of the outstanding shares of capital
stock of the Corporation entitled to vote excluding for purposes of determining
the affirmative vote required by this clause (b) all such shares of which a
"Related Person" (as hereinafter defined) shall be a "Beneficial Owner" (as
hereinafter defined), shall be required for the approval or authorization of
any "Business Combination" (as hereinafter defined) involving a Related Person;
provided, however, that the foregoing voting requirements set forth in clauses
(a) and (b) above shall not be applicable, and the provisions of Delaware law
relating to the percentage of Shareholder approval, if any, shall apply to any
such Business Combination if:
A. The "Continuing Directors" of the Corporation (as hereinafter defined) by
a three-fourths vote thereof have expressly approved the Business Combination
either in advance of or subsequent to the acquisition of outstanding shares of
capital stock of the Corporation that caused the Related Person to become a
Related Person; or
B. If each of the following conditions are satisfied:
1. The aggregate amount of the cash and the fair market value of the
property, securities or other consideration to be received per share of any
class or series of capital stock of the Corporation in the Business
Combination by holders of such capital stock of the Corporation, other than
the Related Person involved in the Business Combination, is not less than the
"Highest Per Share Price" or the "Highest Equivalent Price" (as these terms
are hereinafter defined), paid or to be paid by the Related Person in
acquiring any of such class or series of the capital stock of the Corporation
outside of such Business Combination; and
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<PAGE> 9
2. A proxy statement complying with the requirements of the Securities
Exchange Act of 1934, as amended, shall have been mailed to all Shareholders
of the Corporation for the purpose of soliciting Shareholder approval of the
Business Combination. The proxy statement shall contain at the front
thereof, in a prominent place, the position of the Continuing Directors as to
the advisability (or inadvisability) of the Business Combination and, if
deemed advisable by a majority of the Continuing Directors, the opinion of an
investment banking firm selected by the Continuing Directors as to the
fairness of the terms of the Business Combination, from the point of view of
the holders of the outstanding shares of capital stock of the Corporation
other than any Related Person.
For purposes of this Article Eighth:
1. The term "Business Combination" means (i) any merger, consolidation or
share exchange of the Corporation or any of its subsidiaries into or with any
member of any Related Person, in each case irrespective of which Corporation or
company is the surviving entity; (ii) any sale, lease, exchange, mortgage,
pledge, transfer or other disposition to or with any member of any Related
Person (in a single transaction or a series of related transactions) of all or
a Substantial Part (as hereinafter defined) of the assets of the Corporation
(including without limitation any securities of a subsidiary) or a Substantial
Part of the assets of any of its subsidiaries; (iii) any sale, lease, exchange,
mortgage, pledge, transfer or other disposition to or with the Corporation or
to or with any of its subsidiaries (in a single transaction or series of
related transactions) of all or a Substantial Part of the assets of any member
of any Related Person; (iv) the issuance or transfer of any securities of the
Corporation or any of its subsidiaries by the Corporation or any of its
subsidiaries to any member of any Related Person (other than an issuance or
transfer of securities which is effected on a pro rata basis to all
Shareholders of the Corporation); (v) the acquisition by the Corporation or any
of its subsidiaries of any securities of any member of any Related Person; and
(vi) any agreement, contract or other arrangement providing for any of the
transactions described in this definition of Business Combination.
2. The term "Related Person" shall mean any individual, corporation,
partnership or other person or entity, including any member of a "group" (as
defined in Section 13(d)(3) of the Securities Exchange Act of 1934 as in effect
at the date of the adoption of this Article by the Shareholders of the
Corporation; such act and such Rules and Regulations promulgated thereunder,
collectively and as so in effect, being hereinafter referred to as the
"Exchange Act"), and any "Affiliate" or "Associate" (as defined in Rule 12b-2
of the Exchange Act) of any such individual, corporation, partnership or other
person or entity which, as of the record date for the determination of
Shareholders entitled to notice of and to vote on any Business Combination, or
immediately prior to the consummation of such transaction, together with their
Affiliates and Associates, are "Beneficial Owners" (as defined in Rule 13d-3 of
the Exchange Act) in the aggregate of ten percent or more of the outstanding
shares of any class or series of capital stock of the Corporation.
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<PAGE> 10
3. The term "Substantial Part" shall mean more than 10% of the fair market
value, as determined by three-fourths of the Continuing Directors, of the total
consolidated assets of the Corporation and its subsidiaries taken as a whole,
as of the end of its most recent fiscal year ending prior to the time the
determination is being made.
4. For the purposes of subparagraph B. 1. of Paragraph One of this Article
Eighth, the term "other consideration to be received" shall include, without
limitation, Common stock or other capital stock of the Corporation retained by
Shareholders of the Corporation other than Related Persons or parties to such
Business Combination in which the Corporation is the surviving corporation.
5. The term "Continuing Director" shall mean a director who either (i) was a
member of the Board of Directors of the Corporation immediately prior to the
time that the Related Person involved in a Business Combination became a
Related Person, or (ii) has been designated (before his or her initial election
as director) as a Continuing Director by a majority of the then Continuing
Directors.
6. A "Related Person" shall be deemed to have acquired a share of the capital
stock of the Corporation at the time when such Related Person became a
Beneficial Owner thereof. With respect to the shares owned by Affiliates,
Associates or other persons whose ownership is aggregated with that of a
Related Person under the foregoing definition of Related Person, if the price
paid by such Related Person for such shares is not determinable by the
Continuing Directors, such price shall be deemed to be the higher of (i) the
price paid upon the acquisition thereof by the Affiliate, Associate or other
person or (ii) the market price of the shares in question at the time when the
Related Person became a Beneficial Owner thereof.
7. The terms "Highest Per Share Price" and "Highest Equivalent Price" as used
in this Article Eighth shall mean the following: If there is only one class of
capital stock of the Corporation issued and outstanding, the Highest Per Share
Price shall mean the highest price that can be determined to have been paid at
any time, or to have been agreed to be paid, by the Related Person for any
share or shares of that class of capital stock. If there is more than one
class of capital stock of the Corporation issued and outstanding, the Highest
Equivalent Price shall mean with respect to each class and series of capital
stock of the Corporation, the amount determined by three-fourths of the
Continuing Directors, on whatever basis they believe is appropriate, to be the
highest per share price equivalent for each such class or series of the
highest price that can be determined to have been paid at any time, or to have
been agreed to be paid, by the Related Person for any share or shares of any
class or series of capital stock of the Corporation. In determining the
Highest Per Share Price and Highest Equivalent Price, all acquisitions by the
Related Person shall be taken into account regardless of whether the shares
were acquired before or after the Related Person became a Related Person. The
Highest Per Shares Price and the Highest Equivalent Price shall also include
any brokerage commissions, transfer taxes and soliciting
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<PAGE> 11
dealers' fees paid by the Related Person with respect to the shares of capital
stock of the Corporation acquired by the Related Person.
II. The Board of Directors of the Corporation shall have the power and duty to
determine for the purposes of this Article Eighth on the basis of information
then known to it, (i) whether any person is an Affiliate or Associate of
another person, (ii) whether any proposed sale, lease, exchange or other
disposition of part of the properties or assets of the Corporation involves a
Substantial Part of the properties or assets of the Corporation and (iii) the
value of the Highest Per Share Price and Highest Equivalent Price. Any such
reasonable determination by the Board shall be conclusive and binding for all
purposes of this Article Eighth.
III. Any amendment, change or repeal of this Article Eighth, or any other
amendment of this Restated Certificate of Incorporation which will have the
effect of modifying or permitting circumvention of this Article Eighth, shall
require the favorable vote, at a meeting of the Shareholders of the
Corporation, of (a) the holders of at least 75% of the then outstanding shares
of capital stock of the Corporation entitled to vote and (b) a majority of the
outstanding shares of capital stock of the Corporation entitled to vote of
which a Related Person is not a Beneficial Owner; provided, however, that this
Paragraph III shall not apply to, and such 75% and majority vote shall not be
required for, any such amendment, change or repeal recommended to Shareholders
by the affirmative vote of not less than three-fourths of the Continuing
Directors, and such amendment, change, or repeal so recommended shall require
only the vote, if any, required under the applicable provision of the General
Corporation Law of the State of Delaware.
NINTH
Any action required or permitted to be taken at any Annual or Special Meeting
of Shareholders of the Corporation, may be taken without a meeting, without
prior notice and without a vote, if a consent in writing, setting forth the
action so taken, shall be signed by the holders of not less than 75% of the
outstanding shares of capital stock of the Corporation entitled to vote. Any
amendment, change or repeal of this Article Ninth, or any other amendment of
this Restated Certificate of Incorporation which will have the effect of
modifying or permitting circumvention of this Article Ninth, shall require the
favorable vote, at a meeting of the Shareholders of the Corporation, of the
holders of at lease 75% of the then outstanding shares of capital stock of the
Corporation entitled to vote; provided, however, that such 75% vote shall not
be required for any such amendment, change or repeal recommended to
Shareholders by the affirmative vote of not less than three-fourths of the
Board of Directors, and such amendment, change, or repeal so recommended shall
require only the vote, if any, required under the applicable provision of the
General Corporation Law of the State of Delaware.
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TENTH
The Corporation reserves the right to amend, alter, change or repeal any
provision contained in this Restated Certificate of Incorporation, in the
manner now or hereafter prescribed by the laws of Delaware, and all rights
conferred herein upon stockholders and directors are granted subject to this
reservation. Elections of directors need not be by written ballot unless the
Bylaws of the Corporation shall so provide.
ELEVENTH
A director of the Corporation shall not be personally liable to the Corporation
or its Shareholders for monetary damages for breach of fiduciary duty as a
director except for liability (i) for any breach of the director's duty of
loyalty to the Corporation or its Shareholders; (ii) for act or omissions not
in good faith or which involve intentional misconduct or a knowing violation of
law; (iii) under Section 174 of the Delaware General Corporation Law; or (iv)
for any transaction from which the director derived an improper personal
benefit.
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PAGE 1
STATE OF DELAWARE
LETTERHEAD
OFFICE OF SECRETARY OF STATE
________________________
I, MICHAEL RATCHFORD, SECRETARY OF STATE OF THE STATE OF
DELAWARE, DO HEREBY CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY
OF THE CERTIFICATE OF STOCK DESIGNATION OF "COMERICA INCORPORATED" FILED
IN THIS OFFICE ON THE EIGHTEENTH DAY OF JUNE, A.D. 1992, AT 8:31
O'CLOCK A.M.
/s/ Michael Ratchford
SECRETARY OF STATE AUTHENTICATION: *3488432
DATE: 06/18/1992
[seal]
921705008
<PAGE> 14
STATE OF DELAWARE
SECRETARY OF STATE
DIVISION OF CORPORATIONS
FILED 08:31 AM 06/18/1992
921705008 - 786580
CERTIFICATE OF DESIGNATION
Pursuant to Section 151(g) of the General
Corporation Law of the State of Delaware
860,000 SHARES OF
FIXED RATE CUMULATIVE
PREFERRED STOCK, SERIES B
COMERICA INCORPORATED, a corporation organized and existing under the
laws of the State of Delaware (the "Corporation"), HEREBY CERTIFIES that the
following resolution was duly adopted by the Board of Directors of the
Corporation at meeting thereof held on August 26, 1986, duly amended by the
Board of Directors and duly amended, supplemented, and completed by resolutions
duly adopted by the Board of Directors of the Corporation (i) at a meeting
thereof held on November 25, 1986, and (ii) at a meeting thereof held on June
23, 1987, pursuant to authority conferred upon the Board of Directors by the
provisions of the Restated Certificate of Incorporation, as amended, of the
Corporation, which authorizes the issuance of up to 860,000 shares of "Fixed
Rate Preferred Stock, Series B" (as hereinafter defined) without par value,
and that the complete text of such resolution, as so amended, supplemented, and
completed, is as follows:
NOW, THEREFORE, BE IT RESOLVED, that the Board of Directors hereby
authorizes the issue of the below described series of Preferred Stock
without par value of the Corporation and pursuant to authority set forth in
the Corporation's Restated Certificate of Incorporation, as amended, hereby
fixes the voting powers, designation, preferences and relative,
participating, optional and other special rights, and qualifications,
limitations and
--1--
<PAGE> 15
restrictions thereof as follows:
FIXED RATE CUMULATIVE PREFERRED STOCK, SERIES B
(1) Designation. 860,000 shares of the Preferred Stock without par
value of the Corporation are hereby constituted as a series of Preferred
Stock without par value and designated as Fixed Rate Cumulative Preferred
Stock, Series B (hereinafter called "Fixed Rate Cumulative Preferred Stock,
Series B"). Shares of the Fixed Rate Cumulative Preferred Stock, Series B
shall have a Stated Value of $50 per share. The number of shares
constituting the Fixed Rate Cumulative Preferred Stock, Series B may be
reduced by resolution duly adopted by the Board of Directors and by the
filing of a certificate pursuant to the provisions of the General
Corporation Law of the State of Delaware stating such reduction.
(2) Dividends. The holders of shares of Fixed Rate Cumulative Preferred
Stock, Series B shall be entitled to receive cash dividends, when and as
declared by the Corporation's Board of Directors out of funds legally
available for the purpose, as hereinafter provided in this Section (2).
(a) Dividend rates on the shares of the Fixed Rate Cumulative
Preferred Stock, Series B shall be 8.65% per annum on the Stated Value
thereof for (i) the Initial Dividend Period and (ii) each succeeding
Semi-Annual Dividend Period (the Initial Dividend Period and any
Semi-Annual Dividend Period being hereinafter referred to severally as
a "Dividend Period" and collectively referred to as "Dividend
Periods"). Such dividends shall be cumulative from the date of original
issue of such shares and shall be payable, when and as declared by the
Board, on the first day of January and July of each calendar year,
commencing on the first day of the first January or July following the
date of original issue of such shares. Each such dividend shall be
paid to the holders of record of shares of the Fixed Rate Cumulative
Preferred Stock, Series B as they appear on the stock register of the
Corporation on such record date, not exceeding 30 days preceding the
payment date thereof, as shall be fixed by the Board. Dividends on
account of arrears for any past Dividend Periods may be declared and
paid at any time, without reference to any regular dividend payment
date, to holders of record on such date, not exceeding 45 days
preceding the payment date thereof, as may be fixed by the Board.
(b) Except as provided in the following sentence or in
subsection (c) of this Section (2), no dividends
--2--
<PAGE> 16
shall be declared or paid or set apart for payment on any stock
of the Corporation of any class or series ranking, as to dividends,
on a parity with the Fixed Rate Cumulative Preferred Stock, Series B
for any period unless full cumulative dividends have been or
contemporaneously are declared and paid or declared and a sum
sufficient for the payment thereof set apart for such payment on the
Fixed Rate Cumulative Preferred Stock, Series B outstanding for all
Dividend Periods terminating on or prior to the date of payment of
such dividends on the stock of such other class or series. When
dividends are not paid in full, as aforesaid, upon the shares of the
Fixed Rate Cumulative Preferred Stock, Series B and any other stock of
the Corporation ranking on a parity as to dividends with the Fixed
Rate Cumulative Preferred Stock, Series B, all dividends declared upon
shares of the Fixed Rate Cumulative Preferred Stock, Series B and any
other stock of the Corporation ranking on a parity as to dividends
with the Fixed Rate Cumulative Preferred Stock, Series B shall be
declared pro rata so that the amount of dividends declared per share
on the Fixed Rate Cumulative Preferred Stock, Series B and such other
stock shall in all cases bear to each other the same ratio that
accrued dividends per share on the shares of the Fixed Rate Cumulative
Preferred Stock, Series B and such other stock bear to each other.
Holders of shares of the Fixed Rate Cumulative Preferred Stock, Series
B shall not be entitled to any dividend, whether payable in cash,
property or stocks, in excess of full cumulative dividends, as herein
provided, on the Fixed Rate Cumulative Preferred Stock, Series B.
No interest, or sum of money in lieu of interest, shall be payable in
respect of any dividend payment or payments on the Fixed Rate
Cumulative Preferred Stock, Series B which may be in arrears.
(c) So long as any shares of the Fixed Rate Cumulative
Preferred Stock, Series B are outstanding, no dividend (other than a
dividend in Common Stock or in any other stock of the Corporation
ranking junior to this Series as to dividends and upon liquidation and
other than as provided in this subsection or in subsection (b) of
this Section (2)) shall be declared and paid or set aside for payment
or other distribution declared or made upon the Common Stock or upon
any other stock of the Corporation ranking junior to or on a parity
with the Fixed Rate Cumulative Preferred Stock, Series B as to
dividends or upon liquidation, nor shall any Common Stock or any
other stock of the Corporation ranking junior to or on a parity with
the Fixed Rate Cumulative Preferred Stock,
--3--
<PAGE> 17
Series B as to dividends or upon liquidation be redeemed,
purchased or otherwise acquired for any consideration (or any moneys
paid to or made available for a sinking fund for the redemption of any
shares of any such stock) by the Corporation (except by conversion
into or exchange for stock of the Corporation ranking junior to the
Fixed Rate Cumulative Preferred Stock, Series B as to dividends and
upon liquidation) unless, in each case, the full cumulative dividends
on all outstanding shares of Fixed Rate Cumulative Preferred Stock,
Series B shall have been paid for all past Dividend Periods.
(d) Dividends payable on each share of the Fixed Rate
Cumulative Preferred Stock, Series B for each full Dividend Period
shall be computed by multiplying the Stated Value per share of the
Fixed Rate Cumulative Preferred Stock, Series B by 8.65% per annum.
(e) For purposes of this Section (2), the term:
(i) "Initial Dividend Period" shall mean the period commencing
on the date of issuance and ending on and including the day next
preceding the first day of the first January or July to follow such
date of issuance.
(ii) "Semi-Annual Dividend Period" shall mean each six month
period commencing on January 1 and July 1 of each calendar year and
ending on and including the day next preceding the first day of the
next Semi-Annual Dividend Period.
(3) Redemption. (a) Except as provided in subsection (b) of this
Section (3), the Fixed Rate Cumulative Preferred Stock, Series B may not be
redeemed prior to that date that is 5 years after the date of issuance.
On and after that date, the Corporation, at its option, may redeem shares
of the Fixed Rate Cumulative Preferred Stock, Series B, as a whole or in
part, at any time or from time to time at a redemption price per share of
100% of the Stated Value plus, in each case, accrued and unpaid dividends
thereon (whether or not earned or declared), if any, to the date fixed for
redemption.
(b) In the event the Corporation shall redeem shares of Fixed
Rate Cumulative Preferred Stock, Series B, notice of such redemption
shall be given by registered or certified mail, postage prepaid,
mailed not less than 30 nor more than 60 days prior to the redemption
date, to each holder of record of the shares to be redeemed, at such
holder's address as the same
--4--
<PAGE> 18
appears on the stock register of the Corporation. Each such
notice shall state: (1) the redemption date: (2) the number of
shares of Fixed Rate Cumulative Preferred Stock, Series B to be
redeemed and, if less than all the shares held by such holder are to
be redeemed, the number of such shares to be redeemed from such
holder: (3) the redemption price: (4) the place or places where
certificates for such shares are to be surrendered for payment of the
redemption price; and (5) that dividends on the shares to be redeemed
will cease to accrue on such redemption date. Notice having been
mailed as aforesaid, from and after the redemption date (unless
default shall be made by the Corporation in providing money for the
payment of the redemption price) dividends on the shares of the Fixed
Rate Cumulative Preferred Stock, Series B so called for redemption
shall cease to accrue, and said shares shall no longer be deemed to be
outstanding, and all rights of the holders thereof as stockholders of
the Corporation (except the right to receive from the Corporation the
redemption price) shall cease. The Corporation's obligation to
provide moneys in accordance with the preceding sentence shall be
deemed fulfilled if, on or before the redemption date, the Corporation
shall deposit with a bank or trust company (which may be an affiliate
of the Corporation), having a capital and surplus of at least
$50,000,000.00, funds necessary for such redemption, in trust, with
irrevocable instructions that such funds be applied to the redemption
of the shares of Fixed Rate Cumulative Preferred Stock, Series B so
called for redemption. Any interest accrued on such funds shall be
paid to the Corporation from time to time. Any funds so deposited and
unclaimed at the end of six years from such redemption date shall be
released or repaid to the Corporation, after which the holder or
holders of such shares of Fixed Rate Cumulative Preferred Stock,
Series B so called for redemption shall look only to the Corporation
for payment of the redemption price.
Upon surrender in accordance with said notice of the
certificates for any shares so redeemed (properly endorsed or assigned
for transfer, if the Board of Directors of the Corporation shall so
require and the notice shall so state), such shares shall be redeemed
by the Corporation at the redemption price aforesaid. If less than all
the outstanding shares of Fixed Rate Cumulative Preferred Stock,
Series B are to be redeemed, shares to be redeemed shall be selected
by the Corporation from outstanding shares of Fixed Rate Cumulative
Preferred Stock, Series B not previously called for redemption by lot
or pro rata (as nearly as
--5--
<PAGE> 19
may be) or by any other method determined by the Corporation in
its sole discretion to be equitable.
In no event shall the Corporation redeem less than all the
outstanding shares of Fixed Rate Cumulative Preferred Stock, Series B
pursuant to subsection (a) of this Section (3) or purchase or acquire
any shares of the Fixed Rate Cumulative Preferred Stock, Series B
(otherwise than pursuant to a purchase or exchange offer made on the
same terms to all holders of the Fixed Rate Cumulative Preferred
Stock, Series B) unless full cumulative dividends shall have been paid
or declared and a sum sufficient for the payment thereof set apart for
such payment upon all outstanding shares of Fixed Rate Cumulative
Preferred Stock, Series B for all past Dividend Periods.
(c) All shares of Fixed Rate Cumulative Preferred Stock, Series
B redeemed or purchased by the Corporation shall be retired and
cancelled and shall be restored to the status of authorized but
unissued shares of preferred stock, without designation as to series,
and may thereafter be issued as and when designated as part of a
particular series by the Corporation.
(4) Liquidation Preference. In the event of any liquidation,
dissolution or winding up of the Corporation, whether voluntary or
involuntary, before any payment or distribution of the assets of the
Corporation (whether capital or surplus) shall be made to or set apart for
the holders of any of the Common Stock or any other series or class or
classes of capital stock of the Corporation ranking junior to the Fixed
Rate Cumulative Preferred Stock, Series B with respect to distribution of
assets on liquidation, dissolution or winding up of the Corporation
("Junior Liquidation Stock"), the holders of the shares of the Fixed Rate
Cumulative Preferred Stock, Series B shall be entitled to receive an amount
per share equal to the Stated Value plus an amount equal to all dividends
(whether or not earned or declared) accrued and unpaid thereon to the date
of final distribution to such holders; but such holders shall not be
entitled to any further payment. If, upon any liquidation, dissolution or
winding up of the Corporation, the assets of the Corporation, or proceeds
thereof, distributable among the holders of the shares of the Fixed Rate
Cumulative Preferred Stock, Series B shall be insufficient to pay in full
the preferential amount aforesaid and liquidating payments on any other
stock of the Corporation ranking as to liquidation, dissolution or winding
up, on a parity with the Fixed Rate Cumulative Preferred Stock, Series B,
then such assets, or the proceeds
--6--
<PAGE> 20
thereof, shall be distributed among the holders of Fixed Rate
Cumulative Preferred Stock, Series B and any such other stock ratably in
accordance with the respective amounts which would be payable on such
shares of Fixed Rate Cumulative Preferred Stock, Series B and any such
other stock if all amounts payable thereon were paid in full. For the
purposes of this Section (4), a consolidation or merger of the Corporation
with one or more corporations shall not be deemed to be a liquidation,
dissolution or winding up, voluntary or involuntary.
Subject to the rights of the holders of shares of any series or class
or classes of stock of the Corporation ranking on a parity with or prior to
the Fixed Rate Cumulative Preferred Stock, Series B upon liquidation,
dissolution or winding up, upon any liquidation, dissolution or winding up
of the Corporation, after payment shall have been made in full to the Fixed
Rate Cumulative Preferred Stock, Series B as provided in this Section (4),
but not prior thereto, any Junior Liquidation Stock shall, subject to the
respective terms and provisions (if any) applying thereto, be entitled to
receive any and all assets remaining to be paid or distributed, and the
Fixed Rate Cumulative Preferred Stock, Series B shall not be entitled to
share therein.
(5) Purchase, Retirement or Sinking Fund. The shares of Fixed Rate
Cumulative Preferred Stock, Series B shall not be subject to the operation
of any purchase, retirement or sinking fund.
(6) Conversion or Exchange. The holders of shares of Fixed Rate
Cumulative Preferred Stock, Series B shall not have any rights to convert
such shares into or exchange such shares for shares of any other class or
classes or of any other series of any class or classes of capital stock (or
any other security) of the Corporation.
(7) Voting. Except as hereinafter in this Section (7) expressly
provided or as otherwise from time to time required by law, the Fixed Rate
Cumulative Preferred Stock, Series B shall have no voting rights. If the
Fixed Rate Cumulative Preferred Stock, Series B shall be issued in
fractional shares, then, whenever the holders of the Fixed Rate Cumulative
Preferred Stock, Series B are entitled to vote, each such fractional share
shall entitle the holder thereof to a corresponding fraction of one vote.
Each holder of outstanding shares of Fixed Rate Cumulative Preferred
Stock, Series B shall be entitled to one vote for each such share held,
voting with the holders of outstanding shares of the Corporation s Common
Stock, par
--7--
<PAGE> 21
value $5.00 per share, as a class.
The foregoing voting provisions shall not apply if, at or prior to the
time when the act with respect to which such vote would otherwise be
required shall be effected, all outstanding shares of the Fixed Rate
Cumulative Preferred Stock, Series B shall have been redeemed or sufficient
funds shall have been deposited in trust to effect such redemption.
(8) Ranking. Any class or classes of stock of the Corporation shall
be deemed to rank:
(a) prior to the Fixed Rate Cumulative Preferred Stock, Series
B as to dividends or upon liquidation if the holders of such class
shall be entitled to the receipt of dividends or of amounts
distributable upon liquidation, dissolution or winding up, as the case
may be, in preference or priority to the holders of the Fixed Rate
Cumulative Preferred Stock, Series B;
(b) on a parity with the Fixed Rate Cumulative Preferred Stock
as to dividends or upon liquidation, whether or not the dividend
rates, dividend payment dates, or redemption or liquidation prices per
share thereof be different from those of the Fixed Rate Cumulative
Preferred Stock, Series B, if the holders of such class of stock and
the Fixed Rate Cumulative Preferred Stock, Series B shall be entitled
to the receipt of dividends or of amounts distributable upon
liquidation, dissolution or winding up, as the case may be, in
proportion to their respective dividend rates or liquidation prices,
without preference or priority one over the other; and
(c) junior to the Fixed Rate Cumulative Preferred Stock, Series
B, as to dividends or upon liquidation, if such class shall be Common
Stock or if the holders of the Fixed Rate Cumulative Preferred Stock,
Series B shall be entitled to the receipt of dividends or of amounts
distributable upon liquidation, dissolution or winding up, as the case
may be, in preference or priority to the holders of shares of such
class or classes.
(9) Additional Stock. Except as expressly provided in Section (7)
above and in the Restated Certificate of Incorporation, neither the
issuance of additional shares of Fixed Rate Cumulative Preferred Stock,
Series B nor the issuance of shares of any other class or series of stock
of the Corporation shall be subject to restrictions as to issuance, or as
to the powers, preferences, or rights
--8--
<PAGE> 22
thereof.
(10) No Other Special Rights. The Fixed Rate Cumulative Preferred
Stock, Series B shall have no other preferences, privileges or powers or
relative, optional or other special rights, or qualifications, limitations
or restrictions, except as set forth in Sections (1) through (9) above and
except as provided in the Restated Certificate of Incorporation and by
applicable law.
IN WITNESS WHEREOF, the Corporation has caused this Certificate to be
signed by Eugene A. Miller, its Chairman of the Board, President and Chief
Executive Officer, and attested by Judith C. Lalka, its Secretary, as of
the 18th day of June, 1992.
COMERICA INCORPORATED
/s/ Eugene A. Miller
_____________________
By: Eugene A. Miller
Its: Chairman of the Board, President and
Chief Executive Officer
Attest:
/s/ Judith C. Lalka
_________________________
By: Judith C. Lalka
Its: Secretary
--9--
<PAGE> 23
PAGE 1
STATE OF DELAWARE
LETTERHEAD
OFFICE OF SECRETARY OF STATE
________________________
I, MICHAEL RATCHFORD, SECRETARY OF STATE OF THE STATE OF
DELAWARE, DO HEREBY CERTIFY THE ATTACHED IS A TRUE AND CORRECT
COPY OF THE CERTIFICATE OF STOCK DESIGNATION OF "COMERICA
INCORPORATED" FILED IN THIS OFFICE ON THE EIGHTEENTH DAY OF JUNE,
A.D. 1992, AT 8:32 O'CLOCK A.M.
/s/ Michael Ratchford
SECRETARY OF STATE
AUTHENTICATION: *3488537
DATE: 06/18/1992
[Seal]
921705009
<PAGE> 24
STATE OF DELAWARE
SECRETARY OF STATE
DIVISION OF CORPORATIONS
FILED 08:32 AM 06/18/1992
921705009 - 786580
CERTIFICATE OF DESIGNATION,
PREFERENCES AND RIGHTS OF SERIES C
PARTICIPATING PREFERRED STOCK
COMERICA INCORPORATED
Pursuant to Section 151 of the General Corporation Law
of the State of Delaware
We, Eugene A. Miller, President, and Judith C. Lalka, Secretary, of
Comerica Incorporated, a corporation organized and existing under the General
Corporation Law of the State of Delaware, in accordance with the provisions of
Section 103 thereof, DO HEREBY CERTIFY:
That pursuant to the authority conferred upon the Board of Directors by
the Restated Certificate of Incorporation of the said Corporation, the said
Board of Directors on January 26, 1988, as duly amended by the Board on January
28, 1992, adopted the following resolution creating a series of 500,000 shares
of Preferred Stock designated as Series C Participating Preferred Stock:
RESOLVED, that pursuant to the authority vested in the Board of
Directors of this Corporation in accordance with the provisions of its
Restated Certificate of Incorporation, a series of Preferred Stock of
the Corporation be, and it hereby is, created and that the designation
and amount thereof and the voting powers, preferences and relative,
participating, optional and other special rights of the shares of such
series and the qualifications, limitations or restrictions thereof are
as follows:
Section 1. Designation and Amount. The shares of such series shall be
designated as "Series C Participating Preferred Stock" and the number of
shares constituting such series shall be 500,000.
<PAGE> 25
Section 2. Dividends and Distributions.
(A) The dividend rate on the shares of Series C Participating Preferred
Stock for each quarterly dividend period (hereinafter referred to as a
"quarterly dividend period"), which quarterly dividend periods shall
commence on January 1, April 1, July 1 and October 1 in each year (each
such date being referred to herein as a "Quarterly Dividend Payment Date")
(or in the case of original issuance, from the date of original issuance)
and shall end on and include the day next preceding the first date of the
next quarterly dividend period, shall be equal (rounded to the nearest
cent) to the greater of (a) $10.00 or (b) subject to the provision for
adjustment hereinafter set forth, 100 times the aggregate per share amount
of all cash dividends, and 100 times the aggregate per share amount
(payable in cash, based upon the fair market value at the time the non-cash
dividend or other distribution is declared as determined in good faith by
the Board of Directors) of all non-cash dividends or other distributions
other than a dividend payable in shares of Common Stock or a subdivision of
the outstanding shares of Common Stock (by reclassification or otherwise),
declared (but not withdrawn) on the Common Stock, $5.00 par value, of this
Corporation (the "Common Stock") during the immediately preceding quarterly
dividend period, or, with respect to the first quarterly dividend period,
since the first issuance of any share or fraction of a share of Series C
Participating Preferred Stock. In the event the Corporation shall at any
time after January 26, 1988 (the "Rights Declaration Date") (i) declare any
dividend on Common Stock payable in shares of Common Stock, (ii) subdivide
the outstanding Common Stock, or (iii) combine the outstanding Common Stock
into a smaller number of shares, then in each such case the amount to which
holders of shares of Series C Participating Preferred Stock were entitled
immediately prior to such event under clause (b) of the preceding sentence
shall be adjusted by multiplying such amount by a fraction the numerator of
which is the number of shares of Common Stock outstanding immediately after
such event and the denominator of which is the number of shares of Common
Stock that were outstanding immediately prior to such event.
(B) The Corporation shall declare a dividend or distribution on the
Series C Participating Preferred Stock as provided in paragraph (A) above
immediately after it declares a dividend or distribution on the Common
Stock (other than a dividend payable in shares of Common Stock); provided
that, in the event no dividend or distribution shall have been declared on
the Common Stock during the period between any Quarterly Dividend Payment
Date and the next subsequent Quarterly Dividend Payment Date, a dividend of
$10.00 per share on the Series C Participating Preferred Stock shall
nevertheless be payable on such subsequent Quarterly Dividend Payment Date.
(C) Dividends shall begin to accrue and be cumulative on outstanding
shares of Series C Participating Preferred Stock from the Quarterly
Dividend Payment Date next preceding the date of issue of such shares of
Series C Participating Preferred Stock, unless the date of issue of such
shares is prior to the record date for the first Quarterly Dividend Payment
Date, in which case dividends on such shares shall begin to accrue from the
date of issue of such shares, or unless the date of issue is a Quarterly
Dividend Payment Date
2
<PAGE> 26
or is a date after the record date for the determination of holders of
shares of Series C Participating Preferred Stock entitled to receive a
quarterly dividend and before such Quarterly Dividend Payment Date, in
either of which events, such dividends shall begin to accrue and be
cumulative from such Quarterly Dividend Payment Date. Accrued but unpaid
dividends shall not bear interest. Dividends paid on the shares of Series C
Participating Preferred Stock in an amount less than the total amount of
such dividends at the time accrued and payable on such shares shall be
allocated pro rata on a share-by-share basis among all such shares at the
time outstanding. The Board of Directors may fix a record date for the
determination of holders of shares of Series C Participating Preferred
Stock entitled to receive payment of a dividend or distribution declared
thereon, which record date shall be no more than 30 days prior to the date
fixed for the payment thereof.
Section 3. Voting Rights. The holders of shares of Series C
Participating Preferred Stock shall have the following voting rights:
(A) Subject to the provision for adjustment hereinafter set forth,
each share of Series C Participating Preferred Stock shall entitle the
holder thereof to one vote on all matters submitted to a vote of the
stockholders of the Corporation. In the event the Corporation shall at any
time after the Rights Declaration Date (i) declare any dividend on Common
Stock payable in shares of Common Stock, (ii) subdivide the outstanding
Common Stock, or (iii) combine the outstanding Common Stock into a smaller
number of shares, then in each such case the number of votes per share to
which holders of shares of Series C Participating Preferred Stock were
entitled immediately prior to such event shall be adjusted by multiplying
such number by a fraction the numerator of which is the number of shares of
Common Stock outstanding immediately after such event and the denominator
of which is the number of shares of Common Stock that were outstanding
immediately prior to such event, provided, however, that in no event shall
any share of Series C Participating Preferred Stock have more than one vote
per share.
(B) Except as otherwise provided herein, by the Restated Certificate
of Incorporation or by law, the holders of shares of Series C Participating
Preferred Stock and the holders of shares of Common Stock shall vote
together as one class on all matters submitted to a vote of stockholders of
the Corporation.
