Comerica Issues Revised 2013 Results Based On Unfavorable Jury Verdict; Will Decrease Net Income by $28M

Comerica Incorporated

today issued revised 2013 results based on an unfavorable Montana jury verdict, entered at approximately 7:30 p.m. ET on January 17, 2014. The Montana litigation ("the case") in which Comerica Bank ("the Bank") was a third-party defendant, was tried before the Montana Second District Judicial Court for Silver Bow County in Butte, Montana. The claims underlying the lawsuit against the Bank grew out of an initial $9 million revolving line of credit loan extended by the Bank to Masters Group International, Inc. ("Masters"), a then Michigan-based office supply company, in 2006, that was subsequently increased to $10.5 million and later paid in full through collection actions taken by the Bank following a default by Masters. (Logo: http://photos.prnewswire.com/prnh/20010807/CMALOGO) Following the jury's decision on the case, Comerica increased its reserve for litigation and decreased incentive compensation expense based on the revised results, effective as of December 31, 2013, which resulted in a decrease in net income of $28 million, or 15 cents per share, for the fourth quarter 2013. Comerica reiterates its previously stated outlook for 2014, excluding the impact of this event. "As we consider possible courses of action, including appealing the decision to the Montana Supreme Court, the sole appellate court for the state of Montana, we recorded a charge in the fourth quarter 2013 in accordance with applicable accounting principles," said Ralph W. Babb Jr., chairman and chief executive officer. "We believe we had meritorious defenses for this litigation and anticipated a favorable outcome." Net income decreased by $28 million, or 15 cents per share, to $117 million, or 62 cents per share for the fourth quarter 2013, compared to previously reported net income of $145 million, or 77 cents per share. For the year ended December 31, 2013, net income decreased to $541 million, or $2.85 per share, as compared to previously reported net income of $569 million, or $3.00 per share. As revised, full-year 2013 net income increased $20 million, or 4 percent, compared to 2012, and earnings per diluted share increased 18 cents, or 7 percent. At December 31, 2013, the revised estimated Tier 1 common capital ratio was 10.56 percent, as compared to the previously reported ratio of 10.60 percent. The estimated Basel III Tier 1 common capital ratio remained at 10.3 percent. The following table summarizes the impact of the revisions on the previously reported financial results. December 31, 2013 Quarter Ended Year Ended (dollar amounts in millions, except per share data) As Reported As Revised As Reported As Revised Noninterest expenses $ 429 $ 473 $ 1,678 $ 1,722 Salaries 203 197 769 763 Litigation-related expenses — 52 — 52 Other noninterest expenses 46 44 178 176 Income before income taxes 196 152 774 730 Provision for income taxes 51 35 205 189 Net income 145 117 569 541 Net income attributable to common shares 143 115 561 533 Diluted income per common share 0.77 0.62 3.00 2.85 Total shareholders' equity at period end 7,181 7,153 Estimated Tier 1 common capital ratio (a) 10.60 % 10.56 % Estimated Basel III Tier 1 common capital ratio (a) 10.3 % 10.3 % Tangible common equity ratio (a) 10.11 % 10.07 % a) See Reconciliation of Non-GAAP Financial Measures. The impact of the change in legal reserves primarily affects the Business Bank and the Michigan market. The revised financial results, including segment results, will be reflected in Comerica's Annual Report on Form 10-K. All other revised financial results are included in the financial information that follows. Comerica Bank is a subsidiary of Comerica Incorporated, a financial services company headquartered in Dallas, Texas, and strategically aligned by three major business segments: The Business Bank, The Retail Bank and Wealth Management. Comerica focuses on relationships and helping people and businesses be