Comerica(CMA) - 2025 Q3 - Quarterly Results

Executive Summary & Strategic Highlights Third Quarter 2025 Performance Overview Comerica reported Q3 2025 net income of $176 million, driven by deposit growth and stable net interest income, maintaining strong capital Q3 2025 Key Financial Results (in millions, except per share and ratio data) | Metric | 3rd Qtr '25 | 2nd Qtr '25 | 3rd Qtr '24 | | :----------------------------- | :---------- | :---------- | :---------- | | Net income | $176 | $199 | $184 | | Diluted earnings per common share | $1.35 | $1.42 | $1.33 | | Net interest income | $574 | $575 | $534 | | Noninterest income | $264 | $274 | $277 | | Noninterest expenses | $589 | $561 | $562 | | Average deposits | $62,735 | $61,246 | $63,896 | | Estimated CET1 capital ratio | 11.90 % | 11.99 % | 11.96 %| - The company increased share repurchases to $150 million in the quarter, contributing to capital strength[1] Merger with Fifth Third Bancorp Comerica announced an all-stock merger with Fifth Third Bancorp, pending approvals and expected to close by Q1 2026 - Fifth Third Bancorp will acquire Comerica in an all-stock transaction[3] - Comerica shareholders will receive 1.8663 Fifth Third shares for each Comerica share[3] - The transaction is anticipated to close at the end of the first quarter of 2026, pending shareholder and regulatory approvals[3] Financial Performance Analysis (Q3 2025 vs Q2 2025) Balance Sheet Dynamics Loans and securities remained stable, with deposits increasing by $1.5 billion driven by interest-bearing accounts - Loans remained relatively stable at $50.8 billion[4] - Period-end unrealized losses on securities decreased $251 million to $2.2 billion[5] - Deposits increased $1.5 billion to $62.7 billion, with interest-bearing deposits increasing $1.7 billion[5] - Noninterest-bearing deposits decreased $184 million, comprising 37% of total deposits (down from 38% in the prior quarter)[5][10] Net Interest Income and Margin Net interest income remained stable at $574 million, but net interest margin decreased by 7 bps to 3.09% due to deposit growth and pricing Net Interest Income and Margin Trends (in millions, except margin data) | Metric | 3rd Qtr '25 | 2nd Qtr '25 | Change (QoQ) | | :---------------- | :---------- | :---------- | :----------- | | Net interest income | $574 | $575 | $(1) | | Net interest margin | 3.09 % | 3.16 % | (7 bps) | - The average cost of interest-bearing deposits increased 9 basis points to 2.78%, reflecting strategic growth and competitive environment[10] - Decrease in net interest margin was driven by growth in interest-bearing deposits and relationship-focused deposit pricing, as well as a reduction in the benefit from BSBY cessation, partially offset by a reduction in both short-term borrowings and medium- and long-term debt[10][15] Credit Quality Provision for credit losses decreased to $22 million, while net charge-offs increased and nonperforming assets rose Credit Quality Metrics (in millions, except ratio data) | Metric | 3rd Qtr '25 | 2nd Qtr '25 | Change (QoQ) | | :------------------------------------------ | :---------- | :---------- | :----------- | | Provision for credit losses | $22 | $44 | $(22) | | Net charge-offs | $32 | $28 | $4 | | Nonperforming assets (NPAs) | $260 | $249 | $11 | | NPAs/Total loans and foreclosed property | 0.51 % | 0.49 % | 0.02 pp | | Allowance for credit losses/Total loans | 1.43 % | 1.44 % | (0.01 pp) | - Criticized loans decreased $88 million to $2.7 billion, or 5.2% of total loans[18] Noninterest Income Noninterest income decreased by $10 million to $264 million, driven by lower fiduciary and capital markets income Noninterest Income Breakdown (in millions) | Item | 3rd Qtr '25 | 2nd Qtr '25 | Change (QoQ) | | :-------------------------- | :---------- | :---------- | :----------- | | Total noninterest income | $264 | $274 | $(10) | | Fiduciary income | $51 | $57 | $(6) | | Capital markets income | $37 | $42 | $(5) | | Bank-owned life insurance income | $13 | $9 | $4 | Noninterest Expenses Noninterest expenses increased by $28 