<PAGE> 1
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1995
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 1-10706
Comerica Incorporated
(Exact name of registrant as specified in its charter)
Delaware 38-1998421
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
Comerica Tower at Detroit Center
Detroit, Michigan
48226
(Address of principal executive offices)
(Zip Code)
(313) 222-3300
(Registrant's telephone number, including area code)
Indicate by check mark whether 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.
Yes X No
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date.
$5 par value common stock:
outstanding as of September 30, 1995: 114,556,000 shares
<PAGE>
<PAGE> 2
PART I. FINANCIAL INFORMATION
ITEM 1. Financial Statements
<TABLE>
CONSOLIDATED BALANCE SHEETS
Comerica Incorporated and Subsidiaries
<CAPTION>
Sept. 30, Dec. 31, Sept. 30,
(In thousands, except per share data) 1995 1994 1994
----------- ------------ -----------
<S> <C> <C> <C>
ASSETS
Cash and due from banks $ 1,523,520 $ 1,822,313 $ 1,410,911
Interest-bearing deposits with banks 52,442 378,873 275,361
Federal funds sold and securities
purchased under agreements to resell 733,200 46,000 50,499
Trading account securities 4,783 4,332 8,473
Mortgages held for sale 138,741 91,547 108,565
Investment securities available for sale 2,779,920 2,906,296 3,047,713
Investment securities held to
maturity (estimated fair value of
$4,534,625 at 9/30/95, $4,659,317 at
12/31/94 and $4,864,287 at 9/30/94) 4,591,928 4,970,165 5,081,797
----------- ----------- -----------
Total investment securities 7,371,848 7,876,461 8,129,510
Commercial loans 11,679,983 10,633,808 9,787,241
International loans 1,400,513 1,195,328 1,167,371
Real estate construction loans 574,208 413,987 398,557
Commercial mortgage loans 3,200,054 3,056,337 3,008,809
Residential mortgage loans 2,451,943 2,436,445 2,289,889
Consumer loans 4,734,944 4,214,716 3,942,077
Lease financing 305,425 258,625 222,807
----------- ----------- -----------
Total loans 24,347,070 22,209,246 20,816,751
Less allowance for loan losses (342,914) (326,195) (327,962)
----------- ----------- -----------
Net loans 24,004,156 21,883,051 20,488,789
Premises and equipment 456,424 437,757 440,254
Customers' liability on acceptances
outstanding 34,336 33,632 38,502
Accrued income and other assets 1,029,076 855,936 852,725
----------- ----------- -----------
TOTAL ASSETS $35,348,526 $33,429,902 $31,803,589
=========== =========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Demand deposits (noninterest-bearing) $ 5,180,358 $ 5,257,396 $ 4,617,674
Interest-bearing deposits 15,098,517 14,741,438 14,886,757
Deposits in foreign offices 1,732,254 2,433,482 820,265
----------- ----------- -----------
Total deposits 22,011,129 22,432,316 20,324,696
Federal funds purchased and securities
sold under agreements to repurchase 763,882 2,594,189 1,655,471
Other borrowed funds 4,665,515 1,611,219 3,528,471
Acceptances outstanding 34,336 33,632 38,502
Accrued expenses and other liabilities 372,102 268,823 268,353
Medium- and long-term debt 4,948,576 4,097,943 3,602,381
----------- ----------- -----------
Total liabilities 32,795,540 31,038,122 29,417,874
Common stock - $5 par value:
Authorized - 250,000,000 shares
Issued-115,094,531 shares at
9/30/95, 119,294,531 shares
at 12/31/94 and 9/30/94 575,473 596,473 596,473
Capital surplus 414,672 525,052 524,915
Unrealized gains and losses on investment
securities available for sale 2,719 (55,039) (33,772)
Retained earnings 1,574,639 1,390,405 1,331,379
Less cost of common stock in
treasury-538,453 shares at 9/30/95,
2,382,333 shares at 12/31/94 and
1,193,179 shares at 9/30/94 (14,517) (65,111) (33,280)
----------- ----------- -----------
Total shareholders' equity 2,552,986 2,391,780 2,385,715
----------- ----------- -----------
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $35,348,526 $33,429,902 $31,803,589
=========== =========== ===========
/TABLE
<PAGE>
<PAGE> 3
<TABLE>
CONSOLIDATED STATEMENTS OF INCOME
Comerica Incorporated and Subsidiaries
<CAPTION>
Three Months Ended Nine Months Ended
September 30 September 30
-------------------- ------------------------
(In thousands, except per share data) 1995 1994 1995 1994
-------- -------- ---------- ----------
<S> <C> <C> <C> <C>
INTEREST INCOME
Interest and fees on loans $532,490 $408,709 $1,550,093 $1,129,270
Interest on investment securities:
Taxable 115,225 117,805 353,639 327,425
Exempt from federal income tax 6,390 7,358 20,214 23,445
-------- -------- ---------- ----------
Total interest on investment
securities 121,615 125,163 373,853 350,870
Trading account interest 15 52 169 (18)
Interest on federal funds sold and
securities purchased under agreements
to resell 3,405 642 6,041 4,095
Interest on time deposits with banks 1,099 3,646 7,550 17,204
Interest on mortgages held for sale 3,054 2,722 5,586 8,965
-------- -------- ---------- ----------
Total interest income 661,678 540,934 1,943,292 1,510,386
INTEREST EXPENSE
Interest on deposits 183,958 141,129 538,194 389,231
Interest on short-term borrowings:
Federal funds purchased and securities
sold under agreements to repurchase 35,876 33,241 117,928 81,092
Other borrowed funds 41,301 16,880 112,050 60,894
Interest on medium- and long-term debt 76,607 41,741 211,133 89,418
Net interest rate swap (income)/expense 612 (5,056) 5,126 (28,093)
-------- -------- ---------- ----------
Total interest expense 338,354 227,935 984,431 592,542
-------- -------- ---------- ----------
Net interest income 323,324 312,999 958,861 917,844
Provision for loan losses 26,000 14,000 53,500 44,000
-------- -------- ---------- ----------
Net interest income after
provision for loan losses 297,324 298,999 905,361 873,844
NONINTEREST INCOME
Income from fiduciary activities 31,129 29,019 93,863 91,738
Service charges on deposit accounts 33,150 32,029 97,138 91,456
Customhouse broker fees 8,789 10,201 27,137 30,481
Revolving credit fees 13,699 10,200 37,636 28,557
Securities gains 516 1,581 788 2,363
Other noninterest income 40,831 33,608 113,006 99,415
-------- -------- ---------- ----------
Total noninterest income 128,114 116,638 369,568 344,010
NONINTEREST EXPENSES
Salaries and employee benefits 142,507 138,456 420,374 406,407
Net occupancy expense 24,649 25,188 73,306 74,881
Equipment expense 16,787 16,313 50,670 49,570
FDIC insurance expense (500) 11,106 21,418 33,129
Telecommunications expense 7,230 6,748 22,027 18,869
Other noninterest expenses 74,223 65,304 221,582 196,842
-------- -------- ---------- ----------
Total noninterest expenses 264,896 263,115 809,377 779,698
-------- -------- ---------- ----------
Income before income taxes 160,542 152,522 465,552 438,156
Provision for income taxes 55,240 51,918 158,696 147,511
-------- -------- ---------- ----------
NET INCOME $105,302 $100,604 $ 306,856 $ 290,645
======== ======== ========== ==========
NET INCOME PER SHARE:
Primary $0.91 $0.84 $2.62 $2.46
Fully diluted $0.91 $0.84 $2.61 $2.46
Primary average shares 115,993 119,436 117,199 118,148
Cash dividends declared $40,089 $37,897 $118,237 $107,724
Dividends per share $0.35 $0.32 $1.02 $0.92
</TABLE>
<PAGE>
<PAGE> 4
<TABLE>
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
Comerica Incorporated and Subsidiaries
<CAPTION>
Unrealized Total
Common Capital Gains/ Retained Treasury Shareholders'
(in thousands) Stock Surplus (Losses) Earnings Stock Equity