successful. In addition to Texas, Comerica Bank locations can be found in Arizona, California, Florida and Michigan, with select businesses operating in several other states, as well as in Canada and Mexico. This press release contains both financial measures based on accounting principles generally accepted in the United States (GAAP) and non-GAAP based financial measures, which are used where management believes it to be helpful in understanding Comerica's results of operations or financial position. Where non-GAAP financial measures are used, the comparable GAAP financial measure, as well as a reconciliation to the comparable GAAP financial measure, can be found in this press release. These disclosures should not be viewed as a substitute for operating results determined in accordance with GAAP, nor are they necessarily comparable to non-GAAP performance measures that may be presented by other companies. Forward-looking Statements Any statements in this news release that are not historical facts are forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. Words such as "anticipates," "believes," "contemplates," "feels," "expects," "estimates," "seeks," "strives," "plans," "intends," "outlook," "forecast," "position," "target," "mission," "assume," "achievable," "potential," "strategy," "goal," "aspiration," "opportunity," "initiative," "outcome," "continue," "remain," "maintain," "on course," "trend," "objective," "looks forward" and variations of such words and similar expressions, or future or conditional verbs such as "will," "would," "should," "could," "might," "can," "may" or similar expressions, as they relate to Comerica or its management, are intended to identify forward-looking statements. These forward-looking statements are predicated on the beliefs and assumptions of Comerica's management based on information known to Comerica's management as of the date of this news release and do not purport to speak as of any other date. Forward-looking statements may include descriptions of plans and objectives of Comerica's management for future or past operations, products or services, and forecasts of Comerica's revenue, earnings or other measures of economic performance, including statements of profitability, business segments and subsidiaries, estimates of credit trends and global stability. Such statements reflect the view of Comerica's management as of this date with respect to future events and are subject to risks and uncertainties. Should one or more of these risks materialize or should underlying beliefs or assumptions prove incorrect, Comerica's actual results could differ materially from those discussed. Factors that could cause or contribute to such differences are changes in general economic, political or industry conditions; changes in monetary and fiscal policies, including the interest rate policies of the Federal Reserve Board; volatility and disruptions in global capital and credit markets; changes in Comerica's credit rating; the interdependence of financial service companies; changes in regulation or oversight; unfavorable developments concerning credit quality; any future acquisitions or divestitures; the effects of more stringent capital or liquidity requirements; declines or other changes in the businesses or industries of Comerica's customers; the implementation of Comerica's strategies and business models; Comerica's ability to utilize technology to efficiently and effectively develop, market and deliver new products and services; operational difficulties, failure of technology infrastructure or information security incidents; changes in the financial markets, including fluctuations in interest rates and their impact on deposit pricing; competitive product and pricing pressures among financial institutions within Comerica's markets; changes in customer behavior; management's ability to maintain and expand customer relationships; management's ability to retain key officers and employees; the impact of legal and regulatory proceedings or