million to $589 million, primarily due to higher litigation and operational losses Noninterest Expenses Trends (in millions) | Item | 3rd Qtr '25 | 2nd Qtr '25 | Change (QoQ) | | :-------------------------- | :---------- | :---------- | :----------- | | Total noninterest expenses | $589 | $561 | $28 | | Other noninterest expenses | $36 | $7 | $29 | | Salaries and benefits expense | $353 | $358 | $(5) | - Other noninterest expenses included a $13 million increase in litigation-related expenses and an $8 million increase in operational losses[11] Capital and Shareholder Returns Comerica maintained a strong 11.90% CET1 ratio, returning $241 million to shareholders and issuing $392 million in preferred stock - Estimated common equity Tier 1 capital ratio was 11.90%[8] - Returned a total of $241 million to common shareholders, comprising $150 million in share repurchases and $91 million in common stock dividends[11] - Issued 400,000 shares of 6.875% Series B Preferred Stock, resulting in net proceeds of approximately $392 million[11] Business Segment Results Commercial Bank Commercial Bank net income slightly decreased to $235 million, with stable net interest income and lower credit loss provision Commercial Bank Segment Performance (in millions) | Metric | 3rd Qtr '25 | 2nd Qtr '25 | | :-------------------------- | :---------- | :---------- | | Net income (loss) | $235 | $243 | | Net interest income (expense) | $453 | $453 | | Provision for credit losses | $14 | $48 | | Average loans | $43,141 | $43,146 | Retail Bank Retail Bank net income decreased to $71 million, driven by lower net interest income and higher noninterest expenses Retail Bank Segment Performance (in millions) | Metric | 3rd Qtr '25 | 2nd Qtr '25 | | :-------------------------- | :---------- | :---------- | | Net income (loss) | $71 | $82 | | Net interest income (expense) | $240 | $245 | | Noninterest expenses | $172 | $167 | | Average deposits | $23,321 | $23,443 | Wealth Management Wealth Management net income decreased to $11 million, primarily due to lower noninterest income and higher credit loss provision Wealth Management Segment Performance (in millions) | Metric | 3rd Qtr '25 | 2nd Qtr '25 | | :-------------------------- | :---------- | :---------- | | Net income (loss) | $11 | $30 | | Noninterest income | $69 | $76 | | Provision for credit losses | $6 | $(1) | | Average deposits | $3,860 | $3,576 | Finance and Other Finance segment net loss improved to $142 million, while the 'Other' category moved to a $1 million net income Finance and Other Segment Performance (in millions) | Segment | 3rd Qtr '25 Net Income (Loss) | 2nd Qtr '25 Net Income (Loss) | | :-------- | :-------------------------- | :-------------------------- | | Finance | $(142) | $(148) | | Other | $1 | $(8) | Consolidated Financial Statements Consolidated Financial Highlights Overview of Comerica's key financial metrics, including per share data, performance ratios, capital, and credit quality Consolidated Financial Highlights (Selected Metrics) (in millions, except per share and ratio data) | Metric | Sep 30, 2025 | Jun 30, 2025 | Sep 30, 2024 | | :------------------------------------------ | :----------- | :----------- | :----------- | | Diluted earnings per common share | $1.35 | $1.42 | $1.33 | | Return on average common shareholders' equity | 10.20 % | 11.35 % | 10.88 % | | Common equity tier 1 capital ratio | 11.90 % | 11.99 % | 11.96 % | | Total loans (average, in millions) | $50,755 | $50,665 | $50,861 | | Total deposits (average, in millions) | $62,735 | $61,246 | $63,896 | | Net interest income (in millions) | $574 | $575 | $534 | | Net interest margin | 3.09 % | 3.16 % | 2.80 % | | Net charge-offs (in millions) | $32 | $28 | $11 | | Allowance for credit losses as % of total loans | 1.43 % | 1.44 % | 1.43 % | Consolidated Balance Sheets Presents consolidated balance sheets, detailing assets, liabilities, and equity at key reporting dates Consolidated Balance Sheet Summary (in millions) | Item | Sep 30, 2025 | Jun 30, 2025 | Dec 31, 2024 | Sep 30, 2024 | | :---------------------------------- | :----------- | :----------- | :----------- | :----------- | | Total assets | $77,376 | $77,988 | $79,297 | $79,663 | | Total loans (net) | $50,200 | $50,481 | $49,849 | $49,831 | | Total deposits | $62,596 | $60,003 | $63,811 | $63,077 | | Total liabilities | $69,947 | $71,128 | $72,754 | $72,297 | | Total shareholders' equity | $7,429 | $6,860 | $6,543 | $7,366 | Consolidated Statements of Comprehensive Income Details consolidated statements of comprehensive income, including interest income, expenses, and net income for Q3 2025 and 2024 Consolidated Statements of Comprehensive Income (Three Months Ended September 30, in millions, except per share data) | Item | 2025 | 2024 | | :-------------------------------------- | :--- | :--- | | Total interest income | $946 | $982 | | Total interest expense | $372 | $448 | | Net interest income | $574 | $534 | | Provision for credit losses | $22 | $14 | | Total noninterest income | $264 | $277 | | Total noninterest expenses | $589 | $562 | | Net income | $176 | $184 | | Diluted earnings per common share | $1.35 | $1.33 | Consolidated Quarterly Statements of Comprehensive Income Detailed quarterly comparison of comprehensive income, highlighting changes in key income statement components for Q3 2025 vs Q2 2025 Consolidated Quarterly Statements of Comprehensive Income (Q3 2025 vs Q2 2025, in millions, except per share and percentage data) | Item | Q3 2025 | Q2 2025 | Change (Amount) | Change (Percent) | | :-------------------------------------- | :------ | :------ | :-------------- | :--------------- | | Total interest income | $946 | $931 | $15 | 2% | | Total interest expense | $372 | $356 | $16 | 5% | | Net interest income | $574 | $575 | $(1) | — | | Provision for credit losses | $22 | $44 | $(22) | (50%) | | Total noninterest income | $264 | $274 | $(10) | (4%) | | Total noninterest expenses | $589 | $561 | $28 | 5% | | Net income | $176 | $199 | $(23) | (12%) | | Diluted earnings per common share | $1.35 | $1.42 | $(0.07) | (5%) | Analysis of Net Interest Income (Detailed) Detailed analysis of net interest income, breaking down average balances, interest income/expense, and rates for assets and liabilities Analysis of Net Interest Income (Three Months Ended September 30, 2025, in millions) | Item | Average Balance | Interest | Rate | | :-------------------------------------- | :-------------- | :------- | :----- | | Total loans | $50,755 | $779 | 6.09 % | | Total investment securities | $14,710 | $105 | 2.45 % | | Total earning assets | $71,220 | $946 | 5.10 % | | Total interest-bearing deposits | $39,812 | $280 | 2.78 % | | Total interest-bearing sources | $46,331 | $372 | 3.19 % | | Net interest income | | $574 | 1.91 % | | Net interest margin | | | 3.09 % | Analysis of the Allowance for Credit Losses Detailed analysis of allowance for credit losses, including balances, charge-offs, recoveries, and provision, presented quarterly Analysis of the Allowance for Credit Losses (in millions, except percentage data) | Item | 3rd Qtr '25 | 2nd Qtr '25 | 1st Qtr '25 | 4th Qtr '24 | 3rd Qtr '24 | | :------------------------------------------ | :---------- | :---------- | :---------- | :---------- | :---------- | | Balance at beginning of period (ACL) | $735 | $719 | $725 | $720 | $717 | | Total loan charge-offs | $45 | $31 | $32 | $23 | $23 | | Total recoveries | $13 | $3 | $6 | $7 | $12 | | Net loan charge-offs | $32 | $28 | $26 | $16 | $11 | | Provision for credit losses | $22 | $44 | $20 | $21 | $14 | | Balance at end of period (ACL) | $725 | $735 | $719 | $725 | $720 | | ACL as a percentage of total loans | 1.43 % | 1.44 % | 1.44 % | 1.44 % | 1.43 % | | Net loan charge-offs as % of avg total loans | 0.25 | 0.22 | 0.21 | 0.13 | 0.08 | Nonperforming Assets Detailed breakdown of nonperforming assets, including loans, foreclosed property, and nonaccrual loans, with asset quality ratios Nonperforming Assets Summary (in millions, except ratio data) | Item | 3rd Qtr '25 | 2nd Qtr '25 | 1st Qtr '25 | 4th Qtr '24 | 3rd Qtr '24 | | :------------------------------------------ | :---------- | :---------- | :---------- | :---------- | :---------- | | Total nonperforming loans | $258 | $248 | $301 | $308 | $250 | | Foreclosed property | $2 | $1 | $— | $— | $— | | Total nonperforming assets | $260 | $249 | $301 | $308 | $250 | | Nonperforming loans as % of total loans | 0.51 % | 0.48 % | 0.60 % | 0.61 % | 0.50 % | | Nonperforming assets as % of total loans and foreclosed property | 0.51 % | 0.49 % | 0.60 % | 0.61 % | 0.50 % | | Allowance for credit losses as a multiple of total nonperforming loans | 2.8x | 3.0x | 2.4x | 2.4x | 2.9x | | Loans past due 90 days or more and still accruing | $14 | $42 | $12 | $44 | $21 | Consolidated Statements of Changes in Shareholders' Equity Presents consolidated statements of changes in shareholders' equity, detailing movements from net income, dividends, and share repurchases Consolidated Statements of Changes in Shareholders' Equity (Selected Items, in millions) | Item | Balance at Jun 30, 2025 | Net Income | Other Comprehensive Income, net of tax | Cash Dividends Declared on Common Stock | Purchase of Common Stock | Issuance of Preferred Stock | Balance at Sep 30, 2025 | | :-------------------------------------- | :---------------------- | :--------- | :------------------------------------- | :-------------------------------------- | :----------------------- | :------------------------ | :---------------------- | | Total Shareholders' Equity | $6,860 | $176 | $238 | $(91) | $(151) | $392 | $7,429 | Non-GAAP Financial Measures and Regulatory Ratios Non-GAAP Financial Measures and Regulatory Ratios Explains non-GAAP financial measures like CET1 and tangible common equity, providing reconciliations for capital adequacy evaluation - Non-GAAP measures like Common Equity Tier 1 capital ratio and tangible common equity are used to evaluate the adequacy of common equity and performance trends, reflecting adjustments commonly made by stakeholders[44] Non-GAAP Financial Measures and Regulatory Ratios (in millions, except per share data) | Metric | Sep 30, 2025 | Jun 30, 2025 | Sep 30, 2024 | | :------------------------------------------ | :----------- | :----------- | :----------- | | Common equity tier 1 capital | $8,657 | $8,718 | $8,683 | | Tier 1 capital ratio | 12.44 % | 11.99 % | 12.51 % | | Common equity tier 1 capital ratio | 11.90 % | 11.99 % | 11.96 % | | Tangible common equity | $6,397 | $6,220 | $6,331 | | Tangible common equity ratio | 8.34 % | 8.04 % | 8.01 % | | Tangible common equity per share of common stock | $50.14 | $47.96 | $47.69 | Additional Information Company Overview Comerica Incorporated is a Dallas-based financial services company with three segments, operating across multiple U.S. states, Canada, and Mexico - Comerica Incorporated is a financial services company headquartered in Dallas, Texas[19] - The company is strategically aligned by three business segments: the Commercial Bank, the Retail Bank, and Wealth Management[19] - Comerica provides banking centers in Arizona, California, Florida, Michigan, and Texas, and is expanding into new regions like North Carolina and Colorado, also servicing Canada and Mexico[19] Forward-Looking Statements Contains forward-looking statements on strategy and results, highlighting risks, especially regarding the Fifth Third merger and macroeconomic conditions - Forward-looking statements cover business strategy, goals, projected financial and operating results, and future capital uses[22] - Important factors that could cause actual results to differ materially include risks related to the merger with Fifth Third (e.g., realization of synergies, closing conditions, integration challenges), economic conditions, regulatory changes, and competitive pressures[23][24] - The company undertakes no obligation to publicly update any forward-looking statement, except as required by law[24] Media and Investor Contacts Provides contact information for media and investor relations inquiries - Media Contacts: Nicole Hogan and Louis H. Mora[25] - Investor Contacts: Kelly Gage and Lindsey Baird[25]