--------- --------- ---------- ---------- --------- -------------
<S> <C> <C> <C> <C> <C> <C>
BALANCES AT
JANUARY 1,
1994 $596,473 $524,186 $ 27,473 $1,155,280 $(121,754) $2,181,658
Net income for
1994 - - - 290,645 - 290,645
Cash dividends
declared - - - (107,724) - (107,724)
Purchase of
1,601,164
shares - - - - (43,892) (43,892)
Issuance of
shares:
Employee stock
plans - 318 - (2,964) 7,145 4,499
Acquisition of
Pacific
Western - - - (3,858) 125,221 121,363
Amortization of
deferred
compensation - 411 - - - 411
Change in
unrealized
gains/(losses)
on investment
securities
available for
sale - - (61,245) - - (61,245)
-------- -------- -------- ---------- --------- ----------
BALANCES AT
SEPTEMBER
30, 1994 $596,473 $524,915 $(33,772) $1,331,379 $ (33,280) $2,385,715
======== ======== ======== ========== ========= ==========
BALANCES AT
JANUARY 1,
1995 $596,473 $525,052 $(55,039) $1,390,405 $ (65,111) $2,391,780
Net income for
1995 - - - 306,856 - 306,856
Cash dividends
declared - - - (118,237) - (118,237)
Purchase of
1,405,500
shares - - - - (38,725) (38,725)
Purchase and
retirement
of 4,200,000
shares (21,000) (112,691) - - - (133,691)
Issuance of
shares:
Employee
stock plans - 191 - (4,385) 13,669 9,475
Acquisitions - 1,450 - - 75,650 77,100
Amortization of
deferred
compensation - 670 - - - 670
Change in
unrealized
gains/(losses)
on investment
securities
available for
sale - - 57,758 - - 57,758
-------- -------- -------- ---------- --------- ----------
BALANCES AT
SEPTEMBER
30, 1995 $575,473 $414,672 $ 2,719 $1,574,639 $ (14,517) $2,552,986
======== ======== ======== ========== ========= ==========
</TABLE>
<PAGE>
<PAGE> 5
<TABLE>
CONSOLIDATED STATEMENTS OF CASH FLOWS
Comerica Incorporated and Subsidiaries
<CAPTION>
Nine Months Ended
September 30
---------------------------
(in thousands) 1995 1994
------------ ------------
<S> <C> <C>
OPERATING ACTIVITIES:
Net income $ 306,856 $ 290,645
Adjustments to reconcile net income to net
cash provided by operating activities:
Provision for loan losses 53,500 44,000
Depreciation 47,355 44,320
Net increase in trading account securities (451) (4,873)
Net (increase) decrease in mortgages held
for sale (47,194) 222,102
Net increase in accrued income receivable (30,830) (26,289)
Net increase (decrease) in accrued expenses 111,488 (20,113)
Net amortization of intangibles 21,519 17,994
Funding for employee benefit plans (125,000) (59,719)
Other, net (25,607) 35,109
------------ ------------
Total adjustments 4,780 252,531
------------ ------------
Net cash provided by operating
activities 311,636 543,176
INVESTING ACTIVITIES:
Net decrease in interest-bearing deposits
with banks 326,431 751,112
Net (increase) decrease in federal funds sold
and securities purchased under agreements
to resell (651,900) 1,041,290
Proceeds from sale of investment securities
available for sale 39,342 1,509
Proceeds from maturity of investment
securities available for sale 308,979 455,785
Purchases of investment securities
available for sale (31,434) (1,147,791)
Proceeds from maturity of investment
securities held to maturity 579,776 1,249,296
Purchases of investment securities
held to maturity (164,828) (2,125,409)
Net increase in loans (other
than purchased loans) (1,904,378) (844,671)
Purchase of loans (44,110) (227,192)
Fixed assets, net (49,166) (65,452)
Net increase in customers'
liability on acceptances outstanding (704) (290)
Net cash provided by acquisitions 28,835 58,626
------------ ------------
Net cash used in investing
activities (1,563,157) (853,187)
FINANCING ACTIVITIES:
Net decrease in deposits (839,927) (1,802,852)
Net increase (decrease) in short-term
borrowings 1,223,989 (77,988)
Net increase in acceptances
outstanding 704 290
Proceeds from issuance of medium- and
long-term debt 2,460,000 2,750,000
Repayments and purchases of medium- and
long-term debt (1,614,011) (608,175)
Proceeds from issuance of common stock
and other capital transactions 10,145 4,910
Purchase of common stock for treasury
and retirement (172,416) (43,892)
Dividends paid (115,756) (102,066)
------------ ------------
Net cash provided by financing
activities 952,728 120,227
------------ ------------
Net decrease in cash and due from banks (298,793) (189,784)
Cash and due from banks at beginning of year 1,822,313 1,600,695
------------ ------------
Cash and due from banks at end of period $ 1,523,520 $ 1,410,911
============ ============
Interest paid $ 926,747 $ 597,862
============ ============
Income taxes paid $ 130,629 $ 127,851
============ ============
Noncash investing and financing activities:
Loan transfers to other real estate $ 15,249 $ 12,241
============ ============
Treasury stock issued for acquisitions $ 77,100 $ 121,363
============ ============
Loan transfer to investment securities $ - $ 91,538
============ ============
</TABLE> <PAGE>
<PAGE> 6
Notes to Consolidated Financial Statements
Comerica Incorporated and Subsidiaries
Note 1 - Basis of Presentation
The accompanying unaudited financial statements have been prepared
in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-Q and Article
10 of Regulation S-X. Accordingly, the statements do not include all of
the information and footnotes required by generally accepted accounting
principles for complete financial statements. In the opinion of
management, all adjustments (consisting of normal recurring accruals)
considered necessary for a fair presentation have been included.
Operating results for the nine months ended September 30, 1995 are not
necessarily indicative of the results that may be expected for the year
ended December 31, 1995. For further information, refer to the
consolidated financial statements and footnotes thereto included in the
Comerica Incorporated and Subsidiaries' annual report on Form 10-K for the
year ended December 31, 1994.
Note 2 - Investment Securities
At September 30, 1995 investment securities having a carrying value
of $5.6 billion were pledged where permitted or required by law to secure
liabilities and public and other deposits, including deposits of the State
of Michigan of $36 million.
Note 3 - Allowance for Loan Losses
The following analyzes the changes in the allowance for loan losses
included in the consolidated balance sheets:
<TABLE>
<CAPTION>
(in thousands) 1995 1994
--------- ---------
<S> <C> <C>
Balance at January 1 $ 326,195 $ 298,685
Allowance acquired 3,260 19,467
Loans charged off (73,831) (60,863)
Recoveries on loans previously
charged off 33,790 26,673
--------- ---------
Net loans charged off (40,041) (34,190)
Provision for loan losses 53,500 44,000
--------- ---------
Balance at September 30 $ 342,914 $ 327,962
========= =========
</TABLE>
A loan is considered impaired if it is probable that interest and
principal payments will not be made in accordance with the contractual
terms of the loan agreement. Consistent with this definition, all
nonaccrual and reduced-rate loans (with the exception of residential
mortgage and consumer loans) are impaired. Impaired loans averaged $156
million and $150 million for the quarter and nine months ended September
30, 1995, respectively. Of the $150 million period-end impaired loans,
approximately $84 million required an allowance for loan losses of $19
million in accordance with SFAS No. 114. The remaining impaired loan
balance represents loans for which the fair value exceeded the recorded
investment in the loan.
