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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report: January 22, 1997
COMERICA INCORPORATED
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(Exact name of registrant as specified in its charter)
Delaware 1-10706 38-1998421
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(State or other (Commission File (I.R.S. Employer
jurisdiction of Number) Identification
incorporation) Number)
Comerica Tower at Detroit Center 48226
Detroit, Michigan
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(Address of principal executive offices) (Zip Code)
(313) 222-3432
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(Registrant's telephone number, including area code)
N/A
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(Former name or former address, if changed since last report)
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Item 5. Other Events.
Pursuant to Form 8-K, General Instruction F, Registrant hereby incorporates by
reference the press releases attached hereto as Exhibits 99.1, 99.2, and 99.3.
Item 7. Financial Statements, PRO FORMA Financial Information and Exhibits.
(c) Exhibits.
Exhibit No. Description Page
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99.1 Comerica Incorporated Press Release 4
dated January 22, 1997 regarding
earnings
99.2 Comerica Incorporated Press Release 7
dated January 22, 1997 regarding
results of Phase III
99.3 Consolidated Balance Sheets 9
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SIGNATURES
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)
BY: /s/ Mark W. Yonkman
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Name: Mark W. Yonkman
Title: First Vice President and Assistant
Secretary
Dated: January 22, 1997
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EXHIBIT 99.1
COMERICA REPORTS 1996 EARNINGS
DETROIT/January 22, 1997 -- Comerica Incorporated (NYSE: CMA) today
reported 1996 earnings per share of $3.55, compared to $3.54 in 1995. Net
income was $417 million, up one percent from $413 million for 1995. Return
on common equity was 15.98 percent and return on assets was 1.22 percent,
compared to 16.46 percent and 1.21 percent, respectively, for 1995.
Included in 1996 results was a fourth quarter pre-tax charge of $90 million
associated with a comprehensive restructuring to improve customer service,
increase efficiency, enhance revenue and provide funding for future growth,
called Phase III of Direction 2000. Excluding this charge, net income for
the year would have been $477 million, or $4.08 per share. Return on
common equity and return on assets for the year would have been 18.33
percent and 1.40 percent, respectively.
Net income for the fourth quarter of 1996 was $61 million or $0.52 per
share, compared to $107 million or $0.92 for the same period in 1995,
decreases of 43 percent. Return on common equity was 9.42 percent and
return on assets was 0.72 percent, compared to 16.49 percent and 1.23
percent, respectively, for the fourth quarter of 1995. Excluding the
restructuring charge, net income and earnings per share would have been
$121 million and $1.06, respectively. Return on common equity would have
been 19.41 percent and return on assets would have been 1.44 percent.
"We are pleased with our financial performance, particularly in the fourth
quarter, as we systematically reconsidered everything we do at Comerica in
order to identify ways to improve customer service and increase
efficiency," said Eugene A. Miller, chairman and chief executive officer.
"We completed an intensive review of our operations without sacrificing
revenue momentum or our commitment to high asset quality. As a result, we
believe we have created a solid foundation for future success."
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COMERICA REPORTS 1996 EARNINGS - 2
Net interest income for the fourth quarter of 1996 was up 4 percent
compared to the similar period in 1995, as a result of loan growth and an
increase in the net interest margin. Average loans, excluding the sale of
the Corporation's Illinois subsidiary, increased $2.3 billion, or 10
percent, over last year's fourth quarter. The increase in net interest
margin, from 4.31 percent for the comparable quarter of 1995 to 4.61
percent for the fourth quarter of 1996, was due primarily to a favorable
change in the mix of earning assets -- growth in higher yielding loans and
a decline in lower return investment securities.
Noninterest income was $132 million for the fourth quarter of 1996,
compared to $141 million for the same quarter last year. This decrease was
principally due to the sale of the Corporation's customhouse brokerage
subsidiary in the second quarter of this year. Customhouse broker fees
contributed nearly $9 million to fourth quarter 1995 noninterest income.
Noninterest expenses were $356 million for the fourth quarter of 1996,
compared to $288 million for the same period last year. The $90 million
restructuring charge included in noninterest expenses for the fourth
quarter of 1996 includes $48 million for termination benefits, $21 million
for occupancy and equipment charges and $21 million for other expenses.
Fourth quarter expenses for 1996 also include an $18 million charge related
to increased estimates of projected losses over the remaining loss sharing
period on a bankcard portfolio the Corporation sold at the end of 1995.