(C) (i) If at any time dividends on any Series C Participating
Preferred Stock shall be in arrears in an amount equal to six (6) quarterly
dividends thereon, the occurrence of such contingency shall mark the
beginning of a period (herein called a "default period") which shall extend
until such time when all accrued and unpaid dividends for all previous
quarterly dividend periods and for the current quarterly dividend period on
all shares of Series C Participating Preferred Stock then outstanding shall
have been declared and paid or set apart for payment. During each default
period, all holders of the Series C Participating Preferred Stock with
dividends in arrears in an amount equal to six (6) quarterly dividends
thereon, voting as a class, shall have the right to elect two (2)
Directors.
3
<PAGE> 27
(ii) During any default period, such voting right of the holders of
Series C Participating Preferred Stock may be exercised initially at a
special meeting called pursuant to subparagraph (iii) of this Section 3(C)
or at any annual meeting of stockholders, and thereafter at annual meetings
of stockholders, provided that neither such voting right nor the right of
the holders of any other series of preferred stock, if any, to increase, in
certain cases, the authorized number of Directors shall be exercised unless
the holders of ten percent (10%) in number of shares of Series C
Participating Preferred Stock outstanding shall be present in person or by
proxy. The absence of a quorum of the holders of Common Stock shall not
affect the exercise by the holders of Series C Participating Preferred
Stock of such voting right. At any meeting at which the holders of Series C
Participating Preferred Stock shall exercise such voting right initially
during an existing default period, they shall have the right, voting as a
class, to elect Directors to fill such vacancies, if any, in the Board of
Directors as may then exist up to two (2) Directors or, if such right is
exercised at an annual meeting, to elect two (2) Directors. If the number
which may be so elected at any special meeting does not amount to the
required number, the holders of the Series C Participating Preferred Stock
shall have the right to make such increase in the number of Directors as
shall be necessary to permit the election by them of the required number.
After the holders of the Series C Participating Preferred Stock shall have
exercised their right to elect Directors in any default period and during
the continuance of such period, the number of Directors shall not be
increased or decreased except by vote of the holders of Series C
Participating Preferred Stock as herein provided or pursuant to the rights
of any equity securities ranking senior to or pari passu with the Series C
Participating Preferred Stock.
(iii) Unless the holders of Series C Participating Preferred Stock
shall, during an existing default period, have previously exercised their
right to elect Directors, the Board of Directors may order, or any
stockholder or stockholders owning in the aggregate not less than ten
percent (10%) of the total number of shares of Series C Participating
Preferred Stock outstanding, irrespective of series, may request, the
calling of a special meeting of the holders of Series C Participating
Preferred Stock, which meeting shall thereupon be called by the Chairman,
the President or the Secretary of the Corporation. Notice of such meeting
and of any annual meeting at which holders of Series C Participating
Preferred Stock are entitled to vote pursuant to this paragraph (C) (iii)
shall be given to each holder of record of Series C Participating Preferred
Stock by mailing a copy of such notice to the holder at the holder's last
address as the same appears on the books of the Corporation. Such meeting
shall be called for a time not earlier than 20 days and not later than 60
days after such order or request, or in default of the calling of such
meeting within 60 days after such order or request, such meeting may be
called on similar notice by any stockholder or stockholders owning in the
aggregate not less than ten percent (10%) of the total number of shares of
Series C Participating Preferred Stock outstanding. Notwithstanding the
provisions of this paragraph (C)(iii), no such special meeting shall be
called during the period within 60 days immediately preceding the date
fixed for the next annual meeting of the stockholders.
4
<PAGE> 28
(iv) In any event default period, the holders of Common
Stock, and other classes of Stock of the Corporation if applicable,
shall continue to be entitled to elect the whole number of Directors
until the holders of Series C Participating Preferred Stock shall
have exercised their right to elect two (2) Directors voting as a
class, after the exercise of which right (x) the Directors so elected
by the holders of Series C Participating Preferred Stock shall
continue in office until their successors shall have been elected by
such holders or until the expiration of the default period, and (y)
any vacancy in the Board of Directors may (except as provided in
paragraph (C)(ii) of this Section 3) be filled by vote of a majority
of the remaining Directors theretofore elected by the holders of the
class of the stock which elected the Director whose office shall have
become vacant. References in this paragraph (C) to Directors elected
by the holders of a particular class of stock shall include Directors
elected by such Directors to fill vacancies as provided in clause (y)
of the foregoing sentence.
(v) Immediately upon the expiration of a default period,
(x) the right of the holders of Series C Participating Preferred Stock as
a class to elect Directors shall cease, (y) the term of any Directors
elected by the holders of Series C Participating Preferred Stock as a
Class shall terminate, and (z) the number of Directors shall be such
number as may be provided for in the certificate of incorporation or
by-laws irrespective of any increase made pursuant to the provisions
of paragraph (C)(ii) of this Section 3 (such number being subject,
however, to change, thereafter in any manner provided by law or in
the certificate of incorporation or by-laws). Any vacancies in the
in the preceding sentence may be filled by a majority of the
remaining directors.
(D) Except as set forth herein, holders of Series C Participating
Preferred Stock shall have no special voting rights and their consent
shall not be required (except to the extent that are entitled to vote
with holders of Common Stock as set forth herein) for taking any
corporate action.
Section 4. Certain Restrictions.
(A) Whenever quarterly dividends or other dividends or
distributions payable on the Series C Participating Preferred Stock as
provided in Section 2 are in arrears, thereafter and until all accrued
and unpaid dividends and distributions, whether or not declared, on shares
of Series C Participating Preferred Stock outstanding shall have been
paid in full, the Corporation shall not:
(i) declare or pay dividends on, make any other
distributions on, or redeem or purchase or otherwise acquire for
consideration, any shares of stock ranking junior (either as to dividends or
upon liquidation, dissolution or winding up) to the Series C Participating
Preferred Stock;
5
<PAGE> 29
(ii) declare or pay dividends on, or make any other distributions
on, any shares of stock ranking on a parity (either as to dividends or upon
liquidation, dissolution or winding up) with the Series C Participating
Preferred Stock, except dividends paid ratably on the Series C
Participating Preferred Stock and all such parity stock on which dividends
are payable or in arrears in proportion to the total amounts to which the
holders of all such shares are then entitled;
(iii) redeem or purchase or otherwise acquire for consideration
shares of any stock ranking on a parity (either as to dividends or upon
liquidation, dissolution or winding up) with the Series C Participating
Preferred Stock, provided that the Corporation may at any time redeem,
purchase or otherwise acquire shares of any such parity stock in exchange
for shares of any stock of the Corporation ranking junior (either as to
dividends or upon liquidation, dissolution or winding up) to the Series C
Participating Preferred Stock; and
(iv) purchase or otherwise acquire for consideration any shares of
Series C Participating Preferred Stock, or any shares of stock ranking on a
parity with the Series C Participating Preferred Stock, except in
accordance with a purchase offer made in writing or by publication (as
determined by the Board of Directors) to all holders of such shares upon
such terms as the Board of Directors, after consideration of the respective
annual dividend rates and other relative rights and preferences of the
respective series and classes, shall determine in good faith will result in
fair and equitable treatment among the respective series or classes.
(B) The Corporation shall not permit any subsidiary of the
Corporation to purchase or otherwise acquire for consideration any shares
of stock of the Corporation unless the Corporation could, under paragraph
(A) of this Section 4, purchase or otherwise acquire such shares at such
time and in such manner.
Section 5. Reacquired Shares. Any shares of Series C Participating
Preferred Stock purchased or otherwise acquired by the Corporation in any
manner whatsoever shall be retired and cancelled promptly after the
acquisition thereof. All such shares shall upon their cancellation become
authorized but unissued shares of Preferred Stock and may be reissued as
part of a new series of Preferred Stock to be created by resolution or
resolutions of the Board of Directors, subject to the conditions and
restrictions on issuance set forth herein.
Section 6. Liquidation, Dissolution or Winding Up.
(A) In the event of any voluntary or involuntary liquidation,
dissolution or winding up of the Corporation, no distribution shall be made
to the holders of stock ranking junior (either as to dividends or upon
liquidation, dissolution or winding up) to the Series C Participating
Preferred Stock unless, prior thereto, the holders of shares of Series C
Participating Preferred Stock shall have received $100.00 per share, plus
accrued and unpaid
6
<PAGE> 30
dividends to the date of distribution, whether or not earned or
declared to the date of such payment (the "Series C Liquidation
Preference"). Following the payment of the full amount of the Series C
Liquidation Preference, no additional distributions shall be made to the
holders of shares of Series C Participating Preferred Stock unless, prior
thereto, the holders of shares of Common Stock shall have received an
amount per share (the "Common Adjustment") equal to the quotient obtained
by dividing (i) the Series C Liquidation Preference by (ii) 100 (as
appropriately adjusted as set forth in subparagraph C below to reflect such
events as stock splits, stock dividends and recapitalizations with respect
to the Common Stock) (such number in clause (ii), the "Adjustment Number").
Following the payment of the full amount of the Series C Liquidation
Preference and the Common Adjustment in respect of all outstanding shares
of Series C Participating Preferred Stock and Common Stock, respectively,
holders of Series C Participating Preferred Stock and holders of shares of
Common Stock shall receive their ratable and proportionate share of the
remaining assets to be distributed in the ratio of the Adjustment Number to
1 with respect to such Preferred stock and Common Stock, on a per share
basis, respectively.
(B) In the event, however, that there are not sufficient assets
available to permit payment in full of the Series C Liquidation Preference
and the liquidation preferences of all other series of preferred stock, if
any, which rank on a parity with the Series C Participating Preferred
Stock, then such remaining assets shall be distributed ratably to the
holders of such parity shares in proportion to their respective liquidation
preferences. In the event, however, that there are not sufficient assets
available to permit payment in full of the Common Adjustment, then such
remaining assets shall be distributed ratably to the holders of Common
Stock.
(C) In the event the Corporation shall at any time after the Rights
Declaration Date (i) declare any dividend on Common Stock payable in shares
of Common Stock, (ii) subdivide the outstanding Common Stock, or (iii)
combine the outstanding Common Stock into a smaller number of shares, then
in each such case the amount to which holders of shares of Series C
Participating Preferred Stock were entitled immediately prior to such event
pursuant to clause (ii) of Subsection (A) above shall be adjusted by
multiplying such amount by a fraction the numerator of which is the number
of shares of Common Stock outstanding immediately after such event and the
denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
Section 7. Consolidation, Merger, etc. In case the Corporation shall
enter into any consolidation, merger, combination or other transaction in
which the shares of Common Stock are exchanged for or changed into other
stock or securities, cash and/or any other property, then in any such case
the shares of Series C Participating Preferred Stock shall at the same time
be similarly exchanged or changed in an amount per share (subject to the
provision for adjustment hereinafter set forth) equal to 100 times the
aggregate amount of stock, securities, cash and/or any other property
(payable in kind), as the case may be, into which or for which each share
of Common Stock is changed or exchanged. In the event the Corporation shall
at any time after the Rights Declaration Date (i) declare any dividend on
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Common Stock payable in shares of Common Stock, (ii) subdivide the
outstanding Common Stock, or (iii) combine the outstanding Common Stock
into a smaller number of shares, then in each such case the amount set
forth in the preceding sentence with respect to the exchange or change of
shares of Series C Participating Preferred Stock shall be adjusted by
multiplying such amount by a fraction the numerator of which is the number
of shares of Common Stock outstanding immediately after such event and the
denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
Section 8. No Redemption. The shares of Series C Participating
Preferred Stock shall not be redeemable.
Section 9. Ranking. The Series C Participating Preferred Stock shall
rank junior to the Adjustable Rate Cumulative Dividend Preferred Stock,
Series A and the $4.32 Cumulative Preferred Stock, Series B of the
Corporation as to the payment of dividends and as regards liquidation,
dissolution and winding up and shall rank junior to all other series of the
Corporation's Preferred Stock as to the payment of dividends and as regards
liquidation, dissolution and winding up, unless the terms of any such
series shall provide otherwise.
Section 10. Amendment. The Restated Certificate of Incorporation of
the Corporation shall not be further amended in any manner which would
materially alter or change the powers, preferences or special rights of the
Series C Participating Preferred Stock so as to affect them adversely
without the affirmative vote of the holders of a majority or more of the
outstanding shares of Series C Participating Preferred Stock, voting
separately as a class.
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Section 11. Fractional Shares. Series C Participating Preferred Stock
may be issued in fractions of a share which shall entitle the holder, in
proportion to such holders fractional shares, to exercise voting rights,
receive dividends, participate in distributions and to have the benefit of
all other rights of holders of Series C Participating Preferred Stock.
IN WITNESS WHEREOF, the Corporation has caused this Certificate to be
signed by Eugene A. Miller, its Chairman of the Board, President and Chief
Executive Officer, and attested by Judith C. Lalka, its Secretary, as of
the 18th day of June, 1992.
COMERICA INCORPORATED
/s/ Eugene A. Miller
_____________________
By: Eugene A. Miller
Its: Chairman of the Board, President and
Chief Executive Officer
Attest:
/s/ Judith C. Lalka
____________________
By: Judith C. Lalka
Its: Secretary
--9--
<PAGE> 1
Ex. 3.2
As Amended on
July 16, 1993
BYLAWS
OF
COMERICA INCORPORATED
ARTICLE I
OFFICES
SECTION 1. REGISTERED OFFICE. The registered office shall be
in the City of Wilmington, County of New Castle, State of Delaware.
SECTION 2. OTHER OFFICES. The Corporation may also have
offices at such other places both within and without the State of Delaware as
the Board of Directors may from time to time determine or the business of the
Corporation may require.
ARTICLE II
MEETINGS
SECTION 1. PLACE OF MEETING. All meetings of the shareholders
of this Corporation shall be held at such time and place, either within or
without the State of Delaware, as shall be designated from time to time by the
Board of Directors and stated in the notice of the meeting.
SECTION 2. ANNUAL MEETING OF SHAREHOLDERS. The annual meeting
of shareholders shall be held on the fourth Tuesday of April, if not a legal
holiday, and if a legal holiday then the next secular day following, at 10:00
a.m., or at such other date and time as shall be designated from time to time
by the Board of Directors and stated in the notice of the meeting. At said
meeting, shareholders shall elect by a plurality vote the Directors to be
elected at such meeting, and shall transact such other business as may properly
be brought before the meeting.
SECTION 3. NOTICE OF MEETING OF SHAREHOLDERS. Written notice
of every meeting of shareholders stating the place, date and hour of the
meeting, and, in the case of a special meeting, the purpose or purposes for
which the meeting is called, shall be given to each shareholder entitled to
vote at such meeting not less than ten (10) nor more than sixty (60) days
before the date of the meeting. Business transacted at any special meeting of
shareholders shall be limited to the purposes stated in the notice.
<PAGE> 2
SECTION 4. LIST OF SHAREHOLDERS ENTITLED TO VOTE. The officer
who has charge of the stock ledger of the Corporation shall prepare and make,
at least ten (10) days before every meeting of shareholders, a complete list of
the shareholders entitled to vote at the meeting, arranged in alphabetical
order, and showing the address of each shareholder and the number of shares
registered in the name of each shareholder. Such list shall be open to the
examination of any shareholder, for any purpose germane to the meeting, during
ordinary business hours, for a period of at least ten (10) days prior to the
meeting, either at a place within the city where the meeting is to be held,
which place shall be specified in the notice of the meeting, or, if not so
specified, at the place where the meeting is to be held. The list shall also
be produced and kept at the time and place of the meeting during the whole time
thereof, and may be inspected by any shareholder who is present.
SECTION 5. SPECIAL MEETINGS OF SHAREHOLDERS. Special meetings
of the shareholders, for any purpose or purposes, unless otherwise prescribed
by statute or by the Certificate of Incorporation, may be called by the
Chairman of the Board of Directors or, during the absence or disability of the
Chairman or while that office is vacant, by the President and shall be called
by the President or Secretary at the request in writing of a majority of the
Board of Directors, or at the request in writing of shareholders owning, in the
aggregate, at least seventy-five percent (75%) in amount of the entire capital
stock of the Corporation issued and outstanding and entitled to vote at such
special meeting. Such request shall state the purpose or purposes of the
proposed meeting.
SECTION 6. QUORUM OF SHAREHOLDERS. The holders of a majority
of the stock issued and outstanding and entitled to vote thereat, present in
person or represented by proxy, shall constitute a quorum at all meetings of
the shareholders for the transaction of business except as otherwise provided
by statute or by the Certificate of Incorporation. If, however, such quorum
shall not be present or represented at any meeting of the shareholders, the
shareholders entitled to vote thereat, present in person or represented by
proxy, shall have power to adjourn the meeting from time to time, without
notice other than announcement at the meeting, until a quorum shall be present
or represented. At such adjourned meeting at which a quorum shall be present
or represented any business may be transacted which might have been transacted
at the meeting as originally notified. If the adjournment is for more than
thirty (30) days, or if after the adjournment a new record date is fixed for
the adjourned meeting, a notice of the adjourned meeting shall be given to each
shareholder of record entitled to vote at the meeting.
SECTION 7. REQUIRED VOTE. When a quorum is present at any
meeting, the vote of the holders of a majority of the stock having voting
power, present in person or represented by proxy, shall decide any question
brought before such meeting, unless the question is one upon which a different
vote is required by statute or by the Certificate of Incorporation.
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SECTION 8. VOTING. Unless otherwise provided in the
Certificate of Incorporation or in a certificate filed pursuant to Section
151(g) of the General Corporation Law of Delaware, as amended, each shareholder
shall at every meeting of the shareholders be entitled to one vote, in person
or by proxy, for each share of the capital stock having voting power held by
such shareholder, but no proxy shall be voted on after three (3) years from its
date, unless the proxy provides for a longer period.
ARTICLE III
DIRECTORS
SECTION 1. POWERS. The business of the Corporation shall be
managed by or under the direction of its Board of Directors which may exercise
all such powers of the Corporation and do all such lawful acts and things as
are not by statute or by the Certificate of Incorporation or by these Bylaws
directed or required to be exercised or done by the shareholders.
SECTION 2. LOCATION OF MEETINGS. The Board of Directors of
the Corporation may hold meetings, both regular and special, either within or
without the State of Delaware.
SECTION 3. ORGANIZATION MEETING OF BOARD. The first meeting
of each newly elected Board of Directors shall be held at the place of holding
the annual meeting of shareholders, and immediately following the same, for the
purpose of electing officers and transacting any other business properly
brought before it, provided that the organization meeting in any year may be
held at a different time and place than that herein provided by a consent of a
majority of the Directors of such new Board. No notice of such meeting shall
be necessary to the newly elected Directors in order legally to constitute the
meeting, provided a quorum shall be present, unless said meeting is not held at
the place of holding and immediately following the annual meeting of
shareholders.
SECTION 4. REGULAR MEETINGS OF BOARDS. Regular meetings of
the Board of Directors may be held without notice at such time and at such
place as shall from time to time be determined by the Board.
SECTION 5. SPECIAL MEETINGS OF BOARD. Special meetings of the
Board may be called by the Chairman of the Board of Directors or, during the
absence or disability of the Chairman or while that office is vacant by the
President on one (1) day's notice to each director; and special meetings shall
be called by the President or Secretary on like notice on the written request
of five or more Directors.
SECTION 6. QUORUM AND REQUIRED VOTE. At all meetings of the
Board a majority of the total number of Directors shall constitute a quorum for
the
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transaction of business and the act of a majority of the Directors present at
any meeting at which there is a quorum shall be the act of the Board of
Directors, except as may be otherwise specifically provided by statute or by
the Certificate of Incorporation. If a quorum shall not be present at any
meeting of the Board of Directors the Directors present thereat may adjourn the
meeting from time to time, without notice other than announcement at the
meeting, until a quorum shall be present.
SECTION 7. CONSENT OF DIRECTORS IN LIEU OF MEETING. Unless
otherwise restricted by the Certificate of Incorporation or these Bylaws, any
action required or permitted to be taken at any meeting of the Board of
Directors or of any Committee thereof may be taken without a meeting if all
members of the Board or Committee, as the case may be, consent thereto in
writing, and the writing or writings are filed with the minutes of proceedings
of the Board or Committee.
SECTION 8. COMMITTEES OF DIRECTORS.
(a) General Authority. The Board of Directors may, by
resolution passed by a majority of the whole Board, designate one or more
Committees, each Committee to consist of one or more of the Directors of the
Corporation. The Board may designate one or more Directors as alternate
members of any Committee, who may replace any absent or disqualified member of
any meeting of the Committee. In the absence or disqualification of a member
of a Committee, the member or members thereof present at any meeting and not
disqualified from voting, whether or not he or they constitute a quorum, may
unanimously appoint another member of the Board of Directors to act at the
meeting in the place of any such absent or disqualified member. Any such
Committee, to the extent provided in the resolution of the Board of Directors,
or in these Bylaws shall have and may exercise all the powers and authority of
the Board of Directors in the management of the business and affairs of the
Corporation, and may authorize the seal of the Corporation to be affixed to all
papers which may require it; but no such Committee shall have the power or
authority in reference to amending the Certificate of Incorporation, adopting
an agreement of merger or consolidation, recommending to the stockholders the
sale, lease or exchange of all or substantially all of the Corporation's
property and assets, recommending to the stockholders a dissolution of the
Corporation or a revocation of a dissolution, or amending the Bylaws of the
Corporation; and, unless the resolution of the Board of Directors or the
Certificate of Incorporation expressly so provide, no such Committee shall have
the power or authority to declare a dividend or to authorize the issuance of
stock.
(b) Directors' Committee. Until June 18, 1995, there
shall be a Directors' Committee of the Board of Directors consisting of four
members of the Board of Directors, two of whom shall have been directors of the
Corporation (the "Comerica Directors") immediately prior to June 18, 1992 and
two of whom shall have been directors of Manufacturers National Corporation
(the "MNC Directors") immediately prior to June 18, 1992. In the event that
any member of the Directors' Committee shall cease to be a member of the Board
of Directors for any reason whatsoever, a majority of the Board of
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Directors shall replace such member with another member who shall also be a MNC
Director or a Comerica Director, as the case may be.
The Directors' Committee shall (i) nominate candidates for election as
Directors of the Corporation at any meeting of shareholders called for election
of Directors (an "Election Meeting"), (ii) nominate candidates to fill any
vacancies on the Board of Directors which may exist from time to time and (iii)
have such other powers and authority as the Board of Directors may delegate to
it from time to time.
(c) MNC Indemnification Committee. Until June 18,
1998, there shall be an MNC Indemnification Committee consisting of all of the
MNC Directors. The MNC Indemnification Committee shall make all determinations
necessary with respect to the Corporation's indemnification obligations
pursuant to Section 5.13 of the Agreement and Plan of Merger, dated as of
October 27, 1991, between the Corporation and MNC (the "Merger Agreement").
(d) Comerica Indemnification Committee. Until June 18,
1998, there shall be a Comerica Indemnification Committee consisting of all of
the Comerica Directors. The Comerica Indemnification Committee shall make all
determinations necessary with respect to the Corporation's indemnification
obligations pursuant to the Corporation's Bylaws prior to June 18, 1992.
SECTION 9. COMMITTEE MINUTES. Each Committee shall keep
regular minutes of its meetings and report the same to the Board of Directors
when required.
SECTION 10. COMPENSATION OF DIRECTORS. Unless otherwise
restricted by the Certificate of Incorporation, the Board of Directors shall
have authority to fix the compensation of directors. The Directors may be paid
their expenses, if any, of attendance at each meeting of the Board of Directors
and may be paid a fixed sum for attendance at each meeting of the Board of
Directors or a stated salary as Director. No such payment shall preclude any
director from serving the Corporation in any other capacity and receiving
compensation therefor. Members of special or standing committees may be
allowed like compensation for attending Committee meetings.
SECTION 11. PARTICIPATION IN MEETING BY TELEPHONE. Unless otherwise
restricted by the Certificate of Incorporation or these Bylaws, members of the
Board of Directors or any Committee designated by the Board may participate in
a meeting of the Board or Committee by means of conference telephone or similar
communications equipment by means of which all persons participating in the
meeting can hear each other, and such participation in a meeting shall
constitute presence in person at such meeting.
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SECTION 12. NOMINATIONS OF DIRECTOR CANDIDATES.
(a) Eligibility to Make Nomination. Nominations of
candidates for election as Directors of the Corporation at any Election Meeting
may be made by the Directors' Committee until June 18, 1995, and thereafter by
the Board of Directors. Any shareholder entitled to vote at an Election
Meeting may nominate candidates for election as Directors of the Corporation if
such shareholder meets the requirements of subsection (c) of this Section 12.
(b) Procedure for Nominations by the Board of
Directors. Nominations made by the Board of Directors or the Directors'
Committee, as the case may be, shall be made at a meeting of the Board of
Directors or the Directors' Committee, as the case may be, or by written
consent of Directors in lieu of a meeting, not less than 30 days prior to the
date of the Election Meeting, and such nominations shall be reflected in the
minute books of the Corporation or the Directors' Committee, as the case may
be, as of the date made. At the request of the Secretary of the Corporation
each proposed nominee shall provide the Corporation with such information
concerning himself as is required, under the rules of the Securities and
Exchange Commission, to be included in the Corporation's proxy statement
soliciting proxies for his election as a director.
(c) Procedure for Nominations by Shareholders. Not less than
30 days prior to the date of the Election Meeting any shareholder who intends
to make a nomination at the Election Meeting shall deliver a notice to the
Secretary of the Corporation setting forth (i) the name, age, business address
and residence of each nominee proposed in each such notice, (ii) the principal
occupation or employment of each such nominee, (iii) the number of shares of
capital stock of the Corporation which are beneficially owned by each such
nominee and (iv) such other information concerning each such nominee as would
be required, under the rules of the Securities and Exchange Commission, in a
proxy statement soliciting proxies for the election of such nominee.
(d) Substitution of Nominees. In the event that a person is
validly designated as a nominee in accordance with subsection (b) or (c) hereof
and shall thereafter become unable or unwilling to stand for election to the
Board of Directors, the Board of Directors or the shareholder who proposed such
nominee, as the case may be, may designate a substitute nominee. Such
determination shall be made (1) by the Board of Directors by a majority vote of
a quorum consisting of Directors who were not parties to the action, suit or
proceeding, or (2) if such a quorum is not obtainable, or even if obtainable a
quorum of disinterested Directors so directs, by independent legal counsel
chosen by the entire Board of Directors, subject to the reasonable satisfaction
of the party seeking indemnification, in a written opinion, or (3) by the
shareholders.
(e) Determination of Compliance with Procedures. If the
Chairman of the Election Meeting determines that a nomination was not in
accordance with the foregoing procedures, such nomination shall be void.
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ARTICLE IV
NOTICES
SECTION 1. NOTICE. Whenever any notice is required to be given to
any director or shareholder under any provision of statute or of the
Certificate of Incorporation or of these Bylaws, it shall not be construed to
mean personal notice, but such notice may be given in writing, by mail,
addressed to such director or shareholder, at his address as it appears on the
records of the Corporation, with postage thereon prepaid, and such notice shall
be deemed to be given at the time when the same shall be deposited in the
United States mail. Notice to Directors may also be given orally in person or
by telegram, telex, radiogram or cablegram, and such notice shall be deemed to
be given when the recipient receives the notice personally, by telephone or
when the notice, addressed as provided above, has been delivered to the
company, or to the equipment transmitting such notice.
SECTION 2. WAIVER OF NOTICE. Whenever any notice is required to be
given under any provision of statute or of the Certificate of Incorporation or
of these Bylaws, a written waiver thereof, signed by the person or persons
entitled to said notice, whether before or after the time stated therein, shall
be deemed equivalent to notice. Neither the business to be transacted at, nor
the purpose of, any regular or special meeting of the stockholders, Directors,
or members of a Committee of Directors need be specified in any written waiver
of notice unless so required by the Certificate of Incorporation or these
Bylaws. Attendance of a person at a meeting shall constitute a waiver of
notice of such meeting, except when the person attends a meeting for the
express purpose of objecting, at the beginning of the meeting, to the
transaction of any business because the meeting is not lawfully called or
convened.
ARTICLE V
OFFICERS
SECTION 1. SELECTION. The Board of Directors may appoint such
officers and agents as it shall deem necessary who shall hold their offices for
such terms and shall exercise such powers and perform such duties as shall be
determined from time to time by the Board. The officers so appointed may
include a Chairman of the Board, President, one or more Vice Chairmen, one or
more Vice Presidents (including Executive, Senior, First, regular and Assistant
Vice Presidents), a Secretary and a Treasurer, and one or more lesser officers
as may be deemed appropriate. The Chief Executive Officer may also appoint
officers of the level of Senior Vice President and below as he shall deem
necessary, at any time, which officers shall hold their offices for such terms
and shall exercise such powers and perform such duties as shall be determined
from time to time by the Board or the Chief Executive Officer. Any number of
offices may be held by the same person, unless the Certificate of Incorporation
otherwise provides.
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SECTION 2. COMPENSATION. The salaries of all officers and
agents of the Corporation shall be fixed by the Board of Directors.
SECTION 3. TERM, REMOVAL AND VACANCIES. Each officer of the
Corporation shall hold office until his successor is elected and qualified or
until his earlier resignation or removal. Any officer elected or appointed by
the Board of Directors may be removed at any time by the affirmative vote of a
majority of the Board of Directors. Additionally, any officer of the level of
regular Vice President or below may also be removed at any time by the Chief
Executive Officer. Any vacancy occurring in any office of the Corporation may
be filled by the Board of Directors. Any vacancy occurring in any office of
the Corporation of the level of regular Vice President or below may also be
filled by the Chief Executive Officer.
SECTION 4. CHIEF EXECUTIVE OFFICER AND CHIEF OPERATING OFFICER.
(a) Chief Executive Officer. At the first meeting of
each newly-elected Board of Directors, the Board shall designate the Chairman
of the Board or President as the chief executive officer of the Corporation;
provided, however, that if a motion is not made and carried to change the
designation, the designation shall be same as the designation for the preceding
year; provided, further, that the designation of the chief executive officer
may be changed at any regular or special meeting of the Board of Directors.
The chief executive officer shall be responsible to the Board of Directors for
the general supervision and management of the business and affairs of the
Corporation. The Chairman of the Board or President who is not the chief
executive officer shall be subject to the authority of the chief executive
officer, but shall exercise all of the powers and discharge all of the duties
of the chief executive officer, during the absence or disability of the chief
executive officer.
(b) Chief Operating Officer. At the first meeting of
each newly-elected Board of Directors, the Board shall designate the chief
operating officer of the Corporation; provided, however, that if a motion is
not made and carried to change the designation, the designation shall be same
as the designation for the preceding year; provided, further, that the
designation of the chief executive officer may be changed at any regular or
special meeting of the Board of Directors. The chief operating officer shall
perform such duties as may be delegated to him by the Board of Directors, any
executive committee or the Chairman of the Board.
SECTION 5. CHAIRMAN OF THE BOARD OF DIRECTORS. The Chairman
of the Board of Directors shall be selected by, and from among the membership
of, the Board of Directors. He shall preside at all meetings of the
shareholders and of the Board of Directors. He shall perform such other duties
and functions as shall be assigned to him from time to time by the Board of
Directors. He shall be, ex officio, a member of all standing committees except
the Select Compensation Committee and the Audit and Legal
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Committee. Except where by law the signature of the President of this
Corporation is required, the Chairman of the Board of Directors shall possess
the same power and authority as the President to sign all certificates,
contracts, instruments, papers and documents of every conceivable kind and
character whatsoever, in the name of and on behalf of this Corporation, which
may be authorized by the Board of Directors. During the absence or disability
of the President, the Chairman of the Board of Directors shall exercise all of
the powers and discharge all of the duties of the President.
SECTION 6. PRESIDENT. The President shall be selected by, and
from among the membership of, the Board of Directors. During the absence or
disability of the Chairman of the Board of Directors, or while such office is
vacant, the President shall perform all duties and functions, and while so
acting shall have all of the powers and authority, of the Chairman of the Board
of Directors. The President shall perform all duties incident to the office of
President and such other duties as may be prescribed by the Board of Directors.
The President shall be, ex officio, a member of all standing committees except
the Select Compensation Committee and the Audit and Legal Committee.
SECTION 7. VICE CHAIRMEN. One or more Vice Chairmen may be
chosen from the membership of the Board. Unless the Board of Directors shall
otherwise provide by resolution duly adopted by it, such of the Vice Chairmen
who are members of the Board of Directors in the order specified by the Board
of Directors shall perform the duties and exercise the powers of the President
during the absence or disability of the President. The Vice Chairmen shall
perform such other duties as may be delegated to them by the Board of
Directors, any executive committee, or the President.
SECTION 8. SECRETARY. The Secretary shall attend all meetings
of the Board of Directors and all meetings of the stockholders and shall record
all the proceedings thereof in a book to be kept for that purpose and shall
perform like duties for the standing committees when required. The Secretary
shall give, or cause to be given, all notices required by statute, Bylaw or
resolution, and shall perform such other duties as may be prescribed by the
Board of Directors or President. The Secretary shall have custody of the
corporate seal of the Corporation and the Secretary and Assistant Secretaries
shall have authority to affix the same to any instrument when its use is
required or appropriate.
SECTION 9. ASSISTANT SECRETARIES. The Assistant Secretary or
Assistant Secretaries shall, in the absence of the Secretary or in the event of
his or her inability or refusal to act, perform the duties and exercise the
powers of the Secretary and shall perform such other duties and have such other
powers as the Board of Directors may from time to time prescribe.
SECTION 10. TREASURER. The Treasurer shall have the custody of
the corporate funds and securities and shall keep full and accurate accounts of
receipts and disbursements in books belonging to the Corporation and shall
deposit all moneys and other valuable effects in the name and to the credit of
the Corporation in such depositories as may be
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designated by the Board of Directors. The Treasurer shall disburse the funds
of the Corporation as may be ordered by the Board of Directors, taking proper
vouchers for such disbursements, and shall render to the President and the
Board of Directors, at its regular meetings, or when the Board of Directors so
requires, an account of all his or her transactions as Treasurer and of the
financial condition of the Corporation. If required by the Board of Directors,
the Treasurer shall deliver to the Corporation, and shall keep in force, a
bond, in such form, amount, and with such surety or sureties as shall be
satisfactory to the Board of Directors, for the faithful performance of the
duties of his or her office and for the restoration to the Corporation, in case
of his or her death, resignation, retirement or removal from office, of all
books, papers, vouchers, money and other property of whatever kind in his
possession or under his control belonging to the Corporation.
SECTION 11. ASSISTANT TREASURERS. The Assistant Treasurer or
Assistant Treasurers shall, in the absence of the Treasurer or in the event of
his or her inability or refusal to act, perform the duties and exercise the
powers of the Treasurer and shall perform such other duties and have such other
powers as the Board of Directors may from time to time prescribe.
SECTION 12. INDEMNIFICATION AND INSURANCE.
(a) The Corporation shall indemnify any person who was
or is a party or is threatened to be made a party to any threatened, pending,
or completed action, suit or proceeding, whether civil, criminal,
administrative, or investigative (other than an action by or in the right of
the Corporation) by reason of the fact that he or she is or was a director,
officer or employee of the Corporation or is or was serving at the request of
the Corporation as a director, officer, employee, or agent of another
corporation, partnership, joint venture, trust, or other enterprise, against
expenses (including attorneys' fees), judgments, fines, and amounts paid in
settlement actually and reasonably incurred by him or her in connection with
such action, suit, or proceeding if he or she acted in good faith and in a
manner he or she reasonably believed to be in or not opposed to the best
interests of the Corporation, and, with respect to any criminal action or
proceeding, had no reasonable cause to believe his or her conduct was unlawful.