<PAGE>
<PAGE> 7
Notes to Consolidated Financial Statements
Comerica Incorporated and Subsidiaries
Note 4 - Medium- and Long-term Debt
Medium- and long-term debt consisted of the following at September
30, 1995 and December 31, 1994:
<TABLE>
<CAPTION>
(in thousands) September 30, 1995 December 31, 1994
------------------ -----------------
<S> <C> <C>
Parent Company
9.75% subordinated notes
due 1999 $ 74,669 $ 74,601
10.125% subordinated debentures
due 1998 74,781 74,721
7.25% subordinated notes due
2007 148,591 -
---------- ----------
Total parent company 298,041 149,322
Subsidiaries
Subordinated notes:
8.375% subordinated notes due
2024 147,762 147,709
7.25% subordinated notes due
2002 148,891 148,777
6.875% subordinated notes due
2008 99,047 98,990
7.125% subordinated notes due
2013 147,972 147,890
FDIC subordinated note due 1995 4,500 4,500
---------- ----------
Total subordinated notes 548,172 547,866
Medium-term notes:
Floating rate based on Treasury
bill indices 1,899,600 2,849,205
Floating rate based on Prime
indices 550,000 299,988
Floating rate based on LIBOR
indices 299,934 25,000
Fixed rate notes with interest
rates ranging from 5.65% to 7.5% 1,348,240 224,610
---------- ----------
Total medium-term notes 4,097,774 3,398,803
Notes payable bearing interest at
rates ranging from 7.35% to
8.00% and maturing on dates
ranging from 1995 through 2015 4,589 1,952
---------- ----------
Total subsidiaries 4,650,535 3,948,621
---------- ----------
Total medium- and long-term
debt $4,948,576 $4,097,943
========== ==========
</TABLE>
Note 5 - Income Taxes
The provision for income taxes is computed by applying statutory
federal income tax rates to income before income taxes as reported in the
financial statements after deducting non-taxable items, principally
interest income on state and municipal securities. <PAGE>
<PAGE> 8
Notes to Consolidated Financial Statements
Comerica Incorporated and Subsidiaries
Note 6 - Off-Balance-Sheet Derivatives and Foreign Exchange Contracts
<TABLE>
<CAPTION>
September 30, 1995 December 31, 1994
------------------------------ ------------------------------
Notional/ Notional/
Contract Unrealized Fair Contract Unrealized Fair
Amount Gains Losses Value Amount Gains Losses Value
(in millions) (1) (2) (3) (1) (2) (3)
------------------------------ ------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Risk Management
Interest rate contracts
Swaps (4) $4,224 $34 $(59) $(25) $3,643 $ 4 $(238) $(234)
Caps purchased 25 - - - 50 - - -
Caps written 178 - - - 198 - (1) (1)
Foreign exchange
contracts
Spot and forwards 124 2 - 2 98 - (1) (1)
Swaps 49 7 - 7 25 - - -
Commitments
To purchase securities 59 - - - - - - -
To sell securities 2 - - - - - - -
To sell loans 165 - - - 77 - - -
------ --- ---- ---- ------ --- ----- -----
Total risk management 4,826 43 (59) (16) 4,091 4 (240) (236)
Customer Initiated and
Other
Interest rate contracts
Caps written 474 - - - 321 - (1) (1)
Options purchased 27 - - - - - - -
Swaps 4 - - - 7 - - -
Foreign exchange contracts
Spot, forward, futures
and options 552 9 (8) 1 503 5 (4) 1
------ --- ---- ---- ------ --- ----- -----
Total customer
initiated and other 1,057 9 (8) 1 831 5 (5) -
------ --- ---- ---- ------ --- ----- -----
Total derivatives and
foreign exchange
contracts $5,883 $52 $(67) $(15) $4,922 $ 9 $(245) $(236)
====== === ==== ==== ====== === ===== =====
(1) The notional or contract amounts of derivatives and foreign exchange contracts represent
the extent of the Corporation's involvement in such transactions. These amounts are
generally used as a point of reference for calculating the amounts to be exchanged in
accordance with the terms of the agreement and, therefore, are not reflected in the
consolidated balance sheets. The potential for gain or loss associated with the credit or
market risks inherent in such transactions is significantly less than the notional or
contract amounts.
(2) Represents credit risk exposure which is measured as the cost to replace, at current
market rates, contracts in a profitable position. Credit risk amounts are calculated before
consideration is given to bilateral collateral agreements or master netting arrangements with
counterparties that effectively reduce credit risk.
(3) The fair values of derivatives and foreign exchange contracts generally represent the
estimated amounts the Corporation would receive or pay to terminate or otherwise settle the
contracts at the balance sheet date. Futures contracts are subject to daily cash
settlements; therefore, the fair value of these instruments is zero. The fair values of
customer initiated and other derivatives and foreign exchange contracts are reflected in the
consolidated balance sheets.
(4) Includes the notional amount of index amortizing swaps of $2,143 million and $1,936
million at September 30, 1995 and December 31, 1994, respectively. These swaps had net
unrealized losses of $30 million and $133 million at September 30, 1995 and December 31,
1994, respectively. As of September 30, 1995, index amortizing swaps had an average expected
life of approximately 2.05 years with a stated maturity that averaged 3.25 years.
</TABLE>
<PAGE> 9
Notes to Consolidated Financial Statements
Comerica Incorporated and Subsidiaries
Note 6 - Off-Balance-Sheet Derivatives and Foreign Exchange Contracts
(Continued)
Risk Management
- ---------------
Interest rate risk arises in the normal course of business to the
extent there is a difference between the repricing and maturity
characteristics of interest-earning assets and interest-bearing
liabilities. This gap in the balance sheet structure reflects the
sensitivity of the Corporation's net interest income to a change in
interest rates. Foreign exchange rate risk arises from changes in the
value of certain assets and liabilities denominated in foreign currencies.
The Corporation employs off-balance sheet derivative financial instruments
and foreign exchange contracts, in addition to certain on-balance sheet
instruments, to manage exposure to these and other risks, including
liquidity risk.
The Corporation principally uses off-balance sheet derivatives as an
end-user in connection with asset and liability management activities.
The main objective of asset and liability management is to maximize net
interest income while operating within acceptable ranges of interest rate
sensitivity and providing adequate levels of liquidity and funding. The
Corporation's use of derivatives takes place predominately in the interest
rate markets and mainly involves interest rate swaps, both amortizing and
non-amortizing. Interest rate swaps are primarily used to alter the
interest rate characteristics of certain assets and liabilities in order
to provide a more precise match between their rate maturities.
The following table summarizes the expected maturity distribution of
the notional amount of interest rate swaps used for risk management
purposes. The table also indicates the weighted average interest rates
associated with amounts to be received or paid on interest rate swap
agreements as of September 30, 1995. The swaps are grouped by the assets
or liabilities to which they have been designated.
Various other types of off-balance sheet financial instruments may
also be used for risk management purposes, including interest rate caps,
forward and futures interest and foreign exchange rate contracts, foreign
exchange rate swaps, commitments to purchase and sell securities and
commitments to sell mortgage loans.
Customer Initiated and Other
- -----------------------------
The Corporation earns additional income by executing various
transactions, primarily foreign exchange contracts and interest rate caps,
at the request of customers.