determinations; the effectiveness of methods of reducing risk exposures; the effects of terrorist activities and other hostilities; the effects of catastrophic events including, but not limited to, hurricanes, tornadoes, earthquakes, fires, droughts and floods; changes in accounting standards and the critical nature of Comerica's accounting policies. Comerica cautions that the foregoing list of factors is not exclusive. For discussion of factors that may cause actual results to differ from expectations, please refer to our filings with the Securities and Exchange Commission. In particular, please refer to "Item 1A. Risk Factors" beginning on page 13 of Comerica's Annual Report on Form 10-K for the year ended December 31, 2012 and on page 68 of the Corporation's Quarterly Report on Form 10-Q for the quarter ended June 30, 2013. Forward-looking statements speak only as of the date they are made. Comerica does not undertake to update forward-looking statements to reflect facts, circumstances, assumptions or events that occur after the date the forward-looking statements are made. For any forward-looking statements made in this news release or in any documents, Comerica claims the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. CONSOLIDATED FINANCIAL HIGHLIGHTS (unaudited) Comerica Incorporated and Subsidiaries Three Months Ended Years Ended December 31, September 30, December 31, December 31, (in millions, except per share data) 2013 2013 2012 2013 2012 PER COMMON SHARE AND COMMON STOCK DATA Diluted net income $ 0.62 $ 0.78 $ 0.68 $ 2.85 $ 2.67 Cash dividends declared 0.17 0.17 0.15 0.68 0.55 Common shareholders' equity (at period end) 39.23 37.94 36.87 Tangible common equity (at period end) (a) 35.65 34.38 33.38 Average diluted shares (in thousands) 186,166 187,104 187,954 186,927 192,473 KEY RATIOS Return on average common shareholders' equity 6.66 % 8.50 % 7.36 % 7.76 % 7.43 % Return on average assets 0.72 0.92 0.81 0.85 0.83 Tier 1 common capital ratio (a) (b) 10.56 10.72 10.14 Tier 1 risk-based capital ratio (b) 10.56 10.72 10.14 Total risk-based capital ratio (b) 13.00 13.42 13.15 Leverage ratio (b) 10.77 10.88 10.57 Tangible common equity ratio (a) 10.07 9.87 9.76 AVERAGE BALANCES Commercial loans $ 27,683 $ 27,759 $ 27,462 $ 27,971 $ 26,224 Real estate construction loans: Commercial Real Estate business line (c) 1,363 1,263 1,033 1,241 1,031 Other business lines (d) 289 259 266 245 359 Total real estate construction loans 1,652 1,522 1,299 1,486 1,390 Commercial mortgage loans: Commercial Real Estate business line (c) 1,608 1,714 1,939 1,738 2,259 Other business lines (d) 7,106 7,229 7,580 7,322 7,583 Total commercial mortgage loans 8,714 8,943 9,519 9,060 9,842 Lease financing 838 839 839 847 864 International loans 1,303 1,252 1,314 1,275 1,272 Residential mortgage loans 1,679 1,642 1,525 1,620 1,505 Consumer loans 2,185 2,137 2,161 2,153 2,209 Total loans 44,054 44,094 44,119 44,412 43,306 Earning assets 59,924 58,892 59,276 59,091 57,483 Total assets 64,605 63,660 64,257 63,936 62,572 Noninterest-bearing deposits 23,532 22,379 22,758 22,379 21,004 Interest-bearing deposits 29,237 29,486 28,524 29,332 28,529 Total deposits 52,769 51,865 51,282 51,711 49,533 Common shareholders' equity 7,010 6,923 7,062 6,968 7,012 NET INTEREST INCOME Net interest income (fully taxable equivalent basis) $ 431 $ 413 $ 425 $ 1,675 $ 1,731 Fully taxable equivalent adjustment 1 1 1 3 3 Net interest margin (fully taxable equivalent basis) 2.86 % 2.79 % 2.87 % 2.84 % 3.03 % CREDIT QUALITY Nonaccrual loans $ 350 $ 437 $ 519 Reduced-rate loans 24 22 22 Total nonperforming loans (e) 374 459 541 Foreclosed property 9 19 54 Total nonperforming assets (e) 383 478 595 Loans past due 90 days or more and still accruing 16 25 23 Gross loan charge-offs 41 39 60 $ 153 $ 245 Loan recoveries 28 20 23 80 75 Net loan charge-offs 13 19 37 73 170 Allowance for loan losses 598 604 629 Allowance for credit losses on lending-related commitments 36 34 32 Total allowance for credit losses 634 638 661 Allowance