Any person who is or was an agent of the Corporation may be indemnified to the
same extent as hereinabove provided. In addition, in the event any such
action, suit or proceeding is threatened or instituted against a spouse to whom
a director or officer is legally married at the time such director or officer
is covered under the indemnification provided herein which action, suit or
proceeding arises solely out of his or her status as the spouse of a director
or officer, including, without limitation, an action, suit or proceeding that
seeks damages recoverable from marital community property of the director or
officer and his or her spouse, property owned jointly by them or property
purported to have been transferred from the director or officer to his or her
spouse, the spouse of the director or officer shall be indemnified to the same
extent as hereinabove provided. The termination of any action, suit, or
proceeding by judgment, order, settlement, conviction or upon a plea of nolo
contendere or its equivalent, shall not, of itself, create a presumption that
the person did not act in good faith
10
<PAGE> 11
and in a manner which he or she reasonably believed to be in or not opposed to
the best interests of the Corporation, and, with respect to any criminal action
or proceeding, raise any inference that he or she had reasonable cause to
believe that his or her conduct was unlawful.
(b) The Corporation shall indemnify any person who was
or is a party or is threatened to be made a party to any threatened, pending,
or completed action or suit by or in the right of the Corporation to procure a
judgment in its favor by reason of the fact that he or she is or was a
director, officer or employee of the Corporation, or is or was serving at the
request of the Corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust, or other enterprise against
expenses (including attorneys' fees) actually and reasonably incurred by such
person in connection with the defense or settlement of such action or suit if
he or she acted in good faith and in a manner he or she reasonably believed to
be in or not opposed to the best interests of the Corporation, and except that
no indemnification shall be made in respect of any claim, issue or matter as to
which such person shall have been adjudged to be liable to the Corporation
unless and only to the extent that the court in which such action or suit was
brought shall determine upon application that, despite the adjudication of
liability but in view of all the circumstances of the case, such person is
fairly and reasonably entitled to indemnity for such expenses which the court
shall deem proper. Any person who is or was an agent of the Corporation may be
indemnified to the same extent as hereinabove provided. In addition, in the
event any such action or suit is threatened or instituted against a spouse to
whom a director or officer is legally married at the time such director or
officer is covered under the indemnification provided herein which action or
suit arises solely out of his or her status as the spouse of a director or
officer, including, without limitation, an action or suit that seeks damages
recoverable from marital community property of the director or officer and his
or her spouse, property owned jointly by them or property purported to have
been transferred from the director or officer to his or her spouse, the spouse
of the director or officer shall be indemnified to the same extent as
hereinabove provided.
(c) To the extent that a director, officer, spouse of
the director or officer, employee, or agent of the Corporation has been
successful on the merits or otherwise in defense of any action, suit or
proceeding referred to in subsections (a) and (b) of this Section, or in
defense of any claim, issue or matter therein, such person shall be indemnified
against expenses (including attorneys' fees) actually and reasonably incurred
by such person in connection therewith.
(d) Any indemnification under subsections (a) and (b)
of this Section (unless ordered by a court) shall be made by the Corporation
only as authorized in the specific case upon a determination that
indemnification of the director, officer, spouse of the director or officer,
employee, or agent is proper in the circumstances because such person has met
the applicable standard of conduct set forth in subsections (a) and (b) of this
Section. Such determination shall be made (1) by the Board of Directors by a
majority vote of a quorum consisting of directors who were not parties to the
action, suit or proceeding,
11
<PAGE> 12
or (2) if such a quorum is not obtainable, or, even if obtainable a quorum of
disinterested directors so directs, by independent legal counsel in a written
opinion, or (3) by the shareholders.
(e) Expenses (including attorney's fees) incurred by an
officer, director, or spouse of an officer or director, in defending any civil,
criminal, administrative or investigative action, suit or proceeding may be
paid by the Corporation in advance of the final disposition of such action,
suit or proceeding upon receipt of an undertaking by or on behalf of the
director, officer or spouse to repay such amount if it shall ultimately be
determined that he or she is not entitled to be indemnified by the Corporation
as authorized in this Section. Such expenses (including attorneys' fees)
incurred by other employees and agents may be so paid upon such terms and
conditions, if any, as the board of directors deems appropriate.
(f) The indemnification and advancement of expenses
provided by, or granted pursuant to, the other subsections of this Section
shall not be deemed exclusive of any other rights to which those seeking
indemnification or advancement of expenses may be entitled under any bylaw,
agreement, vote of shareholders or disinterested directors or otherwise, both
as to action in his or her official capacity and as to action in another
capacity while holding such office.
(g) The Corporation may purchase and maintain insurance
on behalf of any person who is or was a director, officer, spouse of a director
or officer, employee or agent of the Corporation, or is or was serving at the
request of the Corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise against any
liability asserted against such person and incurred by such person in any such
capacity, or arising out of his or her status as such, whether or not the
Corporation would have the power to indemnify such person against such
liability under the provisions of this Section.
(h) For the purposes of this Section, references to
"the Corporation" include, in addition to the resulting or surviving
corporation, any constituent corporation (including any constituent of a
constituent) absorbed in a consolidation or merger which, if its separate
existence had continued, would have had the power and authority to indemnify
its directors, officers, spouses of directors or officers, and employees or
agents, so that any person who is or was a director, officer, spouse of a
director or officer, employee or agent of such constituent corporation, or is
or was serving at the request of such constituent corporation as a director,
officer, employee, or agent of another corporation, partnership, joint venture,
trust or other enterprise, shall stand in the same position under the
provisions of this Section with respect to the resulting or surviving
corporation as he or she would have with respect to such constituent
corporation if its separate existence had continued.
(i) For purposes of this Section, references to "other
enterprises" shall include employee benefit plans; references to "fines" shall
include any excise taxes assessed
12
<PAGE> 13
on a person with respect to an employee benefit plan; and references to
"serving at the request of the Corporation" shall include any service as a
director, officer, employee or agent of the Corporation which imposes duties
on, or involves services by, such director, officer, employee, or agent with
respect to an employee benefit plan, its participants, or beneficiaries; and a
person who acted in good faith and in a manner he or she reasonably believed to
be in the interest of the participants and beneficiaries of an employee benefit
plan shall be deemed to have acted in a manner "not opposed to the best
interests of the Corporation" as referred to in this Section.
(j) The indemnification and advancement of expenses
provided by, or granted pursuant to, this Section shall, unless otherwise
provided when authorized or ratified, continue as to a person who has ceased to
be a director, officer, employee or agent, and with respect to any spouse of a
director or officer, shall continue following the time the director or officer
spouse ceases to be a director or officer even if the marriage of the
individuals terminates prior to the end of the period of coverage, and shall
inure to the benefit of the heirs, executors and administrators of such a
person.
SECTION 13. OFFICERS APPOINTED PURSUANT TO MERGER AGREEMENT. During
the period in which the Employment Agreement, dated as of February 20, 1992,
between the Corporation and Mr. Gerald V. MacDonald, and the Employment
Agreement, entered into as of February 20, 1992, between the Corporation and
Mr. Eugene A. Miller (the "Employment Agreements") are in effect, any
modification, amendment or failure to honor the terms of either of such
Employment Agreements shall require the affirmative vote of 75% of the members
of the entire Board of Directors.
ARTICLE VI
STOCK AND TRANSFERS
SECTION 1. CERTIFICATES OF STOCK. Every holder of stock in
the Corporation shall be entitled to have a certificate signed by, or in the
name of the Corporation by, the Chairman of the Board of Directors, or the
President or a Vice President and the Treasurer or an Assistant Treasurer, or
the Secretary or an Assistant Secretary of the Corporation, certifying the
number of shares owned by him in the Corporation. If the Corporation shall be
authorized to issue more than one class of stock or more than one series of any
class, the designations, preferences and relative, participating, optional or
other special rights of each class of stock or series thereof and the
qualifications, limitations or restrictions of such preferences and/or rights
shall be set forth in full or summarized on the face or back of the Certificate
which the Corporation shall issue to represent such class or series of stock,
provided that, except as otherwise provided in Section 202 of the General
Corporation Law of Delaware, in lieu of the foregoing requirements, there may
be set forth on the face or back of the certificate which the Corporation shall
13
<PAGE> 14
issue to represent such class or series of stock, a statement that the
Corporation will furnish without charge to each stockholder who so requests the
designations, preferences and relative, participating optional or other special
rights of each class of stock or series thereof and the qualifications,
limitations or restrictions of such preferences and/or rights. Any of or all
of the signatures on the certificate may be facsimile. In case any officer,
transfer agent or registrar who has signed or whose facsimile signature has
been placed upon a certificate shall have ceased to be such officer, transfer
agent or registrar before such certificate is issued, it may be issued by the
Corporation with the same effect as if he were such officer, transfer agent or
registrar at the date of issue.
SECTION 2. LOST CERTIFICATES. The Board of Directors may
direct a new certificate to be issued in the place of any certificate
theretofore issued by the Corporation, alleged to have been lost, stolen or
destroyed, upon the making of an affidavit of that fact by the person claiming
the certificate of stock to be lost, stolen or destroyed. When authorizing the
issuance of a new certificate the Board of Directors may, in its discretion and
as a condition present to the issuance thereof, require the owner of such lost,
stolen or destroyed certificate, or his legal representative, to advertise the
same in such manner as it shall require and/or to give the Corporation a bond
in such sum as it may direct as indemnity against any claim that may be made
against it with respect to the certificate alleged to have been lost, stolen or
destroyed.
SECTION 3. TRANSFERS OF STOCK. Upon surrender to the
Corporation or the transfer agent of the Corporation of a certificate for
shares duly endorsed or accompanied by proper evidence of succession,
assignment or authority to transfer, it shall be the duty of the Corporation to
issue a new certificate to the person entitled thereto, cancel the old
certificate and record the transaction upon its books.
SECTION 4. FIXING RECORD DATE. In order that the Corporation
may determine the shareholders entitled to notice of or to vote at any meeting
of shareholders or any adjournment thereof, or to express consent to corporate
action in writing without a meeting, or entitled to receive payment of any
dividend or other distribution or allotment of any rights, or entitled to
exercise any rights in respect of any change, conversion or exchange of stock
or for the purpose of any other lawful action, the Board of Directors may fix,
in advance, a record date, which shall not be more than sixty (60) nor less
than ten (10) days before the date of such meeting, nor more than sixty (60)
days prior to any other action. A determination of shareholders of record
entitled to notice of or to vote at a meeting of shareholders shall apply to
any adjournment of the meeting; provided, however, that the Board of Directors
may fix a new record date for the adjourned meeting.
SECTION 5. REGISTERED SHAREHOLDERS. The Corporation shall
have the right to treat the person registered on its books as the owner of
shares as the absolute owner thereof, and shall not be bound to recognize any
equitable or other claim to or interest in such share or shares on the part of
any other person, whether or not it shall have express or other notice thereof,
except as otherwise provided by the laws of Delaware.
14
<PAGE> 15
ARTICLE VII
GENERAL PROVISIONS
SECTION 1. DIVIDENDS. The Board of Directors, subject to any
restrictions contained in its Certificate of Incorporation, may declare and pay
any dividends upon the shares of its capital stock either (1) out of surplus as
defined in and computed in accordance with the provisions of the governing
statute, or (2) in case there shall be no such surplus, out of its net profits
for the fiscal year in which the dividend is declared and/or the preceding
fiscal year. Dividends may be paid in cash, in property, or in shares of the
Corporation's capital stock, subject to the provisions of the statute and of
the Certificate of Incorporation.
SECTION 2. RESERVES. The Board of Directors shall have power
and authority to set apart, out of any funds available for dividends, such
reserve or reserves, for any proper purpose, as the Board in its discretion
shall approve, and the Board shall have the power and authority to abolish any
reserve created by the Board.
SECTION 3. VOTING SECURITIES. Unless otherwise directed by
the Board, the Chairman of the Board or President, or, in the case of their
absence or inability to act, the Vice Presidents, in order of their seniority,
shall have full power and authority on behalf of the Corporation to attend and
to act and to vote, or to execute in the name or on behalf of the Corporation
a proxy authorizing an agent or attorney-in-fact for the Corporation to attend
and vote at any meetings of security holders of Corporations in which the
Corporation may hold securities, and at such meetings he or his duly authorized
agent or attorney-in-fact shall possess and may exercise any and all rights and
powers incident to the ownership of such securities and which, as the owner
thereof, the Corporation might have possessed and exercised if present. The
Board by resolution from time to time may confer like power upon any other
person or persons.
SECTION 4. CHECKS. All checks, drafts and orders for the
payment of money shall be signed in the name of the Corporation in such manner
and by such officer or officers or such other person or persons as the Board of
Directors shall from time to time designate for that purpose.
SECTION 5. CONTRACTS, CONVEYANCES, ETC. When the execution of
any contract, conveyance or other instruments has been authorized without
specification of the executing officers, the Chairman of the Board, President
or any Vice President, and the Secretary or Assistant Secretary, may execute
the same in the name and on behalf of this Corporation and may affix the
corporate seal thereto. The Board of Directors shall have power to designate
the officers and agents who shall have authority to execute any instrument in
behalf of this Corporation.
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<PAGE> 16
SECTION 6. FISCAL YEAR. The fiscal year of the Corporation
shall be fixed by resolution of the Board of Directors.
SECTION 7. SEAL. The corporate seal shall have inscribed
thereon the name of the Corporation and the words "Corporate Seal" and
"Delaware". The seal may be used by causing it or a facsimile thereof to be
impressed or affixed or reproduced or otherwise.
SECTION 8. MICHIGAN CONTROL SHARE STATUTE. Pursuant to
Section 794 of the Michigan Business Corporation Act ("MBCA"), Chapter 7B of
the MBCA shall not apply to the Corporation or control share acquisitions (as
such term is defined in Section 791 of the MBCA) of the shares of the
Corporation's capital stock.
ARTICLE VIII
AMENDMENTS
SECTION 1. AMENDMENT BY REGULAR VOTE. These bylaws may be
altered, amended or repealed or new Bylaws may be adopted by the shareholders
or by the Board of Directors, when such power is conferred upon the Board of
Directors by the Certificate of Incorporation, at any regular meeting of the
shareholders or of the Board of Directors or at any special meeting of the
shareholders or of the Board of Directors if notice of such alteration,
amendment, repeal or adoption of new Bylaws be contained in the notice of such
special meeting.
SECTION 2. AMENDMENT BY 75% VOTE. The affirmative vote of 75%
of the total Board of Directors is required to alter, amend, repeal, add to or
otherwise change the effects of Article III, Sections 8(b), (c) or (d); Article
V, Section 13; or this Article VIII, Section 2 of the Corporation's Bylaws.
16
<PAGE> 1
Ex. 10.13
COMERICA INCORPORATED
DEFERRED COMPENSATION PLAN
<PAGE> 2
COMERICA INCORPORATED
DEFERRED COMPENSATION PLAN
<TABLE>
<CAPTION>
TABLE OF CONTENTS
<S> <C>
ARTICLE I. PURPOSE AND INTENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-1
ARTICLE II. DEFINITIONS
A. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . II-1
(1) Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . II-1
(2) Adoption Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . II-1
(3) Beneficiary(ies) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . II-1
(4) Board . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . II-1
(5) Code . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . II-1
(6) Committee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . II-1
(7) Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . II-1
(8) Compensation Deferral . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . II-1
(9) Deferral Period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . II-1
(10) Disabled and Disability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . II-1
(11) Eligible Employee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . II-1
(12) Employer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . II-2
(13) ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . II-2
(14) Participant . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . II-2
(15) Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . II-2
(16) Plan Administrator(s) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . II-2
(17) Retirement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . II-2
(18) Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . II-2
(19) Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . II-2
(20) Unforeseeable Emergency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . II-2
ARTICLE III. ELECTION TO PARTICIPATE IN THE PLAN
A. Completion of Adoption Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . III-1
B. Contents of Adoption Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . III-1
C. Effect of Entering Into Adoption Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . III-1
D. Special Rules Applicable to Adoption Agreement
and Deferral of Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . III-1
(1) Deferral Election to be Made Before
Compensation is Earned . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . III-1
(2) Irrevocability of Deferral Election . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . III-1
(3) Cancellation of Deferral Election . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . III-2
ARTICLE IV. DEFERRED COMPENSATION ACCOUNTS AND INVESTMENT OF DEFERRED COMPENSATION
A. Deferred Compensation Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . IV-1
B. Earnings on Compensation Deferrals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . IV-1
C. Contribution of Compensation Deferrals to Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . IV-1
D. Insulation from Liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . IV-2
E. Ownership of Compensation Deferrals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . IV-2
</TABLE>
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<PAGE> 3
<TABLE>
<S> <C>
ARTICLE V. DISTRIBUTION OF COMPENSATION DEFERRALS
A. In General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . V-1
(1) Employment Through Deferral Period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . V-1
(2) Termination Prior to End of Deferral Period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . V-1
(3) Death of Participant Prior to End of
Installment Distribution Period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . V-2
(4) Hardship Distributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . V-2
(5) Cash Out Distributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . V-2
B. Designation of Beneficiary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . V-2
(1) Beneficiary Designation Must be Filed Prior to Participant's Death . . . . . . . . . . . . . . . . . . . . V-3
(2) Absence of Beneficiary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . V-3
ARTICLE VI. AMENDMENT OR TERMINATION
A. Amendment and Termination of Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . VI-1
ARTICLE VII. AUDITING OF ACCOUNTS AND STATEMENTS
TO PARTICIPANTS
A. Auditing of Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . VII-1
B. Statements to Participants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . VII-1
C. Fees and Expenses of Administration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . VII-1
ARTICLE VIII. MISCELLANEOUS PROVISIONS
A. Nonforfeitability of Participant Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . VIII-1
B. Prohibition Against Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . VIII-1
C. No Employment Contract . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . VIII-1
D. Successors Bound . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . VIII-1
E. Prohibition Against Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . VIII-1
F. Administration By Committee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . VIII-1
G. Governing Law and Rules of Construction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . VIII-1
H. Power to Interpret . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . VIII-2
I. Effective Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . VIII-2
</TABLE>
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<PAGE> 4
ARTICLE I.
PURPOSE AND INTENT.
The Plan enables Eligible Employees to defer receipt of all or a portion of
their Compensation to provide additional income for them subsequent to
retirement, disability or termination of employment. It is the intention of
Comerica Incorporated that the Plan cover only employees who are management or
highly-compensated employees within the meaning of sections 201(2), 301(a)(3),
and 401(a)(1) of ERISA.
I-1
<PAGE> 5
ARTICLE II.
DEFINITIONS.
A. Definitions. The following words and phrases, wherever capitalized,
shall have the following meanings respectively:
(1) "Account(s)" means the account established for each Participant under
Article IV(A) hereof.
(2) "Adoption Agreement" means the Adoption Agreement in the form attached
hereto as Exhibit A, as it may be revised from time to time.
(3) "Beneficiary(ies)" means the person(s), natural or corporate, in
whatever capacity, designated by a Participant pursuant to this Plan, or the
person otherwise deemed to constitute the Participant's beneficiary under
Article V(B)(2) hereof.
(4) "Board" means the Board of Directors of Comerica Incorporated.
(5) "Code" means the Internal Revenue Code of 1986, as amended.
(6) "Committee" means the Compensation Committee of the Board, or such other
committee appointed by the Board to administer the Plan.
(7) "Compensation" means gross salary from the Employer including base
salary, incentive compensation, bonuses, overtime, commissions and any other
form of cash remuneration approved by the Committee.
(8) "Compensation Deferral(s)" means the amount of Compensation a
Participant has elected to defer, pursuant to an Adoption Agreement and, where
the context requires, shall also include earnings on such amounts.
(9) "Deferral Period" means the period during which a Participant elects to
defer receipt of Compensation under the Plan.
(10) "Disabled" or "Disability" means "disabled" under the Comerica
Incorporated Long-Term Disability Plan or under the Comerica Incorporated
Executive Long-Term Disability Plan, whichever such plan covers the individual.
(11) "Eligible Employee" means an individual employed by an Employer who is:
(i) eligible to receive compensation under the Comerica Incorporated Annual
Management Incentive Program; (ii) eligible to receive compensation under an
incentive program sponsored by any business unit of the Employer, provided the
Compensation the individual expects to earn in the year his deferred election
is operative is approximately $100,000; or (iii) approved for participation by
the Committee on the basis of high
II-1
<PAGE> 6
earning potential and other relevant factors consistent with the Plan.
(12) "Employer" means Comerica Incorporated, a Delaware corporation, and its
subsidiary corporations, and any successor entity which may succeed the
Employer and its subsidiary corporations.
(13) "ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
(14) "Participant" means an Eligible Employee whose Adoption Agreement has
been accepted by the Committee pursuant to Article III(A) hereof, and who
either has a deferral election currently in effect or an Account balance under
the Plan.
(15) "Plan" means the unfunded, nonqualified elective deferred compensation
plan the provisions of which are set forth herein, as they may be amended from
time to time.
(16) "Plan Administrator(s)" means the individual(s) appointed by the
Committee to handle the day-to-day administration of the Plan.
(17) "Retirement" means retirement under the Comerica Incorporated Retirement
Plan.
(18) "Trust" means such trust as may be established by Comerica Incorporated
in connection with this Plan.
(19) "Trustee" means the entity selected by Comerica Incorporated as trustee
of the Trust.
(20) "Unforeseeable Emergency" means a severe financial hardship to the
Participant resulting from a sudden and unexpected illness or accident of the
Participant or of a dependent (within the meaning of Code Section 152(a)) of
the Participant, loss of the Participant's property due to casualty, or other
similar extraordinary and unforeseeable circumstances arising as a result of
events beyond the control of the Participant.
II-2
<PAGE> 7
ARTICLE III.
ELECTION TO PARTICIPATE IN THE PLAN.
A. Completion of Adoption Agreement. An Eligible Employee who wishes to
become a Participant in the Plan must complete and sign an Adoption Agreement.
Any Adoption Agreement received by the Committee shall become binding upon the
Committee's acceptance thereof. In the Adoption Agreement, the Employee shall
indicate the Compensation the Participant wishes to defer. An Eligible
Employee must file a separate Adoption Agreement with respect to each year's
Compensation he or she wishes to defer.
B. Contents of Adoption Agreement. Each Adoption Agreement shall: (i)
designate the amount of Compensation to be deferred in whole percentages or in
whole dollars; (ii) request that the Employer defer payment of the Compensation
to the Participant until the year the Participant retires; (iii) state how the
Participant wishes to receive payment of the Compensation Deferrals at
retirement; and (iv) contain other provisions the Committee deems appropriate.
C. Effect of Entering Into Adoption Agreement. Upon the Committee's
acceptance of a Participant's Adoption Agreement, the Participant shall be (i)
bound by the provisions of the Plan and by the provisions of any agreement
governing the Trust; (ii) bound by the provisions of the Adoption Agreement;
and (iii) deemed to have assumed the risks of deferral, including, without
limitation, the risk of poor investment performance and the risk that Comerica
Incorporated may become insolvent.
D. Special Rules Applicable to Adoption Agreements and Deferral of
Compensation.
(1) Deferral Election to be Made Before Compensation is Earned. In no event
shall any Compensation which has been earned by a Participant prior to the date
such Participant's Adoption Agreement has been accepted by the Committee be
deferred under the Plan. Further, the effective date of any Adoption Agreement
shall not be earlier than the first day of the calendar year which begins after
the Adoption Agreement is signed by the Participant and accepted by the
Committee. Notwithstanding the preceding sentence, an Adoption Agreement
delivered to the Committee within 60 days of the effective date of the Plan may
defer Compensation to be earned in the remaining portion of the year in which
it is delivered; and, provided further, an Adoption Agreement delivered to the
Committee within 30 days of the date an individual first becomes eligible to
participate in the Plan may defer Compensation to be earned in the remaining
portion of the year in which it is delivered.
(2) Irrevocability of Deferral Election. Except as provided in Article
III(D)(3) and V(A)(4) below, the provisions of the Adoption Agreement relating
to a Participant's election to defer Compensation and the Participant's
selection of the time and manner of payment of Compensation Deferrals shall be
irrevocable.
III-1
<PAGE> 8
(3) Cancellation of Deferral Election. In the event of an Unforeseeable
Emergency, the Committee may, in its sole discretion, permit the Participant to
cancel an election to defer Compensation, in whole or in part, and permit the
Participant to receive at the otherwise scheduled payment date whatever portion
of the amount subject to the deferral election as is necessary, in the judgment
of the Committee, to alleviate the financial hardship occasioned by the
Unforeseeable Emergency.
Any Participant who seeks to cancel a deferral election on account of an
Unforeseeable Emergency shall submit to the Committee a written request which
sets forth in reasonable detail the Unforeseeable Emergency, and the amount of
the Compensation Deferral which the Participant believes to be necessary to
remedy it. In determining whether to grant any Participant's request to cancel
a deferral election on the basis of Unforeseeable Emergency, the Committee
shall adhere to the requirements of Section 1.457-2(h)(4) of the Income Tax
Regulations, the provisions of which are incorporated herein by reference. Any
Participant who is permitted to cancel a deferral election shall not again be
eligible to submit a deferral election until the calendar year following the
calendar year in which such cancellation is permitted.
If a Participant receives a hardship distribution under the Comerica
Incorporated Preferred Savings Plan, the Participant's deferral election
hereunder shall be automatically cancelled to the extent it would defer the
Participant's receipt of any Compensation the Participant would earn during a
twelve-month period beginning on the date of the Participant's receipt of such
hardship distribution. Any Participant whose deferral election is automatically
cancelled in accordance with the provisions hereof shall not again be eligible
to submit a deferral election until the next enrollment period after the elapse
of at least 12 months following the Participant's receipt of a hardship
distribution.
III-2
<PAGE> 9
ARTICLE IV.
DEFERRED COMPENSATION ACCOUNTS
AND INVESTMENT OF DEFERRED COMPENSATION.
A. Deferred Compensation Accounts. The Plan Administrator shall establish a
book reserve account in the name of each Participant. As soon as is
administratively feasible following the date Compensation subject to a
Participant's deferral election would otherwise be paid to the Participant, the
Plan Administrator shall credit the Compensation being deferred to the
Participant's Account. Each Participant's Account shall further be credited
with earnings or charged with losses resulting from the deemed investment of
the Compensation Deferrals credited to the Account as though the Compensation
Deferrals had been invested in the investments selected by the Participant as
provided below, and shall be charged with any distributions, any federal and
state income tax withholdings, any social security tax as may be required by
law and by any further amounts, including administrative fees and expenses, the
Employer is either required to withhold or determines are appropriate charges
to such Participant's Account.
B. Earnings on Compensation Deferrals. At the time a Participant submits an
Adoption Agreement, and from time to time thereafter at intervals to be
determined by the Committee, each Participant shall direct, in a form approved
by and in accordance with procedures established by the Committee, how the
Participant chooses the balance in his Account to be deemed to be invested
among investment options to be made available by the Committee. In lieu of
making investment options available to Participants, Comerica Incorporated may
credit deferred sums with a reasonable rate of interest to reflect the time
value of money.
Comerica Incorporated shall be under no obligation to acquire any of the
investments selected by any Participant, and any investments actually made by
it with Compensation Deferrals will be acquired solely in the name of Comerica
Incorporated, and will remain the sole property of Comerica Incorporated.
C. Contribution of Compensation Deferrals to Trust. In the sole discretion
of Comerica Incorporated, all or any portion of the Compensation Deferrals
credited to any Participant's Account may be contributed to a Trust established
by Comerica Incorporated in connection with the Plan. No Participant or
Beneficiary shall have the right to direct or require that Comerica
Incorporated contribute the Participant's Compensation Deferrals to the Trust.
Any Compensation Deferrals so contributed shall be held, invested and
administered to provide benefits under the Plan except as otherwise required in
the agreement governing the Trust.
IV-1
<PAGE> 10
D. Insulation from Liability. No member of the Committee or officer,
employee or director of any Employer shall be liable to any person for any
action taken or omitted in connection with the administration of this Plan or
Trust unless attributable to such individual's own fraud or willful misconduct.
E. Ownership of Compensation Deferrals. Title to and beneficial ownership of
any assets, of whatever nature, which may be allocated by Comerica Incorporated
to any Account in the name of any Participant shall at all times remain with
Comerica Incorporated, and no Participant or Beneficiary shall have any
property interest whatsoever in any specific assets of Comerica Incorporated by
reason of the establishment of the Plan nor shall the rights of any Participant
or Beneficiary to payments under the Plan be increased by reason of Comerica
Incorporated's contribution of Compensation Deferrals to the Trust. The rights
of each Participant and Beneficiary hereunder shall be limited to enforcing the
unfunded, unsecured promise of the Participant's Employer to pay benefits under
the Plan, and the status of any Participant or Beneficiary shall be that of an
unsecured general creditor of Comerica Incorporated. Participants and
Beneficiaries shall not be deemed to be parties to any trust agreement Comerica
Incorporated enters into with the Trustee.
IV-2
<PAGE> 11
ARTICLE V.
DISTRIBUTION OF COMPENSATION DEFERRALS.
A. In General. The benefits payable hereunder as deferred compensation shall
be paid to the Participant or to the Participant's Beneficiary as follows:
(1) Employment Through Deferral Period. If the Participant's employment
with an Employer continues until the last day of the Deferral Period, Comerica
Incorporated shall, as soon as administratively feasible following the end of
the Deferral Period, distribute, or commence to distribute, the balance of the
Account in the name of the Participant in any manner described below which is
selected by the Participant in the Participant's Adoption Agreement: (i) a
single sum; (ii) annual installments over 5 years, (iii) annual installments
over 10 years; or (iv) annual installments over 15 years.
For purposes of determining the amount of annual installments, X shall equal
the number of years over which benefits will be paid as elected by the
Participant. Comerica Incorporated shall pay to the Participant or to the
Participant's Beneficiary an amount equal to 1/X of the fair market value of
the Account in the Participant's name, such value to be determined by the
Committee as of a date as close as reasonably possible prior to the date the
payment is to be made. On approximately the same date of the following year,
Comerica Incorporated shall pay to the Participant or to the Participant's
Beneficiary an amount equal to 1/X-1 of the fair market value of such Account,
such value to be determined by the Committee as of a date as close as
reasonably possible prior to the date the payment is to be made. On
approximately the same date of the following year, Comerica Incorporated shall
pay to the Participant or to the Participant's Beneficiary an amount equal to
1/X- 2 of the fair market value of such Account, such value to be determined by
the Committee as of a date as close as reasonably possible prior to the date
the payment is to be made, and similar payments shall be made on approximately
the same date of each succeeding year until a total of X annual payments have
been made with the last such payment being in an amount equal to the fair
market value of the Account in the name of the Participant determined as of the
date such amount is paid.
(2) Termination Prior to End of Deferral Period. If the Participant's
employment with the Employer terminates prior to the last day of the Deferral
Period (unless such termination is due to the Participant's Disability), then
notwithstanding the manner of distribution selected by the Participant,
Comerica Incorporated shall distribute or direct the Trustee to distribute an
amount equal to the fair market value of the Account determined by the
Committee as of the Participant's termination date. Such amount shall be
distributed to the Participant or to the Participant's
V-1
<PAGE> 12
Beneficiary in a single sum as soon as is administratively feasible following
the Participant's termination date.
If the Participant's employment terminates prior to the last day of the
Deferral Period because the Participant has become Disabled, then
notwithstanding the distribution date selected by the Participant in the
Participant's Adoption Agreement, the balance of the Account in the name of the
Participant shall be distributed, or commence to be distributed, as soon as
administratively feasible following his termination date, such distribution to
be made in the manner specified in the Participant's Adoption Agreement.
(3) Death of Participant Prior to End of Installment Distribution Period.
If the Participant dies before a total X annual payments are made hereunder,
then an amount equal to the fair market value of the Account in the name of the
Participant determined by the Committee as of the date of death of the
Participant shall be distributed in a single sum to the Participant's
Beneficiary, such distribution to be made as soon as is administratively
feasible following the date of the Participant's death.
(4) Hardship Distributions. In the event of an Unforeseeable Emergency
involving a Participant which occurs prior to distribution of the entire
balance of the Account in the name of the Participant, the Committee may, in
its sole discretion, distribute to the Participant in a single sum an amount
equal to such portion of the Account in the Participant's name as shall be
necessary in the judgment of the Committee to alleviate the financial hardship
occasioned by the Unforeseeable Emergency. Any Participant desiring a
distribution under the Plan on account of an Unforeseeable Emergency shall
submit to the Committee a written request for such distribution which sets
forth in reasonable detail the Unforeseeable Emergency which would cause the
Participant severe financial hardship, and the amount which the Participant
believes to be necessary to alleviate the financial hardship. In determining
whether to grant any requested hardship distribution, the Committee shall
adhere to the requirements of the Income Tax Regulations referred to in Article
III(D)(3) hereof.
(5) Cash Out Distributions. If, at the time an installment distribution
of an Account in the name of any Participant is scheduled to commence, the fair
market value of such Account does not exceed $3,500 then, notwithstanding an
election by the Participant that such Account be distributed in installments,
the balance of such Account shall be distributed to the Participant in a single
sum on or about the date the first installment is scheduled to be made.
B. Designation of Beneficiary. A Participant shall deliver to the Committee
a written designation of Beneficiary(ies) under the Plan, which designation may
from time to time be amended or revoked
V-2
<PAGE> 13
without notice to, or consent of, any previously designated Beneficiary.
(1) Beneficiary Designation Must be Filed Prior to Participant's Death. No
designation of Beneficiary, and no amendment or revocation thereof, shall
become effective if delivered to the Committee after such Participant's death,
unless the Committee shall determine such designation, amendment or revocation
to be valid.
(2) Absence of Beneficiary. In the absence of an effective designation of
Beneficiary, or if no Beneficiary designated shall survive the Participant,
then the balance of the Account in the name of the Participant shall be paid to
the Participant's estate.
V-3
<PAGE> 14
ARTICLE VI.
AMENDMENT OR TERMINATION.
A. Amendment and Termination of Plan. This Plan may be amended or terminated
at any time in the sole discretion of the Committee by a written instrument
executed by the Committee. No such amendment shall affect the time of payment
of any Compensation earned prior to the time of such amendment or termination
except as the Committee may determine to be necessary to carry out the purpose
of the Plan.
Written notice of any such amendment or termination shall be given to each
Participant. Upon termination of the Plan, Comerica Incorporated shall
distribute to each Participant or Beneficiary, or direct that the Trustee so
distribute, the amounts which would have been distributed to such Participant
or Beneficiary under the Plan had the Participant's employment with an Employer
terminated at the time of termination of the Plan. In addition, no such
amendment shall make the Trust revocable.
VI-1
<PAGE> 15
ARTICLE VII.
AUDITING OF ACCOUNTS AND STATEMENTS
TO PARTICIPANTS.
A. Auditing of Accounts. The Plan shall be audited from time to time as
directed by the Committee by auditors selected by the Committee.
B. Statements to Participants. Statements will be provided to Participants
under the Plan on at least an annual basis.
C. Fees and Expenses of Administration. Fees of the Trustee and expenses of
administration of the Plan shall be deducted from Accounts.
VII-1
<PAGE> 16
ARTICLE VIII.
MISCELLANEOUS PROVISIONS.
A. Nonforfeitability of Participant Accounts. Each Participant shall be
fully vested in his or her Account.