The average fair value of customer initiated and other foreign
exchange contracts was $1 million for both the nine months ended September
30, 1995 and the year ended December 31, 1994. Foreign exchange contracts
generated $5 million of income for the nine months ended September 30,
1995, compared to $3 million for the same period a year earlier and $5
million for the year ended December 31, 1994. The risks associated with
customer initiated foreign exchange contracts are generally reduced by
entering into offsetting foreign exchange contracts.
Customer initiated interest rate caps generally are not offset by
other on- or off-balance sheet financial instruments; however, diminutive
authority limits have been established for engaging in these transactions
in order to minimize risk exposure. As a result, average fair values and
income from this activity were not significant for the nine-month period
ended September 30, 1995 and for the year ended December 31, 1994.<PAGE>
<PAGE> 10
Notes to Consolidated Financial Statements
Comerica Incorporated and Subsidiaries
Note 6 - Off-Balance-Sheet Derivatives and Foreign Exchange Contracts
(Continued)
Available credit lines on fixed rate credit card and check product
accounts, which expose the Corporation to the risk of a reduction in net
interest income as rates increase, totaled approximately $2.0 billion and
$1.9 billion at September 30, 1995 and December 31, 1994, respectively.
Market risk exposure arising from these revolving credit commitments is
very limited, however, since it is unlikely that a significant number of
customers with these accounts will simultaneously borrow up to their
maximum available credit lines.
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------
Remaining Expected Maturity of Risk Management Interest Rate Swaps:
2000- Dec. 31,
(dollar amounts in millions) 1995 1996 1997 1998 1999 2014 Total 1994
-----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Variable rate asset
designation:
Receive fixed swaps
Generic $ - $ 50 $ - $ - $ - $ - $ 50 $ 50
Amortizing 21 16 84 100 - - 221 297
Index Amortizing 281 361 961 175 130 235 2,143 1,936
Weighted average: (1)
Receive rate 6.42% 5.76% 5.23% 5.70% 6.20% 5.83% 5.64% 5.38%
Pay rate 5.88% 5.88% 5.91% 5.85% 5.83% 5.81% 5.88% 5.78%
Fixed rate asset designation:
Generic pay fixed swaps $ 98 $ 35 $ - $ - $ 2 $ - $ 135 $ 185
Weighted average: (1)
Receive rate 5.91% 5.91% -% -% 5.83% -% 5.95% 5.91%
Pay rate 6.31% 7.05% -% -% 8.73% -% 6.56% 7.43%
Medium- and long-term debt
designation:
Generic receive fixed swaps $ - $ 600 $ 50 $ - $ - $700 $1,350 $ 675
Weighted average: (1)
Receive rate -% 6.27% 9.35% -% -% 7.65% 7.10% 7.37%
Pay rate - 5.88% 5.89% -% -% 5.96% 5.92% 5.73%
Generic pay fixed swaps $ - $ 25 $ - $ - $ - $ - $ 25 $ 25
Weighted average: (1)
Receive rate -% 5.88% -% -% -% -% 5.88% 6.89%
Pay rate -% 8.28% -% -% -% -% 8.28% 8.28%
Basis swaps $ - $ 300 $ - $ - $ - $ - $ 300 $ 475
Weighted average: (1)
Receive rate -% 5.80% -% -% -% -% 5.80% 6.01%
Pay rate -% 5.80% -% -% -% -% 5.80% 5.80%
Total notional amount $400 $1,387 $1,095 $275 $132 $935 $4,224 $3,643
- -----------------------------------------------------------------------------------------
(1) Variable rates are based on those rates paid or received at September 30, 1995.
Variable rates paid or received are based on LIBOR.
- -----------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<PAGE> 11
Notes to Consolidated Financial Statements
Comerica Incorporated and Subsidiaries
Note 6 - Off-Balance-Sheet Derivatives and Foreign Exchange Contracts
(Continued)
Off-Balance-Sheet Derivative and Foreign Exchange Activity
- ----------------------------------------------------------
The following table provides a reconciliation of the beginning and
ending notional amounts for interest rate derivatives and foreign exchange
contracts.
<TABLE>
<CAPTION>
Customer Initiated
Risk Management and Other
----------------------- -----------------------
Interest Foreign Interest Foreign
Rate Exchange Rate Exchange
(in millions) Contracts Contracts Contracts Contracts
----------------------- -----------------------
<S> <C> <C> <C> <C>
Balances at December 31, 1994 $ 3,891 $ 123 $ 328 $ 503
Additions 1,678 1,817 427 26,367
Maturities/amortizations (1,142) (1,767) (250) (26,318)
Terminations - - - -
------- ------- ----- --------
Balances at September 30, 1995 $ 4,427 $ 173 $ 505 $ 552
======= ======= ===== ========
</TABLE>
Additional information regarding the nature, terms and attendant risks of
the above off-balance sheet derivatives and foreign exchange contracts, along
with information on derivative accounting policies, can be found in the
Corporation's 1994 annual report on Form 10-K on pages 33 through 37 and in
Notes 1 and 17 to the consolidated financial statements.
<PAGE>
<PAGE> 12
ITEM 2. Management's Discussion and Analysis of Results of Operations
and Financial Condition
-----------------------
Results of Operations
- ---------------------
Comerica Incorporated reported net income of $105 million for the
quarter ended September 30, 1995, an increase of nearly $5 million, or 5
percent, over the amount reported for the third quarter of 1994. Net
income per share increased 8 percent to $0.91 from $0.84 a year ago.
Return on average common shareholders' equity was 16.81 percent and return
on average assets was 1.22 percent, compared to 17.11 percent and 1.27
percent, respectively, for the comparable quarter last year.
For the nine months ended September 30, 1995, net income rose 6
percent to $307 million, or $2.62 per share, compared to net income of
$291 million, or $2.46 per share, reported for the same period in 1994.
Return on average common shareholders' equity was 16.45 percent and return
on average assets was 1.20 percent for the year-to-date period, compared
to 16.94 percent and 1.24 percent, respectively, a year earlier.
Acquisitions
- ------------
On October 27, 1995, the Corporation completed the acquisition of
QuestStar Bank, N.A. (QuestStar) in Houston, Texas, for approximately $25
million in cash. At September 30, 1995, QuestStar had approximately $200
million in total assets. The transaction was accounted for as a purchase.
In May 1995, the Corporation entered into an Agreement and Plan of
Merger to acquire Metrobank, headquartered in Los Angeles, California, for
approximately 4.2 million shares of common stock then valued at $120
million. At March 31, 1995 Metrobank had approximately $1.3 billion in
total assets. The transaction will be accounted for as a purchase and,
subject to regulatory approval, is expected to be completed in the first
quarter of 1996.
Net Interest Income
- -------------------
The Rate-Volume Analyses in Tables I and II detail the components of
the change in net interest income (FTE) for the quarter and nine months
ended September 30, 1995. On a fully taxable equivalent (FTE) basis, net
interest income was $329 million for the three months ended September 30,
1995, up $10 million, or 3 percent, from $319 million reported for the
comparable quarter in 1994. This increase, primarily the result of
acquisitions and continued expansion in the loan portfolio, was partially
offset by the utilization of wholesale funds to support loan growth and
customers shifting deposits from NOW, savings and money market accounts to
higher-paying certificates of deposit.
Growth in commercial and consumer loan balances accounted for more
than 75 percent of the overall increase in average total loans. For the
third quarter of 1995, average commercial loans rose $1.9 billion, or 19
percent, over the prior year, reflecting continued strong loan demand by
corporate customers. Average consumer loans increased $842 million, or 22
percent, over the comparable period a year earlier, due to rapid growth in
the revolving credit portfolio. This growth resulted as customers
responded to bankcard promotions begun in the third quarter of 1994.
