Comerica 2013 Annual Report Download - page 47

F-14
The Business Bank's net income of $785 million in 2013 decreased $41 million, compared to $826 million in 2012. Net
interest income (FTE) of $1.5 billion decreased $14 million in 2013, primarily due to lower loan yields and a $7 million decrease
in accretion of the purchase discount on the acquired loan portfolio, partially offset by the benefit provided by a $1.0 billion
increase in average loans, a decrease in net FTP charges and lower deposit rates. Average deposits increased $1.3 billion in 2013,
compared to 2012. The provision for credit losses increased $20 million, to $54 million in 2013, compared to the prior year,
primarily due to 2013 enhancements to the approach utilized to determine the allowance for loan losses, partially offset by
improvements in credit quality. Net credit-related charge-offs of $43 million decreased $64 million in 2013, compared to 2012,
primarily reflecting decreases in Commercial Real Estate and general Middle Market. Noninterest income of $326 million in 2013
increased $7 million from the prior year, primarily due to increases in warrant income ($5 million), card fees ($4 million) and
service charges on deposit accounts ($4 million), partially offset by a decrease in letter of credit fees ($6 million). Noninterest
expenses of $643 million in 2013 increased $41 million compared to the prior year, primarily due to an increase in litigation-
related expenses ($51 million), primarily related to an unfavorable jury verdict on a lender liability case, a loss on other foreclosed
property in 2013 ($5 million), and the impact of large gains recognized on the sale of assets in 2012 ($5 million), partially offset
by small decreases in several other noninterest expense categories.
Net income for the Retail Bank of $42 million in 2013 decreased $8 million, compared to net income of $50 million in
2012. Net interest income (FTE) of $610 million decreased $37 million in 2013, primarily due to a decrease in net FTP credits, a
$15 million decrease in accretion of the purchase discount on the acquired loan portfolio and lower loan yields, partially offset by
lower deposit rates. Average loans decreased $19 million and average deposits increased $624 million. The provision for credit
losses of $13 million in 2013 decreased $11 million from the prior year, primarily reflecting decreases in Small Business and
Retail Banking. Net credit-related charge-offs of $22 million in 2013 decreased $18 million compared to 2012, primarily reflecting
decreases in Small Business and Retail Banking in the three primary geographic markets. Noninterest income of $175 million in
2013 increased $2 million compared to 2012, primarily the result of an increase in card fees ($5 million), primarily due to the
change in the method of allocating commercial card income as discussed above, partially offset by a decrease in service charges
on deposit accounts ($4 million). Noninterest expenses of $708 million in 2013 decreased $15 million from the prior year, primarily
due to decreases in FDIC deposit insurance expense ($4 million), in part due to the change in allocation method as discussed
above, corporate overhead expense ($3 million) and smaller decreases in several other noninterest expense categories.
Wealth Management's net income of $87 million in 2013 increased $20 million, compared to $67 million in 2012. Net
interest income (FTE) of $184 million in 2013 decreased $3 million compared to 2012, primarily due to lower loan yields, partially
offset by the benefit provided by a $122 million increase in average loans. Average deposits increased $95 million. The provision
for credit losses was a benefit of $18 million in 2013, a decrease of $37 million compared to 2012, primarily due to improvements
in credit quality. Net credit-related charge-offs were $8 million in 2013, compared to $23 million in 2012. Noninterest income of
$252 million decreased $6 million from the prior year, primarily reflecting decreases in net securities gains from the redemption
of auction-rate securities ($13 million) and securities trading income ($5 million), partially offset by an increase in fiduciary
income ($13 million). Noninterest expenses of $319 million in 2013 decreased $1 million from the prior year.
The net loss in the Finance segment was $376 million in 2013, compared to a net loss of $382 million in 2012. Net
interest expense (FTE) of $653 million in 2013 decreased $5 million, compared to 2012, primarily reflecting a decrease in net
FTP expense as a result of lower net rates paid to the business segments under the Corporation's internal FTP methodology as
described above, partially offset by an $18 million decrease in interest earned on mortgage-backed investment securities. The
Finance Division pays the three major business segments for the long-term value of deposits based on their implied lives. The
three major business segments pay the Finance Division for funding based on the pricing and term characteristics of their loans.
Noninterest income of $61 million in 2013 increased $1 million compared to 2012. Noninterest expenses of $10 million in 2013
decreased $2 million from the prior year.
Net income in the Other category of $3 million in 2013 increased $43 million, compared to a net loss of $40 million in
2012. The increase in net income primarily reflected a $58 million decrease in noninterest expenses, largely due to decreases in
merger and restructuring charges ($35 million) and litigation-related expenses ($16 million).