B. Prohibition Against Assignment. Benefits payable to Participants and
their Beneficiaries under the Plan may not be anticipated, assigned (either at
law or in equity), alienated, sold, transferred, pledged or encumbered in any
manner, nor may they be subjected to attachment, garnishment, levy, execution
or other legal or equitable process for the debts, contracts, liabilities,
engagements or acts of any Participant or Beneficiary.
C. No Employment Contract. Nothing in the Plan is intended to be construed,
or shall be construed, as constituting an employment contract between the
Employer and any Participant nor shall any Plan provision affect the Employer's
right to discharge any Participant for any reason or for no reason.
D. Successors Bound. The contractual agreement between Comerica Incorporated
and each Participant resulting from the execution of an Adoption Agreement
shall be binding upon and inure to the benefit of Comerica Incorporated, its
successors and assigns, and to the Participant and to the Participant's heirs,
executors, administrators and other legal representatives.
E. Prohibition Against Loans. The Participant may not borrow any
Compensation Deferrals from Comerica Incorporated nor utilize his or her
Account as security for any loan from the Employer.
F. Administration By Committee. Responsibility for administration of the
Plan shall be vested in the Committee. To the extent permitted by law, the
Committee may delegate any authority it possesses to the Plan Administrator(s).
To the extent the Committee has delegated authority concerning a matter to the
Plan Administrator(s), any reference in the Plan to the "Committee" insofar as
it pertains to such matter, shall refer likewise to the Plan Administrator(s).
G. Governing Law and Rules of Construction. This Plan shall be governed in
all respects, whether as to construction, validity or otherwise, by applicable
federal law and, to the extent that federal law is inapplicable, by the laws of
the State of Michigan. Each provision of this Plan shall be treated as
severable, to the end that, if any one or more provisions shall be adjudged or
declared illegal, invalid or unenforceable, this Plan shall be interpreted, and
shall remain in full force and effect, as though such provision or provisions
had never been contained herein. It is the intention of Comerica Incorporated
that the Plan established hereunder be "unfunded" for income tax purposes and
for purposes of
VIII-1
<PAGE> 17
Title I of ERISA, and the provisions hereof shall be construed in a manner to
carry out that intention.
H. Power to Interpret. This Plan shall be interpreted and effectuated to
comply with the applicable requirements of ERISA, the Code and other applicable
tax law principles; and all such applicable requirements are hereby
incorporated herein by reference. Subject to the above, the Committee shall
have power to construe and interpret this Plan, including but not limited to
all provisions of this Plan relating to eligibility for benefits and the
amount, manner and time of payment of benefits, any such construction and
interpretation by the Committee and any action taken thereon in good faith by
the Plan Administrator(s) to be final and conclusive upon any affected party.
The Committee shall also have power to correct any defect, supply any omission,
or reconcile any inconsistency in such manner and to such extent as the
Committee shall deem proper to carry out and put into effect this Plan; and any
construction made or other action taken by the Committee pursuant to this
Article VIII(H) shall be binding upon such other party and may be relied upon
by such other party.
I. Effective Date. The effective date of this Plan shall be January 1, 1994.
VIII-2
<PAGE> 1
EXHIBIT 13
SUBSIDIARY DATA Comerica Incorporated and Subsidiaries
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
December 31 California* Florida Illinois* Michigan Texas
---------------- --------------- -------------- ---------------- --------------
(dollar amounts in millions) 1993 1992 1993 1992 1993 1992 1993 1992 1993 1992
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Earnings Summary
Total interest income $65 $65 $7 $6 $103 $112 $1,430 $1,600 $195 $164
Total interest expense 13 16 2 3 35 48 547 690 54 60
Net interest income 52 49 5 3 68 64 883 910 141 104
Provision for loan losses 7 8 1 1 5 5 53 89 4 9
Securities gains -- -- -- -- -- -- 2 5 -- 2
Noninterest income
(excluding securities gains) 6 4 8 8 11 9 383 365 43 33
Noninterest expenses 36 33 12 13 59 60 785 861 127 90
Provision for income taxes
(credit) 6 5 -- (1) 3 -- 131 88 16 10
Net income (loss) 9 7 -- (2) 12 8 299 242 37 30
Year-End Balances
Total assets $1,151 $980 $109 $74 $1,410 $1,426 $24,913 $22,323 $3,108 $3,147
Total earning assets 1,031 903 97 67 1,307 1,332 23,093 20,540 2,813 2,792
Total loans 823 742 84 54 1,057 951 15,659 15,185 1,659 1,529
Allowance for loan losses 13 14 2 1 15 11 236 245 35 40
Total deposits 693 621 65 60 1,011 1,194 16,690 16,652 2,557 2,765
Total borrowings 348 257 29 -- 244 84 5,088 3,881 236 118
Long-term debt -- -- -- -- -- -- 1,309 564 2 11
Common shareholder's equity 104 99 13 13 151 141 1,626 1,610 298 261
Daily Average Balances
Total assets $988 $913 $89 $82 $1,408 $1,486 $22,124 $21,916 $2,991 $2,304
Total earning assets 900 839 79 71 1,297 1,362 20,501 20,421 2,677 2,058
Total loans 733 707 61 53 983 916 15,123 14,893 1,601 1,075
Total deposits 626 601 63 62 1,080 1,193 16,431 17,222 2,568 1,816
Total borrowings 258 212 11 3 175 133 2,927 2,979 121 117
Long-term debt -- -- -- 2 -- -- 917 231 7 12
Common shareholder's equity 100 96 13 12 145 148 1,665 1,490 275 188
Statistical Data
Return on average assets 0.93% 0.82% 0.25% (2.84)% 0.88% 0.55% 1.35% 1.10% 1.24% 1.29%
Return on average assets
(excluding purchase accounting) 1.09 0.92 0.91 (2.42) 1.06 0.72 1.38 1.13 1.36 1.42
Return on average equity 9.20 7.74 1.72 (18.60) 8.55 5.55 17.94 16.24 13.44 15.79
Return on average equity
(excluding purchase accounting) 12.84 11.11 12.28 (35.49) 12.44 7.28 19.31 17.38 17.20 20.95
Average equity to average assets 10.11 10.54 14.65 15.26 10.33 9.99 7.53 6.80 9.19 8.16
Tier 1 capital 10.54 12.21 10.37 10.70 10.85 11.50 7.64 8.28 11.63 11.35
Total capital 11.79 13.99 11.64 11.70 12.11 12.62 10.75 10.80 12.89 12.60
Tier 1 leverage 8.62 10.78 7.06 7.91 9.22 7.48 6.52 7.14 8.83 7.00
Number of offices 7 8 7 7 23 24 298 335 50 53
Number of employees
(full-time equivalent)+ 314 342 105 102 708 747 10,209 10,698 1,334 1,433
</TABLE>
* Amounts include loans participated to the Michigan bank.
+ Michigan number includes employees working in states other than California,
Florida, Illinois and Texas.
17
<PAGE> 2
FINANCIAL REVIEW AND REPORTS
19
<PAGE> 3
HIGHLIGHTS
Net income was $341 million for 1993, or $2.85 per share, compared with $240
million, or $1.99 per share for 1992. Excluding a $92 million ($0.77 per share)
after-tax restructuring charge related to the merger with Manufacturers
National Corporation (Manufacturers) in June 1992, net income for 1992 would
have been $332 million, or $2.76 per share. In 1991, net income was $280
million, or $2.41 per share.
Return on average common shareholders' equity (ROE) was 15.94 percent in 1993,
compared to 12.10 percent in 1992 and 15.90 percent in 1991. Return on average
assets was 1.25 percent in 1993, 0.91 percent in 1992 and 1.06 percent in 1991.
Adjusted for the restructuring charge, 1992 ROE and return on average assets
were 16.38 percent and 1.25 percent, respectively.
In July, the board of directors increased the quarterly dividend by 9.8 percent
to $0.28 per share. Total cash dividends declared per common share were $1.07
in 1993, compared to $0.96 in 1992 and $0.92 in 1991. On January 4, 1993, the
Corporation effected a two-for-one stock split in the form of a stock dividend.
All per share amounts in this financial review have been adjusted to reflect
the split.
Total average assets in 1993 were $27.2 billion, compared to $26.5 billion in
1992. This increase is due primarily to average loans, which increased 5
percent to $18.3 billion from 1992. Average common shareholders' equity was
$2.1 billion in 1993, compared to $2.0 billion in 1992.
During 1993, most of the conversion and integration efforts resulting from the
merger with Manufacturers were completed. Noninterest expenses were inflated
by over $60 million in costs incurred to complete these efforts, including a
$22 million charge in the fourth quarter to accrue for costs yet to be
incurred.
On December 31, 1992, the Corporation acquired Hibernia National Bank in Texas
(Hibernia) for $56 million in a transaction accounted for as a purchase.
On February 25, 1993, the Corporation acquired the $206 million Sugar Creek
National Bank in Sugar Land, Texas, for $28 million of common stock.
Additionally, on May 28, 1993, the $712 million NorthPark National Corporation
in Dallas, Texas, was acquired for $79 million of common stock. These
transactions were accounted for as pooling-of-interests combinations and,
accordingly, the historical financial statements have been restated to reflect
these mergers.
The Corporation entered into an Agreement and Plan of Merger on September 8,
1993, for the acquisition of the approximately $1 billion Pacific Western
Bancshares in San Jose, California. The Corporation has repurchased
approximately 4.6 million shares of its own stock which will be reissued to
Pacific Western Bancshares shareholders, resulting in the acquisition being
treated as a purchase combination for accounting purposes. The acquisition is
expected to be completed in early 1994.
(NET INCOME GRAPH)
(RETURN ON ASSETS GRAPH)
EARNINGS PERFORMANCE
NET INTEREST INCOME
Net interest income on a fully taxable equivalent basis (FTE) is the difference
between interest and certain yield-related fees earned on assets and interest
paid on liabilities, with adjustments made to present yields on tax-exempt
assets as if such income was fully taxable. In 1993, FTE net interest income
provided 71.6 percent of the Corporation's net revenues, compared with 73.8
percent in 1992 and 74.0 percent in 1991.
Net interest margin decreased 8 basis points in 1993 to 4.65 percent. The
principal factor contributing to the decline was lower yielding earning assets
which were partially offset by lower cost sources of funds and higher interest
rate spreads.
Total FTE net interest income was relatively flat totaling $1,163 million in
1993, compared to $1,159 million and $1,093 million in 1992 and 1991,
respectively. Growth in average earning assets was a nominal 2 percent, while
average yields declined on high prepayment assets including investment
securities, residential mortgages and installment loans. In addition, a shift
in earning assets towards commercial
20
<PAGE> 4
Table 1 SELECTED FINANCIAL DATA
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Year Ended December 31
(dollar amounts in millions, except per share data) 1993 1992 1991 1990 1989
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Earnings Summary
Total interest income $1,783 $1,933 $2,268 $2,282 $2,192
Net interest income 1,134 1,121 1,050 927 847
Provision for loan losses 69 111 105 100 147
Securities gains 2 6 5 2 2
Noninterest income (excluding securities gains) 460 405 380 346 291
Noninterest expenses 1,038 1,092 945 848 754
Net income 341 240 280 248 188
Per Share of Common Stock
Primary net income $2.85 $1.99 $2.41 $2.25 $1.73
Fully diluted net income 2.85 1.98 2.38 2.23 1.71
Cash dividends declared 1.07 0.96 0.92 0.87 0.77
Common shareholders' equity 18.99 17.38 16.30 14.52 13.05
Year-end Balances
Total assets $30,295 $27,556 $28,989 $26,815 $23,842
Total earning assets 27,852 25,131 26,594 24,414 21,463
Total loans 19,100 18,215 17,269 16,503 14,869
Total deposits 20,950 21,200 21,142 20,699 19,408
Total borrowings 6,861 3,963 5,522 4,016 2,528
Long-term debt 1,461 741 306 331 349
Common shareholders' equity 2,182 2,058 1,898 1,583 1,403
Daily Average Balances
Total assets $27,236 $26,510 $26,365 $24,332 $22,466
Total earning assets 25,012 24,510 24,374 22,351 20,655
Total loans 18,307 17,447 16,622 15,477 14,113
Total deposits 20,721 20,913 20,785 19,381 18,397
Total borrowings 4,105 3,275 3,380 2,924 2,254
Long-term debt 1,087 414 323 348 354
Common shareholders' equity 2,136 1,957 1,741 1,485 1,322
Ratios
Return on average assets 1.25% 0.91% 1.06% 1.02% 0.84%
Return on average common shareholders' equity 15.94 12.10 15.90 16.47 13.94
Dividend payout ratio 36.82 45.51 33.73 31.95 36.37
Common shareholders' equity as a
percent of average assets 7.84 7.38 6.60 6.11 5.89
</TABLE>
21
<PAGE> 5
loans, which are lower yielding than consumer and residential mortgage loans,
negatively impacted net interest margin. As a percent of average earning
assets, total average loans increased to 73 percent in 1993, compared to 71
percent in 1992.
The interest margin was positively impacted as the average mix of sources of
funds shifted toward purchased funds and shareholders' equity and there existed
a higher spread between the prime and federal funds rates. Lower costing
purchased funds provided additional funding to replace investment deposit
run-off. During 1993, the average balances of certificates of deposit decreased
$1.1 billion, while average purchased funds increased $830 million.
Additionally, average shareholders' equity increased $141 million, or 7 percent
from year-end 1992.
Net interest margin risk is typically related to a narrowing of the prime and
federal funds rate spread. The Corporation reduced this risk with a modestly
asset sensitive balance sheet during most of 1993 since it was perceived that
interest rates had approached their estimated low point. A more neutral stance
was adopted later in the year by purchasing investment securities which lowered
the interest margin in the fourth quarter but contributed to an increase in net
interest income. The Corporation practices a conservative asset and liability
management policy which is more fully explained on page 36 of this financial
review.
The growth in net interest income in 1992 over 1991 represented an improvement
in the rate spread between earning assets and interest-bearing liabilities.
This spread also resulted in a subsequent shift in the mix of earning assets
toward higher yielding assets. Average loans as a percent of average earning
assets increased to 71 percent in 1992 from 68 percent in 1991. Earning assets
were also affected in 1992 by a 113 percent increase in the average balance of
mortgages held for sale.
(NET INTEREST INCOME GRAPH)
(NET INTEREST MARGIN GRAPH)
PROVISION AND ALLOWANCE FOR LOAN LOSSES
The provision for loan losses is the amount necessary to adjust the allowance
for loan losses to an amount which represents management's assessment of the
losses inherent in the Corporation's loan portfolio. The allowance for loan
losses is based on the application of projected loss ratios to the risk-ratings
of loans both individually and by category. The adequacy of the allowance is
reviewed on a quarterly basis. Projected loss ratios incorporate such factors
as recent loss experience, current economic conditions and trends, trends in
past due and nonaccrual amounts, risk characteristics of various categories and
concentrations of loans, geographical dispersion of borrowers, transfer risks
and other pertinent factors. The provision for loan losses was $69 million in
1993, compared to $111 million and $105 million in 1992 and 1991, respectively.
The allowance for loan losses at December 31, 1993, was $299 million, a
decrease of $9 million since year-end 1992. As a percent of total loans, the
allowance was 1.56 percent at year-end 1993, compared to 1.69 percent in 1992.
The allowance for loan losses as a percent of nonperforming assets increased to
143 percent at December 31, 1993, from 113 percent at year-end 1992.
The Corporation's estimated allocation of the allowance for loan losses is
shown on page 33. The majority of the loan categories experienced minor
decreases in allocations while the unallocated allowance increased $28 million
to $64 million at year-end 1993. The increase in the unallocated allowance
reflects the overall improvement in the credit quality of the loan portfolio.
Net charge-offs were $78 million in 1993, compared to $99 million in 1992 and
$97 million in 1991. The commercial loan portfolio experienced decreased net
charge-offs as a result of favorable economic conditions in our markets and
improved financial condition of the commercial loan customers. Commercial
mortgage net charge-offs increased during the year due to the effects on
several borrowers of the recessionary cycle on the commercial real estate
market.
22
<PAGE> 6
Table 2 ANALYSIS OF NET INTEREST INCOME -- FTE
<TABLE>
<CAPTION>
1993 1992 1991
------------------------- ------------------------ ------------------------
Average Average Average Average Average Average
(dollar amounts in millions) Balance Interest Rate Balance Interest Rate Balance Interest Rate
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Commercial loans $8,473 $556 6.56% $7,753 $542 6.98% $7,359 $663 9.01%
International loans 897 45 5.04 710 41 5.70 501 41 8.14
Real estate construction loans 441 29 6.63 503 35 7.00 530 46 8.69
Commercial mortgage loans 2,629 213 8.10 2,368 202 8.54 2,190 219 9.99
Residential mortgage loans 1,979 169 8.57 2,297 219 9.53 2,438 244 10.01
Consumer loans 3,697 369 9.98 3,625 400 11.03 3,427 415 12.10
Lease financing 191 14 7.34 191 17 8.89 177 17 9.66
----------------------- ----------------------- ---------------------
Total loans (1) 18,307 1,395 7.62 17,447 1,456 8.34 16,622 1,645 9.89
U.S. Government and agency securities 4,340 275 6.35 3,541 288 8.14 3,612 337 9.34
State and municipal securities 619 64 10.25 794 82 10.35 894 96 10.70
Other securities 553 30 5.48 1,038 68 6.54 1,234 98 7.95
----------------------- ----------------------- ---------------------
Total investment securities 5,512 369 6.70 5,373 438 8.16 5,740 531 9.25
Interest-bearing deposits with banks 814 28 3.41 1,017 45 4.43 1,413 99 7.01
Federal funds sold and securities purchased
under agreements to resell 135 4 2.99 399 15 3.67 454 25 5.58
Trading account securities 12 1 6.76 78 3 3.99 53 3 6.75
Mortgages held for sale 232 15 6.38 196 14 7.34 92 8 8.66
----------------------- ---------------------- ---------------------
Total earning assets 25,012 1,812 7.25 24,510 1,971 8.04 24,374 2,311 9.48
Cash and due from banks 1,490 1,322 1,201
Allowance for loan losses (311) (291) (275)
Accrued income and other assets 1,045 969 1,065
------------------------ ------------------------ ----------------------
Total assets $27,236 $26,510 $26,365
------------------------ ------------------------ ----------------------
------------------------ ------------------------ ----------------------
NOW accounts $1,657 37 2.23 $1,470 42 2.83 $1,289 58 4.48
Money market deposit accounts 4,723 129 2.73 4,553 152 3.34 3,841 197 5.14
Savings deposits 2,494 67 2.67 2,181 72 3.31 2,009 95 4.72
Certificates of deposit 6,161 254 4.13 7,245 372 5.14 8,794 595 6.76
Foreign office deposits (2) 1,306 43 3.29 1,668 69 4.11 1,435 88 6.14
----------------------- ----------------------- ---------------------
Total interest-bearing deposits 16,341 530 3.24 17,117 707 4.13 17,368 1,033 5.95
Federal funds purchased and securities
sold under agreements to repurchase 1,586 47 3.01 1,553 53 3.44 1,530 86 5.60
Other borrowed funds 1,432 41 2.88 1,308 46 3.52 1,527 86 5.68
Long-term debt 1,087 63 5.77 414 30 7.18 323 28 8.56
Other (3) -- (32) -- -- (24) -- -- (15) --
----------------------- ----------------------- ---------------------
Total interest-bearing sources 20,446 649 3.18 20,392 812 3.98 20,748 1,218 5.87
Noninterest-bearing deposits 4,380 3,796 3,417
Accrued expenses and other liabilities 274 327 421
Preferred stock -- 38 38
Common shareholders' equity 2,136 1,957 1,741
----------------------- ----------------------- ---------------------
Total liabilities and shareholders' equity $27,236 $26,510 $26,365
------------------------ ------------------------ ----------------------
------------------------ ------------------------ ----------------------
Net interest income/Rate spread (FTE) $1,163 4.07 $1,159 4.06 $1,093 3.61
------ ------- -------
------ ------- -------
FTE adjustment (4) $29 $38 $43
------ ------- -------
------ ------- -------
Impact of net noninterest-bearing sources of
funds 0.58 0.67 0.88
----------------------- ----------------------- ---------------------
Net interest margin (as a percent of
average earning assets) (FTE) 4.65% 4.73% 4.49%
----------------------- ----------------------- ---------------------
----------------------- ----------------------- ---------------------
</TABLE>
(1) Nonaccrual loans are included in average balances reported and are used to
calculate rates.
(2) Includes substantially all deposits by foreign depositors; deposits are
in excess of $100,000.
(3) Net interest rate swap income.
(4) The FTE adjustment is computed using a federal income tax rate of 35% in
1993 and 34% in 1992 and 1991.
23
<PAGE> 7
In May 1993, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards (SFAS) No. 114, "Accounting by Creditors for
Impairment of a Loan." This statement addresses the accounting by creditors for
impairment of certain loans and requires that impaired loans be measured based
on the present value of the expected future cash flows arising from the loan.
The statement will become effective on January 1, 1995, unless deferred. The
Corporation does not expect the standard to have a material impact on its
financial statements.
(Allowance for Loan Losses Graph)
NONINTEREST INCOME
Noninterest income totaled $462 million in 1993, a 12 percent increase over
1992. The 1992 total of $411 million represented an increase of $26 million, or
7 percent, over 1991.
Income from fiduciary activities increased 7 percent to $122 million in 1993.
This increase occurred primarily as a result of aggressive new business
development, increased trust assets, and a new personal trust fee schedule
implemented during the year.
Trust assets at year-end 1993 totaled $78 billion, compared to $68 billion at
December 31, 1992. Included in trust assets at year-end 1993 was $29 billion
for which the Corporation had discretionary management authority, reflecting a
19 percent increase over the $24 billion at year-end 1992. The increases in
trust assets held and new business in 1993 reflected the Corporation's highly
competitive investment management, institutional trust and corporate and
personal trust products. In 1994, the Corporation intends to further expand its
product base with a strategic focus on mutual fund sales.
Service charges on deposit accounts totaled $120 million in 1993, compared to
$113 million in 1992 and $103 million in 1991. The majority of the 1993
increase is attributable to higher service charges related to commercial
noninterest-bearing accounts, which rose as a result of an increase in direct
charge maintenance and activity fees on commercial accounts and a lower
earnings credit allowance.
Customhouse broker fees are generated through John V. Carr & Son, Inc., a
provider of international trade services. These fees increased 5 percent in
1993, compared to a 6 percent increase in 1992. The growth in 1993 reflected an
increased emphasis on the collection of drawback and transportation fees during
the year.
Revolving credit fees increased 5 percent to $36 million in 1993, compared to
$34 million in 1992. The higher fees resulted from increases in bankcard
interchange and merchant fees which were partially offset by a decline in
bankcard annual fees due to competitive pressures to waive annual fees on
revolving credit products. Although the trend of waiving annual fees is
expected to continue, the fees represent less than 10 percent of total
revolving credit fee income.
In 1993, security gains were $2 million, compared to $6 million in 1992.
Securities gains in 1993 and 1992 included recoveries on previously written
down municipal securities, and early redemption premiums received on state and
municipal securities.
Other noninterest income increased $36 million in 1993, which included several
unusual items. These nonrecurring components of other noninterest income
include a $24 million gain on the sale of land adjacent to an operations
center, a $5 million gain on the sale of Brazilian debt, and a $3 million gain
on the sale of stock warrants. These gains were partially offset by lower
mortgage servicing income due to a change in accounting method for purchased
mortgage servicing rights (PMSR). The Corporation moved from a nondiscounted
disaggregated method of amortization to a discounted disaggregated method using
the original discount rates in effect when the mortgage servicing rights were
purchased. Of the $22 million of PMSR amortization recorded in 1993, $5 million
resulted from the change to the discounted disaggregated amortization method
while $10 million represents increased prepayments and higher prepayment
assumptions during the year. As of December 31, 1993, only $11 million of PMSR
remains to be amortized in future periods.
There were no significant nonrecurring components of other noninterest income
in 1992 and 1991.
(Noninterest Income Graph)
24
<PAGE> 8
TABLE 3 - NONINTEREST INCOME
<TABLE>
<CAPTION>
Increase (Decrease) Increase (Decrease)
------------------- -------------------
Year Ended December 31 1993/1992 1992/1991
---------------------- ----------- -----------
(dollar amounts in millions) 1993 1992 1991 Amount Change Amount Change
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Income from fiduciary activities $122 $114 $105 $8 7% $9 8%
Service charges on deposit accounts 120 113 103 7 6 10 10
Customhouse broker fees 40 38 36 2 5 2 6
Revolving credit fees 36 34 32 2 5 2 5
Securities gains 2 6 5 (4) (69) 1 31
Other 142 106 104 36 35 2 1
--------------------- -------------- ---------------
Total noninterest income $462 $411 $385 $51 12% $26 7%
--------------------- -------------- ---------------
--------------------- -------------- ---------------
</TABLE>
TABLE 4 - NONINTEREST EXPENSES
<TABLE>
<CAPTION>
Increase (Decrease) Increase (Decrease)
------------------- -------------------
Year Ended December 31 1993/1992 1992/1991
---------------------- ----------- -----------
(dollar amounts in millions) 1993 1992 1991 Amount Change Amount Change
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Salaries $434 $427 $418 $7 2% $9 2%
Employee benefits 95 89 82 6 6 7 9
--------------------- -------------- ---------------
Total salaries and employee benefits 529 516 500 13 2 16 3
Net occupancy expense 96 86 83 10 11 3 4
Equipment expense 62 57 54 5 9 3 6
FDIC insurance expense 44 45 41 (1) -- 4 8
Merger, integration and restructuring charge 22 128 -- (106) (83) 128 100
Other 285 260 267 25 10 (7) (3)
---------------------- -------------- ---------------
Total noninterest expenses $1,038 $1,092 $945 $(54) (5)% $147 15%
---------------------- -------------- ---------------
---------------------- -------------- ---------------
</TABLE>
TABLE 5 - ANALYSIS OF THE ALLOWANCE FOR LOAN LOSSES
<TABLE>
<CAPTION>
Year Ended December 31
(dollar amounts in millions) 1993 1992 1991 1990 1989
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Balance at beginning of period $308 $279 $265 $342 $266
Allowance of institutions and loans purchased/sold -- 17 6 5 2
Loans charged off
Domestic
Commercial 36 47 47 50 35
Real estate construction 1 4 8 8 12
Commercial mortgage 20 8 9 16 10
Residential mortgage 1 1 2 1 1
Consumer 52 60 59 44 36
Lease Financing -- 1 1 1 1
International -- -- -- 99 --
------- ------- ------- ------- -------
Total loans charged off 110 121 126 219 95
Recoveries
Domestic
Commercial 18 9 15 15 9
Real estate construction -- 1 -- -- --
Commercial mortgage 2 1 2 3 2
Residential mortgage -- 1 1 -- --
Consumer 12 10 9 9 8
International -- -- 2 10 3
------- ------- ------- ------- -------
Total recoveries 32 22 29 37 22
------- ------- ------- ------- -------
Net loans charged off 78 99 97 182 73
Provision for loan losses 69 111 105 100 147
------- ------- ------- ------- -------
Balance at end of period $299 $308 $279 $265 $342
------- ------- ------- ------- -------
------- ------- ------- ------- -------
Ratio of allowance for loan losses to total loans
at end of period 1.56% 1.69% 1.62% 1.60% 2.30%
Ratio of net loans charged off during the period
to average loans outstanding during the period 0.43% 0.57% 0.58% 1.18% 0.51%
</TABLE>
25
<PAGE> 9
NONINTEREST EXPENSES
Noninterest expenses were $1,038 million in 1993, compared to $1,092 million in
1992 and $945 million in 1991. Without the respective restructuring charges,
expenses were $1,016 million in 1993 and $964 million in 1992. The increase of
$52 million was due, in large part, to the acquisition of Hibernia as of
December 31, 1992. Without this acquisition, noninterest expenses would have
increased by approximately $20 million, or only 2 percent. This low level of
expense growth was accomplished as a result of the achievement in 1993 of
approximately 50 percent of the anticipated $145 million cost savings from the
merger with Manufacturers in June 1992. By the end of 1994, full cost savings
are expected to be achieved.
More than $60 million in merger, integration and restructuring expenses were
incurred in 1993. Of these expenses, $22 million represents a revised estimate
of the remaining costs to be incurred and was recognized as a separate line in
the financial statements in the fourth quarter. The other merger, integration
and restructuring costs were recognized throughout 1993 and recorded in various
expense categories.
Total salaries expense increased only 2 percent in both 1993 and in 1992.
Regular salaries remained flat in 1993, while overtime and temporary-help
salaries increased 28 percent. The higher overtime and temporary-help balances
were offset by a drop in the number of full-time equivalent employees in 1993
to 12,670, a 5 percent decline, after a 4 percent decline in 1992. Since
December 31, 1991, approximately 1,600 full-time equivalent positions have been
eliminated through early retirement, severance and attrition, some of which
were offset by the addition of 443 full-time equivalent employees from the
acquisition of Hibernia, and by additions to staff in some of the Corporation's
growing businesses.
Employee benefits expense was $95 million in 1993 compared to $89 million and
$82 million in 1992 and 1991, respectively. Excluding the impact of adopting
SFAS No. 106 "Employers' Accounting for Postretirement Benefits Other Than
Pensions," employee benefits expense in 1993 was unchanged from 1992. SFAS No.
106 requires the accrual of the cost of providing postretirement benefits
during the active service period of the employee. Prior to 1993 these benefits
were expensed when paid. The Corporation's postretirement medical and life
insurance benefit plans cover pre-1993 retirees and provide a significantly
lower benefit level to active employees. Postretirement benefit expense under
SFAS No. 106 was $12 million in 1993. In 1992 and 1991, postretirement benefits
were recognized on a cash basis and were approximately $5 million and $4
million, respectively.
The Corporation adopted SFAS No. 112, "Employers' Accounting for Postemployment
Benefits" as of December 31, 1993. This accounting standard provides guidance
on the accounting for benefits provided by an employer to former or inactive
employees after active employment but before retirement. The adoption of SFAS
No. 112 resulted in an additional charge to benefits expense of nearly $3
million.
In 1994, the Corporation's discount rate used in determining the projected
pension benefits obligation will decline from the current 8.25 percent to 7.5
percent and salary growth assumptions will decline from 6 percent to 5 percent.
Based on the combination of the decreased pension discount rate and salary
increases, the Corporation estimates that future pension expense will not
significantly change from 1993.
Net occupancy and equipment expense increased on a combined basis by $15
million or 10 percent in 1993, compared to $6 million or 5 percent in 1992.
Increases in both years were caused by acquisitions and increased occupancy
costs associated with interim space needs while employees were being relocated.
In addition, items processing operations required duplicate technologies for
much of the year until systems conversions occurred, which increased equipment
maintenance expenses. Some of these increases were offset by the closing of 51
Michigan branches since the merger with Manufacturers. The Corporation has also
incurred increased costs to update remaining branches and implement more
efficient technology which is designed to reduce utilities expenses in the
future.
(Noninterest Expenses Graph)
26
<PAGE> 10
TABLE 6- RATE-VOLUME ANALYSIS - FTE
<TABLE>
<CAPTION>
1993/1992 1992/1991
-------------------------------------- -----------------------------------
Increase Increase Net Increase Increase Net
(Decrease) (Decrease) Increase (Decrease) (Decrease) Increase
(in millions) Due to Rate Due to Volume* (Decrease) Due to Rate Due to Volume* (Decrease)
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Interest income (FTE)
Commercial loans $(33) $47 $14 $(149) $28 $(121)
International loans (5) 9 4 (12) 12 --
Real estate construction loans (2) (4) (6) (9) (2) (11)
Commercial mortgage loans (10) 21 11 (32) 15 (17)
Residential mortgage loans (23) (27) (50) (11) (14) (25)
Consumer loans (38) 7 (31) (37) 22 (15)
Lease financing (3) -- (3) (1) 1 --
-------------------------------------- ---------------------------------
Total loans (114) 53 (61) (251) 62 (189)
U.S. Government and agency securities (64) 51 (13) (43) (6) (49)
State and municipal securities -- (18) (18) (4) (10) (14)
Other securities (11) (27) (38) (17) (13) (30)
-------------------------------------- ---------------------------------
Total investment securities (75) 6 (69) (64) (29) (93)
Interest-bearing deposits with banks (10) (7) (17) (36) (18) (54)
Federal funds sold and securities
purchased under agreements to resell (3) (8) (11) (8) (2) (10)
Trading account securities 2 (4) (2) (1) 1 --
Mortgages held for sale (1) 2 1 (1) 7 6
-------------------------------------- ---------------------------------
Total interest income (FTE) (201) 42 (159) (361) 21 (340)
Interest expense
NOW accounts (9) 4 (5) (21) 5 (16)
Money market deposit accounts (28) 5 (23) (69) 24 (45)
Savings deposits (14) 9 (5) (28) 5 (23)
Certificates of deposit (73) (45) (118) (143) (80) (223)
Foreign office deposits (14) (12) (26) (29) 10 (19)
-------------------------------------- ---------------------------------
Total interest-bearing deposits (138) (39) (177) (290) (36) (326)
Federal funds purchased and securities
sold under agreements to repurchase (7) 1 (6) (33) -- (33)
Other borrowed funds (8) 3 (5) (33) (7) (40)
Long-term debt (6) 39 33 (4) 6 2
Other (1) (8) -- (8) (9) -- (9)
-------------------------------------- ---------------------------------
Total interest expense (167) 4 (163) (369) (37) (406)
-------------------------------------- ---------------------------------
Net interest income (FTE) $(34) $38 $4 $8 $58 $66
-------------------------------------- ---------------------------------
-------------------------------------- ---------------------------------
</TABLE>
* Rate/volume variances are allocated to variances due to volume.
(1) Net interest rate swap income.
27
<PAGE> 11
Federal Deposit Insurance Corporation (FDIC) insurance expense remained
constant between 1993 and 1992 while increasing 8 percent in 1992. Beginning in
1993, the FDIC adopted a risk-related premium system which correlates the
assessment rate to a bank's risk-based capital levels. Each subsidiary bank's
capital level qualified for the lowest assessment rate of 23.0 cents per $100
of deposits in 1993. In 1992, the Corporation's assessment rate was also 23.0
cents per $100 of deposits. The Corporation anticipates the assessment rate to
remain constant in 1994.
Consultant fees were $16 million in 1993 compared to $7 million in 1992 and $6
million in 1991. As the end of merger-related investment in systems conversions
and technology upgrades nears, these costs should return to pre-merger levels.
Other real estate was sold at a $2 million gain in 1993, compared to a loss of
$1 million in 1992, and a loss of $8 million in 1991.
Net amortization of intangible assets, excluding excess mortgage loan servicing
rights, was $20 million in 1993, 1992 and 1991. The 1993 expense included
amortization of goodwill from the acquisition of Hibernia on December 31, 1992,
which was offset by declining core deposit intangible amortization.
INCOME TAXES
The provision for income taxes was $148 million in 1993, compared with $89
million in 1992 and $105 million in 1991. The effective tax rate, derived by
dividing the provision for income taxes by income before income taxes, was 30.3
percent in 1993, 26.9 percent in 1992, and 27.2 percent in 1991. The increase
in the effective rate in 1993 over 1992 is the net result of higher levels of
taxable income combined with lower tax exempt interest income and nondeductible
merger related expenses. In addition, the Revenue Reconciliation Act of 1993
changed the stated tax rate for the Corporation from 34 percent to 35 percent
retroactive to January 1, 1993.