The provision for loan losses was $32 million in the fourth quarter of
1996, a decrease of $1 million compared to the same period in 1995. Net
charge-offs for the quarter were $22 million or 0.35 percent of average
total loans, compared with $36 million or 0.59 percent in the fourth
quarter of 1995. Nonperforming assets were $140 million or 0.53 percent of
loans and other real estate at December 31, 1996, compared to $163 million
or 0.67 percent at December 31, 1995.
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COMERICA REPORTS 1996 EARNINGS - 3
At December 31, 1996, assets totaled $34 billion, compared with $35 billion
one year earlier, and common shareholders' equity was $2.4 billion,
compared to $2.6 billion in 1995. During 1996, 13 million shares were
repurchased under existing share repurchase authorizations compared to 4.3
million in 1995. Total loans at year-end were $26 billion, compared to $24
billion a year earlier, and year-end deposits were $22 billion, compared to
$23 billion at December 31, 1995.
Comerica Incorporated is a bank holding company headquartered in Detroit
that operates banking subsidiaries in Michigan, California, Texas and
Florida.
###
MEDIA CONTACTS: INVESTOR CONTACT:
Sharon R. McMurray Allison T. McFerren
(313) 222-4881 (313) 222-6317
Wayne J. Mielke
(313) 222-4732
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EXHIBIT 99.2
COMERICA ANNOUNCES RESULTS OF PHASE III
DETROIT/January 22, 1997 -- Comerica Incorporated (NYSE: CMA) today announced
the completion of a comprehensive effort to improve customer service, increase
efficiency, enhance revenue and provide funding for future growth. The results
will help move Comerica toward its goal of consistent first quintile financial
performance, as measured by return on equity among the top 50 bank holding
companies in the nation.
In addition to supporting future investments in growth businesses, geographic
expansion, marketing, technology and talent, the results of Phase III of
Direction 2000 are expected to reduce overhead costs and enhance revenues by
$110 million on an annualized basis, when fully implemented by the first half of
1998.
"We began this effort from a position of strength, and emerge from it even
stronger," said Comerica Chairman and Chief Executive Officer Eugene A. Miller.
"Over a four-month period, our employees worked diligently to scrutinize
everything that we do while conducting business as usual, as always with the
highest level of professionalism. We now are implementing their ideas to
simplify and streamline our processes to ensure we are using our resources as
efficiently as possible, and to provide substantial resources for future
growth."
Among the ideas to be implemented over the next 15 months are the
following:
- - Eliminating one-third of paper forms and replacing them with electronic
forms.
- - Simplifying the referral and delivery of investment services.
- - Empowering branch employees with additional levels of authority, and
reducing their clerical responsibilities, so they can serve customers
better.
- - Automating loan documentation to accelerate customer response times.
- - Reducing the documentation required to open a new account.
- - Leveraging vendor agreements corporate-wide.
- - Streamlining the credit approval process.
- - Streamlining financial and operations reporting.
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COMERICA ANNOUNCES RESULTS OF PHASE III - 2
"Regrettably," Miller noted, "as we streamline processes and eliminate
redundancies, a number of employees throughout the corporation will be
displaced. To assist these employees, we have put in place an enhanced
severance plan with outplacement services to help their transition."
Comerica expects to eliminate 1,890 positions. The combination of normal
attrition, hiring limitations in effect from the beginning of the project, and
reinvestment is expected to reduce the actual number of layoffs in the
workforce.
To recognize costs associated with this project, Comerica incurred a $90 million
pre-tax restructuring charge in the fourth quarter of 1996.
Phase III was conducted by Comerica employees with the assistance of Tandon
Capital Associates, Inc., a New York-based advisory firm.
Comerica Incorporated is a bank holding company headquartered in Detroit that
operates banking subsidiaries in Michigan, California, Texas and Florida. It
reported total assets of $34 billion at year-end 1996.
* * *
NOTE: This news release contains forward-looking statements about expected
savings and other effects of Phase III which are subject to risks and
uncertainties that could cause actual results to differ materially. These
risks and uncertainties include unanticipated changes in the competitive
environment.