Investments in other earning assets were reduced in order to partially
fund loan growth.
<PAGE> 13
The net interest margin for the three months ended September 30,
1995, was 4.10 percent, a decline of 5 basis points from 4.15 percent for
the second quarter of 1995, and 25 basis points from 4.35 percent for the
third quarter of 1994. Continued margin compression is an indication of
market pressure to maintain competitive pricing on loan and deposit
products and the Corporation's increased use of purchased funds, a more
expensive funding vehicle.
For the nine months ended September 30, 1995, net interest income
(FTE) totaled $976 million, an increase of $40 million, or 4 percent, over
the amount reported for the same period a year ago. This increase in net
interest income, led by acquisitions and growth in commercial and consumer
loans, was partially offset by a rise in purchased funds used to support
loan growth as well as an overall increase in interest-bearing deposits as
customers invested more funds in certificates of deposit. Average
commercial loans grew $1.8 billion, or 19 percent, while average consumer
loans rose $784 million, or 21 percent. The average balances of
investment securities and temporary investments were reduced to facilitate
loan growth.
The net interest margin for the nine months ended September 30,
1995, was 4.14 percent, a decrease of 2 basis points from 4.16 percent for
the six months ended June 30, 1995, and 20 basis points from 4.34 percent
for the first nine months of 1994. Continued compression in the margin
for the year-to-date period is attributable to the same factors discussed
above for the third quarter.
Net interest income growth for the quarter and nine months ended
September 30, 1995, was also partially offset as the Corporation's risk
management interest rate swap portfolio continued to generate net interest
expense. These interest rate swaps are designated against certain assets
and liabilities, therefore, the impact on net interest income attributable
to these off-balance sheet instruments is generally offset by net interest
income generated by on-balance sheet assets and liabilities.
In addition to using interest rate swaps and other off-balance sheet
instruments to control the Corporation's exposure to interest rate risk,
management attempts to minimize the effect of movements in interest rates
on net interest income by regularly performing interest sensitivity gap
and earnings simulation analyses.
At September 30, 1995, the Corporation was in an asset sensitive
position of approximately $542 million (on an elasticity-adjusted basis),
or 1.66 percent of earning assets. The earnings simulation analysis
performed at September 30, 1995, indicated forecasted net interest income
is at risk by less than 4 percent if short-term interest rates decreased
200 basis points or could increase by less than 1 percent if short-term
interest rates rose 200 basis points. These results are within
established corporate policy guidelines.
Provision for Loan Losses
- -------------------------
The provision for loan losses for the third quarter of 1995 was $26
million, up $12 million from the third quarter of 1994. For the nine
months ended September 30, 1995, the provision for loan losses was $54
million, an increase of $10 million over the provision for the same period
a year ago. The provision is predicated upon maintaining an adequate
allowance for loan losses, which is further discussed in the section
entitled "Financial Condition."
<PAGE>
<PAGE> 14
<TABLE>
TABLE I - QUARTERLY ANALYSIS OF NET INTEREST INCOME & RATE/VOLUME (FTE)
<CAPTION>
Three Months Ended
-------------------------------------------------------------
September 30, 1995 September 30, 1994
----------------------------- -----------------------------
Average Average Average Average
(in millions) Balance Interest Rate Balance Interest Rate
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Loans $23,984 $ 534 8.86% $20,463 $ 411 7.99%
Investment securities 7,534 125 6.63 8,228 129 6.24
Other earning assets 451 8 6.67 479 7 5.86
- ----------------------------------------------------------------------------------------------
Total earning assets 31,969 667 8.30 29,170 547 7.45
Interest-bearing deposits 16,926 184 4.31 16,743 141 3.34
Short-term borrowings 5,280 77 5.80 4,361 50 4.56
Medium- and long-term debt 4,779 77 6.37 3,185 42 5.24
Net interest rate swap
(income)/expense (1) - - - - (5) -
- ----------------------------------------------------------------------------------------------
Total interest-bearing
sources $26,985 338 4.98 $24,289 228 3.73
----------------- -----------------
Net interest income/
Rate spread (FTE) $ 329 3.32 $ 319 3.72
====== ======
FTE adjustment $ 5 $ 6
====== ======
Impact of net noninterest-
bearing sources of funds 0.78 0.63
- ----------------------------------------------------------------------------------------------
Net interest margin as a percent
of average earning assets (FTE) 4.10% 4.35%
==============================================================================================
(1) After allocation of the income or expense generated by interest rate swaps for the three
months ended September 30, 1995, to the related assets and liabilities, the average yield on total
loans was 8.85 percent as of September 30, 1995, compared to 8.08 percent a year ago. The average
cost of funds for medium- and long-term debt was 6.14 percent as of September 30, 1995, compared
to 4.97 percent a year earlier.
Increase Increase
(Decrease) (Decrease) Net
Due to Due to Increase
Rate Volume* (Decrease)
---------- ---------- ----------
(in millions)
Loans $ 45 $ 78 $ 123
Investment securities 7 (11) (4)
Other earning assets 1 - 1
------------------------------
Total earning assets 53 67 120
Interest-bearing deposits 36 7 43
Short-term borrowings 14 13 27
Medium- and long-term debt 9 26 35
Net interest rate swap
(income)/expense 5 - 5
------------------------------
Total interest-bearing sources 64 46 110
------------------------------
Net interest income/Rate spread (FTE) $ (11) $ 21 $ 10
==============================
* Rate/Volume variances are allocated to variances due to volume.
/TABLE
<PAGE>
<PAGE> 15
<TABLE>
TABLE II - YEAR-TO-DATE ANALYSIS OF NET INTEREST INCOME & RATE/VOLUME (FTE)
<CAPTION>
Nine Months Ended
-------------------------------------------------------------
September 30, 1995 September 30, 1994
----------------------------- -----------------------------
Average Average Average Average
(in millions) Balance Interest Rate Balance Interest Rate
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Loans $23,291 $1,556 8.93% $19,825 $1,135 7.65%
Investment securities 7,721 385 6.62 7,996 363 6.06
Other earning assets 389 19 6.67 931 30 4.34
- ----------------------------------------------------------------------------------------------
Total earning assets 31,401 1,960 8.33 28,752 1,528 7.10
Interest-bearing deposits 16,875 538 4.26 16,641 389 3.13
Short-term borrowings 5,200 230 5.91 4,948 142 3.84
Medium- and long-term debt 4,393 211 6.42 2,298 89 5.19
Net interest rate swap
(income)/expense (1) - 5 - - (28) -
- ----------------------------------------------------------------------------------------------
Total interest-bearing
sources $26,468 984 4.97 $23,887 592 3.32
----------------- ------------------
Net interest income/
Rate spread (FTE) $ 976 3.36 $ 936 3.78
====== ======
FTE adjustment $ 17 $ 18
====== ======
Impact of net noninterest-bearing
sources of funds 0.78 0.56
- ----------------------------------------------------------------------------------------------
Net interest margin as a percent of
average earning assets (FTE) 4.14% 4.34%
==============================================================================================
(1) After allocation of the income or expense generated by interest rate swaps for the nine
months ended September 30, 1995, to the related assets and liabilities, the average yield on
total loans was 8.83 percent as of September 30, 1995, compared to 7.77 percent a year ago.
The average cost of funds for medium- and long-term debt was 6.16 percent as of September 30,
1995, compared to 4.71 percent a year earlier.