BALANCE SHEET AND
CAPITAL FUNDS ANALYSIS
Total assets were $30.3 billion at year-end 1993, which represented a $2.7
billion increase from December 31, 1992. On an average basis, total assets
increased to $27.2 billion in 1993 from $26.5 billion in 1992. This increase
was funded primarily by higher average purchased funds of $830 million and
higher average shareholders' equity of $141 million. These increases were
partially offset by a decrease in average deposits of $192 million.
EARNING ASSETS
Average domestic commercial loans, consisting of commercial, real estate
construction and commercial mortgage loans, increased from 1992 by $919
million. This growth of 9 percent, along with an increase of approximately 15
percent in commercial loan commitments to extend credit, resulted from the
continued development of account relationship management which allowed the
Corporation to take advantage of the economic recovery in the automotive
industry and other primary markets and increased growth in affiliate
markets.
The $400 million increase in international loans at year-end 1993 was
made up largely of loans to facilitate trade that represented a limited
increase in cross-border risk. At the end of 1993, the only cross-border
exposure to banks and other financial institutions greater than 0.75 percent of
total assets were outstandings in Mexico totaling $302 million. In 1992, no
cross-border outstandings exceeded the above threshold while cross-border
exposure to Japan totaled $554 million in 1991. Non-trade loans to
lesser-developed countries (LDC) totaled $92 million at December 31, 1993,
compared to $113 million at December 31, 1992.
Average residential mortgage loans decreased $318 million during 1993,
reflecting an accelerated level of prepayments received and refinancing of
mortgage loans. The increased prepayment and refinancing activity are a result
of the declines in overall market rates. As rates are generally perceived as
having reached the lower end of their range, this increased level of activity
is not expected to continue. The $72 million increase in average consumer loans
was the net effect of an increase in average installment loans of $184 million
and a decrease of $95 million and $17 million in revolving credit and
(Average Earning Assets Graph)
(Average Loans Graph)
28
<PAGE> 12
TABLE 7 -- ANALYSIS OF INVESTMENT SECURITIES AND LOANS
<TABLE>
<CAPTION>
Year Ended December 31
(in millions) 1993 1992 1991 1990 1989
- ----------------------------------------------- -------- -------- ------- ------- --------
<S> <C> <C> <C> <C> <C>
Investment securities available for sale
U.S. Government and agency securities $ 2,164 $ -- $ -- $ -- $ --
State and municipal securities -- -- -- -- --
Other securities 158 -- -- -- --
------ ------ ----- ----- -----
Total investment securities available for sale 2,322 -- -- -- --
Investment securities held to maturity
U.S. Government and agency securities 3,232 3,824 3,542 3,680 2,549
State and municipal securities 513 693 889 937 985
Other securities 233 646 1,275 1,179 953
------ ------ ----- ----- -----
Total investment securities held to maturity 3,978 5,163 5,706 5,796 4,487
------ ------ ----- ----- -----
Total investment securities $ 6,300 $ 5,163 $ 5,706 $ 5,796 $ 4,487
------ ------ ----- ----- -----
------ ------ ----- ----- -----
Commercial loans $ 9,087 $ 8,213 $ 7,568 $ 7,608 $ 6,971
International loans
Government and official institutions 143 156 156 159 289
Banks and other financial institutions 671 323 148 195 159
Other 322 257 245 83 55
------ ------ ----- ----- -----
Total international loans 1,136 736 549 437 503
Real estate construction loans 437 471 521 499 494
Commercial mortgage loans 2,700 2,666 2,315 2,088 1,729
Residential mortgage loans 1,857 2,126 2,462 2,379 1,985
Consumer loans 3,674 3,836 3,654 3,316 3,016
Lease financing 209 167 200 176 171
------- -------- ------- ------- --------
Total loans $ 19,100 $ 18,215 $17,269 $16,503 $ 14,869
------- -------- ------- ------- --------
------- -------- ------- ------- --------
</TABLE>
TABLE 8 - LOAN MATURITIES AND INTEREST RATE SENSITIVITY
<TABLE>
<CAPTION>
After One
December 31, 1993 Within But Within After
(in millions) One Year* Five Years Five Years Total
- -------------------------------------------- --------- ---------- --------- --------
<S> <C> <C> <C> <C>
Commercial loans $6,598 $1,898 $591 $9,087
Commercial mortgage loans 660 1,579 461 2,700
International loans 882 145 109 1,136
Real estate construction loans 289 131 17 437
------ ------- ------ -------
Total $8,429 $3,753 $1,178 $13,360
------ ------- ------ -------
------ ------- ------ -------
Loans maturing after one year
Predetermined interest rates $1,999 $891
Floating interest rates 1,754 287
------- ------
Total $3,753 $1,178
------- ------
------- ------
</TABLE>
* Includes demand loans, loans having no stated repayment schedule or
maturity, and overdrafts.
29
<PAGE> 13
bankcard loans, respectively. Average installment loans increased
mainly as a result of the acquisition of Hibernia, which was effective on
December 31, 1992. Revolving credit and bankcard loans have declined mainly due
to lower activity in products with non-tax deductible interest and the
competitive impact of non-banks entering the revolving credit business.
Total average investment securities increased to $5.5 billion in 1993, compared
to $5.4 billion in 1992. This $139 million increase was due to an increase of
$799 million in average U.S. Government agency securities and offsetting
decreases of $175 million in average state and municipal securities, and $485
million in average other securities. The U.S. Government agency securities are
FNMA, GNMA and FHLMC mortgage participation securities, and other securities
are primarily collateralized mortgage obligations. The Corporation has invested
significantly in these types of securities over the past several years because
of relatively high yields, credit quality and favorable treatment received
related to risk-based capital regulations. The decrease in the average balances
of other securities during the current year was mainly a result of prepayments
received on collateralized mortgage obligations, which accelerated with the
declines in market rates and the resulting refinancing of a significant portion
of outstanding mortgages. The tax-exempt portfolio of state and municipal
securities continues to decrease as the securities are called or mature. The
reduced tax advantages of these types of securities deter additional
investment.
As of December 31, 1993 the Corporation adopted SFAS No. 115, "Accounting for
Certain Investments in Debt and Equity Securities." The accounting statement
establishes standards of financial accounting and reporting for investments in
equity securities that have readily determinable fair values and for all
investments in debt securities. The statement requires the classification of
applicable securities into the three categories of held to maturity, available
for sale, and trading. The required accounting for each security classification
is described on page 42 in Note 1 of the consolidated financial statements.
Approximately $2.3 billion of investment securities were classified as
available for sale, representing, specifically, floating rate bonds, certain
types of collateralized mortgage obligations and 30-year fixed rate pools of
Government backed mortgages with remaining lives exceeding 15 years. These
types of securities represent investments which may be liquidated if certain
economic conditions or interest rate environments were to materialize in the
foreseeable future. The resulting after-tax net unrealized holding gain on the
available for sale securities is reported as a separate component of
shareholders' equity and totaled $27 million at year-end.
OTHER EARNING ASSETS
The Corporation holds short-term investments in interest-bearing deposits with
banks, federal funds sold, and securities purchased under agreements to resell
as a way of maintaining liquidity and earning acceptable yields. All of these
investments provide a range of maturities under one year. Deposits were with
foreign banks' international banking facilities located in the U.S. or with
banks in developed countries. Federal funds sold provide a vehicle to control
the Corporation's reserve position and serve correspondent banks. On an
average basis, these short-term investments declined $467 million during 1993,
consisting of decreases in bank time deposits of $203 million and federal funds
sold and securities purchased under agreements to resell of $264 million.
The decrease in trading account securities of $106 million at December 31,
1993, reflects the Corporation's emphasis on the development of the longer-term
investment portfolio.
Mortgages held for sale increased by $96 million in 1993 and $75 million in
1992. These increases reflect the Corporation's strategic emphasis and
expansion in the mortgage banking business as well as higher origination and
refinancing activity throughout 1993 and 1992 as residential mortgage interest
rates declined. A spike in interest rates near the end of 1993 prompted
customers to close a large number of mortgage loans. The higher volume is
reflected in the amount of mortgages held for sale at year-end.
(Average Liquid Assets Graph)
(Average Deposits and Borrowed Funds Graph)
30
<PAGE> 14
Table 9 ANALYSIS OF INVESTMENT SECURITIES PORTFOLIO -- FTE
<TABLE>
<CAPTION>
Maturity+
------------------------------------------------------------- Weighted
December 31, 1993 Within 1 Year 1-5 Years 5-10 Years After 10 Years Total Average
------------ ------------ -------------- -------------- ------------ Market Maturity
(dollar amounts in millions) Amount Yield Amount Yield Amount Yield Amount Yield Amount Yield Value (Yrs./Mos.)
------------ ------------ -------------- ------------- ------------ ------ ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Available for sale
U.S. Treasury $ -- --% $ -- --% $ -- --% $ -- --% $ -- --% $ -- --
U.S. Government and agency -- -- 3 3.93 168 3.91 1,993 5.89 2,164 5.74 2,164 19/5
State and municipal securities -- -- -- -- -- -- -- -- -- -- -- --
Other bonds, notes
and debentures -- -- -- -- -- -- 158 5.23 158 5.23 158 26/3
Federal Reserve Bank stock
and other investments* -- -- -- -- -- -- -- -- -- -- -- --
---------- ---------- ------------ ------------- ------------ ------
Total investment securities
available for sale -- -- 3 3.93 168 3.91 2,151 5.84 2,322 5.70 2,322
Held to maturity
U.S. Treasury 86 4.10 39 6.43 -- -- -- -- 125 4.82 126 0/10
U.S. Government and agency 6 7.68 64 6.99 490 7.09 2,547 6.48 3,107 6.59 3,121 14/1
State and municipal securities 60 8.79 291 11.13 118 11.13 44 11.21 513 10.88 551 5/7
Other bonds, notes
and debentures 17 7.59 28 7.33 4 10.07 138 7.92 187 7.85 186 20/7
Federal Reserve Bank stock
and other investments* -- -- -- -- -- -- -- -- 46 -- 46 --
---------- ----------- ----------- ------------ ----------- -----
Total investment securities
held to maturity 169 6.30 422 9.81 612 7.89 2,729 6.63 3,978 7.16 4,030
---------- ---------- ----------- ------------ ------------ -------
Total investment securities $169 6.30% $425 9.77% $780 7.03% $4,880 6.29% $6,300 6.62% $6,352
---------- ---------- ------------ ------------- ------------ -------
---------- ---------- ------------ ------------- ------------ -------
</TABLE>
* Balances are excluded in the calculation of total yield.
+ Based on contractual maturity.
Table 10 MATURITY DISTRIBUTION OF DOMESTIC CERTIFICATES OF DEPOSIT OF $100,000
AND OVER
<TABLE>
<CAPTION>
December 31
(in millions) 1993
- ----------------------------------------------------------------
<S> <C>
Three months or less $682
Over three months to six months 149
Over six months to twelve months 111
Over twelve months 170
------
Total $1,112
------
------
</TABLE>
DEPOSITS AND BORROWED FUNDS
Total deposits at December 31, 1993 were $20.9 billion, a decrease of $250
million, or 1 percent, over December 31, 1992. On an average basis, total
deposits fell $192 million, or 1 percent, from 1992. This slight decrease
primarily reflects interest-bearing deposits where interest-sensitive consumers
have shifted funds away from deposits in favor of alternative investments,
including mutual funds.
Changes in the average mix of deposits in 1993 also reflect the declining
interest rate environment present throughout the year. Average certificates of
deposit decreased $1.1 billion as depositors shifted maturing certificate of
deposit balances into more liquid savings and money market deposits in
anticipation of rising interest rates.
Earning asset growth in 1993 was funded primarily from non-core sources.
Average short-term borrowings increased $157 million due primarily to higher
treasury, tax and loan borrowings from the U.S. Government and the issuance of
$125 million of short-term bank notes.
The increase in the 1993 year-end balance of long-term debt is the result of
the issuance by the Corporation's Michigan bank of subordinated notes and
medium-term notes totaling $250 million and $755 million respectively,
throughout the year.
The subordinated notes support acquisition activity and the maintenance of the
bank's total capital ratio to the level that qualifies for the lowest FDIC
risk-based insurance premium. The interest rate associated with the bank's
medium-term notes creates a low cost funding source with maturities ranging
from three months to five years. These increases were partially offset by the
early retirement of $108 million of floating rate subordinated debt and the
maturation of $150 million of medium-term notes. Further information on the
Corporation's long-term debt is included in Note 10 to the consolidated
financial statements on page 48.
31
<PAGE> 15
CAPITAL
Common shareholders' equity increased to $2.2 billion at December 31, 1993,
from $2.1 billion at year-end 1992, an increase of 6 percent. The increased
equity represents the net result of several factors. Contributing to higher
equity were earnings retention of $215 million, $14 million of common stock
issued for stock plans and debenture conversions, and a $27 million credit to
equity relating to the implementation of SFAS No. 115, "Accounting for Certain
Investments in Debt and Equity Securities." These items were partially offset
by the repurchase of 4.1 million shares of Comerica stock into treasury which
will be reissued to shareholders of Pacific Western Bancshares in early 1994.
Additionally, 768,500 shares of stock has been repurchased as part of a
September 1992 board authorization to purchase up to one million shares of
treasury stock for reissuance under employee stock plans.
In January 1993, the Corporation redeemed all its preferred stock for
approximately $42 million due to the stock's relatively high dividend rate. The
common equity-to-assets ratio increased to 7.8 percent at year-end 1993, from
7.4 percent at year-end 1992.
In accordance with the adoption of SFAS No. 115, as discussed in the analysis
of earning assets, after-tax net unrealized gains of $27 million on securities
classified as available for sale have been reported as a separate component of
shareholders' equity.
The Corporation's capital ratios exceeded the minimum levels prescribed by the
Federal Reserve Board, as shown below.
At December 31, 1993, all of the Corporation's banking subsidiaries exceeded
the minimum ratios required of a "well capitalized" institution as defined in
the final rule under the Federal Deposit Insurance Corporation Improvement Act
of 1991.
(Components of Capital Graph)
(Risk-based Capital Graph)
DIVIDENDS
The common dividend payout ratio was 36.8 percent in 1993, compared to 32.8
percent in 1992, excluding the restructuring charge. The target payout ratio is
currently 30 to 40 percent. The board of directors determines the target ratio
based on market and industry conditions.
<TABLE>
<CAPTION>
CAPITAL RATIOS
December 31
(in millions) 1993 1992
-------- --------
<S> <C> <C>
Tier 1 (core) capital
Common shareholders' equity $ 2,182 $ 2,058
Preferred stock -- 37
Less: Goodwill and other disallowed intangibles 132 137
Less: Unrealized gains and losses 27 --
-------- --------
Total tier 1 capital $ 2,023 $ 1,958
-------- --------
-------- --------
Tier 2 (supplemental) capital
Qualifying subordinated debt $ 530 $ 384
Eligible allowance for loan losses 299 278
-------- --------
Total tier 2 capital $ 829 $ 662
-------- --------
-------- --------
Total capital $ 2,852 $ 2,620
-------- --------
-------- --------
Assets
Risk-weighted assets (net) $ 24,623 $ 22,167
Average quarterly assets (net) $ 28,743 $ 26,054
Risk-based ratios
Tier 1 (minimum-4.0%) 8.21% 8.83%
Total (minimum-8.0%) 11.58% 11.82%
Tier 1 leverage (minimum-3.0%) 7.04% 7.52%
</TABLE>
32
<PAGE> 16
Table 11 -
ALLOCATION OF THE ALLOWANCE FOR LOAN LOSSES
<TABLE>
<CAPTION>
1993 1992 1991 1990 1989
------------------ ------------------ ----------------- ------------------ ------------------
Percent Percent Percent Percent Percent
December 31 Allocated of Total Allocated of Total Allocated of Total Allocated of Total Allocated of Total
(dollar amounts in millions) Allowance Loans Allowance Loans Allowance Loans Allowance Loans Allowance Loans
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Domestic
Commercial $ 123 48% $ 120 45% $ 81 44% $ 53 46% $ 44 47%
Real estate construction 4 2 9 2 12 3 10 3 16 3
Commercial mortgage 26 14 37 15 20 14 20 13 22 12
Residential mortgage 3 10 6 12 1 14 2 14 1 13
Consumer 60 19 59 21 55 21 42 20 35 20
Lease financing 1 1 2 1 2 1 2 1 2 1
International 18 6 39 4 54 3 74 3 168 4
Unallocated 64 -- 36 -- 54 -- 62 -- 54 --
---------------- ---------------- ---------------- ----------------- -----------------
Total $ 299 100% $ 308 100% $ 279 100% $ 265 100% $ 342 100%
---------------- ---------------- ---------------- ----------------- -----------------
---------------- ---------------- ---------------- ----------------- -----------------
</TABLE>
Table 12 -
SUMMARY OF NONPERFORMING ASSETS AND PAST DUE LOANS
<TABLE>
<CAPTION>
December 31
(dollar amounts in millions) 1993 1992 1991 1990 1989
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Nonperforming assets
Nonaccrual loans
Commercial loans $ 71 $ 75 $ 62 $ 74 $ 45
International loans -- -- -- 13 18
Real estate construction loans 19 28 47 44 71
Real estate mortgage loans (principally commercial) 64 120 101 53 48
----- ----- ----- ----- -----
Total nonaccrual loans 154 223 210 184 182
Reduced-rate loans 5 1 -- 14 15
----- ----- ----- ----- -----
Total nonperforming loans 159 224 210 198 197
Other real estate 50 49 46 57 54
----- ----- ----- ----- -----
Total nonperforming assets $ 209 $ 273 $ 256 $ 255 $ 251
----- ----- ----- ----- -----
----- ----- ----- ----- -----
Nonperforming loans as a percentage of total loans 0.83% 1.23% 1.22% 1.19% 1.33%
Nonperforming assets as a percentage of total loans
and other real estate 1.09% 1.50% 1.48% 1.54% 1.68%
Allowance for loan losses as a percentage of total
nonperforming assets 143% 113% 109% 104% 137%
Loans past due 90 days-domestic $ 46 $ 100 $ 54 $ 66 $ 57
</TABLE>
33
<PAGE> 17
ASSET QUALITY
NONPERFORMING ASSETS
Accounting and classification policies regarding nonaccrual loans result from
the importance to the Corporation of early recognition of troubled loans.
Depending on the loan type, consumer loans are directly charged off when deemed
uncollectible which is typically no later than 180 days past due. Loans, other
than consumer, are placed on nonaccrual status when management determines that
principal or interest may not be fully collectible, but no later than when the
loan is 90 days past due on principal or interest unless it is fully
collateralized and in the process of collection. Loan amounts which are in
excess of the probable future cash collections are normally partially charged
off at the time the loan is placed on nonaccrual status to an amount that
represents management's assessment of the ultimate collectibility of the loan.
Interest previously accrued but not collected on nonaccrual loans is charged
against current income. Income on such loans is then recognized only to the
extent that cash is received and where the future collection of principal is
probable.
Nonaccrual loans at December 31, 1993 totaled $154 million, a 31 percent
decrease from year-end 1992. The ratio of net loans charged off to average
total loans also decreased to 0.43 percent in 1993, compared to 0.57 percent in
1992. The decrease in nonaccrual loans and net charge offs to average total
loans reflects an improvement in the quality of the loan portfolio.
The increase of $1 million in other real estate owned during 1993 includes the
addition of a group of loans totaling approximately $13 million extended to one
borrower and approximately $8 million related to branches closed as a result of
the Manufacturers merger. These items were partially offset by write-downs and
sales of other properties throughout the year.
In addition to the nonaccrual loans and the loans past due 90 days or more at
December 31, 1993, there were loans totaling $354 million where possible
financial problems of borrowers caused management to have serious doubts as to
the ability of such borrowers to comply with the present contractual repayment
terms. These loans are specifically considered in management's evaluation of
the adequacy of the allowance for loan losses.
(Internal Capital Generation Rate Graph)
(Nonperforming Assets Graph)
CONCENTRATIONS OF CREDIT
The Corporation believes in a diversified loan portfolio. The only significant
industry concentration is loans to companies and individuals involved with the
automotive industry. These loans totaled $3.0 billion, or 16 percent of total
loans at December 31, 1993, compared to approximately $2.6 billion, or 15
percent of total loans at year-end 1992. Of the amounts at December 31, 1993
and 1992, floor plan loans to automobile dealers represent approximately $789
million and $642 million, respectively. All other industry concentrations
individually represent less than 5 percent of total loans at year-end 1993.
The Corporation has successfully operated in the Michigan economy during
several downturns in the automotive industry. Although there is a loan
concentration to the automotive industry, the concentration is not excessive
and has not had a significant negative impact on operations. There were no
automotive industry-related loans larger than $3 million in nonaccrual status
as of year-end 1993. In addition, there were no significant automotive
industry-related charge-offs during the year. Loans to highly leveraged
companies and non-trade loans to lesser developed countries are not significant
representing less than 4 percent and 1 percent of the total loan portfolio,
respectively.
34
<PAGE> 18
Table 13 - SCHEDULE OF RATE SENSITIVE ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
December 31, 1993 December 31, 1992
Interest Sensitivity Period Interest Sensitivity Period
----------------------------------- ---------------------------------
Within Over Within Over
(dollar amounts in millions) One Year One Year Total One Year One Year Total
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Assets
Cash and due from banks $ -- $ 1,601 $ 1,601 $ -- $ 1,580 $ 1,580
Short-term investments 2,344 108 2,452 1,693 59 1,752
Investment securities 2,881 3,419 6,300 2,115 3,048 5,163
Commercial loans (including
lease financing) 7,820 1,476 9,296 7,387 993 8,380
International loans 1,096 40 1,136 723 13 736
Real estate related loans 2,906 2,088 4,994 2,895 2,368 5,263
Consumer loans 1,732 1,942 3,674 1,949 1,887 3,836
---------- ----------- ---------- ---------- ---------- ----------
Total loans 13,554 5,546 19,100 12,954 5,261 18,215
Other assets 241 601 842 -- 846 846
---------- ----------- ---------- ---------- ---------- ----------
Total assets $ 19,020 $11,275 $ 30,295 $ 16,762 $ 10,794 $ 27,556
---------- ----------- ---------- ---------- ---------- ----------
---------- ----------- ---------- ---------- ---------- ----------
Liabilities
Deposits
Noninterest-bearing $ 1,090 $ 3,849 $ 4,939 $ 693 $ 3,875 $ 4,568
NOW 296 1,487 1,783 148 1,494 1,642
Savings -- 2,453 2,453 -- 2,371 2,371
Money market 4,644 27 4,671 4,991 28 5,019
Certificates of deposit 4,375 1,361 5,736 5,250 1,452 6,702
Foreign office 1,367 1 1,368 898 -- 898
---------- ----------- ---------- ---------- ---------- ----------
Total deposits 11,772 9,178 20,950 11,980 9,220 21,200
Short-term borrowings 5,376 24 5,400 3,220 2 3,222
Long-term debt 736 725 1,461 275 466 741
Other liabilities 1 301 302 -- 298 298
---------- ----------- ---------- ---------- ---------- ----------
Total liabilities 17,885 10,228 28,113 15,475 9,986 25,461
Shareholders' equity 28 2,154 2,182 -- 2,095 2,095
Total liabilities
and shareholders'
equity $ 17,913 $ 12,382 $ 30,295 $ 15,475 $ 12,081 $ 27,556
---------- ----------- ---------- ---------- ---------- ----------
---------- ----------- ---------- ---------- ---------- ----------
Sensitivity impact of
interest rate swaps $ (1,363) $ 1,363 -- $ (304) $ 304 --
Sensitivity impact of
unsettled swap and
security purchases (886) 886 -- (95) 95 --
---------- ----------- ---------- ---------- ---------- ----------
Interest sensitivity gap (1,142) 1,142 -- 888 (888) --
Gap as percentage of earning
assets (4)% 4% -- 3% (3)% --
Sensitivity impact from
elasticity adjustments (1) 1,474 (1,474) -- 1,572 (1,572) --
---------- ----------- ---------- ---------- ---------- ----------
Interest sensitivity gap with
elasticity adjustments $ 332 $ (332) -- $ 2,460 $ (2,460) --
Gap as a percentage of
earning assets 1% (1)% -- 10% (10)% --
---------- ----------- ---------- ---------- ---------- ----------
---------- ----------- ---------- ---------- ---------- ----------
</TABLE>
(1) Elasticity adjustments for NOW, savings and money market deposit accounts
are based on historical pricing relationships dating back to 1985, as well
as expected future pricing relationships.
35
<PAGE> 19
COMMERCIAL REAL ESTATE LENDING
The Corporation's real estate construction loan portfolio consists primarily of
many relatively small loans to longtime customers in local markets with
satisfactory project completion experience. The portfolio contains
approximately 624 loans, the largest of which has a balance under $25 million.
Approximately 83 percent of the loans have balances of less than $1 million.
The commercial mortgage loan portfolio represents a similar customer base as
the real estate construction portfolio. The commercial mortgage portfolio, 43
percent of which relates to owner-occupied properties, contains over 7,200
loans which average less than $372,000. The largest of these loans has a
balance under $20 million, and 92 percent of these loans have balances under $1
million.
Geographical dispersion and industry concentration are important determinants
in evaluating the credit risk inherent in any commercial loan portfolio. The
geographic distribution of real estate construction and commercial mortgage
loans at December 31, 1993, was as follows:
Geographic Distribution
<TABLE>
<CAPTION>
December 31, 1993 Commercial
(in millions) Construction Mortgage
- ------------------------------------------------------------------------------------
<S> <C> <C>
Michigan $ 239 $ 1,819
Illinois 15 252
Texas 87 239
California 57 179
Florida 16 52
Other 23 159
-------------------------
Total $ 437 $ 2,700
-------------------------
-------------------------
</TABLE>
ASSET AND LIABILITY MANAGEMENT
The asset and liability portfolios are managed to ensure adequate liquidity and
to control interest rate risk exposure. Management seeks to minimize the risk
of a reduction in net interest income that could result from fluctuations in
market interest rates. This process is carried out through regular meetings of
executive and senior management representing the finance, lending, investment
and deposit gathering areas of the Corporation.
INTEREST RATE SENSITIVITY
There is no single interest rate risk measurement system that satisfies all
objectives. As a result, a combination of simulation modeling and asset and
liability repricing schedules are used to analyze and manage interest rate
risk. The repricing schedule of all interest-bearing assets and liabilities is
reviewed regularly. While most assets and liabilities reprice either at
maturity or in accordance with their contractual terms, several balance sheet
components demonstrate characteristics that require adjustments to more
accurately reflect their repricing behavior. Assumptions based on historical
pricing relationships and anticipated market reactions are made to certain core
deposits to reflect the elasticity of the changes in their interest rates
relative to the changes in market interest rates. In addition, estimates are
made regarding early loan and security repayments. These adjustments provide a
more accurate picture of the Corporation's interest rate risk profile.
Net interest income is frequently evaluated under various balance sheet and
interest rate scenarios. The results of this analysis provide the information
needed to assess the proper balance sheet structure. As market interest rates
approach expected turning points, management adjusts the interest rate
sensitivity of the Corporation. This sensitivity is measured as a percentage of
earning assets. The Corporation's operating range for interest rate
sensitivity, before elasticity adjustments, is between an asset sensitive
position of 5 percent and a liability sensitive position of 10 percent.
However, the elasticity adjustment made to the bank's core deposits adds asset
sensitivity to the balance sheet. Accordingly, on an elasticity adjusted basis,
the operating range allows for an asset sensitive position of 10 percent and a
liability sensitive position of 5 percent.
The schedule on page 35 shows the interest sensitive gap as of year-end 1993
and 1992. The report reflects the contractual repricing and payment schedules
of assets and liabilities, as well as estimates of early loan and security
repayments. In addition, the schedule reflects an adjustment for the price
elasticity of core deposits.
The Corporation had a one-year liability sensitive gap of $1.1 billion, or 4
percent of earning assets, as of December 31, 1993. Restated for core deposit
elasticities, the gap is $332 million asset sensitive, or 1 percent of earning
assets. This compares to an $888 million asset sensitive gap or $2.5 billion
elasticity adjusted gap on December 31, 1992.
The asset sensitive position of the bank was reduced over the course of the
year to take advantage of the earnings potential provided by the steep yield
curve. However, it is necessary to have in place a level of asset sensitivity
to hedge the risks of rate increases. Management intends to add this
sensitivity over the course of the year to grow into the desired strategic
interest rate risk management position.
An unexpected change in the pace of the economy's recovery, whether
domestically or internationally, could translate into a materially different
interest rate environment. These risks have been evaluated by performing
simulation analysis on a multitude of different interest rate and balance sheet
scenarios. As a result of this analysis, management is confident that the
current balance sheet structure is appropriate.
36
<PAGE> 20
OFF-BALANCE-SHEET RISK
Investment securities and various funding instruments, as well as hedging
vehicles such as interest rate swaps and futures contracts, are utilized to
manage the interest sensitivity position and minimize the effect of interest
and foreign exchange rate fluctuations on earnings and market values.
Liquidity, capital requirements and yield are all considered in determining the
appropriate mix of securities and off-balance-sheet derivatives.
Corporate policy limits the use and dollar amount of all financial market
instruments. Credit risk exposure represents the net settlement, or the
difference between the calculated pay and receive amounts of each swap
transaction. When credit risk is evident, collateral is obtained from
counterparties in order to secure the receipt of amounts due.
In accordance with generally accepted accounting principles, the notional or
contract amount of interest rate swaps, forward rate agreements and futures
contracts are excluded from the statement of condition. Letters of credit and
loan commitments are also examples of transactions which may have a risk
element without balance sheet recognition. The notional or contract amount of
interest rate swaps, forward rate agreements and futures contracts was $4.1
billion at December 31, 1993. Note 18 to the consolidated financial statements
on page 53 provides further information on off-balance-sheet risk.
LIQUIDITY
Liquidity is the ability to meet financial obligations through the maturity or
sale of existing assets or acquisition of additional funds. It is necessary to
have a balance between the amount of liquid assets and purchased funds. Liquid
assets totaled $6.4 billion at December 31, 1993. In addition, $1.3 billion was
available from a collateralized borrowing account with the Federal Reserve Bank
at year-end 1993. Purchased funds at December 31, 1993, excluding certificates
of deposit with maturities beyond one year, approximated $7.7 billion.
PARENT COMPANY
The Corporation's ability to pay dividends is primarily dependent upon the
receipt of dividends from its subsidiary banks, which are limited by bank
regulatory agencies. As of January 1, 1994, the subsidiary banks could pay
dividends of up to $273 million without prior regulatory approval. At December
31, 1993, total assets of the Corporation's parent company, excluding the
investment in subsidiaries, were 88 percent of total liabilities. This
relatively high ratio value indicates that the parent company had little double
leverage at year-end 1993.
OTHER MATTERS
As described in Note 19 of the consolidated financial statements on page 54,
the Corporation has been named the defendant in a lawsuit involving hazardous
waste issues. The Corporation's motion for a summary judgment was granted in
the case. Management believes that even if the summary judgment is not upheld
on appeal the results of this legal action will not have a material impact on
the Corporation's financial position. However, depending on the amount of the
ultimate liability, if any, and the consolidated results of operations in the
year of final resolution, the legal action may have a materially adverse effect
on the consolidated results of operations in that year.
The Corporation and its subsidiary banks are subject to annual examinations by
various federal and state banking regulatory agencies. During 1993, there were
no significant findings resulting from these examinations.
37
<PAGE> 21
Consolidated Balance Sheets -
Comerica Incorporated and Subsidiaries
<TABLE>
<CAPTION>
December 31
(in thousands, except share data) 1993 1992
- ---------------------------------------- ------------ -------------
<S> <C> <C>
Assets
Cash and due from banks $ 1,600,695 $ 1,579,742
Interest-bearing deposits with banks 1,026,473 1,321,515
Federal funds sold and securities purchased under agreements to resell 1,091,789 86,632
Trading account securities 3,600 109,379
Mortgages held for sale 330,667 234,712
Investment securities available for sale 2,322,101 --
Investment securities held to maturity (estimated fair value of
$4,030,492 in 1993 and $5,297,650 in 1992) 3,977,450 5,163,351
------------ ------------
Total investment securities 6,299,551 5,163,351
Commercial loans 9,086,757 8,213,241
International loans 1,135,585 736,397
Real estate construction loans 437,481 470,831
Commercial mortgage loans 2,699,861 2,665,884
Residential mortgage loans 1,856,822 2,125,891
Consumer loans 3,674,256 3,836,109
Lease financing 209,185 166,632
------------ ------------
Total loans 19,099,947 18,214,985
Less allowance for loan losses (298,685) (308,007)
------------ ------------
Net loans 18,801,262 17,906,978
Premises and equipment 399,123 374,291
Customers' liability on acceptances outstanding 38,212 25,664
Accrued income and other assets 703,501 753,550
------------ ------------
Total assets $ 30,294,873 $ 27,555,814
------------ ------------
------------ ------------
Liabilities and Shareholders' Equity
Demand deposits (noninterest-bearing) $ 4,939,234 $ 4,567,593
Interest-bearing deposits 14,642,834 15,733,980
Deposits in foreign offices 1,367,811 897,945
------------ ------------
Total deposits 20,949,879 21,199,518
Federal funds purchased and securities sold
under agreements to repurchase 450,092 1,646,291
Other borrowed funds 4,950,507 1,575,418
Acceptances outstanding 38,212 25,664
Accrued expenses and other liabilities 263,969 272,594
Long-term debt 1,460,556 741,192
------------ ------------
Total liabilities 28,113,215 25,460,677
Redeemable preferred stock--$50 stated value
Authorized--10,000,000 shares
Issued--835,688 shares in 1992 -- 37,605
Common stock--$5 par value
Authorized--250,000,000 shares
Issued--119,294,531 shares in 1993 and 61,843,866 shares in 1992 596,473 309,219
Capital surplus 524,186 538,097
Unrealized gains and losses 27,473 --
Retained earnings 1,155,280 1,239,078
Less cost of common stock in treasury--4,423,603 shares
in 1993 and 898,988 shares in 1992 (121,754) (28,862)
------------ ------------
Total shareholders' equity 2,181,658 2,095,137
------------ ------------
Total liabilities and shareholders' equity $ 30,294,873 $ 27,555,814
------------ ------------
------------ ------------
</TABLE>
See notes to consolidated financial statements.