# # #
MEDIA CONTACT: INVESTOR CONTACT:
Sharon R. McMurray Allison T. McFerren
(313) 222-4881 (313) 222-6317
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EXHIBIT 99.3 CONSOLIDATED BALANCE SHEETS
COMERICA INCORPORATED AND SUBSIDIARIES
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December 31, December 31,
(IN THOUSANDS, EXCEPT SHARE DATA) 1996 1995
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ASSETS
Cash and due from banks $ 1,901,760 $ 2,028,375
Interest-bearing deposits
with banks 27,329 23,568
Federal funds sold and
securities purchased
under agreements to
resell 32,200 203,798
Trading account securities 6,009 10,668
Loans held for sale 38,069 511,562
Investment securities
available for sale 4,800,034 6,859,310
Commercial loans 13,520,246 12,041,009
International loans 1,706,388 1,384,814
Real estate construction
loans 750,760 641,432
Commercial mortgage loans 3,445,562 3,254,041
Residential mortgage loans 1,743,876 2,221,359
Consumer loans 4,634,258 4,570,015
Lease financing 405,618 329,608
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Total loans 26,206,708 24,442,278
Less allowance for loan losses (367,165) (341,344)
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Net loans 25,839,543 24,100,934
Premises and equipment 407,663 455,002
Customers' liability on
acceptances outstanding 33,102 21,135
Accrued income and other
assets 1,120,362 1,255,522
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Total assets $34,206,071 $35,469,874
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LIABILITIES AND SHAREHOLDERS'
EQUITY
Demand deposits
(noninterest-bearing) $ 6,712,985 $ 5,579,536
Interest-bearing deposits 15,357,840 15,461,213
Deposits in foreign offices 296,348 2,126,466
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Total deposits 22,367,173 23,167,215
Federal funds purchased and
securities sold under
agreements to repurchase 1,395,540 3,206,612
Other borrowed funds 3,093,651 1,467,550
Acceptances outstanding 33,102 21,135
Accrued expenses and other
liabilities 459,267 355,219
Medium- and long-term debt 4,241,769 4,644,416
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Total liabilities 31,590,502 32,862,147
Nonredeemable preferred stock
- $50 stated value:
Authorized - 5,000,000 shares
Issued - 5,000,000 shares at
12/31/96 250,000 -
Common stock - $5 par value:
Authorized - 250,000,000
shares
Issued - 107,297,345 shares
at 12/31/96, 115,094,531
shares at 12/31/95 536,487 575,473
Capital surplus - 410,618
Unrealized gains and losses
on investment securities
available for sale (22,789) (4,141)
Retained earnings 1,854,116 1,640,980
Deferred compensation (2,245) (1,974)
Less cost of common stock in
treasury-490,704 shares
at 12/31/95 - (13,229)
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Total shareholders' equity 2,615,569 2,607,727
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Total liabilities and
shareholders' equity $34,206,071 $35,469,874
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CONSOLIDATED STATEMENTS OF INCOME
Comerica Incorporated and Subsidiaries
<TABLE>
<CAPTION>
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Three Months Ended Year Ended
December 31 December 31
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(IN THOUSANDS, EXCEPT PER SHARE DATA) 1996 1995 1996 1995
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INTEREST INCOME
<S> <C> <C> <C> <C>
Interest and fees on loans $ 543,083 $ 540,761 $2,160,981 $2,090,854
Interest on investment securities:
Taxable 84,498 120,120 372,331 473,759
Exempt from federal income tax 3,189 5,975 17,443 26,189
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Total interest on investment securities 87,687 126,095 389,774 499,948
Trading account interest 54 58 210 227
Interest on federal funds sold and securities purchased
under agreements to resell 756 1,361 5,068 7,402
Interest on time deposits with banks 395 482 1,827 8,032
Interest on loans held for sale 762 1,875 4,920 7,461
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Total interest income 632,737 670,632 2,562,780 2,613,924
INTEREST EXPENSE
Interest on deposits 165,161 183,281 685,539 721,475
Interest on short-term borrowings:
Federal funds purchased and securities sold
under agreements to repurchase 34,059 47,616 111,729 165,544
Other borrowed funds 22,343 23,617 107,155 135,667
Interest on medium-and long-term debt 70,750 77,857 294,990 288,990
Net interest rate swap (income)/expense (12,837) (2,761) (48,911) 2,365
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Total interest expense 279,476 329,610 1,150,502 1,314,041
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Net interest income 353,261 341,022 1,412,278 1,299,883
Provision for loan losses 32,000 33,000 114,000 86,500
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Net interest income after provision
for loan losses 321,261 308,022 1,298,278 1,213,383
NONINTEREST INCOME
Income from fiduciary activities 34,094 31,175 133,482 125,038