Increase Increase
(Decrease) (Decrease) Net
Due to Due to Increase
Rate Volume* (Decrease)
---------- ---------- ----------
(in millions)
Loans $ 189 $ 232 $ 421
Investment securities 35 (13) 22
Other earning assets 16 (27) (11)
------------------------------
Total earning assets 240 192 432
Interest-bearing deposits 130 19 149
Short-term borrowings 77 11 88
Medium- and long-term debt 21 101 122
Net interest rate swap
(income)/expense 33 - 33
------------------------------
Total interest-bearing sources 261 131 392
------------------------------
Net interest income/Rate spread (FTE) $ (21) $ 61 $ 40
==============================
* Rate/Volume variances are allocated to variances due to volume.
/TABLE
<PAGE>
<PAGE> 16
Noninterest Income
- ------------------
After adjusting for acquisitions, noninterest income rose $10
million to $127 million for the three months ended September 30, 1995, a
9 percent increase from the corresponding period in 1994. This growth in
noninterest income, primarily attributable to an escalation in revenue
within the other noninterest income category and a $3 million increase in
revolving credit fees resulting from new credit card balances, was
partially offset by decreases in customhouse brokerage fees and securities
gains.
Other noninterest income grew $7 million, or 21 percent, from the
third quarter of 1994, benefiting principally from increases in fees and
commissions generated by the investment management, securities brokerage
and insurance businesses.
For the nine months ended September 30, 1995, noninterest income
totaled $361 million, excluding the effects of acquisitions, an increase
of $17 million, or 5 percent, over the comparable period in 1994. Growth
in noninterest income primarily resulted from an $8 million boost in
revolving credit fees arising directly from growth in the bankcard
portfolio and an increase in other noninterest income. Reductions in
income associated with customhouse brokerage fees and securities gains
partially offset the rise in noninterest income.
Other noninterest income for the first nine months of 1995 reached
$112 million, an increase of $12 million, or 13 percent, over the same
period a year earlier. Earnings from investment management activities
contributed $6 million to other noninterest income for the nine-month
period, while the securities brokerage and insurance areas generated over
$5 million in additional fees and commissions. A decline in income from
mortgage-related activities, particularly gains from bulk sales of
mortgage servicing rights, partially offset the increase in other
noninterest income.
Noninterest Expenses
- --------------------
Noninterest expenses for the three months ending September 30,
1995, rose 3 percent, or $8 million, from the corresponding period in
1994, excluding the effects of acquisitions and a $12 million rebate
received in connection with a lower FDIC insurance rate. This nominal
increase in noninterest expenses was the result of normal business growth.
For the nine months ended September 30, 1995, noninterest expenses
were well-controlled, rising less than 2 percent from the same period a
year ago, excluding the expenses associated with acquisitions and the
aforementioned FDIC insurance premium rebate.
Provision for Income Taxes
- --------------------------
The provision for income taxes for the nine months ended September
30, 1995, totaled $159 million, an increase of 8 percent compared to $148
million reported for the same period a year ago. The effective tax rate
was 34 percent for the first nine months of both 1995 and 1994.
<PAGE>
<PAGE> 17
Financial Condition
- -------------------
Total assets at September 30, 1995 were $35.3 billion, up $2 billion
or 6 percent since December 31, 1994.
Earning assets growth of $2 billion, or 7 percent, to $32.6 billion
since year-end 1994 was mainly caused by a $2.1 billion, or 10 percent,
increase in total loans. This increase was partially funded by a decline
in the investment securities portfolio of $505 million.
Since December 31, 1994, loan growth has remained strong as a result
of both acquisitions and continued expansion in the commercial and
consumer loan portfolios. Commercial loans showed the strongest
improvement, increasing $1.0 billion, or 10 percent, reflecting prolonged
customer demand in the Corporation's markets. Consumer loans followed
with an increase of $520 million, or 12 percent, largely due to growth in
revolving credit loans.
Total liabilities increased $1.8 billion, or 6 percent, to $32.8
billion since December 31, 1994, primarily due to the addition of $1.2
billion in short-term borrowings and an increase of $850 million in
medium- and long-term debt. The rise in medium- and long-term debt
reflects the net result of the issuance of $2.4 billion of medium- and
long-term notes and the maturity of approximately $1.6 billion of medium-
term notes since December 31, 1994. Refer to the notes to the
consolidated financial statements for an analysis of medium- and long-term
debt. As the deposit base remains relatively flat, greater reliance on
federal funds purchased, other short-term borrowings, and medium- and
long-term debt is necessary to support expanding loan volumes.
Allowance for Loan Losses and Nonperforming Assets
- --------------------------------------------------
Management determines the adequacy of the allowance for loan losses
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 loan loss experience, current economic conditions and
trends, geographic dispersion of borrowers, trends in past due and
nonaccrual amounts, risk characteristics of various categories and
concentrations of loans, and transfer risks.
At September 30, 1995, the allowance for loan losses was $343
million, an increase of $17 million, or 5 percent, since December 31,
1994. Due to the magnitude of loan growth during 1995, the allowance as
a percentage of total loans declined slightly to 1.41 percent from 1.47
percent at December 31, 1994. However, the allowance as a percentage of
total nonperforming assets increased from 160 percent at year-end 1994 to
178 percent at September 30, 1995.
Net charge-offs for the third quarter of 1995 were $21 million, or
0.35 percent of average total loans, compared with $11 million, or 0.21
percent of average total loans in the third quarter of 1994. The level of
charge-offs, while still below historical norms, has increased relative to
the extremely low levels experienced over the past year due to credit card
loans. For the first nine months of both 1995 and 1994, net charge-offs
of $40 million and $34 million, respectively, represented just 0.23
percent of average total loans. An analysis of the allowance for loan
losses is presented in the notes to the consolidated financial statements.
<PAGE>
<PAGE> 18
Nonperforming assets declined 6 percent since December 31, 1994, and
were categorized as follows:
<TABLE>
<CAPTION>
September 30, December 31,
(in thousands) 1995 1994
------------- ------------
<S> <C> <C>
Nonaccrual loans:
Commercial $ 98,653 $ 88,514
Real estate construction 9,788 16,941
Commercial mortgage 35,408 47,152
Residential mortgage 7,933 9,116
------------- ------------
Total nonaccrual loans 151,782 161,723
Reduced-rate loans 4,137 2,299
------------- ------------
Total nonperforming loans 155,919 164,022
Other real estate 36,941 40,462
------------- ------------
Total nonperforming assets $ 192,860 $ 204,484
============= ============
Loans past due 90 days or more $ 71,924 $ 39,161
============= ============
</TABLE>
Nonperforming assets as a percentage of total loans and other real
estate at September 30, 1995 and December 31, 1994, were 0.79 percent and
0.92 percent, respectively. The $33 million increase in loans past due 90
days or more since year-end 1994 is related principally to credit card
loans.
Capital
- -------
Shareholders' equity increased $161 million from December 31, 1994
to September 30, 1995, principally through retention of $189 million in
earnings, the issuance of $76 million of common stock in connection with
the acquisition of University Bank & Trust (University) in March 1995, and
a $58 million decrease in unrealized losses on investment securities
available for sale. The repurchase of 1.4 million shares, or $39 million,
of common stock related to the acquisition of University partially offset
the rise in shareholders' equity, along with the repurchase and retirement
of 4.2 million shares, or $134 million, of common stock related to the
impending Metrobank acquisition.