for loan losses as a percentage of total loans 1.32 % 1.37 % 1.37 % Net loan charge-offs as a percentage of average total loans (f) 0.12 0.18 0.34 0.16 % 0.39 % Nonperforming assets as a percentage of total loans and foreclosed property (e) 0.84 1.08 1.29 Allowance for loan losses as a percentage of total nonperforming loans 160 131 116 (a) See Reconciliation of Non-GAAP Financial Measures. (b) December 31, 2013 ratios are estimated. (c) Primarily loans to real estate developers. (d) Primarily loans secured by owner-occupied real estate. (e) Excludes loans acquired with credit-impairment. (f) Lending-related commitment charge-offs were insignificant in all periods presented. CONSOLIDATED BALANCE SHEETS Comerica Incorporated and Subsidiaries December 31, September 30, December 31, (in millions, except share data) 2013 2013 2012 (unaudited) (unaudited) ASSETS Cash and due from banks $ 1,140 $ 1,384 $ 1,395 Federal funds sold — — 100 Interest-bearing deposits with banks 5,311 5,704 3,039 Other short-term investments 112 106 125 Investment securities available-for-sale 9,307 9,488 10,297 Commercial loans 28,815 27,897 29,513 Real estate construction loans 1,762 1,552 1,240 Commercial mortgage loans 8,787 8,785 9,472 Lease financing 845 829 859 International loans 1,327 1,286 1,293 Residential mortgage loans 1,697 1,650 1,527 Consumer loans 2,237 2,152 2,153 Total loans 45,470 44,151 46,057 Less allowance for loan losses (598) (604) (629) Net loans 44,872 43,547 45,428 Premises and equipment 594 604 622 Accrued income and other assets 3,891 3,837 4,063 Total assets $ 65,227 $ 64,670 $ 65,069 LIABILITIES AND SHAREHOLDERS' EQUITY Noninterest-bearing deposits $ 23,875 $ 23,896 $ 23,279 Money market and interest-bearing checking deposits 22,332 21,697 21,273 Savings deposits 1,673 1,645 1,606 Customer certificates of deposit 5,063 5,180 5,531 Foreign office time deposits 349 491 502 Total interest-bearing deposits 29,417 29,013 28,912 Total deposits 53,292 52,909 52,191 Short-term borrowings 253 226 110 Accrued expenses and other liabilities 986 1,001 1,106 Medium- and long-term debt 3,543 3,565 4,720 Total liabilities 58,074 57,701 58,127 Common stock - $5 par value: Authorized - 325,000,000 shares Issued - 228,164,824 shares 1,141 1,141 1,141 Capital surplus 2,179 2,171 2,162 Accumulated other comprehensive loss (391) (541) (413) Retained earnings 6,321 6,239 5,931 Less cost of common stock in treasury - 45,860,786 shares at 12/31/13, 44,483,659 shares at 9/30/13 and 39,889,610 shares at 12/31/12 (2,097) (2,041) (1,879) Total shareholders' equity 7,153 6,969 6,942 Total liabilities and shareholders' equity $ 65,227 $ 64,670 $ 65,069 CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (unaudited) Comerica Incorporated and Subsidiaries Three Months Ended Years Ended December 31, December 31, (in millions, except per share data) 2013 2012 2013 2012 INTEREST INCOME Interest and fees on loans $ 397 $ 398 $ 1,556 $ 1,617 Interest on investment securities 55 55 214 234 Interest on short-term investments 4 3 14 12 Total interest income 456 456 1,784 1,863 INTEREST EXPENSE Interest on deposits 12 16 55 70 Interest on medium- and long-term debt 14 16 57 65 Total interest expense 26 32 112 135 Net interest income 430 424 1,672 1,728 Provision for credit losses 9 16 46 79 Net interest income after provision for credit losses 421 408 1,626 1,649 NONINTEREST INCOME Service charges on deposit accounts 53 52 214 214 Fiduciary income 43 42 171 158 Commercial lending fees 28 25 99 96 Card fees 19 17 74 65 Letter of credit fees 15 17 64 71 Bank-owned life insurance 9 9 40 39 Foreign exchange income 9 9 36 38 Brokerage fees 4 5 17 19 Net securities gains (losses) — 1 (1) 12 Other noninterest income 24 27 112 106 Total noninterest income 204 204 826 818 NONINTEREST EXPENSES Salaries 197 196 763 778 Employee benefits 61 59 246 240 Total salaries and employee benefits 258 255 1,009 1,018 Net occupancy expense 41 42 160 163 Equipment expense 15 15 60 65 Outside processing fee expense 30 28 119 107 