Service charges on deposit accounts 35,075 33,111 140,436 130,249
Customhouse broker fees - 8,949 10,764 36,086
Revolving credit fees 5,935 10,020 22,670 36,248
Securities gains 10,194 10,960 13,588 11,748
Other noninterest income 47,110 46,350 186,014 159,356
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Total noninterest income 132,408 140,565 506,954 498,725
NONINTEREST EXPENSES
Salaries and employee benefits 136,769 141,785 560,784 562,159
Net occupancy expense 22,821 25,639 99,211 98,945
Equipment expense 17,483 17,202 68,827 67,872
FDIC insurance expense 695 2,399 8,139 23,817
Telecommunications expense 7,659 7,617 29,092 29,644
Restructuring charge 90,000 - 90,000 -
Other noninterest expenses 80,793 93,803 302,973 303,977
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Total noninterest expenses 356,220 288,445 1,159,026 1,086,414
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Income before income taxes 97,449 160,142 646,206 625,694
Provision for income taxes 36,633 53,632 229,045 212,328
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NET INCOME $ 60,816 $ 106,510 $ 417,161 $ 413,366
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Net income applicable to common stock $ 56,541 $ 106,510 $ 408,136 $ 413,366
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Primary net income per share $ 0.52 $ 0.92 $ 3.55 $ 3.54
Average common and common equivalent shares 109,703 116,041 114,854 116,894
Cash dividends declared on common stock $ 41,789 $ 40,072 $ 170,067 $ 158,309
Dividends per common share $ 0.39 $ 0.35 $ 1.52 $ 1.37
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</TABLE>
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CONSOLIDATED FINANCIAL HIGHLIGHTS
COMERICA INCORPORATED AND SUBSIDIARIES
<TABLE>
<CAPTION>
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Three Months Ended Year Ended
(IN THOUSANDS, EXCEPT PER SHARE DATA, December 31 December 31
AVERAGE BALANCES AND RATIOS) 1996 1995 1996 1995
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<S> <C> <C> <C> <C>
PER SHARE AND COMMON STOCK DATA
Net income $0.52 $0.92 $3.55 $3.54
Net income (excluding
restructuring charge) 1.06 N/A 4.08 N/A
Cash dividends declared 0.39 0.35 1.52 1.37
Common shareholders' equity
(at December 31) 22.05 22.75
Average common and common equivalent shares 109,703 116,041 114,854 116,894
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KEY RATIOS
Return on average common 9.42% 16.49% 15.98% 16.46%
equity
Return on average common
equity (excluding restructuring 19.41% N/A 18.33% N/A
charge)
Return on average assets 0.72% 1.23% 1.22% 1.21%
Return on average assets (excluding
restructuring charge) 1.44% N/A 1.40% N/A
Average common equity as a
percentage of average assets 7.13% 7.46% 7.47% 7.36%
Core capital ratio 7.18% 7.63%
Total capital ratio 10.99% 11.21%
Leverage ratio 7.07% 6.87%
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AVERAGE BALANCES (in millions)
Commercial loans (including
lease financing) $13,323 $11,902 $13,037 $11,587
International loans 1,670 1,421 1,541 1,257
Real estate construction loans 744 632 707 541
Commercial mortgage loans 3,424 3,201 3,483 3,157
Residential mortgage loans 1,760 2,398 1,960 2,450
Consumer loans 4,574 4,809 4,624 4,569
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Total loans $25,495 $24,363 $25,352 $23,561
Earning assets 30,744 31,942 31,370 31,537
Total assets 33,645 34,631 34,195 34,129
Interest-bearing deposits 16,088 16,927 16,669 16,888
Noninterest-bearing deposits 5,791 4,980 5,589 4,767
Total interest-bearing
liabilities 24,781 26,700 25,519 26,527
Common shareholders' equity 2,400 2,584 2,554 2,511
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NET INTEREST INCOME
Net interest
income (fully taxable
equivalent basis) $356,116 $345,285 $1,426,976 $1,320,959
Fully taxable equivalent 2,855 4,263 14,698 21,076
adjustment
Net interest margin 4.61% 4.31% 4.54% 4.19%
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CREDIT QUALITY
Nonaccrual loans $103,294 $130,403
Reduced-rate loans 8,009 3,244
Other real estate 28,398 29,384
Total nonperforming assets 139,701 163,031
Loans 90 days past due 51,748 57,134
Gross charge-offs 35,258 45,197 $125,912 $119,028
Recoveries 12,967 9,219 41,363 43,009
Net charge-offs 22,291 35,978 84,549 76,019
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Allowance for loan losses
as a percentage of total
loans 1.40% 1.40%
Nonperforming assets as a
percentage of total
loans and other real
estate 0.53% 0.67%
Net loans charged off as
a percentage of average
total loans 0.35% 0.59% 0.33% 0.32%
Allowance for loan losses
as a percentage of total
nonperforming assets
263% 209%
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ADDITIONAL DATA
Goodwill $250,926 $228,106
Core deposit intangible 28,688 35,009
Other intangibles 5,709 8,632
Mortgage servicing rights 22,744 15,817
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</TABLE>