Capital ratios continue to comfortably exceed minimum regulatory
requirements as follows:
<TABLE>
<CAPTION>
September 30, December 31,
1995 1994
------------- ------------
<S> <C> <C>
Leverage ratio (3.00 - minimum) 6.72% 6.93%
Tier 1 risk-based capital
ratio (4.0 - minimum) 7.75 8.13
Total risk-based capital
ratio (8.0 - minimum) 11.47 11.68
</TABLE>
<PAGE> 19
At September 30, 1995, the capital ratios of all the Corporation's
banking subsidiaries exceeded the minimum ratios required of a "well
capitalized" institution as defined in the final rule under FDICIA.
Other Matters
- -------------
As disclosed in Part I, Item 3 of Form 10-K for the year ended
December 31, 1994, a lawsuit was filed on July 24, 1990, by the State of
Michigan against a subsidiary bank involving hazardous waste issues. The
Corporation's motion for summary judgment was granted in January 1993,
however, the State of Michigan has filed an appeal that is still pending.
Management believes that even if the summary judgment is not upheld on
appeal, the results of this action will not have a materially adverse
effect on the Corporation's consolidated financial position. Although,
depending upon 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 operation in that year.<PAGE>
<PAGE> 20
PART II. OTHER INFORMATION
ITEM 2. Changes in Securities
(a) Changes in documents defining rights of security holders.
On July 21, 1995, the Corporation made several amendments to its
bylaws. Among other things, these amendments modified the procedure for
holders of its Common Stock, $5.00 par value per share, to make director
nominations and added procedures regarding shareholder requests for
business to be conducted at a shareholder meeting. Advance notice of
director nominations must be given by a shareholder not less than 60 days
nor more than 90 days prior to the anniversary date of the immediately
preceding annual meeting of shareholders; previously, such notice had to
be given at least 30 days prior to such anniversary date. In addition,
shareholders who desire to bring business at a shareholders meeting must
comply with the advance notice provisions listed above as well as satisfy
certain other technical notice requirements. A copy of the amended bylaws
is attached hereto as Exhibit (4).
ITEM 6. Exhibits and Reports on Form 8-K
--------------------------------
(a) Exhibits
(4) Instruments Defining the Rights of Security Holders
- Corporate Bylaws As Amended on July 21, 1995
(11) Statement re: Computation of Earnings Per Share
(b) Reports on Form 8-K
None.
<PAGE>
<PAGE> 21
SIGNATURE
Pursuant to the requirements 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.
COMERICA INCORPORATED
--------------------------------------
(Registrant)
/s/Ralph W. Babb, Jr.
--------------------------------------
Ralph W. Babb, Jr.
Executive Vice President and
Chief Financial Officer
(Principal Financial Officer)
/s/Arthur W. Hermann
--------------------------------------
Arthur W. Hermann
Senior Vice President and Controller
(Principal Accounting Officer)
Date: October 31, 1995
<PAGE>
<PAGE> 1
Exhibit (4) Instruments Defining the Rights of Security Holders
As Amended on
July 21, 1995
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 third Friday of May, 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.
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
<PAGE> 2
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.
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.
SECTION 9. NATURE OF BUSINESS. At any meeting of shareholders,
only such business shall be conducted as shall have been brought before
the meeting by or at the direction of the Board of Directors or by any
shareholder who complies with the procedures set forth in this Section 9.
No business may be transacted at any meeting of shareholders, other than
business that is either:
(a) specified in the notice of meeting (or any supplement
thereto) given by or at the direction of the Board of Directors (or any
duly authorized committee thereof);
(b) otherwise properly brought before such meeting of
<PAGE> 3
shareholders by or at the direction of the Board of Directors (or any duly
authorized committee thereof); or
(c) in the case of an annual meeting of shareholders,
otherwise properly brought before such meeting by any shareholder (i) who
is a shareholder of record on the date of the giving of the notice
provided for in this Section 9 and on the record date for the
determination of shareholders entitled to vote at such annual meeting of
shareholders; and (ii) who complies with the notice procedures set forth
in this Section 9.
In addition to any other applicable requirements, for business to be
properly brought before an annual meeting of shareholders by a
shareholder, such shareholder must have given timely notice thereof in
proper written form to the Secretary of the Corporation. To be timely, a
shareholder's notice to the Secretary of the Corporation must be delivered
to or mailed and received at the principal executive offices of the
Corporation not less than sixty (60) days nor more than ninety (90) days
prior to the anniversary date of the immediately preceding annual meeting
of shareholders; provided, however, that in the event that the annual
meeting of shareholders is called for a date that is not within thirty
(30) days before or after such anniversary date, notice by the shareholder
in order to be timely must be so received not later than the close of
business on the tenth (10th) day following the day on which notice of the
date of the annual meeting of shareholders was mailed or public disclosure
of the date of the annual meeting of shareholders was made, whichever
first occurs.
To be in proper written form, a shareholder's notice to the Secretary of
the Corporation must set forth as to each matter such shareholder proposes
to bring before the annual meeting of shareholders: (i) a brief
description of the business desired to be brought before the annual
meeting of shareholders and the reasons for conducting such business at
the annual meeting of shareholders; (ii) the name and record address of
such shareholder; (iii) the class or series and number of shares of
capital stock of the Corporation which are owned beneficially or of
record by such shareholder as of the record date for the meeting (if such
date shall then have been made publicly available and shall have
occurred); (iv) as of the date of such notice, a description of all
arrangements or understandings between such shareholder an any other
person or persons (including their names) in connection with the proposal
of such business by such shareholder and any material interest of such
shareholder in such business; (v) any other information which would be
required to be disclosed in a proxy statement or other filings required to
be made in connection with the solicitation of proxies for the proposal
pursuant to Section 14 of the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), and the rules and regulations promulgated
thereunder if such shareholder were engaged in such a solicitation; and
(vi) a representation that such shareholder intends to appear in person
or by proxy at the annual meeting of shareholders to bring such business
before the meeting.
No business shall be conducted at the annual meeting of shareholders
except business brought before the annual meeting of shareholders in
accordance with the procedures set forth in this Section 9, provided
however, that once business has been properly brought before the annual
meeting of shareholders in accordance with such procedures, nothing in
this Section 9 shall be deemed to preclude discussion by any shareholder
of any such business. If the Chairman of an annual meeting of
shareholders determines that business was not properly brought before the
annual meeting of shareholders in accordance with the foregoing
<PAGE> 4
procedures, the Chairman shall declare to the meeting that the business
was not properly brought before the meeting and such business shall not be
transacted. When a meeting is adjourned to another time or place, notice
of the adjourned meeting need not be given if the time and place thereof
are announced at the meeting at which the adjournment is taken, unless the
adjournment is for more than 30 days, or unless after the adjournment a
new record date is fixed for the adjourned meeting, in which case notice
of the adjourned meeting shall be given to each shareholder of record
entitled to vote at the meeting. 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 original meeting as originally
notified.
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 BOARD. 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 of Directors 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
of Directors a majority of the total number of Directors shall constitute
a quorum for the 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.
<PAGE> 5
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 of Directors 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. The Board of Directors may
establish a Directors' Committee of the Board of Directors. The
Directors' Committee may: (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
directors of Manufacturers National Corporation ("MNC"). 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 directors of the Corporation immediately prior to June 18,
1992. 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
<PAGE> 6
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
of Directors may participate in a meeting of the Board of Directors 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.
SECTION 12. NOMINATIONS OF DIRECTOR CANDIDATES. Only persons who
are nominated in accordance with the following procedures shall be
eligible for election as directors of the Corporation, except as may be
otherwise provided in the Certificate of Incorporation with respect to the
right of holders of preferred stock of the Corporation to nominate and
elect a specified number of directors in certain circumstances.