Software expense 24 23 90 90 Litigation-related expense 52 — 52 23 FDIC insurance expense 7 9 33 38 Advertising expense 3 6 21 27 Other real estate expense (1) 3 2 9 Merger and restructuring charges — 2 — 35 Other noninterest expenses 44 44 176 182 Total noninterest expenses 473 427 1,722 1,757 Income before income taxes 152 185 730 710 Provision for income taxes 35 55 189 189 NET INCOME 117 130 541 521 Less income allocated to participating securities 2 2 8 6 Net income attributable to common shares $ 115 $ 128 $ 533 $ 515 Earnings per common share: Basic $ 0.64 $ 0.68 $ 2.92 $ 2.68 Diluted 0.62 0.68 2.85 2.67 Comprehensive income (loss) 267 (30) 563 464 Cash dividends declared on common stock 31 28 126 106 Cash dividends declared per common share 0.17 0.15 0.68 0.55 CONSOLIDATED QUARTERLY STATEMENTS OF COMPREHENSIVE INCOME (unaudited) Comerica Incorporated and Subsidiaries Fourth Third Second First Fourth Fourth Quarter 2013 Compared To: Quarter Quarter Quarter Quarter Quarter Third Quarter 2013 Fourth Quarter 2012 (in millions, except per share data) 2013 2013 2013 2013 2012 Amount Percent Amount Percent INTEREST INCOME Interest and fees on loans $ 397 $ 381 $ 388 $ 390 $ 398 $ 16 4 % $ (1) — % Interest on investment securities 55 54 52 53 55 1 2 — — Interest on short-term investments 4 4 3 3 3 — — 1 27 Total interest income 456 439 443 446 456 17 4 — — INTEREST EXPENSE Interest on deposits 12 13 15 15 16 (1) (8) (4) (24) Interest on medium- and long-term debt 14 14 14 15 16 — — (2) (15) Total interest expense 26 27 29 30 32 (1) (5) (6) (20) Net interest income 430 412 414 416 424 18 4 6 1 Provision for credit losses 9 8 13 16 16 1 22 (7) (42) Net interest income after provision for credit losses 421 404 401 400 408 17 4 13 3 NONINTEREST INCOME Service charges on deposit accounts 53 53 53 55 52 — — 1 1 Fiduciary income 43 41 44 43 42 2 2 1 4 Commercial lending fees 28 28 22 21 25 — — 3 6 Card fees 19 20 18 17 17 (1) (1) 2 15 Letter of credit fees 15 17 16 16 17 (2) (9) (2) (13) Bank-owned life insurance 9 12 10 9 9 (3) (25) — — Foreign exchange income 9 9 9 9 9 — — — — Brokerage fees 4 4 4 5 5 — — (1) (14) Net securities gains (losses) — 1 (2) — 1 (1) (43) (1) (82) Other noninterest income 24 29 34 25 27 (5) (16) (3) (6) Total noninterest income 204 214 208 200 204 (10) (5) — — NONINTEREST EXPENSES Salaries 197 196 182 188 196 1 — 1 1 Employee benefits 61 59 63 63 59 2 3 2 4 Total salaries and employee benefits 258 255 245 251 255 3 1 3 1 Net occupancy expense 41 41 39 39 42 — — (1) (2) Equipment expense 15 15 15 15 15 — — — — Outside processing fee expense 30 31 30 28 28 (1) (7) 2 5 Software expense 24 22 22 22 23 2 11 1 6 Litigation-related expense 52 (4) 1 3 — 56 N/M 52 N/M FDIC insurance expense 7 9 8 9 9 (2) (19) (2) (22) Advertising expense 3 6 6 6 6 (3) (49) (3) (48) Other real estate expense (1) 1 1 1 3 (2) N/M (4) N/M Merger and restructuring charges — — — — 2 — — (2) N/M Other noninterest expenses 44 41 49 42 44 3 7 — — Total noninterest expenses 473 417 416 416 427 56 13 46 11 Income before income taxes 152 201 193 184 185 (49) (25) (33) (18) Provision for income taxes 35 54 50 50 55 (19) (35) (20) (36) NET INCOME 117 147 143 134 130 (30) (21) (13) (10) Less income allocated to participating securities 2 2 2 2 2 — — — — Net income attributable to common shares $ 115 $ 145 $ 141 $ 132 $ 128 $ (30) (21)% $ (13) (10)% Earnings per common share: Basic $ 0.64 $ 0.80 $ 0.77 $ 0.71 $ 0.68 $ (0.16) (20)% $ (0.04) (6)% Diluted 0.62 0.78 0.76 0.70 0.68 (0.16) (21) (0.06) (9) Comprehensive income (loss) 267 144 15 137 (30) 123 87 297 N/M Cash dividends declared on common stock 31 31 32 32 28 — — 3 10 Cash dividends declared per common share 0.17 0.17 0.17 0.17 0.15 — — 0.02 13 N/M - Not Meaningful CONSOLIDATED STATISTICAL DATA (unaudited) Comerica Incorporated and Subsidiaries December 31, September 30, June 30, March 31, December 31, (in millions, except per share data) 2013 2013 2013 2013 2012 Commercial loans: Floor plan $ 3,504 $ 2,869 $ 3,241 $ 2,963 $ 2,939 