38
<PAGE> 22
Consolidated Statements of Income -
Comerica Incorporated and Subsidiaries
<TABLE>
<CAPTION>
Year Ended December 31
(in thousands, except per share data) 1993 1992 1991
- ------------------------------------------ ----- ----- -----
<S> <C> <C> <C>
Interest Income
Interest and fees on loans $1,388,169 $1,445,350 $1,633,521
Interest on investment securities
Taxable 307,354 356,299 437,138
Exempt from federal income tax 40,124 54,457 61,926
---------- --------- ---------
Total interest on investment securities 347,478 410,756 499,064
Trading account interest 640 3,012 3,494
Interest on federal funds sold and securities
purchased under agreements to resell 4,050 14,619 25,322
Interest on time deposits with banks 27,744 45,065 99,046
Interest on mortgages held for sale 14,772 14,387 7,976
---------- --------- ---------
Total interest income 1,782,853 1,933,189 2,268,423
Interest Expense
Interest on deposits 529,802 706,873 1,033,145
Interest on short-term borrowings
Federal funds purchased and securities
sold under agreements to repurchase 47,817 53,422 85,748
Other borrowed funds 41,216 45,998 86,662
Interest on long-term debt 62,719 29,742 27,703
Net interest rate swap income (32,239) (24,292) (15,448)
---------- --------- ---------
Total interest expense 649,315 811,743 1,217,810
---------- --------- ---------
Net interest income 1,133,538 1,121,446 1,050,613
Provision for loan losses 69,000 111,562 105,229
---------- --------- ---------
Net interest income after provision for loan losses 1,064,538 1,009,884 945,384
Noninterest Income
Income from fiduciary activities 122,280 113,895 104,990
Service charges on deposit accounts 120,125 113,099 102,890
Customhouse broker fees 39,926 38,010 35,697
Revolving credit fees 35,707 34,059 32,357
Securities gains 1,978 6,320 4,812
Other noninterest income 142,486 105,791 104,380
---------- --------- ---------
Total noninterest income 462,502 411,174 385,126
Noninterest Expenses
Salaries and employee benefits 528,658 516,341 499,897
Net occupancy expense 95,736 86,041 82,547
Equipment expense 62,401 57,398 54,361
FDIC insurance expense 44,593 44,629 41,209
Merger, integration and restructuring charge 22,000 128,000 --
Other noninterest expenses 285,077 259,614 267,461
---------- --------- ---------
Total noninterest expenses 1,038,465 1,092,023 945,475
---------- --------- ---------
Income before income taxes 488,575 329,035 385,035
Provision for income taxes 147,937 88,603 104,607
---------- --------- ---------
Net Income $ 340,638 $ 240,432 $ 280,428
---------- --------- ---------
---------- --------- ---------
Net income applicable to common stock $ 340,596 $ 236,819 $ 276,814
---------- --------- ---------
---------- --------- ---------
Net Income Per Common Share
Primary $ 2.85 $ 1.99 $ 2.41
Fully diluted $ 2.85 $ 1.98 $ 2.38
Primary average shares 119,569 119,113 114,713
Cash dividends declared on common stock $ 125,411 $ 107,788 $ 93,376
Dividends per common share $ 1.07 $ 0.96 $ 0.92
</TABLE>
See notes to consolidated financial statements.
39
<PAGE> 23
Consolidated Statements of Changes in Shareholders' Equity -
Comerica Incorporated and Subsidiaries
<TABLE>
<CAPTION>
Redeemable Unrealized Total
Preferred Common Capital Gains Retained Treasury Shareholders'
(in thousands, except share data) Stock Stock Surplus and (Losses) Earnings Stock Equity
- -------------------------------- ---------- --------- --------- ----------- ---------- -------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Balances at January 1, 1991 $37,605 $155,937 $335,696 $ -- $1,055,644 $(7,536) $1,577,346
Balances of Sugar Creek at
January 1, 1991 -- 586 920 -- 10,682 -- 12,188
Balances of NorthPark at
January 1, 1991 -- 3,192 12,140 -- 17,205 (675) 31,862
Pooling-of-interests adjustment -- 17,605 5,665 -- -- (23,270) --
------ ------- ------ ------- ---------- -------- --------
Balances at January 1, 1991,
as restated 37,605 177,320 354,421 -- 1,083,531 (31,481) 1,621,396
Net income for 1991 -- -- -- -- 280,428 -- 280,428
Cash dividends declared
Preferred stock -- -- -- -- (3,614) -- (3,614)
Common stock -- -- -- -- (93,376) -- (93,376)
Issuance of 2,760,000 shares
of common stock -- 13,800 93,763 -- -- -- 107,563
Issuance of common stock under
employee stock plans and for
conversion of debentures -- 2,573 13,320 -- (217) 6,157 21,833
Stock splits -- 110,471 45,877 -- (156,348) -- --
Amortization of
deferred compensation -- -- 1,460 -- -- -- 1,460
------ ------- ------ ------- ---------- -------- --------
Balances at December 31, 1991 37,605 304,164 508,841 -- 1,110,404 (25,324) 1,935,690
Net income for 1992 -- -- -- -- 240,432 -- 240,432
Cash dividends declared
Preferred stock -- -- -- -- (3,613) -- (3,613)
Common stock -- -- -- -- (107,788) -- (107,788)
Purchase of 89,383 shares
of common stock -- -- -- -- -- (5,635) (5,635)
Issuance of common stock under
employee stock plans and for
conversion of debentures -- 5,055 28,077 -- (357) 2,097 34,872
Amortization of
deferred compensation -- -- 1,179 -- -- -- 1,179
------ ------- ------ ------- ---------- -------- --------
Balances at December 31, 1992 37,605 309,219 538,097 -- 1,239,078 (28,862) 2,095,137
Net income for 1993 -- -- -- -- 340,638 -- 340,638
Cash dividends declared
Preferred stock -- -- -- -- (42) -- (42)
Common stock -- -- -- -- (125,411) -- (125,411)
Purchase of 4,720,117 shares
of common stock -- -- -- -- -- (128,848) (128,848)
Retirement of treasury stock -- (4,105) (17,730) -- (505) 22,340 --
Issuance of common stock under
employee stock plans and for
conversion of debentures -- 3,780 3,118 -- (6,725) 13,616 13,789
Stock split -- 287,579 -- -- (287,579) -- --
Amortization of
deferred compensation -- -- 701 -- -- -- 701
Redemption of preferred stock (37,605) -- -- -- (4,174) -- (41,779)
Adjustment for change in accounting
method, net of income taxes -- -- -- 27,473 -- -- 27,473
------ ------- ------ ------- ---------- -------- --------
Balances at December 31, 1993 $ -- $596,473 $524,186 $27,473 $1,155,280 $(121,754) $2,181,658
------ -------- -------- ------- ---------- --------- ----------
------ -------- -------- ------- ---------- --------- ----------
</TABLE>
( ) Indicates deduction.
See notes to consolidated financial statements.
40
<PAGE> 24
Consolidated Statements of Cash Flows -
Comerica Incorporated and Subsidiaries
<TABLE>
<CAPTION>
Year Ended December 31
(in thousands) 1993 1992 1991
- ------------------------------------------- ---------- -------- ---------
<S> <C> <C> <C>
Operating Activities
Net income $ 340,638 $ 240,432 $ 280,428
Adjustments to reconcile net income to
net cash provided by operating activities
Provision for loan losses 69,000 111,562 105,229
Depreciation 54,473 52,788 52,286
Merger, integration and restructuring charge -- 37,618 --
Net (increase) decrease in trading account securities 105,779 (95,095) 58,730
Net increase in mortgages held for sale (95,955) (75,115) (98,628)
Net (increase) decrease in accrued income receivable (2,888) 59,615 60,156
Net increase (decrease) in accrued expenses 15,967 (104,096) (139,294)
Net amortization of intangibles 42,967 32,741 24,865
Other, net (132,108) 94,079 32,517
--------- -------- -------
Total adjustments 57,235 114,097 95,861
--------- -------- -------
Net cash provided by operating activities 397,873 354,529 376,289
Investing Activities
Net decrease in interest-bearing deposits with banks 295,042 120,643 171,318
Net (increase) decrease in federal funds sold and securities
purchased under agreements to resell (1,005,157) 2,324,632 (1,834,824)
Proceeds from sale of investment securities held to maturity -- 214,110 514,368
Proceeds from maturity of investment securities held to maturity 3,316,794 3,437,288 1,381,303
Purchases of investment securities held to maturity (4,320,627) (3,304,872) (1,542,031)
Net increase in loans (other than loans purchased) (927,971) (601,532) (504,556)
Purchase of loans (23,868) (59,175) (279,768)
Fixed assets, net (79,305) (39,474) (72,181)
Net (increase) decrease in customers' liability
on acceptances outstanding (12,548) 4,444 6,590
Net cash used for acquisitions -- (56,220) (19,591)
--------- -------- -------
Net cash provided by (used in) investing activities (2,757,640) 2,039,844 (2,179,372)
Financing Activities
Net increase (decrease) in deposits (249,639) (717,097) 300,164
Net increase (decrease) in short-term borrowings 2,178,890 (2,013,389) 1,526,345
Net increase (decrease) in acceptances outstanding 12,548 (4,444) (6,590)
Proceeds from issuance of long-term debt 1,005,000 450,000 4,391
Repayments and purchases of long-term debt (280,541) (13,931) (24,964)
Proceeds from issuance of common stock
and other capital transactions 9,395 33,057 126,469
Purchase of common stock for treasury (128,848) (5,635) --
Redemption of preferred stock (41,779) -- --
Dividends paid (124,306) (80,472) (96,681)
--------- -------- -------
Net cash provided by (used in) financing activities 2,380,720 (2,351,911) 1,829,134
--------- -------- -------
Net increase in cash and due from banks 20,953 42,462 26,051
Cash and due from banks at beginning of year 1,579,742 1,537,280 1,511,229
--------- -------- -------
Cash and due from banks at end of year $1,600,695 $1,579,742 $1,537,280
--------- -------- -------
--------- -------- -------
Interest paid $ 665,297 $ 887,232 $1,317,677
--------- -------- -------
--------- -------- -------
Income taxes paid $ 109,557 $ 115,835 $ 95,397
--------- -------- -------
--------- -------- -------
Noncash investing and financing activities
Loan transfers to other real estate $ 38,955 $ 20,784 $ 31,761
--------- -------- -------
--------- -------- -------
Conversion of debentures to equity $ 5,095 $ 1,348 $ 3,277
--------- -------- -------
--------- -------- -------
</TABLE>
See notes to consolidated financial statements.
41
<PAGE> 25
Notes to Consolidated Financial Statements -
Comerica Incorporated and Subsidiaries
NOTE 1 ACCOUNTING POLICIES
The accounting and reporting policies of Comerica Incorporated and its
subsidiaries conform to generally accepted accounting principles and prevailing
practices within the banking industry.
The following is a summary of the more significant accounting and reporting
policies.
Consolidation
The consolidated financial statements include the accounts of the Corporation
and its subsidiaries after elimination of all significant intercompany accounts
and transactions.
The historical consolidated financial statements have been restated to include
the accounts and results of operations for acquisitions accounted for as
pooling-of-interests combinations. For acquisitions of subsidiary banks using
the purchase method of accounting, the assets acquired and liabilities assumed
have been adjusted to fair market values at the date of acquisition, and the
resulting net discount or premium is being accreted or amortized into income
over the remaining lives of the relevant assets and liabilities. Goodwill
representing the excess of cost over the net book value of identifiable assets
acquired is amortized on a straight-line basis over periods ranging from 10 to
30 years. Core deposit intangible assets are amortized on an accelerated method
over 10 years.
Mortgages Held for Sale
Mortgages held for sale are carried at the lower of cost or market. Market
value is determined in the aggregate.
Securities
In May 1993, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards (SFAS) No. 115, "Accounting for Certain
Investments in Debt and Equity Securities." As permitted under the Statement,
the Corporation has elected to adopt the provisions of the new standard as of
the end of its current fiscal year. In accordance with the Statement, prior
period financial statements have not been restated to reflect the change in
accounting principle. The Statement requires the classification of applicable
securities into the three categories of held to maturity, available for sale
and trading.
Investment securities held to maturity are those securities which management
has the ability and positive intent to hold to maturity. Investment securities
held to maturity are stated at cost, adjusted for amortization of premium and
accretion of discount. In the event that a held-to-maturity security is sold,
the adjusted cost of the specific security is used to compute the applicable
gain or loss.
Investment securities that fail to meet the ability and positive intent
criteria are accounted for as securities available for sale, and stated at fair
value with unrealized gains and losses, net of income taxes, reported as a
component of shareholders' equity.
Trading account securities are carried at market value. Gains or losses on the
disposition of trading securities are included in noninterest income.
Premises and Equipment
Premises and equipment are stated at cost, less accumulated depreciation and
amortization. Depreciation, computed on the straight-line method, is charged to
operations over the estimated useful lives of the properties. Leasehold
improvements are amortized over the terms of their respective leases or the
estimated useful lives of the improvements, whichever is shorter.
Allowance for Loan Losses
The allowance is maintained at a level adequate to absorb losses inherent in
the loan portfolio. Management determines the adequacy of the allowance by
applying projected loss ratios to the risk ratings of loans both individually
and by category. The projected loss ratios incorporate such factors as recent
loss experience, current economic conditions, the risk characteristics of the
various categories and concentrations of loans, transfer risk problems and other
pertinent factors. Loans which are deemed uncollectible are charged off and
deducted from the allowance. The provision for loan losses and recoveries on
loans previously charged off are added to the allowance.
Nonperforming Assets
Nonperforming assets are comprised of loans for which the accrual of interest
has been discontinued, loans for which the terms have been renegotiated to less
than market rates due to a serious weakening of the borrower's financial
condition, and other real estate which has been acquired primarily through
foreclosure and is awaiting disposition.
Loans are generally placed on nonaccrual status when principal or interest is
past due 90 days or more and/or when, in the opinion of management, full
collection of principal or interest is unlikely. At the time a loan is placed
on nonaccrual status, interest previously accrued but not collected is charged
against current income. Income on such loans is then recognized only to the
extent that cash is received and where future collection of principal is
probable.
42
<PAGE> 26
Other real estate acquired is carried at the lower of cost or fair value, minus
estimated costs to sell. When the property is acquired through foreclosure, any
excess of the related loan balance over fair value is charged to the allowance
for loan losses. Subsequent write-downs, operating expenses, and losses upon
sale, if any, are charged to noninterest expenses.
Pension Costs
Pension costs are charged to salaries and employee benefits expense and funded
consistent with the requirements of federal law and regulations.
Postretirement Benefits
Effective January 1, 1993, the Corporation adopted SFAS No. 106, "Employers'
Accounting for Postretirement Benefits Other Than Pensions." This Statement
requires that the expected cost of providing postretirement benefits be
recognized in the financial statements during the employee's active service
period. Prior to 1993, the Corporation's practice was to expense these benefits
when paid.
Interest Rate Futures, Caps and Floors, and Forward Contracts
The Corporation is party to a variety of interest rate futures, caps and
floors, and forward contracts in the management of the Corporation's overall
interest rate risk and in its trading activities. Gains and losses on contracts
which are designated as hedges are deferred and amortized over the lives of the
hedged items as an adjustment to interest income or expense. Fees received on
instruments sold to customers are deferred and amortized over the life of the
instrument. Futures and foreign exchange forward contracts used in trading
activities are carried at market value and realized and unrealized gains and
losses are included in other noninterest income.
Interest Rate Swaps
The Corporation enters into interest rate swap agreements to manage interest
rate exposure and for arbitrage purposes. Associated yield-related income or
expense is accrued over the life of the agreements. Related fees are deferred
and amortized over the life of the agreements. Income or expenses on interest
rate swaps that are entered into for arbitrage purposes are recorded in other
noninterest income.
Income Taxes
Provisions for income taxes are based on amounts reported in the statements of
income (after exclusion of nontaxable income such as interest on state and
municipal securities) and include deferred income taxes on temporary
differences in the recognition of income and expense for tax and financial
statement purposes.
Statements of Cash Flows
For the purpose of presentation in the Statements of Cash Flows, cash and cash
equivalents are defined as those amounts included in the balance sheet caption,
"Cash and due from banks."
Loan Origination Fees and Costs
Loan origination and commitment fees are deferred and recognized over the life
of the related loan or over the commitment period as a yield adjustment. Loan
fees on unused commitments and fees related to loans sold are recognized
currently as other noninterest income.
- --------------------------------------------------------------------------------
NOTE 2 MERGER AND ACQUISITIONS
On June 18, 1992, the Corporation merged with Manufacturers National
Corporation in a transaction accounted for as a pooling-of-interests. The
merger was accomplished by issuing .81 share of common stock (25.3 million
shares) for each share of Manufacturers stock. The historical financial
statements have been restated to include financial information of Manufacturers.
In connection with the merger with Manufacturers, the Corporation incurred a
pre-tax restructuring charge of $128 million ($92 million after-tax) in the
second quarter of 1992 principally as a result of the planned reduction of
1,800 positions in the combined entities; properties and equipment costs
associated with writing off duplicate facilities and computer systems; and
advisory fees. An additional pre-tax charge of $22 million ($14 million
after-tax) was incurred in the fourth quarter of 1993 for ongoing merger and
integration costs.
During the years ended December 31, 1993, 1992 and 1991 Comerica made the
following acquisitions:
Transactions accounted for as purchases:
<TABLE>
<CAPTION>
FMV of FMV of (Purchase
Assets Liabilities Price)/ Intangibles
(in millions) Acquired Assumed Assistance Recorded
- --------------- --------- --------- ----------- -----------
<S> <C> <C> <C> <C>
During 1992
Hibernia National Bank in Texas $ 841 $ 785 $ (56) $11
During 1991
InBancshares 240 206 (34) 17
Other 35 249 19 8
</TABLE>
43
<PAGE> 27
Transactions accounted for using the pooling-of-interests method:
<TABLE>
<CAPTION>
Common
Shares Issued
------------------------------ -------------
<S> <C>
During 1993
NorthPark National Corporation 2,677,706
Sugar Creek National Bank 892,976
During 1991
Plaza Commerce Bancorp 3,054,200
</TABLE>
The Corporation has announced the following acquisition which is
expected to be completed in 1994, pending all regulatory and shareholder
approvals:
<TABLE>
<CAPTION>
(in millions) Asset Size Purchase Price Method
<S> <C> <C> <C>
-------------------------- -------- ------------- -------
Pacific Western Bancshares $1,000 $133 Purchase
</TABLE>
- --------------------------------------------------------------------------------
NOTE 3 INVESTMENT SECURITIES
Information concerning investment securities as shown in the
consolidated balance sheets of the Corporation at December 31 was as
follows:
<TABLE>
<CAPTION>
Gross Gross
Unrealized Unrealized Estimated
(in thousands) Cost Gains Losses Fair Value
- -------------------------- ---------- ---------- ---------- -----------
<S> <C> <C> <C> <C>
December 31, 1993
U.S. Government and agency securities $3,232,127 $ 27,413 $12,452 $3,247,088
State and municipal securities 513,020 39,470 1,376 551,114
Other securities 232,303 2,536 2,549 232,290
--------- ------ ------ ----------
Total securities held to maturity $3,977,450 $ 69,419 $16,377 $4,030,492
--------- ------ ------ ----------
--------- ------ ------ ----------
December 31, 1992
U.S. Government and agency securities $3,823,979 $102,916 $13,495 $3,913,400
State and municipal securities 693,658 40,586 1,440 732,804
Other securities 645,714 7,095 1,363 651,446
--------- ------ ------ ----------
Total securities held to maturity $5,163,351 $150,597 $16,298 $5,297,650
--------- ------ ------ ----------
--------- ------ ------ ----------
</TABLE>
At December 31, 1993, gross unrealized gains and losses were $46 million
and $4 million respectively, for securities available for sale. The
available for sale portfolio is primarily U.S. Government and agency
securities.
The cost and estimated fair values of debt securities by contractual
maturity were as follows (securities with multiple maturity dates are
classified in the period of final maturity). Expected maturities will
differ from contractual maturities because borrowers may have the right
to call or prepay obligations with or without call or prepayment
penalties.
<TABLE>
<CAPTION>
Held to Maturity Available for Sale
---------------------------- ----------------------------
December 31, 1993 Estimated Estimated
(in thousands) Cost Fair Value Cost Fair Value
- ----------------------- ----------- ---------- ---------- -----------
<S> <C> <C> <C> <C>
Contractual maturity
Within one year $ 151,924 $ 153,383 $ -- $ --
Over one year to five years 357,970 381,266 -- --
Over five years to ten years 119,213 132,535 -- --
Over ten years 44,622 48,494 -- --
--------- --------- --------- ---------
Sub-total securities 673,729 715,678 -- --
Mortgage-backed securities 3,257,899 3,268,888 2,279,835 2,322,101
Equity and other non-debt securities 45,822 45,926 -- --
--------- --------- --------- ---------
Total securities $3,977,450 $4,030,492 $2,279,835 $2,322,101
--------- --------- --------- ---------
--------- --------- --------- ---------
</TABLE>
44
<PAGE> 28
Sales of investment securities resulted in realized gains and losses as
follows:
<TABLE>
<CAPTION>
Available
Year Ended December 31 Held to Maturity for Sale
(in thousands) ------------------- --------
1993 1992 1993
- ------------------------- ------ ------ ------
<S> <C> <C> <C>
Securities gains $2,128 $ 7,501 $ --
Securities losses (150) (1,181) --
----- ----- ----
Total $1,978 $ 6,320 $ --
----- ----- ----
----- ----- ----
</TABLE>
Assets, principally securities, carried at approximately $4.7 billion at
December 31, 1993 were pledged to secure public deposits (including State of
Michigan deposits of $25 million at December 31, 1993), and for other purposes
as required by law.
- -----------------------------------------------------------------------------
NOTE 4 NONPERFORMING ASSETS
The table below summarizes nonperforming assets, and loans which are
contractually past due 90 days or more as to interest or principal payments.
Nonperforming assets consist of nonaccrual loans, reduced-rate loans, and other
real estate. Nonaccrual loans are those on which interest is not being
recognized. Reduced-rate loans are those on which interest has been
renegotiated to lower than market rates because of the weakened financial
condition of the borrower. Nonaccrual and reduced-rate loans are included in
loans on the consolidated balance sheet.
<TABLE>
<CAPTION>
December 31 December 31
(in thousands) 1993 1992
- --------------------------- ----------- -----------
<S> <C> <C>
Nonaccrual loans
Commercial loans $ 71,268 $ 75,337
International loans 215 262
Real estate construction loans 18,748 27,608
Real estate mortgage loans
(principally commercial) 63,688 119,851
------- -------
Total 153,919 223,058
Reduced-rate loans 5,057 850
------- -------
Total nonperforming loans 158,976 223,908
Other real estate 50,174 49,188
------- -------
Total nonperforming assets $ 209,150 $ 273,096
------- -------
------- -------
Loans past due 90 days $ 45,880 $ 100,480
------- -------
------- -------
Gross interest income that would
have been recorded had the
nonaccrual and reduced-rate
loans performed in accordance
with original terms $ 20,247 $ 19,639
------- -------
------- -------
Interest income recognized $ 1,394 $ 1,594
------- -------
------- -------
</TABLE>
In May 1993, the Financial Accounting Standards Board issued SFAS No. 114,
"Accounting by Creditors for Impairment of a Loan." This statement addresses
the accounting by creditors for impairment of certain loans, and requires that
impaired loans be measured based on the present value of the expected future
cash flows arising from the loan. The statement will become effective on
January 1, 1995. The Corporation does not expect the standard to have a
material impact on its financial statements.
- -------------------------------------------------------------------------
NOTE 5 ALLOWANCE FOR LOAN LOSSES
An analysis of changes in the allowance for loan losses follows:
<TABLE>
<CAPTION>
(in thousands) 1993 1992 1991
- --------------------------------------- --------- -------- ----------
<S> <C> <C> <C>
Balance at January 1 $ 308,007 $ 279,342 $ 264,862
Allowance of institutions and loans purchased/sold -- 16,335 6,053
Loans charged off (110,504) (120,778) (125,750)
Recoveries on loans previously charged off 32,182 21,546 28,948
------ ------ -------
Net loans charged off (78,322) (99,232) (96,802)
Provision for loan losses 69,000 111,562 105,229
------ ------ -------
Balance at December 31 $ 298,685 $ 308,007 $ 279,342
------ ------ -------
------ ------ -------
As a percent of total loans 1.56% 1.69% 1.62%
------ ------ -------
------ ------ -------
</TABLE>
45
<PAGE> 29
NOTE 6 INTERNATIONAL OPERATIONS
The Corporation's international operations are conducted through the main
office of Comerica Bank and a branch in the Cayman Islands.
The following are the identifiable international assets based upon the domicile
of the customer at December 31, 1993 and 1992.
<TABLE>
<CAPTION>
(in thousands) 1993 1992
- ---------------------- ----------- -----------
<S> <C> <C>
International
Cash and due from banks $ 6,291 $ 1,499
Interest-bearing deposits with banks 976,357 1,310,094
Investment securities 24,101 22 653
Loans, net 1,085,372 697,398
Other assets 23,008 33,793
---------- -----------
Total 2,115,129 2,065,437
Domestic 28,179,744 25,490,377
---------- -----------
Total assets $30,294,873 $27,555,814
---------- -----------
---------- -----------
</TABLE>
Certain estimates and assumptions relating to the Corporation's international
activities have been used in calculating the operating results shown below.
Interest income has been determined based on the distribution of the
identifiable international assets on which the income is earned. Noninterest
income items attributable to international operations are not significant.
Interest expense related to international sources of funding are based on
actual rates. The cost of domestic funding of international assets included in
interest expense is based on the average cost of interest-bearing sources of
funds considered to have funded such assets. Operating expenses included an
allocation for administrative and other overhead expenses. Income taxes were
computed using the United States statutory federal tax rates.
<TABLE>
<CAPTION>
Total Income Before
(in thousands) Revenue Income Taxes Net Income
- ---------------------- ------------ ------------- ----------
<S> <C> <C> <C>
Year ended December 31, 1993
International $ 98,904 $ 25,564 $ 15,924
Domestic 2,146,451 463,011 324,714
---------- ----------- ----------
Total $ 2,245,355 $ 488,575 $ 340,638
---------- ----------- ----------
---------- ----------- ----------
Year ended December 31, 1992
International $ 104,761 $ 29,512 $ 19,817
Domestic 2,239,602 299,523 220,615
---------- ----------- ----------
Total $ 2,344,363 $ 329,035 $ 240,432
---------- ----------- ----------
---------- ----------- ----------
Year ended December 31, 1991
International $ 153,163 $19,953 $14,250
Domestic 2,500,386 365,082 266,178
---------- ----------- ----------
Total $ 2,653,549 $ 385,035 $ 280,428
---------- ----------- ----------
---------- ----------- ----------
</TABLE>
- --------------------------------------------------------------------------------
NOTE 7 SIGNIFICANT GROUP CONCENTRATIONS OF CREDIT RISK
Concentrations of both on-balance-sheet and off-balance-sheet credit
risk are controlled and monitored as part of the Corporation's credit
policies. The Corporation is a regional bank holding company with a
geographic concentration of its on-balance-sheet and off-balance-sheet
activities centered in Michigan. In addition, the Corporation has an
industry concentration with the automotive industry, which includes
manufacturers and their finance subsidiaries, suppliers, dealers and
company executives.
At December 31, 1993 and 1992, the Corporation's exposure from loan
commitments and guarantees to companies related to the automobile
industry totaled $5.5 billion and $4.6 billion, respectively.
Additionally, the Corporation's commercial real estate loans, including
commercial mortgages and construction loans, totaled $3.1 billion in
1993 and 1992. Approximately $1.4 billion of the Corporation's
commercial real estate exposure involves mortgages on owner-occupied
properties. Those borrowers are involved in business activities other
than real estate, and the sources of repayment are not dependent on the
performance of the real estate market.
46
<PAGE> 30
Note 8 PREMISES AND EQUIPMENT
A summary of premises and equipment at December 31 by major category
follows:
<TABLE>
<CAPTION>
(in thousands) 1993 1992
----------------------------------------------- ------- -------
<S> <C> <C>
Land $ 52,932 $ 64,487
Buildings and improvements 335,365 329,270
Furniture and equipment 409,728 392,349
------- --------
Total cost 798,025 786,106
Less accumulated depreciation and amortization (398,902) (411,815)
------- --------
Net book value $399,123 $374,291
------- --------
------- --------
</TABLE>
Other noninterest income for 1993 includes a $24 million gain on the
sale of land adjacent to an operations center.
Rental expense for leased properties and equipment amounted to $42
million in 1993, $41 million in 1992, and $37 million in 1991. Future
minimum lease rentals under noncancelable operating lease obligations
are as follows:
<TABLE>
<CAPTION>
1999
(in thousands) 1994 1995 1996 1997 1998 and Later Total
---------------- ------- -------- ------- ------- ------- ----------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
Lease rentals $39,988 $36,699 $33,807 $29,186 $27,455 $256,490 $423,625
</TABLE>
- --------------------------------------------------------------------------------
NOTE 9 SHORT-TERM BORROWINGS
Federal funds purchased and securities sold under agreements to
repurchase generally mature within one to four days from the transaction
date. Other borrowed funds, consisting of commercial paper, borrowed
securities, term federal funds purchased, short-term notes and treasury
tax and loan deposits, generally mature within one to 120 days from the
transaction date. The following is a summary of short-term borrowings
for the three years ended December 31, 1993:
<TABLE>
<CAPTION>
Federal Funds
Purchased and
Securities Sold Other Total
Under Agreements Borrowed Short-term
(in thousands) to Repurchase Funds Borrowings
- ----------------------------------------- --------------- ------------ -----------
<S> <C> <C> <C>
December 31, 1993
Amount outstanding at year-end $ 450,092 $4,950,507 $5,400,599
Weighted average interest rate at year-end 2.89% 2.66% 2.68%
Daily average amount outstanding $1,586,662 $1,431,692 $3,018,354
Weighted average interest rate for the year 3.01% 2.88% 2.95%
Maximum amount outstanding at any month-end $3,340,562 $4,950,507 $8,291,069
December 31, 1992
Amount outstanding at year-end $1,646,291 $1,575,418 $3,221,709
Weighted average interest rate at year-end 2.75% 2.52% 2.65%
Daily average amount outstanding $1,552,616 $1,307,908 $2,860,524
Weighted average interest rate for the year 3.44% 3.52% 3.48%
Maximum amount outstanding at any month-end $2,214,077 $3,302,345 $5,516,422
December 31, 1991
Amount outstanding at year-end $1,882,029 $3,333,359 $5,215,388
Weighted average interest rate at year-end 4.32% 4.12% 4.19%
Daily average amount outstanding $1,530,126 $1,526,909 $3,057,035
Weighted average interest rate for the year 5.60% 5.68% 5.64%
Maximum amount outstanding at any month-end $1,981,368 $3,333,359 $5,314,727
</TABLE>
47
<PAGE> 31
NOTE 10 LONG-TERM DEBT
Long-term debt consisted of the following at December 31:
<TABLE>
<CAPTION>
(in thousands) 1993 1992
- -------------------------------------------- --------- --------
<S> <C> <C>
Parent Company
Floating rate subordinated notes due 1997 $ -- $ 62,500
9.75% subordinated notes due 1999 74,511 75,000
10.125% subordinated debentures due 1998 74,641 75,000
Floating rate subordinated notes due 1996 -- 45,500
9% convertible subordinated notes due 2004 -- 3,055
10% subordinated convertible debentures
due 1994 to 2000 -- 2,187
12.5% notes payable due 1993 -- 2,860
---------- ----------
Total parent company 149,152 266,102
Subsidiaries
7.25% subordinated notes due 2002 148,619 149,412
Medium-term fixed rate notes bearing
interest at rates ranging from 3.28% to 5.95%
and maturing on dates ranging from 1994 to 1997 904,285 300,000
6.875% subordinated notes due 2008 98,913 --
7.125% subordinated notes due 2013 147,779 --
FDIC subordinated note due 1994 to 1995 8,941 13,293
Notes payable bearing interest at rates
ranging from 6.29% to 13% and maturing
on dates ranging from 1994 through 1996 2,867 12,385
---------- ----------
Total subsidiaries 1,311,404 475,090
---------- ----------
Total long-term debt $1,460,556 $ 741,192
---------- ----------
---------- ----------
</TABLE>
The 9.75% notes are subordinated to deposits and qualify as tier 2
capital.
The 10.125% subordinated debentures bear interest payable semiannually
and qualify as tier 2 capital.
The 7.25% subordinated notes due October 15, 2002 qualify as tier 2
capital.
Under established medium-term senior bank note programs, certain of the
Corporation's bank subsidiaries may offer an aggregate principal amount
of up to $2 billion. The notes can be issued as fixed or floating rate
notes and with terms from 9 months to 15 years. The notes do not qualify
as tier 2 capital and are not insured by the FDIC.
The 6.875% subordinated notes due March 1, 2008 qualify as tier 2
capital.
The 7.125% subordinated notes due December 1, 2013 qualify as tier 2
capital.
The FDIC subordinated note, which was assumed as part of an acquisition
in 1983, has a principal balance of $9 million, and has been discounted
to effect a market rate of interest as of the date of acquisition.
Annual principal payments of $4.5 million are due December 31, 1994 and
December 31, 1995. The interest rate is determined quarterly and is set
at 50 basis points over the 52-week U.S. Treasury Bill discount rate
(3.77% at December 31, 1993). The note qualifies as tier 2 capital.
The following table indicates the principal maturities of the long-term
debt:
<TABLE>
<CAPTION>
1999
(in thousands) 1994 1995 1996 1997 1998 and Later
- ---------------- ------- ------- ------ -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Long-term debt $735,455 $31,263 $149 $150,000 $75,000 $475,000
</TABLE>
48
<PAGE> 32
NOTE 11 SHAREHOLDERS' EQUITY
In November 1993, the board of directors authorized the repurchase of up
to 5 million shares of Comerica Incorporated common stock. The
Corporation intends to re-issue up to 4.6 million of the repurchased
shares to shareholders of Pacific Western Bancshares, in exchange for
their Pacific Western stock. Shares not used for this purpose will be
held in treasury for future corporate use at the discretion of the
board. At December 31, 1993, 4.1 million shares had been repurchased
under this program. Additionally, 0.8 million shares have been
repurchased as part of a September 1992 board authorization to purchase
up to one million shares of treasury stock for reissuance under employee
stock plans.
The redeemable preferred stock was redeemed on January 4, 1993 for $42
million. Dividends on the redeemable preferred stock were cumulative at
a fixed rate of 8.65 percent and were paid semiannually.
In November 1992, the Corporation declared a two-for-one stock split,
effected by means of a stock dividend paid January 4, 1993. In May 1991,
the Corporation declared a three-for-two stock split and, in July 1991,
Manufacturers declared a two-for-one stock split both effected by means
of a stock dividend. All per share data included in the consolidated
financial statements and in the related notes thereto have been
retroactively adjusted to reflect all of the splits.
At December 31, 1993, the Corporation had reserved 3.7 million shares of
common stock for issuance to employees under the Corporation's profit
sharing and long-term incentive plans.
- --------------------------------------------------------------------------------
NOTE 12 NET INCOME PER COMMON SHARE
Primary net income per common share is computed by dividing adjusted net
income by the weighted average number of shares of common stock and
dilutive common stock equivalents outstanding during the period. Common
stock equivalents consist of common stock issuable under the assumed
exercise of stock options granted under the Corporation's stock plans,
using the treasury stock method. Fully diluted net income per share of
common stock is computed by assuming conversion of common stock
equivalents and convertible subordinated notes after eliminating the
related after-tax interest expense. A computation of earnings per share
follows:
<TABLE>
<CAPTION>
Year Ended December 31
(in thousands, except per share data) 1993 1992 1991
- ------------------------------------------ -------- -------- ---------
<S> <C> <C> <C>
Primary
Average shares outstanding 118,461 117,185 113,261
Common stock equivalent
Net effect of the assumed
exercise of stock options 1,108 1,928 1,452
------- -------- --------
Primary average shares 119,569 119,113 114,713
------- -------- --------
------- -------- --------
Net income $340,638 $240,432 $280,428
Less preferred stock dividends 42 3,613 3,614
------- -------- --------
Income applicable to common stock $340,596 $236,819 $276,814
------- -------- --------
------- -------- --------
Primary net income per share $2.85 $1.99 $2.41
Fully diluted
Average shares outstanding 118,461 117,185 113,261
Common stock equivalents
Net effect of the assumed
exercise of stock options 1,109 2,054 2,157
Average shares reserved for
conversion of convertible debt 166 800 913
------- -------- --------
Fully diluted average shares 119,736 120,039 116,331
------- -------- --------
------- -------- --------
Net income $340,638 $240,432 $280,428
Less preferred stock dividends 42 3,613 3,614
------- -------- --------
Income applicable to common stock 340,596 236,819 276,814
Interest on convertible debt less
related income tax effect 86 390 502
------- -------- --------
Net income applicable to common stock
excluding above interest (net of income tax effect) $340,682 $237,209 $277,316
------- -------- --------
------- -------- --------
Fully diluted net income per share $2.85 $1.98 $2.38
</TABLE>
49
<PAGE> 33
NOTE 13 LONG-TERM INCENTIVE PLAN
The Corporation has long-term incentive plans under
which it has awarded both shares of restricted stock
to key executive officers and stock options to key
executive and senior officers of the Corporation and
its subsidiaries. The exercise price of the stock
options is equal to the fair market value at the time
the options are granted and the options may have restrictions
regarding exercisability. The duration of each option is
determined at the date of grant; however, no options may be
exercised later than ten years from the date of grant.