Nominations of persons for election to the Board of Directors may be made
at any annual meeting of shareholders, or at any special meeting of
shareholders called for the purpose of electing directors, shall be made:
(a) by or at the direction of the Board of Directors (or any
duly authorized committee thereof, including the Directors' Committee); or
(b) by any shareholder of the Corporation: (i) who is a
shareholder of record on the date of the giving of the notice provided for
in this Section 12 and on the record date for the determination of
shareholders entitled to vote at such meeting; and (ii) who complies with
the notice procedures set forth in this Section 12.
In addition to any other applicable requirements, for a nomination to be
made by a shareholder, such shareholder must have given timely notice
thereof in proper written form to the Secretary of the Corporation. To be
timely, a shareholder's notice to the Secretary of the Corporation must be
delivered to or mailed and received at the principal executive offices of
the Corporation (a) in the case of an annual meeting of shareholders, not
less than sixty (60) days nor more than ninety (90) days prior to the
anniversary date of the immediately preceding annual meeting of
shareholders; provided, however, that in the event that the annual meeting
of shareholders is called for a date that is not within thirty (30) days
before or after such anniversary date, notice by the shareholder in order
to be timely must be so received not later than the close of business on
the tenth (10th) day following the day on which notice of the date of the
annual meeting of shareholders was mailed or public disclosure of the date
of the annual meeting was made, whichever first occurs; and (b) in the
case of a special meeting of shareholders called for the purpose of
electing directors, not later than the close of business on the tenth
(l0th) day following the day on which notice of the date of the special
meeting of shareholders was mailed or public disclosure of the date of the
<PAGE> 7
special meeting of shareholders was made, whichever first occurs.
To be in proper written form, a shareholder's notice to the Secretary of
the Corporation must set forth:
(a) as to each person whom the shareholder proposes to
nominate for election as a director: (i) the name, age, business address
and residence address of the person; (ii) the principal occupation or
employment of the person; (iii) the class or series and number of shares
of capital stock of the Corporation which are owned beneficially or of
record by the person as of the record date for the meeting (if such date
shall then have been made publicly available and shall have occurred) and
as of the date of such notice; and (iv) any other information relating to
the person that would be required to be disclosed in a proxy statement or
other filings required to be made in connection with solicitations of
proxies for election of directors pursuant to section 14 of the Exchange
Act, and the rules and regulations promulgated thereunder; and
(b) as to the shareholder giving the notice: (i) the name and
record address of such shareholder; (ii) the class or series and number of
shares of capital stock of the Corporation which are owned beneficially or
of record by such shareholder as of the record date for the meeting (if
such date shall then have been made publicly available and shall have
occurred) and as of the date of such notice; (iii) a description of all
arrangements or understandings between such shareholder and each proposed
nominee and any other person or persons (including their names) pursuant
to which the nominations are to be made by such shareholder; (iv) a
representation that such shareholder intends to appear in person or by
proxy at the meeting to nominate the persons named in its notice; and (v)
any other information relating to such shareholder that would be required
to be disclosed in a proxy statement or other filings required to be made
in connection with solicitations of proxies for election of directors
pursuant to Section 14 of the Exchange Act and the rules and regulations
promulgated thereunder. Such notice must be accompanied by the written
consent to such nomination of each person proposed as a nominee and such
person's written consent to serve as a director if elected.
No person shall be eligible for election as a director of the Corporation
unless nominated in accordance with the procedures set forth in this
Section 12. If the Chairman of the meeting determines that a nomination
was not made in accordance with the foregoing procedures, the Chairman
shall declare to the meeting that the nomination was defective and such
defective nomination shall be disregarded.
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.
<PAGE> 8
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.
SECTION 2. COMPENSATION. The salaries of all executive officers
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 or her successor is elected and
qualified or until his or her 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
<PAGE> 9
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 any meeting of the Board
of Directors, the Board may designate a chief operating officer of the
Corporation. The chief operating officer shall perform such duties as may
be delegated to him or her by the Board of Directors, the Executive
Committee of the Board 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 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
<PAGE> 10
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 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.
<PAGE>
<PAGE> 11
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 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
<PAGE> 12
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, 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) 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
<PAGE> 13
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 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
<PAGE> 14
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 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.
<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.
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.
<PAGE> 16
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.
<PAGE> 1
Exhibit (11) - Statement Re: Computation of Earnings Per Share
<TABLE>
COMPUTATION OF EARNINGS PER SHARE
Comerica Incorporated and Subsidiaries
<CAPTION>
(In thousands, except per share data)
Three Months Ended Nine Months Ended
September 30 September 30
------------------- -------------------
1995 1994 1995 1994
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Primary:
Average shares outstanding 114,629 118,466 116,207 117,212
Common stock equivalent:
Net effect of the assumed
exercise of stock options 1,364 970 992 936
-------- -------- -------- --------
Primary average shares 115,993 119,436 117,199 118,148
======== ======== ======== ========
Net income $105,302 $100,604 $306,856 $290,645
-------- -------- -------- --------
Primary net income per share $0.91 $0.84 $2.62 $2.46
Fully diluted:
Average shares outstanding 114,629 118,466 116,207 117,212
Common stock equivalent:
Net effect of the assumed
exercise of stock options 1,472 971 1,490 940
-------- -------- -------- --------
Fully diluted average shares 116,101 119,437 117,697 118,152
======== ======== ======== ========
Net income $105,302 $100,604 $306,856 $290,645
-------- -------- -------- --------
Fully diluted net income
per share $0.91 $0.84 $2.61 $2.46
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED
FROM THE SEPTEMBER 1995 FORM 10Q FOR COMERICA INCORPORATED AND
SUBSIDIARIES AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> SEP-30-1995
<CASH> 1,523,520
<INT-BEARING-DEPOSITS> 52,442
<FED-FUNDS-SOLD> 733,200
<TRADING-ASSETS> 4,783
<INVESTMENTS-HELD-FOR-SALE> 2,779,920
<INVESTMENTS-CARRYING> 4,591,928
<INVESTMENTS-MARKET> 4,534,625
<LOANS> 24,347,070
<ALLOWANCE> 342,914
<TOTAL-ASSETS> 35,348,526
<DEPOSITS> 22,011,129
<SHORT-TERM> 5,429,397
<LIABILITIES-OTHER> 372,102
<LONG-TERM> 4,948,576
<COMMON> 575,473
0
0
<OTHER-SE> 1,977,513
<TOTAL-LIABILITIES-AND-EQUITY> 35,348,526
<INTEREST-LOAN> 1,550,093
<INTEREST-INVEST> 373,853
<INTEREST-OTHER> 19,346
<INTEREST-TOTAL> 1,943,292
<INTEREST-DEPOSIT> 538,194
<INTEREST-EXPENSE> 984,431
<INTEREST-INCOME-NET> 958,861
<LOAN-LOSSES> 53,500
<SECURITIES-GAINS> 788
<EXPENSE-OTHER> 809,377
<INCOME-PRETAX> 465,552
<INCOME-PRE-EXTRAORDINARY> 306,856
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 306,856
<EPS-PRIMARY> 2.62
<EPS-DILUTED> 2.61
<YIELD-ACTUAL> 4.14
<LOANS-NON> 151,782
<LOANS-PAST> 71,924
<LOANS-TROUBLED> 4,137
<LOANS-PROBLEM> 344,114
<ALLOWANCE-OPEN> 326,195
<CHARGE-OFFS> 73,831
<RECOVERIES> 33,790
<ALLOWANCE-CLOSE> 342,914
<ALLOWANCE-DOMESTIC> 294,589
<ALLOWANCE-FOREIGN> 2,296
<ALLOWANCE-UNALLOCATED> 46,029
</TABLE>