Other 25,311 25,028 25,945 25,545 26,574 Total commercial loans 28,815 27,897 29,186 28,508 29,513 Real estate construction loans: Commercial Real Estate business line (a) 1,447 1,283 1,223 1,185 1,049 Other business lines (b) 315 269 256 211 191 Total real estate construction loans 1,762 1,552 1,479 1,396 1,240 Commercial mortgage loans: Commercial Real Estate business line (a) 1,678 1,592 1,743 1,812 1,873 Other business lines (b) 7,109 7,193 7,264 7,505 7,599 Total commercial mortgage loans 8,787 8,785 9,007 9,317 9,472 Lease financing 845 829 843 853 859 International loans 1,327 1,286 1,209 1,269 1,293 Residential mortgage loans 1,697 1,650 1,611 1,568 1,527 Consumer loans: Home equity 1,517 1,501 1,474 1,498 1,537 Other consumer 720 651 650 658 616 Total consumer loans 2,237 2,152 2,124 2,156 2,153 Total loans $ 45,470 $ 44,151 $ 45,459 $ 45,067 $ 46,057 Goodwill $ 635 $ 635 $ 635 $ 635 $ 635 Core deposit intangible 16 17 18 19 20 Loan servicing rights 1 1 2 2 2 Tier 1 common capital ratio (c) (d) 10.56 % 10.72 % 10.43 % 10.37 % 10.14 % Tier 1 risk-based capital ratio (c) 10.56 10.72 10.43 10.37 10.14 Total risk-based capital ratio (c) 13.00 13.42 13.29 13.41 13.15 Leverage ratio (c) 10.77 10.88 10.81 10.75 10.57 Tangible common equity ratio (d) 10.07 9.87 10.04 9.86 9.76 Common shareholders' equity per share of common stock $ 39.23 $ 37.94 $ 37.32 $ 37.41 $ 36.87 Tangible common equity per share of common stock (d) 35.65 34.38 33.79 33.90 33.38 Market value per share for the quarter: High 48.69 43.49 40.44 36.99 32.14 Low 38.64 38.56 33.55 30.73 27.72 Close 47.54 39.31 39.83 35.95 30.34 Quarterly ratios: Return on average common shareholders' equity 6.66 % 8.50 % 8.23 % 7.68 % 7.36 % Return on average assets 0.72 0.92 0.90 0.84 0.81 Efficiency ratio (e) 74.55 66.66 66.43 67.58 68.08 Number of banking centers 483 484 484 487 487 Number of employees - full time equivalent 8,948 8,918 8,929 9,001 9,035 (a) Primarily loans to real estate developers. (b) Primarily loans secured by owner-occupied real estate. (c) December 31, 2013 ratios are estimated. (d) See Reconciliation of Non-GAAP Financial Measures. (e) Noninterest expenses as a percentage of the sum of net interest income (FTE) and noninterest income excluding net securities gains. PARENT COMPANY ONLY BALANCE SHEETS (unaudited) Comerica Incorporated December 31, September 30, December 31, (in millions, except share data) 2013 2013 2012 ASSETS Cash and due from subsidiary bank $ 31 $ 36 $ 2 Short-term investments with subsidiary bank 482 480 431 Other short-term investments 96 92 88 Investment in subsidiaries, principally banks 7,176 7,008 7,045 Premises and equipment 4 4 4 Other assets 139 134 150 Total assets $ 7,928 $ 7,754 $ 7,720 LIABILITIES AND SHAREHOLDERS' EQUITY Medium- and long-term debt $ 617 $ 620 $ 629 Other liabilities 158 165 149 Total liabilities 775 785 778 Common stock - $5 par value: Authorized - 325,000,000 shares Issued - 228,164,824 shares 1,141 1,141 1,141 Capital surplus 2,179 2,171 2,162 Accumulated other comprehensive loss (391) (541) (413) Retained earnings 6,321 6,239 5,931 Less cost of common stock in treasury - 45,860,786 shares at 12/31/13, 44,483,659 shares at 9/30/13 and 39,889,610 shares at 12/31/12 (2,097) (2,041) (1,879) Total shareholders' equity 7,153 6,969 6,942 Total liabilities and shareholders' equity $ 7,928 $ 7,754 $ 7,720 CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (unaudited) Comerica Incorporated and Subsidiaries Accumulated Common Stock Other Total Shares Capital Comprehensive Retained Treasury Shareholders' (in millions, except per share data) Outstanding Amount Surplus Loss Earnings Stock Equity BALANCE AT DECEMBER 31, 2011 197.3 $ 1,141 $ 2,170 $ (356) $ 5,546 $ (1,633) $ 6,868 Net income — — — — 521 — 521 Other comprehensive loss, net of tax — — — (57) — — (57) Cash dividends declared on common stock ($0.55 per share) — — — — (106) — (106) Purchase of common stock (10.2) — — — — (308) (308) Net issuance of common stock under employee stock plans 1.2 — (46) — (30) 63 (13) Share-based compensation — — 37 — — — 37 Other — — 1 — — (1) — BALANCE AT DECEMBER 31, 2012 188.3 $ 1,141 $ 2,162 $ (413) $ 5,931 $ (1,879) $ 6,942 Net income — — — — 541 — 541 Other comprehensive income, net of tax — — — 22 — — 22 Cash dividends declared on common stock ($0.68 per share) — — — — (126) — (126) Purchase of common stock (7.5) — — — — (291) (291) Net issuance of common stock under employee stock plans 1.5 — (17) — (25) 72 30 Share-based compensation — — 35 — — — 35 Other — — (1) — — 1 — BALANCE AT DECEMBER 31, 2013 182.3 $ 1,141 $ 2,179 $ (391) $ 6,321 $ (2,097) $ 7,153 RECONCILIATION OF NON-GAAP FINANCIAL MEASURES (unaudited) Comerica Incorporated and Subsidiaries December 31, September 30, June 30, March 31, December 31, (dollar amounts in millions) 2013 2013 2013 2013 2012 Tier 1 Common Capital Ratio: Tier 1 and Tier 1 common capital (a) (b) $ 6,895 $ 6,862 $ 6,800 $ 6,748 $ 6,705 Risk-weighted assets (a) (b) $ 65,317 $ 64,027 $ 65,220 $ 65,099 $ 66,115 Tier 1 and Tier 1 common risk-based capital ratio (b) 10.56 % 10.72 % 10.43 % 10.37 % 10.14 % Basel III Tier 1 Common Capital Ratio: Tier 1 common capital (b) $ 6,895 $ 6,862 $ 6,800 $ 6,748 $ 6,705 Basel III adjustments (c) (6) (4) — (1) (39) Basel III Tier 1 common capital (c) 6,889 6,858 6,800 6,747 6,666 Risk-weighted assets (a) (b) $ 65,317 $ 64,027 $ 65,220 $ 65,099 $ 66,115 Basel III adjustments (c) 1,735 1,726 2,091 1,996 1,854 Basel III risk-weighted assets (c) $ 67,052 $ 65,753 $ 67,311 $ 67,095 $ 67,969 Tier 1 common capital ratio (b) 10.6 % 10.7 % 10.4 % 10.4 % 10.1 % Basel III Tier 1 common capital ratio (c) 10.3 10.4 10.1 10.1 9.8 Tangible Common Equity Ratio: Common shareholders' equity $ 7,153 $ 6,969 $ 6,911 $ 6,988 $ 6,942 Less: Goodwill 635 635 635 635 635 Other intangible assets 17 18 20 21 22 Tangible common equity $ 6,501 $ 6,316 $ 6,256 $ 6,332 $ 6,285 Total assets $ 65,227 $ 64,670 $ 62,947 $ 64,885 $ 65,069 Less: Goodwill 635 635 635 635 635 Other intangible assets 17 18 20 21 22 Tangible assets $ 64,575 $ 64,017 $ 62,292 $ 64,229 $ 64,412 Common equity ratio 10.97 % 10.78 % 10.98 % 10.77 % 10.67 % Tangible common equity ratio 10.07 9.87 10.04 9.86 9.76 Tangible Common Equity per Share of Common Stock: Common shareholders' equity $ 7,153 $ 6,969 $ 6,911 $ 6,988 $ 6,942 Tangible common equity 6,501 6,316 6,256 6,332 6,285 Shares of common stock outstanding (in millions) 182 184 185 187 188 Common shareholders' equity per share of common stock $ 39.23 $ 37.94 $ 37.32 $ 37.41 $ 36.87 Tangible common equity per share of common stock 35.65 34.38 33.79 33.90 33.38 (a) Tier 1 capital and risk-weighted assets as defined by regulation. (b) December 31, 2013 Tier 1 capital and risk-weighted assets are estimated. (c) Estimated ratios based on the standardized approach in the final rule for the U.S. adoption of the Basel III regulatory capital framework and excluding most elements of AOCI. The Tier 1 common capital ratio removes preferred stock and qualifying trust preferred securities from Tier 1 capital as defined by and calculated in conformity with bank regulations. The Basel III Tier 1 common capital ratio further adjusts Tier 1 common capital and risk-weighted assets to account for the final rule approved by U.S. banking regulators in July 2013 for the U.S. adoption of the Basel III regulatory capital framework. The final Basel III capital rules are effective January 1, 2015 for banking organizations subject to the standardized approach. The tangible common equity ratio removes preferred stock and the effect of intangible assets from capital and the effect of intangible assets from total assets. Tangible common equity per share of common stock removes the effect of intangible assets from common shareholders equity per share of common stock. Comerica believes these measurements are meaningful measures of capital adequacy used by investors, regulators, management and others to evaluate the adequacy of common equity and to compare against other companies in the industry.