<TABLE>
<CAPTION>
Number Exercise Price Range
--------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Outstanding--January 1, 1991 5,546,688 $ 4.58 -- $ 17.06
Granted 520,650 14.75 -- 23.57
Cancelled (20,622) 12.89 -- 17.06
Exercised (1,634,986) 4.58 -- 17.06
Expired (4,536) 17.06
---------- ----------------------------
Outstanding--December 31, 1991 4,407,194 7.00 -- 23.57
Granted 890,000 29.75 -- 31.06
Cancelled (44,848) 12.89 -- 29.75
Exercised (1,980,776) 7.00 -- 19.32
Expired --
---------- ----------------------------
Outstanding--December 31, 1992 3,271,570 8.71 -- 31.06
Granted 754,740 32.38
Cancelled (139,943) 11.40 -- 32.38
Exercised (445,094) 8.71 -- 29.75
Expired --
---------- ----------------------------
Outstanding--December 31, 1993 3,441,273 $ 8.71 -- $ 32.38
---------- ----------------------------
---------- ----------------------------
Exercisable--December 31, 1993 2,101,192
Available for grant--December 31, 1993 145,135
</TABLE>
- -------------------------------------------------------------------------------
NOTE 14 EMPLOYEE BENEFIT PLANS
The Corporation has either defined benefit or defined
contribution pension plans in effect for substantially
all full-time employees. Staff expense includes expense
of $2.4 million in 1993, $190 thousand in 1992 and income
of $718 thousand in 1991 for defined benefit plans and
expense of $866 thousand in 1993, $748 thousand in 1992
and $567 thousand in 1991 for defined contribution plans.
Benefits under the defined benefit pension plan are primarily
based on years of service and the levels of compensation
during the five highest paid consecutive calendar years
occurring during the last ten years before retirement. The
plan's assets primarily consist of U.S. Government and agency
securities, corporate bonds and notes, equity securities and
units of certain collective investment funds administered by
Comerica Bank.
Contributions under the defined contribution plans are made at the
discretion of the governing board and are intended to provide not
only for benefits attributed to service to date but also for those
expected to be earned in the future.
The following table sets forth the funded status of the defined
benefit pension plans and amounts recognized on the Corporation's
balance sheet:
<TABLE>
<CAPTION>
December 31
(in thousands) 1993 1992
--------------------------------------------------------------------------------------------
<S> <C> <C>
Accumulated benefit obligation
Vested $ 305,461 $ 271,283
Nonvested 16,860 4,757
--------- ---------
Accumulated benefit obligation 322,321 276,040
Effect of projected future compensation levels 68,197 74,238
--------- ---------
Projected benefit obligation 390,518 350,278
Plan assets at fair value 424,024 389,339
--------- ---------
Plan assets in excess of projected benefit obligation 33,506 39,061
Unrecognized net loss due to past experience
different from that assumed and effects of
changes in assumptions (8,350) (10,134)
Unrecognized net assets being amortized over 15 years (34,693) (39,248)
--------- ---------
Accrued pension liability $ (9,537) $ (10,321)
--------- ---------
--------- ---------
</TABLE>
50
<PAGE> 34
Net periodic pension cost consisted of the following:
<TABLE>
<CAPTION>
(in thousands) 1993 1992 1991
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Service cost--benefits earned during the period $ 11,101 $ 11,923 $ 9,724
Interest cost on projected benefit obligation 28,541 24,896 21,480
Actual return on plan assets (44,094) (4,844) (54,326)
Net amortization and (deferral) 6,811 (31,785) 22,404
-------- ------- ---------
Net pension (income) expense $ 2,359 $ 190 $ (718)
-------- ------- ---------
-------- ------- ---------
</TABLE>
Actuarial assumptions were as follows:
<TABLE>
<CAPTION>
1993 1992 1991
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Discount rate used in determining projected
benefit obligation 7.5% 8.25% 8.25%-9%
Rate of increase in compensation levels 5% 6% 6%
Long-term rate of return on assets 8%-8.75% 8%-8.75% 8%-8.75%
</TABLE>
As a result of the merger with Manufacturers, the Corporation offered
its employees an early retirement program. Approximately 700 employees
who met certain eligibility requirements elected to participate in the
program. The termination cost of the enhanced benefits ($42 million) was
included in the restructuring charge.
The Corporation adopted SFAS No. 106, "Employer's Accounting for
Postretirement Benefits Other Than Pensions" in the first quarter of
1993. This statement mandates the accrual of the cost of providing
postretirement benefits during the active service period of the
employee. The Corporation's previous practice was to expense these
benefits when paid. The Corporation's plan continues postretirement
health care and life insurance benefits for current retirees, provides a
phase-out for employees over 50, and substantially reduces all benefits
for active employees. The postretirement plan is currently unfunded.
Net periodic postretirement benefit cost for the year ended December 31,
1993 included the following components:
<TABLE>
<CAPTION>
(in thousands) 1993
<S> <C>
- ----------------------------------------------------------------------------------------------------------------------
Service cost $ 335
Interest cost on accumulated postretirement
benefit obligation 7,234
Amortization of transition obligation 4,534
--------
Net periodic postretirement benefit cost $ 12,103
--------
--------
</TABLE>
For the years ended December 31, 1992 and 1991, postretirement benefit
costs were recognized on a cash basis and approximated $5 million and $4
million, respectively.
The following table sets forth the status of the postretirement plan at
December 31, 1993.
<TABLE>
<CAPTION>
(in thousands) 1993
- ---------------------------------------------------------------------------------------------------------------------
<S> <C>
Retirees $ 88,915
Other fully eligible plan participants 1,732
Other active plan participants 6,358
--------
Total accumulated postretirement benefit obligation 97,005
Unrecognized net loss (5,453)
Unrecognized transition obligation (86,129)
--------
Accrued postretirement benefit liability $ 5,423
--------
--------
</TABLE>
A 13 percent health care cost trend rate was projected for 1993, and is
assumed to decrease gradually to 6 percent by 2002, remaining constant
thereafter. Increasing each health care rate by one percentage point
would increase the accumulated postretirement benefit obligation by $8
million at December 31, 1993 and the aggregate of the service and
interest cost components by $668 thousand for the year ended December
31, 1993. A weighted average discount rate of 7.5 percent was used in
determining the accumulated postretirement benefit obligation.
The Corporation adopted SFAS No. 112, "Employers' Accounting for
Postemployment Benefits" as of December 31, 1993. This accounting
standard provides guidance on the accounting for benefits provided by an
employer to former or inactive employees after active employment but
before retirement. The adoption of SFAS No. 112 resulted in an
additional charge to benefits expense of nearly $3 million.
51
<PAGE> 35
- -------------------------------------------------------------------------------
NOTE 15 INCOME TAXES
The Corporation prospectively adopted SFAS No. 109, "Accounting for
Income Taxes," in 1992, which had no material effect on the financial
statements.
The domestic and foreign components of income before related income
taxes included in the consolidated statements of income were as
follows:
<TABLE>
<CAPTION>
(in thousands) 1993 1992 1991
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Income before income taxes
Domestic $ 469,681 $ 310,234 $ 367,507
Foreign 18,894 18,801 17,528
--------- --------- ---------
Total $ 488,575 $ 329,035 $ 385,035
--------- --------- ---------
--------- --------- ---------
</TABLE>
The current and deferred components of income taxes were as follows:
<TABLE>
<CAPTION>
(in thousands) 1993 1992 1991
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Currently payable
Federal $ 129,220 $ 106,205 $ 98,562
Foreign 1,603 1,001 1,002
State and local 2,540 1,347 504
--------- --------- ---------
133,363 108,553 100,068
Deferred federal and state
and local (credit) 14,574 (19,950) 4,539
--------- --------- ---------
Total $ 147,937 $ 88,603 $ 104,607
--------- --------- ---------
--------- --------- ---------
</TABLE>
There were $.7 million, $2.1 million and $1.6 million of income taxes
provided on securities transactions in 1993, 1992 and 1991,
respectively.
The principal components of deferred tax (assets) liabilities were as
follows:
<TABLE>
<CAPTION>
(in thousands) 1993 1992
- ----------------------------------------------------------------------------------
<S> <C> <C>
Allowance for loan losses $ (74,166) $ (71,809)
Lease financing transactions 70,303 54,346
Allowance for depreciation 5,640 3,373
Deferred loan origination fees and costs (13,170) (10,938)
Investment securities available for sale 14,793 --
Employee benefits 1,150 (5,707)
Other temporary differences, net (36,923) (42,782)
--------- ---------
Total $ (32,373) $ (73,517)
--------- ---------
--------- ---------
</TABLE>
The provision for federal income taxes is less than that computed by
applying the federal statutory rate of 35 percent in 1993 and 34
percent in 1992 and 1991 for the reasons in the following analysis:
<TABLE>
(in thousands) 1993 1992 1991
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Tax based on statutory rate $ 171,001 $ 111,872 $ 130,912
Effect of tax-exempt interest income (18,145) (24,761) (28,164)
Effect of certain merger related expenses -- 6,800 --
Other (4,919) (5,308) 1,859
--------- --------- ---------
Provision for income taxes $ 147,937 $ 88,603 $ 104,607
--------- --------- ---------
--------- --------- ---------
</TABLE>
NOTE 16 TRANSACTIONS WITH RELATED PARTIES
The Corporation's bank subsidiaries have had, and expect to have in
the future, transactions with the Corporation's directors and their
affiliates. Such transactions were made in the ordinary course of
business and included extensions of credit, all of which were made
on substantially the same terms, including interest rates and
collateral, as those prevailing at the same time for comparable
transactions with other customers and did not, in management's
opinion, involve more than normal risk of collectibility or present
other unfavorable features. The aggregate amount of loans attributable
to persons who were related parties at December 31, 1993,
approximated $179 million at the beginning and $139 million at the
end of 1993. During 1993, new loans to related parties aggregated
$123 million and repayments totaled $163 million.
52
<PAGE> 36
- ------------------------------------------------------------------------------
Note 17 DIVIDENDS DECLARED BY BANKING SUBSIDIARIES
Banking regulations limit the transfer of assets in the
form of dividends, loans or advances from the bank subsidiaries
to the Corporation. Under the most restrictive of these
regulations, the aggregate amount of dividends which can be
paid to the Corporation without obtaining prior approval from
bank regulatory agencies approximated $273 million at January
1, 1994. Substantially all the assets of the Corporation's
subsidiaries are restricted from transfer to the Corporation in
the form of loans or advances.
Dividends paid to the Corporation by its banking
subsidiaries amounted to $311 million in 1993, $60 million in
1992, and $148 million in 1991.
- ------------------------------------------------------------------------------
Note 18 FINANCIAL INSTRUMENTS WITH OFF-BALANCE-SHEET RISK
The consolidated balance sheets do not reflect various
commitments and contingent liabilities which arise in the
normal course of business and which, to varying degrees,
involve elements of credit, interest or liquidity risk. These
include commitments to extend credit; financial guarantees,
including primarily standby and commercial letters of credit;
interest rate floors and caps; options; when-issued securities;
forward and futures interest rate and foreign exchange
contracts; and interest rate swaps. The contract or notional
amounts of those instruments express the extent of involvement
the Corporation has in each particular financial instrument.
For commitments to extend credit and financial
guarantees written, exposure to credit loss in the event of
nonperformance by the other party to the financial instrument
is represented by the contractual amount of those instruments.
The Corporation uses similar credit policies in making these
commitments and conditional obligations as it does for
on-balance-sheet instruments. Since these instruments generally
have fixed expiration dates or other termination clauses, many
of them expire without being drawn upon and do not necessarily
represent future liquidity requirements. Long-term guarantees
account for $581 million of total financial guarantees and
generally extend for five years or more. The remaining $894
million generally matures within one year or less. Collateral
is obtained if deemed necessary based on managements credit
evaluation of the counterparty. Collateral held by the
Corporation varies, but may include cash; marketable
securities; accounts receivable; inventory; property, plant and
equipment; and income-producing commercial properties.
The contractual amounts of commitments to extend
credit, and standby and commercial letters of credit written by
the Corporation at December 31, 1993 and 1992 were as follows:
<TABLE>
<CAPTION>
(in millions) 1993 1992
------------------------------------------------------------------------------------------------
<S> <C> <C>
Commitments to extend credit (unused) $11,042 $9,763
Standby letters of credit and financial guarantees 1,475 1,359
Commercial letters of credit 518 542
</TABLE>
Interest rate floors and caps, options, when-issued
securities, forward and futures interest rate and foreign
exchange contracts, and interest rate swaps are instruments
which assist the Corporation and its customers in managing
their interest rate and foreign currency risks. Management
limits the instruments which the Corporation uses to manage its
interest rate exposure to those which either act as a hedge or
those which reduce a specific interest rate or foreign currency
gap. Thus, market risk resulting from a particular
off-balance-sheet financial instrument is normally offset by
other on- or off-balance-sheet transactions. Risks which arise
from the inability of counterparties to meet the terms of their
contracts are minimized through normal credit reviews on those
counterparties. The Corporation generally does not require
collateral for these types of instruments.
Interest rate floors and caps are agreements to make
payments for interest rate differentials between an index rate
and a specified minimum or maximum rate, computed on notional
amounts. The Corporation sells interest rate floors and caps to
enable its customers to manage their interest rate risk. In
these transactions, the Corporation is subject to the interest
rate risk that interest rate movements will create a further
obligation beyond that which is recognized on the balance
sheet.
Option contracts allow the holder to purchase (sell) a
financial instrument at a specified price within a specified
period of time from (to) the writer of the option. As a writer
of options, the Corporation receives a premium at the outset
and then bears the risk of an unfavorable change in the price
of the financial instrument underlying the option. There is
also the inherent credit risk involved in financial instruments
purchased as a result of holders exercising their options. The
Corporation enters into option contracts only if the option
creates an economic hedge on the underlying instrument.
When-issued securities represent commitments to
purchase or sell securities which have been authorized but not
yet issued. Upon entering such commitments, the Corporation is
subject to the risks of unfavorable price changes in the
security before its actual issuance. The Corporation enters
into these commitments mainly to secure certain rates on U.S.
Government and agency securities.
53
<PAGE> 37
Forward and futures interest rate and foreign exchange
contracts represent commitments to purchase or sell securities,
other money market instruments, or foreign currency at a future
date and at a specified price. The Corporation enters into such
contracts to assist in managing its interest rate and foreign
currency exposures. Risks arise from the changes in value of
the underlying financial instrument and from the possible
inability of the counterparty to meet the terms of the
contract. These contracts are normally closed out prior to
settlement, thus the notional amount of forward and futures
contracts significantly exceeds the future cash requirements of
the Corporation. The gross amount of contracts to purchase
securities represents the Corporation's maximum exposure to
credit risk.
Interest rate swaps are agreements to exchange interest
rate payments, generally fixed-rate for variable-rate, computed
on notional amounts. The Corporation enters into interest rate
swaps mainly to assist in managing its interest rate exposure
and is subject to both the market risk inherent in such
agreements and the risk that a counterparty will fail to meet
the terms of the agreement. The replacement costs of
outstanding interest rate swap agreements were $55 million and
$59 million at December 31, 1993 and 1992, respectively.
Interest settlements, rather than the notional
principal or contract amounts often used to express the volume
of the following transactions, represent the amount potentially
subject to risk. The notional or contract amounts at December
31, 1993 and 1992 were as follows:
<TABLE>
<CAPTION>
(in millions) 1993 1992
- ------------------------------------------------------------------------------
<S> <C> <C>
Interest rate floors and caps and
options written $ 283 $ 307
When-issued securities
Commitments to purchase 657 50
Commitments to sell 250 211
Forward and futures contracts
To purchase foreign currencies and
U.S. dollar exchange 356 294
Forward rate agreements 65 15
Interest rate swaps 3,634 2,632
</TABLE>
- ------------------------------------------------------------------------------
Note 19 CONTINGENT LIABILITIES
The State of Michigan filed a lawsuit in District Court
on July 24, 1990, against a subsidiary bank and certain former
officers, directors and shareholders of a lending customer
seeking recovery of amounts expended by the State (past and
future) to clean up hazardous waste at two former plant sites,
compensation for damages to natural resources, civil penalties
for claimed violation of State Acts and attorneys fees.
Plaintiff seeks cleanup costs and damages and has expressed the
opinion that the claim will be well in excess of $30 million.
In January 1993, the court granted the banks motion for summary
judgment and denied the Attorney General's motion for summary
judgment. The period during which the Attorney General may
appeal the courts order has not yet lapsed.
The Corporation and its subsidiaries are parties to
other litigation and claims arising in the normal course of
their activities. Although the amount of ultimate liability, if
any, with respect to such matters cannot be determined,
management, after consultation with legal counsel, believes
that the litigation and claims, including the matter described
above, will not have a materially adverse effect on the
Corporation's consolidated financial position.
54
<PAGE> 38
- -----------------------------------------------------------------------------
Note 20 USAGE RESTRICTIONS
Included in cash and due from banks are amounts
required to be deposited with the Federal Reserve Bank. These
reserve balances vary, depending on the level of customer
deposits in the Corporation's subsidiary banks. At December 31,
1993 and 1992, the Federal Reserve balances were $532 million
and $485 million, respectively.
- -----------------------------------------------------------------------------
Note 21 ESTIMATED FAIR VALUES OF FINANCIAL INSTRUMENTS
Generally accepted accounting principals currently
require disclosure of the estimated fair values of financial
instruments. In cases where quoted market values are not
available, the Corporation uses present value techniques and
other valuation methods to estimate the fair values of its
financial instruments. These valuation methods require
considerable judgment, and the resulting estimates of fair
value can be significantly affected by the assumptions made and
methods used. Accordingly, the estimates provided herein do not
necessarily indicate amounts which could be realized in a
current exchange. Further, as the Corporation normally intends
to hold the majority of its financial instruments until
maturity, it does not expect to realize many of the estimated
amounts disclosed. The disclosures also do not include
estimated fair value amounts for items which are not defined as
financial instruments, but which have significant value. These
include such items as core deposit intangibles and loan
servicing rights, the future earnings potential of significant
customer relationships, and the value of trust operations and
other fee generating businesses. The Corporation does not
believe that it would be practicable to estimate a
representational fair value for these types of items.
The Corporation used the following methods and
assumptions:
Cash and short-term investments: The carrying amount
approximates the estimated fair value of these instruments,
which consist of cash and due from banks, interest-bearing
deposits with banks, and federal funds sold.
Trading account securities: These securities are
carried at quoted market value or the market value for
comparable securities, which represents estimated fair value.
Mortgages held for sale: The market value of these
loans represents estimated fair value. The market value is
determined on the basis of existing forward commitments or the
market values of similar loans.
Investment securities: The market value of investment
securities, which is based on quoted market values or the
market values for comparable securities, represents estimated
fair value.
Domestic commercial loans: These consist of commercial,
real estate construction, commercial mortgage, and equipment
lease financing loans. The estimated fair value of the
Corporation's variable-rate commercial loans is represented by
their carrying value, adjusted by an amount which estimates the
change in fair value caused by changes in the credit quality of
borrowers since the loans were originated. The estimated fair
value of fixed-rate commercial loans is calculated by
discounting the contractual cash flows of the loans using
year-end origination rates derived from the Treasury yield
curve or other representative bases. The resulting amounts are
adjusted to estimate the effect of changes in the credit
quality of borrowers since the loans were originated.
International loans: The estimated fair value of the
Corporation's short-term international loans which consist of
trade-related loans, or loans which have no cross-border risk
due to the existence of domestic guarantors or liquid
collateral, is represented by their carrying value, adjusted by
an amount which estimates the effect on fair value of changes
in the credit quality of borrowers or guarantors. The estimated
fair value of long-term international loans is based on the
quoted market values of these loans or on the market values of
international loans with similar characteristics.
Retail loans: This category consists of residential
mortgage, consumer, and auto lease financing loans. The
estimated fair value of residential mortgage loans is based on
discounted contractual cash flows or market values of similar
loans sold in conjunction with securitized transactions. For
consumer loans, the estimated fair values are calculated by
discounting the contractual cash flows of the loans using rates
representative of year-end origination rates. The resulting
amounts are adjusted to estimate the effect of changes in the
credit quality of borrowers since the loans were originated.
Customers' liability on acceptances outstanding: The
carrying amount approximates the estimated fair value.
Deposit liabilities: The estimated fair value of demand
deposits, consisting of checking, savings and certain money
market deposit accounts, is represented by the amounts payable
on demand. The carrying amount of deposits in foreign offices
approximates their estimated fair value, while the estimated
fair value of term deposits is calculated by discounting the
scheduled cash flows using the year-end rates offered on these
instruments.
55
<PAGE> 39
Short-term borrowings: The carrying amount of federal funds purchased,
securities sold under agreements to repurchase, and other borrowings
approximates estimated fair value.
Acceptances outstanding: The carrying amount approximates the estimated
fair value.
Long-term debt: The estimated fair value of the majority of long-term
debt is based on quoted market values. If quoted market values are not
available, the estimated fair value is based on the market values of
debt with similar characteristics.
Commitments to extend credit: The estimated fair value of unused
commitments to extend credit and stand-by and commercial letters of
credit is represented by the estimated cost to terminate or otherwise
settle the obligations with the counterparties. This amount is
approximated by the fees currently charged to enter into similar
arrangements, considering the remaining terms of the agreements and any
changes in the credit quality of counterparties since the agreements
were entered into. This estimate of fair value does not take into
account the significant value of the customer relationships and the
future earnings potential involved in such arrangements, as the
Corporation does not believe that it would be practicable to estimate a
representational fair value for these items.
Interest rate and foreign currency exchange agreements: The estimated
fair value of interest rate caps, when-issued securities, foreign
currency exchange contracts, and forward rate agreements is based on
quoted market values or the market values of similar instruments. The
estimated fair value of interest rate swaps is represented by the
estimated replacement cost or value of the agreements.
The estimated fair values of the Corporation's financial instruments at
December 31, 1993 and 1992 are as follows:
<TABLE>
<CAPTION>
1993 1992
--------------------------- --------------------------
Carrying Estimated Carrying Estimated
(in millions) Amount Fair Value Amount Fair Value
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
ASSETS
Cash and short-term investments $ 3,719 $ 3,719 $ 2,988 $ 2,988
Trading account securities 4 4 109 109
Mortgages held for sale 331 332 235 235
Investment securities available for sale 2,322 2,322 -- --
Investment securities held to maturity 3,978 4,030 5,163 5,298
Commercial loans 9,087 9,002 8,213 8,140
International loans 1,136 1,155 736 727
Real estate construction loans 437 435 471 462
Commercial mortgage loans 2,700 2,717 2,666 2,681
Residential mortgage loans 1,857 1,880 2,126 2,176
Consumer loans 3,674 3,677 3,836 3,848
Lease financing 209 210 167 167
-------------------------- -------------------------
Total loans 19,100 19,076 18,215 18,201
Less allowance for loan losses (299) -- (308) --
-------------------------- -------------------------
Net loans 18,801 19,076 17,907 18,201
Customers' liability on
acceptances outstanding 38 38 26 26
LIABILITIES
Demand deposits (noninterest-bearing) 4,939 4,939 4,568 4,568
Interest-bearing deposits 14,643 14,731 15,734 15,858
Deposits in foreign offices 1,368 1,368 898 898
-------------------------- -------------------------
Total deposits 20,950 21,038 21,200 21,324
Short-term borrowings 5,400 5,400 3,222 3,222
Acceptances outstanding 38 38 26 26
Long-term debt 1,461 1,502 741 743
Off-Balance-Sheet Financial Instruments
Commitments to extend credit -- (11) -- (12)
Interest rate and foreign currency
exchange agreements -- 117 -- 56
</TABLE>
56
<PAGE> 40
NOTE 22 PARENT COMPANY FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
BALANCE SHEETS -- Comerica Incorporated
December 31 (in thousands, except share data) 1993 1992
- ----------------------------------------------- ---------- -----------
<S> <C> <C>
ASSETS
Cash and due from banks $ 1,111 $ 2,263
Securities purchased from bank
subsidiaries under agreements to resell -- 16,538
Time deposits with banks 97,200 123,600
Investment securities held to maturity 7,507 24,320
Receivables from subsidiaries -- 100,000
Investment in subsidiaries, principally banks 2,208,710 2,132,226
Premises and equipment 49,670 31,633
Other assets 43,462 26,645
--------- ----------
Total assets $2,407,660 $2,457,225
--------- ----------
--------- ----------
LIABILITIES AND SHAREHOLDERS' EQUITY
Commercial paper $ -- $ 8,502
Long-term debt 149,152 266,102
Advances from nonbanking subsidiaries 4,277 11,741
Other liabilities 72,573 75,743
--------- ----------
Total liabilities 226,002 362,088
Redeemable preferred stock--$50 stated value
Authorized--10,000,000 shares
Issued--835,688 shares in 1992 -- 37,605
Common stock--$5 par value
Authorized--250,000,000 shares
Issued--119,294,531 in 1993 and 61,843,866 in 1992 596,473 309,219
Capital surplus 524,186 538,097
Unrealized gains and losses 27,473 --
Retained earnings 1,155,280 1,239,078
Less cost of common stock in treasury--4,423,603 shares
in 1993 and 898,988 shares in 1992 (121,754) (28,862)
--------- ----------
Total shareholders' equity 2,181,658 2,095,137
--------- ----------
Total liabilities and shareholders' equity $2,407,660 $2,457,225
--------- ----------
--------- ----------
</TABLE>
<TABLE>
<CAPTION>
STATEMENTS OF INCOME -- Comerica Incorporated
Year Ended December 31 (in thousands) 1993 1992 1991
- ------------------------------------------------ ----------- --------- ----------
<S> <C> <C> <C>
INCOME
Income from subsidiaries
Dividends from subsidiaries $ 312,148 $ 60,975 $ 148,669
Interest on receivables from subsidiaries 3,303 8,839 9,151
Other interest income 1,630 5,777 9,279
Intercompany management fees 211,351 136,806 110,053
Interest on bank time deposits 51 3,326 3,094
Other noninterest income 24,818 3,038 5,409
--------- ------- -------
Total income 553,301 218,761 285,655
EXPENSES
Interest on commercial paper 13 473 1,448
Interest on long-term debt 18,529 21,623 24,829
Interest on advances from subsidiaries 193 548 1,266
Salaries and employee benefits 128,509 90,643 67,667
Occupancy expense 8,515 6,438 6,924
Equipment expense 23,608 9,330 11,945
Merger, integration and restructuring charge 22,000 45,962 --
Other noninterest expenses 60,305 34,549 22,619
--------- ------- -------
Total expenses 261,672 209,566 136,698
--------- ------- -------
Income before income taxes and equity
in undistributed net income of subsidiaries 291,629 9,195 148,957
Income tax credit (6,550) (10,720) (120)
--------- ------- -------
298,179 19,915 149,077
Equity in undistributed net income of
subsidiaries, principally banks 42,459 220,517 131,351
--------- ------- -------
NET INCOME $340,638 $240,432 $280,428
--------- ------- -------
--------- ------- -------
</TABLE>
57
<PAGE> 41
<TABLE>
<CAPTION>
STATEMENTS OF CASH FLOWS--Comerica Incorporated
Year Ended December 31 (in thousands) 1993 1992 1991
- ---------------------------------------------------- ---------- ------- ---------
<S> <C> <C> <C>
OPERATING ACTIVITIES
Net income $ 340,638 $ 240,432 $ 280,428
Adjustments to reconcile net income to
net cash provided by operating activities
Undistributed earnings of
subsidiaries, principally banks (42,459) (220,517) (131,351)
Depreciation 17,658 7,344 7,305
Merger, integration and restructuring charge 5,414 15,701 --
Net amortization of intangibles 1,207 773 407
Interest on note with subsidiary -- (1,924) (2,565)
Other, net (21,962) 6,142 (12,727)
-------- -------- -------
Total adjustments (40,142) (192,481) (138,931)
-------- -------- -------
Net cash provided by operating activities 300,496 47,951 141,497
INVESTING ACTIVITIES
Net (increase) decrease in receivables from subsidiaries 100,000 2,297 (2,297)
Net (increase) decrease in securities purchased from
bank subsidiary under agreements to resell 16,538 9,046 (18,652)
Proceeds from maturities of investment securities
held to maturity 33,548 1,024 13,985
Purchase of investment securities held to maturity (16,549) (14,194) (18,826)
Proceeds from sales of fixed assets and other real estate 13,633 2,516 6,492
Purchases of fixed assets (58,086) (15,374) (7,867)
Net (increase) decrease in bank time deposits 26,400 101,782 (88,400)
Capital transactions with subsidiaries (4,620) (2,350) (750)
Purchase of subsidiaries -- (56,220) (33,580)
-------- -------- -------
Net cash provided by (used in) investing activities 110,864 28,527 (149,895)
FINANCING ACTIVITIES
Net increase (decrease) in advances from subsidiaries (7,464) (7,864) 5,333
Proceeds from issuance of long-term debt -- -- --
Repayments and purchases of long-term debt (111,008) (6,946) (14,679)
Net decrease in short-term borrowings (8,502) (7,696) (12,727)
Proceeds from issuance of common stock
and other capital transactions 9,395 33,057 126,469
Purchases of treasury stock (128,848) (5,635) --
Redemption of preferred stock (41,779) -- --
Cash dividends paid (124,306) (80,472) (96,681)
-------- -------- -------
Net cash provided by (used in) financing activities (412,512) (75,556) 7,715
Net increase (decrease) in cash on deposit at bank subsidiary (1,152) 922 (683)
Cash on deposit at bank subsidiary at beginning of year 2,263 1,341 2,024
-------- -------- -------
Cash on deposit at bank subsidiary at end of year $1,111 $2,263 $1,341
-------- -------- -------
-------- -------- -------
Interest paid $18,652 $22,190 $27,654
-------- -------- -------
-------- -------- -------
Income taxes recovered $12,191 $12,936 $7,125
-------- -------- -------
-------- -------- -------
Noncash investing and financing activities
Conversion of debentures to equity $5,095 $1,348 $3,277
-------- -------- -------
-------- -------- -------
</TABLE>
58
<PAGE> 42
NOTE 23 SUMMARY OF QUARTERLY FINANCIAL INFORMATION
The following quarterly information is unaudited. However, in the
opinion of management, the information furnished reflects all
adjustments which are necessary for the fair presentation of the
results of operations for the periods presented.
<TABLE>
<CAPTION>
1993
-----------------------------------------------------------------
Fourth Third Second First
(in thousands, except per share data) Quarter Quarter Quarter Quarter
- -------------------------------------------- -------- -------- -------- --------
<S> <C> <C> <C> <C>
Interest income $ 451,594 $ 438,088 $ 446,024 $ 447,147
Interest expense 163,457 158,173 162,440 165,245
Net interest income 288,137 279,915 283,584 281,902
Provision for loan losses 14,000 15,000 18,000 22,000
Securities gains 411 526 407 634
Noninterest income (excluding
securities gains) 130,891 109,488 111,101 109,044
Noninterest expenses 276,917 253,821 255,292 252,435
Net income 90,090 83,696 83,727 83,125
Per common share
Primary net income $0.76 $0.70 $0.70 $0.69
Fully diluted net income $0.76 $0.70 $0.70 $0.69
</TABLE>
<TABLE>
<CAPTION>
1992
------------------------------------------------------------------
Fourth Third Second First
(in thousands, except per share data) Quarter Quarter Quarter Quarter
- -------------------------------------------- -------- -------- -------- --------
<S> <C> <C> <C> <C>
Interest income $ 457,965 $ 470,623 $ 492,409 $ 512,192
Interest expense 174,660 190,034 212,632 234,417
Net interest income 283,305 280,589 279,777 277,775
Provision for loan losses 24,060 27,045 30,778 29,679
Securities gains 3,116 717 134 2,353
Noninterest income (excluding
securities gains) 100,139 103,663 100,454 100,598
Noninterest expenses 246,064 236,971 367,860* 241,128
Net income (loss) 87,684 86,683 (12,456) 78,521
Per common share
Primary net income (loss) $0.73 $0.72 $(0.11) $0.65
Fully diluted net income (loss) $0.72 $0.72 $(0.11) $0.65
</TABLE>
* Included $128 million restructuring charge (Note 2).
59
<PAGE> 43
Report of Management and Independent Auditors
Management is responsible for the accompanying financial statements and all
other financial information in this Annual Report. The financial statements
have been prepared in conformity with generally accepted accounting principles
and include amounts which of necessity are based on management's best estimates
and judgments and give due consideration to materiality. The other financial
information herein is consistent with that in the financial statements.
In meeting its responsibility for the reliability of the financial statements,
management develops and maintains systems of internal accounting controls.
These controls are designed to provide reasonable assurance that assets are
safeguarded and transactions are executed and recorded in accordance with
management's authorization. The concept of reasonable assurance is based on the
recognition that the cost of internal accounting control systems should not
exceed the related benefits. The systems of control are continually monitored
by the internal auditors whose work is closely coordinated with and supplements
in many instances the work of independent auditors.
The financial statements have been audited by independent auditors Ernst &
Young. Their role is to render an independent professional opinion on
management's financial statements based upon performance of procedures they
deem appropriate under generally accepted auditing standards.
The Corporation's Board of Directors oversees management's internal control and
financial reporting responsibilities through its Audit Committee as well as
various other committees. The Audit Committee, which consists of directors who
are not officers or employees of the Corporation, meets periodically with
management and internal and independent auditors to assure that they and the
Committee are carrying out their responsibilities and to review auditing,
internal control and financial reporting matters.
/s/ EUGENE A. MILLER
Eugene A. Miller
Chairman of the Board and
Chief Executive Officer
/s/ PAUL H. MARTZOWKA
Paul H. Martzowka
Chief Financial Officer
/s/ ARTHUR W. HERMANN
Arthur W. Hermann
Senior Vice President and
Controller
BOARD OF DIRECTORS, COMERICA INCORPORATED
We have audited the accompanying consolidated balance sheets of Comerica
Incorporated and subsidiaries as of December 31, 1993 and 1992, and the related
consolidated statements of income, changes in shareholders' equity, and cash
flows for each of the three years in the period ended December 31, 1993. The
1991 consolidated financial statements give retroactive effect to the merger on
June 18, 1992 of Comerica Incorporated and Manufacturers National Corporation
(the combining companies), which has been accounted for using the
pooling-of-interests method. These financial statements are the responsibility
of the Corporation's management. Our responsibility is to express an opinion on
these financial statements based on our audits. We did not audit the 1991
financial statements of Comerica Incorporated (the combining company) which
statements reflect total revenues constituting 55 percent in 1991 of the
related consolidated total. Those statements were audited by other auditors
whose report has been furnished to us, and our opinion, insofar as it relates
to data included for Comerica Incorporated (the combining company) is based
solely on the report of the other auditors.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits and the reports of other
auditors provide a reasonable basis for our opinion.
In our opinion, based on our audits and the report of other auditors, the
financial statements referred to above present fairly, in all material
respects, the consolidated financial position of Comerica Incorporated and
subsidiaries at December 31, 1993 and 1992, and the consolidated results of
their operations and their cash flows for each of the three years in the period
ended December 31, 1993, in conformity with generally accepted accounting
principles.
ERNST & YOUNG
Detroit, Michigan
January 18, 1994
60
<PAGE> 44
<TABLE>
<CAPTION>
Historical Review-Average Balance Sheets - Comerica Incorporated and Subsidiaries
Consolidated Financial Information
(in millions) 1993 1992 1991 1990 1989
- -------------------------------------- ----- ------ ------- -------- ------
<S> <C> <C> <C> <C> <C>
Assets
Cash and due from banks $ 1,490 $ 1,322 $ 1,201 $ 1,231 $ 1,212
Interest-bearing deposits with banks 814 1,017 1,413 1,376 1,861
Federal funds sold and securities
purchased under agreements to resell 135 399 454 307 612
Trading account securities 12 78 53 47 17
Mortgages held for sale 232 196 92 63 15
Investment securities 5,512 5,373 5,740 5,081 4,037
Commercial loans 8,473 7,753 7,359 7,034 6,507
International loans 897 710 501 412 602
Real estate construction loans 441 503 530 478 496
Commercial mortgage loans 2,629 2,368 2,190 1,938 1,694
Residential mortgage loans 1,979 2,297 2,438 2,317 1,850
Consumer loans 3,697 3,625 3,427 3,130 2,798
Lease financing 191 191 177 168 166
------- ------ ------- ------ ------
Total loans 18,307 17,447 16,622 15,477 14,113
Less allowance for loan losses (311) (291) (275) (276) (292)
------- ------ ------- ------ ------
Net loans 17,996 17,156 16,347 15,201 13,821
Accrued income and other assets 1,045 969 1,065 1,026 891
------- ------ ------- ------ ------
Total assets $27,236 $26,510 $26,365 $24,332 $22,466
------- ------ ------- ------ ------
------- ------ ------- ------ ------
Liabilities and Shareholders' Equity
Demand deposits (noninterest-bearing) $ 4,380 $ 3,796 $ 3,417 $ 3,336 $ 3,282
Interest-bearing deposits 15,035 15,449 15,933 15,202 14,068
Deposits in foreign offices 1,306 1,668 1,435 843 1,047
------- ------ ------- ------ ------
Total deposits 20,721 20,913 20,785 19,381 18,397
Federal funds purchased and securities sold
under agreements to repurchase 1,586 1,553 1,530 1,767 1,411
Other borrowed funds 1,432 1,308 1,527 809 489
Accrued expenses and other liabilities 274 327 421 504 455
Long-term debt 1,087 414 323 348 354
------- ------ ------- ------ ------
Total liabilities 25,100 24,515 24,586 22,809 21,106
Shareholders' equity 2,136 1,995 1,779 1,523 1,360
------- ------ ------- ------ ------
Total liabilities and
shareholders' equity $27,236 $26,510 $26,365 $24,332 $22,466
------- ------ ------- ------ ------
------- ------ ------- ------ ------
</TABLE>
61
<PAGE> 45
Historical Review-Statements of Income - Comerica Incorporated and Subsidiaries
<TABLE>
<CAPTION>
Consolidated Financial Information
(in millions, except per share data) 1993 1992 1991 1990 1989
- -------------------------------------- --------- ------- ------- ------- --------
<S> <C> <C> <C> <C> <C>
Interest Income
Interest and fees on loans $ 1,388 $ 1,445 $ 1,634 $ 1,668 $ 1,593
Interest on investment securities
Taxable 307 356 437 392 290
Exempt from federal income tax 40 55 62 67 71
------- ------ ------- ------ ------
Total interest on investment securities 347 411 499 459 361
Trading account interest 1 3 3 4 1
Interest on federal funds sold and securities
purchased under agreements to resell 4 15 25 25 57
Interest on time deposits with banks 28 45 99 120 178
Interest on mortgages held for sale 15 14 8 6 2
------- ------ ------- ------ ------
Total interest income 1,783 1,933 2,268 2,282 2,192
Interest Expense
Interest on deposits 530 707 1,033 1,119 1,133
Interest on short-term borrowings
Federal funds purchased and Securities
sold under agreements to repurchase 47 53 86 142 129
Other borrowed funds 41 46 86 65 45
Interest on long-term debt 63 30 28 33 35
Net interest rate swap (income) expense (32) (24) (15) (4) 3
------- ------ ------- ------ ------
Total interest expense 649 812 1,218 1,355 1,345
------- ------ ------- ------ ------
Net interest income 1,134 1,121 1,050 927 847
Provision for loan losses 69 111 105 100 147
------- ------ ------- ------ ------
Net interest income after provision
for loan losses 1,065 1,010 945 827 700
Noninterest Income
Income from fiduciary activities 122 114 105 100 92
Service charges on deposit accounts 120 113 103 89 78
Customhouse broker fees 40 38 36 35 30
Revolving credit fees 36 34 32 30 27
Securities gains 2 6 5 2 2
Other noninterest income 142 106 104 92 64
------- ------ ------- ------ ------
Total noninterest income 462 411 385 348 293
Noninterest Expenses
Salaries and employee benefits 529 516 500 454 406
Net occupancy expense 96 86 83 76 70
Equipment expense 62 57 54 50 46
FDIC insurance expense 44 45 41 22 14
Merger, integration and restructuring charge 22 128 -- -- --
Other noninterest expenses 285 260 267 246 218
------- ------ ------- ------ ------
Total noninterest expenses 1,038 1,092 945 848 754
Income before income taxes 489 329 385 327 239
Provision for income taxes 148 89 105 79 51
------- ------ ------- ------ ------
Net Income $341 $240 $280 $248 $188
------- ------ ------- ------ ------
------- ------ ------- ------ ------
Net income applicable to common stock $341 $237 $277 $245 $184
------- ------ ------- ------ ------
------- ------ ------- ------ ------
Net Income Per Common Share
Primary $2.85 $1.99 $2.41 $2.25 $1.73
Fully diluted $2.85 $1.98 $2.38 $2.23 $1.71
Primary average shares (in thousands) 119,569 119,113 114,713 108,742 106,640
Cash dividends declared on common stock $125 $108 $93 $78 $67
Dividends per common share $1.07 $0.96 $0.92 $0.87 $0.77
</TABLE>
62
<PAGE> 46
Historical Review-Statistical Data - Comerica Incorporated and Subsidiaries
<TABLE>
<CAPTION>
Consolidated Financial Information 1993 1992 1991 1990 1989
- ----------------------------------------------- ----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C>
Average Rates (Fully Taxable Equivalent Basis)
Interest-bearing deposits with banks 3.41% 4.43% 7.01% 8.73% 9.57%
Federal funds sold and securities purchased
under agreements to resell 2.99 3.67 5.58 8.18 9.39
Trading account securities 6.76 3.99 6.75 7.95 8.32
Mortgages held for sale 6.38 7.34 8.66 9.78 10.18
U.S. Government and agency securities 6.35 8.14 9.34 9.61 9.60
State and municipal securities 10.25 10.35 10.70 10.81 10.90
Other securities 5.48 6.54 7.95 8.99 9.43
----- ----- ----- ----- ------
Total investment securities 6.70 8.16 9.25 9.73 9.88
Commercial loans 6.56 6.98 9.01 10.48 11.40
International loans 5.04 5.70 8.14 9.94 10.18
Real estate construction loans 6.63 7.00 8.69 10.17 10.08
Commercial mortgage loans 8.10 8.54 9.99 11.04 11.59
Residential mortgage loans 8.57 9.53 10.01 9.96 9.98
Consumer loans 9.98 11.03 12.10 12.53 12.58
Lease financing 7.34 8.89 9.66 10.06 9.69
----- ----- ----- ----- ------
Total loans 7.62 8.34 9.89 10.86 11.35
----- ----- ----- ----- ------
Interest income as a percent of earning assets 7.25 8.04 9.48 10.42 10.84
Domestic deposits 3.24 4.13 5.93 6.90 7.35
Deposits in foreign offices 3.29 4.11 6.14 8.31 9.41
----- ----- ----- ----- ------
Total interest-bearing deposits 3.24 4.13 5.95 6.97 7.50
Federal funds purchased and securities sold
under agreements to repurchase 3.01 3.44 5.60 8.04 9.15
Other borrowed funds 2.88 3.52 5.68 9.36 9.92
Long-term debt 5.77 7.18 8.56 8.05 9.11
----- ----- ----- ----- ------
Interest expense as a percent of
interest bearing sources 3.18 3.98 5.87 7.14 7.74
----- ----- ----- ----- ------
Interest rate spread 4.07 4.06 3.61 3.28 3.10
Impact of net noninterest-bearing sources of funds 0.58 0.67 0.88 1.08 1.23
----- ----- ----- ----- ------
Net interest margin as percent of earning assets 4.65 4.73 4.49 4.36 4.33
Return on Average Common Shareholders' Equity 15.94 12.10 15.90 16.47 13.94
Return on Average Assets 1.25 0.91 1.06 1.02 0.84
Per Share Data
Book value at year-end $18.99 $17.38 $16.30 $14.52 $13.05
Market value--high and low for year 35-25 33-26 27-14 17-11 20-15
Other Data
Number of offices 385 427 412 401 362
Number of employees (full-time equivalent) 12,670 13,322 13,836 13,423 12,846
</TABLE>
63
<PAGE> 47
Directors and Officers Comerica Incorporated
BOARD OF DIRECTORS
E. Paul Casey
Managing General Partner
Metapoint Partners
James F. Cordes*
Executive Vice President
The Coastal Corporation
J. Philip DiNapoli*
Attorney
J. Philip DiNapoli Offices
Max M. Fisher
Investor
John D. Lewis+
Vice Chairman
Comerica Incorporated
Patricia Shontz Longe, Ph.D.*
Economist; Senior Partner
The Longe Company
Wayne B. Lyon
President and Chief Operating Officer
Masco Corporation
Gerald V. MacDonald
Retired Chairman and Chief Executive Officer
Comerica Incorporated
Donald R. Mandich*
Retired Chairman and Chief Executive Officer
Comerica Incorporated
Eugene A. Miller
Chairman and Chief Executive Officer
Comerica Incorporated and Comerica Bank
Michael T. Monahan
President
Comerica Incorporated and Comerica Bank
Alfred A. Piergallini
Chairman, President and Chief Executive Officer
Gerber Products Company
Dean E. Richardson*
Retired Chairman
Manufacturers National Corporation
Thomas F. Russell
Retired Chairman and Chief Executive Officer
Federal-Mogul Corporation
Alan E. Schwartz
Partner
Honigman Miller Schwartz and Cohn
Howard F. Sims*
Chairman
Sims-Varner & Associates
*Audit Committee Members
+Appointed to board January 21, 1994
EXECUTIVE OFFICERS
Joseph J. Buttigieg III
Executive Vice President
Comerica Bank
Richard A. Collister
Executive Vice President
Comerica Incorporated and
Comerica Bank
Robert L. Condon
Executive Vice President
Comerica Incorporated
Judith C. Lalka Dart
Executive Vice President
General Counsel and Corporate Secretary
Comerica Incorporated and Comerica Bank
George C. Eshelman
Executive Vice President
Comerica Incorporated and Comerica Bank
Douglas W. Fiedler
President and Chief Executive Officer
Comerica Bank & Trust, FSB
J. Michael Fulton
President and Chief Executive Officer
Comerica Bank-California
Charles L. Gummer
President and Chief Executive Officer
Comerica Bank-Texas
Robert A. Herdoiza
Executive Vice President
Comerica Bank
Arthur W. Hermann
Senior Vice President and Controller
Comerica Incorporated and Comerica Bank
Thomas R. Johnson
Executive Vice President
Comerica Incorporated
John D. Lewis
Vice Chairman
Comerica Incorporated
Paul H. Martzowka
Executive Vice President and Chief Financial Officer
Comerica Incorporated and Comerica Bank
Eugene A. Miller
Chairman and Chief Executive Officer
Comerica Incorporated and Comerica Bank
Thomas E. Mines
Senior Vice President and General Auditor
Comerica Incorporated
Michael T. Monahan
President
Comerica Incorporated and Comerica Bank
David B. Stephens
Executive Vice President
Comerica Bank
Paul D. Tobias
Executive Vice President
Comerica Incorporated
David C. White
President and Chief Executive Officer
Comerica Bank-Illinois
64
<PAGE> 48
COMERICA BANK (MICHIGAN)
Eugene A. Miller
Chairman and Chief Executive Officer
Michael T. Monahan
President
DIRECTORS
Wendell W. Anderson Jr.
Retired Chairman
Bundy Corporation
Lillian Bauder
President and Chief Executive Officer
Cranbrook Educational Community
E.L. Cox
President and Chief Executive Officer
Accident Fund of Michigan
Roger Fridholm
Chief Executive Officer
Of Counsel Enterprises, Inc.
Todd W. Herrick
President and Chief Executive Officer
Tecumseh Products Company
Edward C. Levy Jr.
President and Chief Executive Officer
Edward C. Levy Company
John D. Lewis
Vice Chairman
Comerica Incorporated
Paul H. Martzowka
Executive Vice President and Chief Financial Officer
Comerica Incorporated and Comerica Bank
Walter J. McCarthy Jr.
Retired Chairman and Chief Executive Officer
The Detroit Edison Company
Eugene A. Miller
Chairman and Chief Executive Officer
Comerica Incorporated and Comerica Bank
Michael T. Monahan
President
Comerica Incorporated and Comerica Bank
John W. Porter
Chief Executive Officer
Urban Education Alliance, Inc.
Heinz C. Prechter
Chairman and Chief Executive
ASC Incorporated
Richard D. Rohr
Partner
Bodman, Longley & Dahling
Robert S. Taubman
President and Chief Executive Officer
The Taubman Company, Inc.
Alfred H. Taylor Jr.
Retired Chairman and Chief Executive Officer
Kresge Foundation
William P. Vititoe
Chairman and Chief Executive Officer
Washington Energy Company
Martin D. Walker
Chairman and Chief Executive Officer
M.A. Hanna Company
Gail L. Warden
President and Chief Executive Officer
Henry Ford Health System
COMERICA BANK-TEXAS
Charles L. Gummer
President and Chief Executive Officer
DIRECTORS
Carroll Baird
President
Mrs. Baird's Bakeries, Inc.
C. Dewitt Brown Jr.
President and Chief Executive Officer
Dee Brown Masonry
James F. Cordes
Executive Vice President
The Coastal Corporation
Charles R. Cravens Jr.
Attorney
Hopkins & Sutter
Thomas M. Dunning
Chairman
Dunning Benefit Corporation
Joe R. Goyne
Vice Chairman
Comerica Bank-Texas
Charles L. Gummer
President and Chief Executive Officer
Comerica Bank-Texas
Rev. Zan W. Holmes Jr.
Senior Pastor
St. Luke Community United
Methodist Church
Jake Kamin
Investor and Developer
John D. Lewis
Vice Chairman
Comerica Incorporated
W. Thomas McQuaid
President
Performance Properties Corporation
Raymond D. Nasher
Chairman of the Board of Directors
Comerica Bank-Texas
Chairman
The Nasher Company
Calvin E. Person
Owner
Calvin Person & Associates
Boone Powell Jr.
President and Chief Executive Officer
Baylor University Medical Center
Bill J. Priest, Ph.D.
Chancellor Emeritus
Dallas County Community College District
Thomas J. Tierney
Chairman of the Board
Corporate Communications Center, Inc.
COMERICA BANK-ILLINOIS
David C. White
President and Chief Executive Officer
DIRECTORS
Gregory R. Beard
Executive Vice President
Comerica Bank-Illinois
Thomas F. Carey
Attorney at Law
Carey, Filter, White & Boland
Robert E. Hughes
Retired Chairman of the Board
Affiliated Banc Group, Inc.
John D. Lewis
Vice Chairman
Comerica Incorporated
David C. White
President and Chief Executive Officer
Comerica Bank-Illinois
Robert J. Zahorik
President
Midwest Steel Erection Company, Inc.
65
<PAGE> 49
Directors and Officers - Comerica Incorporated and Subsidiaries
COMERICA BANK-CALIFORNIA
J. Michael Fulton
President and Chief Executive Officer
DIRECTORS
Theodore J. Biagini
Of Counsel
Pillsbury Madison & Sutro
Maxwell H. Bloom
First Vice President
Kemper Securities
Jack C. Carsten
Venture Capitalist
Jack W. Conner
Chairman
Comerica Bank-California
J. Philip DiNapoli
Attorney
J. Philip DiNapoli Offices
Bruce C. Edwards
President
March Development Company
J. Michael Fulton
President and Chief Executive Officer
Comerica Bank-California
Drew Gibson
Principal
Gibson Speno Company
Walter T. Kaczmarek
Executive Vice President and Chief Operating Officer
Comerica Bank-California
John D. Lewis
Vice Chairman
Comerica Incorporated
Patricia N. Lowell
Retired President
Comerica Bank-California
Walter J. McCarthy Jr.
Retired Chairman and Chief Executive Officer
The Detroit Edison Company
Lowell W. Morse
President
Cypress Ventures, Inc.
Edward P. Roski Jr.
Executive Vice President
Majestic Realty Company
Lewis N. Wolff
Chairman and Chief Executive Officer
Wolff Sesnon Buttery
COMERICA BANK & TRUST, FSB
(FLORIDA)
Douglas W. Fiedler
President and Chief Executive Officer
DIRECTORS
Arthur R. Bradley
Chairman
Comerica Bank & Trust, FSB
Nancy H. Canary
Partner
Thompson, Hine and Flory
E. Paul Casey
Managing General Partner
Metapoint Partners
John F. Daly
Retired Vice Chairman
Johnson Controls
Douglas W. Fiedler
President and Chief Executive Officer
Comerica Bank & Trust, FSB
Don B. Dean
Retired President and
Chief Executive Officer
Manufacturers Bank & Trust of Florida
J. Russell Fowler
Retired Chairman
Jacobson Stores, Inc.
Ronald S. Holliday, Esq.
Managing Partner
Rudnick & Wolf
John D. Lewis
Vice Chairman
Comerica Incorporated
Patricia Shontz Longe, Ph.D.
Economist; Senior Partner
The Longe Company
Donald R. Mandich
Retired Chairman and
Chief Executive Officer
Comerica Incorporated
William A. Prew
Retired President
Prew Insurance
Bill T. Smith Jr., Esq.
Attorney
Bill T. Smith Jr., P.A.
A.V. Witbeck
Retired President
Witbeck Appliance, Inc.
66
<PAGE> 50
COMERICA INCORPORATED SUBSIDIARIES
COMERICA BANK-CALIFORNIA
COMERICA BANK & TRUST, FSB (FLORIDA)
COMERICA BANK-ILLINOIS
COMERICA BANK (MICHIGAN)
COMERICA BANK-TEXAS
COMERICA ACCEPTANCE CORPORATION
Generates consumer loans through dealers in several states.
COMERICA BANK-MIDWEST, N.A.
Specializes in revolving credit loans; based in Toledo, Ohio.
COMERICA COMMUNITY DEVELOPMENT CORPORATION
Provides a non-conventional financial resource for housing rehabilitation and
small business enterprise in Comerica's Michigan markets.
COMERICOMP INCORPORATED
Offers employee benefit consulting services for companies outsourcing employee
benefit functions.
COMERICA BANK (MICHIGAN) SUBSIDIARIES
COMERICA LEASING CORPORATION
Provides equipment leasing and financing services for businesses throughout the
United States.
COMERICA MORTGAGE CORPORATION
Offers residential real estate financing for new mortgages and servicing of
existing mortgages owned by Comerica Bank and other investors.
JOHN V. CARR & SON, INC.
Provides customhouse brokerage and freight forwarding services from offices in
14 states and Ontario, Canada.
COMERICA INVESTMENT SERVICES
COMERICA INSURANCE SERVICES CORPORATION
Offers retail and commercial
insurance consulting, sales and
product management services.
COMERICA SECURITIES, INC.
Provides investment counseling and
a full range of investment products,
including mutual funds and annuities.
WILSON, KEMP & ASSOCIATES, INC.
Offers individualized investment
portfolio management services to
customers in the Midwest and Florida.
WOODBRIDGE CAPITAL MANAGEMENT, INC.
Provides advisory services as an
investment management firm for
Comerica Bank's trust investment
activities in Michigan, Florida,
Texas, California and Illinois.
WORLD ASSET MANAGEMENT, INC.
Offers a full range of quantitative
investment management services.
67
<PAGE> 51
SHAREHOLDER INFORMATION
STOCK
Comerica's stock trades on the New York Stock Exchange (NYSE) under the symbol
CMA.
SHAREHOLDER ASSISTANCE
Inquiries related to shareholder records, change of name, address or ownership
of stock, and lost or stolen stock certificates should be directed to the
transfer agent and registrar:
Norwest Bank Minnesota, N.A.
P.O. Box 738
South St. Paul, Minnesota 55075-0738
800-468-9716
ELIMINATION OF DUPLICATE MATERIALS
If you receive duplicate mailings of quarterly and annual reports at one
address, you may have multiple shareholder accounts. You can consolidate your
multiple accounts into a single, more convenient account by contacting the
transfer agent shown above. In addition, if more than one member of your
household is receiving shareholder materials, you can eliminate the duplicate
mailings by contacting the transfer agent.
DIVIDEND REINVESTMENT PLAN
Comerica offers a dividend reinvestment plan which permits participating
shareholders of record to reinvest dividends in Comerica common stock without
paying brokerage commissions or service charges. Participating shareholders may
also invest up to $3,000 in additional funds each quarter for the purchase of
additional shares. A brochure describing the plan in detail and an
authorization form can be requested from the transfer agent shown above.
DIVIDEND DIRECT DEPOSIT
Common shareholders of Comerica may have their dividends deposited into their
savings or checking account at any bank that is a member of the National
Automated Clearing House (ACH) system. Information describing this service and
an authorization form can be requested from the transfer agent shown above.
DIVIDEND PAYMENTS
Subject to approval of the board of directors, dividends are customarily paid
on Comerica's common stock on or about April 1, July 1, September 1 and January
1.
ANNUAL MEETING
May 20, 1994
CORPORATE INFORMATION
Comerica Incorporated
Comerica Tower at Detroit Center
Detroit, Michigan 48226
313-222-3300
EQUAL EMPLOYMENT OPPORTUNITY
Comerica is committed to its affirmative action program and practices which
ensure uniform treatment of employees without regard to race, creed, color,
age, national origin, religion, handicap, marital status, veteran status,
weight, height or sex.
INVESTOR CONTACT
Judith V. Hicks
313-222-6317
MEDIA CONTACT
Sharon R. McMurray
313-222-4881
68
<PAGE> 52
<TABLE>
<CAPTION>
APPENDIX
DESCRIPTION OF GRAPHIC MATERIAL
PAGE
NUMBER GRAPHIC MATERIAL
- ------ ----------------
<CAPTION>
20 Bar graph depicting the Corporation's Net Income (in millions) from 1989 to 1993.
1989 1990 1991 1992 1993
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Net Income 188 248 280 240 341
Excluding Restructuring Charge 332
<CAPTION>
20 Bar graph depicting the Corporation's Return on Assets (in percentages) from 1989 to 1993.
1989 1990 1991 1992 1993
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Return on Assets 0.84 1.02 1.06 0.91 1.25
Excluding Restructuring Charge 1.25
<CAPTION>
22 Bar graph depicting the Corporation's Net Income--Fully Taxable Equivalent (in millions) from 1989 to 1993.
1989 1990 1991 1992 1993
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Net Interest Income (FTE) 894 975 1,093 1,158 1,163
<CAPTION> Bar graph depicting the Corporation's Net Interest Margin--Fully Taxable Equivalent (percent of earning assets)
22 From 1989 to 1993.
1989 1990 1991 1992 1993
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
4.33 4.36 4.49 4.73 4.65
<CAPTION>
24 Bar graph depicting the Corporation's Allowance for Loan Losses (in percentages) from 1989 to 1993.
1989 1990 1991 1992 1993
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Allowance for Loan Losses to
Total Loans (period-end) 2.30 1.60 1.62 1.69 1.56
Net Loans Charged off to
Average Loans 0.51 1.18 0.58 0.57 0.43
</TABLE>
<PAGE> 53
<TABLE>
<CAPTION>
APPENDIX
DESCRIPTION OF GRAPHIC MATERIAL
PAGE
NUMBER GRAPHIC MATERIAL
- ------ ----------------
24 Bar graph depicting the Corporation's Noninterest Income (in millions) from 1989 to 1993.
1989 1990 1991 1992 1993
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Income from Fiduciary
Activities 91.500 99.852 104.990 113.895 122.280
Service Charges 78.240 88.543 102.890 113.099 120.125
Other 123.466 159.674 177.246 184.180 220.097
------- ------- ------- ------- -------
Total 293.206 348.069 385.126 411.174 462.502
<CAPTION>
26 Bar graph depicting the Corporation's Noninterest Expense (in millions) from 1989 to 1993.
1989 1990 1991 1992 1993
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Salaries and Benefits 406.201 454.272 499.897 516.341 528.658
Net Occupancy 69.619 75.713 82.547 86.041 95.736
Equipment 46.245 49.532 54.361 57.398 62.401
Other 232.033 268.207 308.670 304.243 329.670
Restructuring Charge 128.000 22.000
------- ------- ------- ------- -------
Total 754.098 847.724 945.475 1,092.023 1,038.465
<CAPTION>
28 Bar graph depicting the Corporation's Average Earning Assets (in billions) from 1989 to 1993.
1989 1990 1991 1992 1993
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Loans 14.113 15.477 16.622 17.447 18.307
Securities 4.037 5.081 5.740 5.373 5.512
Short-term investments 2.505 1.793 2.012 1.690 1.193
------ ------ ------ ------ ------
Total 20.655 22.351 24.374 24.510 25.012
<CAPTION>
28 Bar graph depicting the Corporation's Average Loans (in billions) from 1989 to 1993.
1989 1990 1991 1992 1993
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Commercial 6.673 7.202 7.536 7.944 8.664
Consumer 2.798 3.130 3.427 3.625 3.697
Real Estate 4.040 4.733 5.158 5.168 5.049
International 0.602 0.412 0.501 0.710 0.897
----- ----- ----- ----- -----
Total 14.113 15.477 16.622 17.447 18.307
<CAPTION>
30 Bar graph depicting the Corporation's Average Liquid Assets (in millions) from 1989 to 1993.
1989 1990 1991 1992 1993
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Cash and Due from Banks 1,212 1,231 1,201 1,322 1,490
Interest-bearing deposits
with banks 1,861 1,376 1,413 1,017 814
U.S. Government and
Agency Securities 2,111 3,279 3,612 3,541 4,340
Federal Funds Sold 612 307 454 399 135
----- ----- ----- ----- -----
Total 5,796 6,193 6,680 6,279 6,779
</TABLE>
<PAGE> 54
APPENDIX
DESCRIPTION OF GRAPHIC MATERIAL
<TABLE>
<CAPTION>
PAGE
NUMBER GRAPHIC MATERIAL
- ------ ----------------
30 Bar graph depicting the Corporation's Average Deposits and Borrowed Funds (in millions) for 1989 to 1993.
1989 1990 1991 1992 1993
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Noninterest-bearing
Deposits 3,282 3,336 3,417 3,796 4,380
Interest-bearing
Deposits 15,115 16,045 17,368 17,117 16,341
Federal Funds Purchased 1,411 1,778 1,546 1,553 1,586
Other Borrowed Funds 489 802 1,515 1,308 1,432
Long-term Debt 354 344 319 414 1,087
------ ------ ------ ------ ------
Total 20,651 22,305 24,165 24,188 24,826
<CAPTION>
32 Bar graph depicting the Corporation's Components of Capital (in millions) for 1989 to 1993.
1989 1990 1991 1992 1993
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Tier 1 1,318 1,453 1,764 1,958 2,023
Tier 2 450 544 547 662 829
----- ----- ----- ----- -----
Total 1,768 1,997 2,311 2,620 2,852
<CAPTION>
32 Bar graph depicting the Corporation's Risk-Based Capital (in percentages) from 1989 to 1993.
1989 1990 1991 1992 1993
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Leverage 5.84 5.72 6.55 7.52 7.04
Tier 1 7.3 7.28 8.17 8.83 8.21
Total 9.8 10.01 10.71 11.82 11.58
<CAPTION>
34 Bar graph depicting the Corporation's Internal Capital Generation Rate (in percentages) for 1989 to 1993.
1989 1990 1991 1992 1993
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Generation Rate 8.93 11.18 10.51 6.65 10.08
Excluding Restructuring
Charge 11.01
<CAPTION>
34 Bar graph depicting the Corporation's Nonperforming Assets (in millions) for 1989 to 1993.
1989 1990 1991 1992 1993
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Nonaccrual loans 181.912 183.621 210.087 223.058 153.919
Reduced-rate loans 15.127 13.575 0.346 0.850 5.057
Other real estate 53.505 57.327 45.753 49.188 50.174
------- ------- ------- ------- -------
Total 250.544 254.523 256.186 273.096 209.150
</TABLE>
<PAGE> 1
Exhibit 21
SUBSIDIARIES OF THE REGISTRANT
<TABLE>
<CAPTION>
State or jurisdiction
of Incorporation
Name or organization
<S> <C>
Comerica Bank Michigan
Comerica California Incorporated California
Comerica Bank-Illinois Illinois
Comerica Community Development Corporation Michigan
Comerica Assurance Ltd. Bermuda
Stanford State Bank Illinois
Comerica Bank & Trust, F.S.B. United States
Comerica Bank-Midwest, N.A. United States
Manufacturers Bank-Wilmington Delaware
Comerica Bank-Ann Arbor, N.A. United States
Comerica Texas Incorporated Delaware
Comerica Acceptance Corporation Michigan
Comerica Corporate Services Incorporated Michigan
Comerica Insurance Company Arizona
Comerica Properties Corporation Michigan
ComeriCOMP Incorporated Michigan
Magic Line, Inc. Michigan
Manufacturers Properties Corporation Michigan
Waterfront Corporation Michigan
Subsidiaries of Comerica Bank
Comerica Investment Services, Inc. Michigan
Comerica Insurance Services Corporation Michigan
Comerica Securities, Inc. Michigan
Wilson, Kemp & Associates, Inc. Michigan
Woodbridge Capital Management, Inc. Michigan
C-Tec Ventures, Inc. Michigan
Access Insurance Services, Inc. Michigan
World Asset Management, Inc. Delaware
Comerica Leasing Corporation d/b/a Manucor
Leasing, Inc. Michigan
Comerica Mortgage Corporation Michigan
Manufacturers Data Corporation Michigan
Manufacturers Mortgage Corporation Michigan
A/H Hotel Management Co. Michigan
Roca-I, Inc. Michigan
</TABLE>
<PAGE> 2
<TABLE>
<S> <C>
VRB Corp. Michigan
Jefferson Development, Inc. Michigan
John V. Carr & Son, Inc. Michigan
Duty Drawback Service, Inc. Michigan
Comerica International Corporation United States
Comerica International (Canada) Limited Ontario
Comerica International (Canada)
Properties, Limited Ontario
Manufacturers International (Australia)
Properties Limited Australia
Subsidiaries of Comerica California Incorporated
Comerica Bank-California California
Interstate Select Insurance Services, Inc. California
Rowland Financial Corporation California
Plaza Realty Advisors California
Plaza Commerce Leasing California
Subsidiary of Comerica Bank-Illinois
B&E Realty Corporation Illinois
Subsidiaries of Comerica Texas Incorporated
Comerica Bank-Texas Texas
Comerica Asset Management Incorporated Michigan
Comerica Financial Services, Inc. Texas
Riverside Investments Inc. Texas
Riverside Investments II Inc. Texas
BTXW Investments, Inc. Texas
NorthPark Securities, Inc. Texas
North Dallas Realty Management
Corporation Texas
P & SA Corp. Texas
Park Properties, Inc. Texas
Subsidiary of Manufacturers Properties Corporation
Sunshine Canal Corporation Michigan
</TABLE>
<PAGE> 1
[LOGO] ERNST & YOUNG
EXHIBIT 23.1
Consent of Independent Auditors
We consent to the incorporation by reference in the Registration Statements
listed below, of our reports on the consolidated financial statements of
Comerica Incorporated and subsidiaries dated January 18, 1994, financial
statements of Comerica Incorporated Preferred Savings Plan dated March 8, 1994
and financial statements of John V. Carr & Son, Inc. Employees' Profit-Sharing
Trust dated March 8, 1994, all included in the Annual Report on Form 10-K of
Comerica Incorporated for the year ended December 31, 1993:
Registration Statement No. 33-42485 on Form S-8 dated August 29, 1991
Registration Statement No. 33-45500 on Form S-8 dated February 11, 1992
Registration Statement No. 33-49964 on Form S-8 dated July 23, 1992
Registration Statement No. 33-49966 on Form S-8 dated July 23, 1992
Registration Statement No. 33-53220 on Form S-8 dated October 13, 1992
Registration Statement No. 33-53222 on Form S-8 dated October 13, 1992
ERNST & YOUNG
Detroit, Michigan
March 28, 1994
<PAGE> 1
EXHIBIT 23.2
CONSENT OF INDEPENDENT AUDITORS
The Board of Directors
Comerica Incorporated:
We consent to the incorporation by reference in the Registration Statements
listed below, of our report dated January 15, 1992, on the consolidated
statements of income, changes in shareholders' equity, and cash flows for the
year ended December 31, 1991, which report appears in the Annual Report on Form
10-K of Comerica Incorporated for the year ended December 31, 1993:
Registration Statement No. 33-42485 on Form S-8 dated August 29, 1991
Registration Statement No. 33-45500 on Form S-8 dated February 11, 1992
Registration Statement No. 33-49964 on Form S-8 dated July 23, 1992
Registration Statement No. 33-49966 on Form S-8 dated July 23, 1992
Registration Statement No. 33-53220 on Form S-8 dated October 13, 1992
Registration Statement No. 33-53222 on Form S-8 dated October 13, 1992
KPMG PEAT MARWICK
Detroit, Michigan
March 25, 1994
<PAGE> 1
EXHIBIT 23.3
REPORT OF INDEPENDENT AUDITORS
To the Shareholders and Board of Directors
Comerica Incorporated
We have audited the consolidated statements of income, changes in shareholders'
equity, and cash flows of Comerica Incorporated and subsidiaries for the year
ended December 31, 1991. These consolidated financial statements are the
responsibility of the company's management. Our responsibility is to express
an opinion on these consolidated financial statements based on our audit.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a resonable basis
for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the results of operations and cash flows of
Comerica Incorporated and subsidiaries for the year ended December 31, 1991, in
conformity with generally accepted accounting principles.
KPMG PEAT MARWICK
January 15, 1992
