Comerica Reports First Quarter 2006 Earnings

DETROIT, April 19 /PRNewswire-FirstCall/ -- Comerica Incorporated today reported first quarter 2006 earnings of $194 million, or $1.18 per diluted share, compared to $207 million, or $1.25 per diluted share, for the fourth quarter 2005 and $199 million, or $1.16 per diluted share, for the first quarter 2005. Earnings were reduced by $8 million, or $0.05 per diluted share, in the first quarter 2006 due to the cumulative effect of a change in accounting principle.

(Logo: http://www.newscom.com/cgi-bin/prnh/20010807/CMALOGO ) (dollar amounts in millions, except per share data) 1st Qtr '06 4th Qtr '05 1st Qtr '05 Net interest income $479 $501 $460 Provision for loan losses (27) (20) 1 Noninterest income 215 281 210 Noninterest expenses Provision for credit losses on lending-related commitments 13 25 (3) Noninterest expenses - other 436 462 377 Total noninterest expenses 449 487 374 Provision for income taxes 70 108 96 Income before cumulative effect of change in accounting principle 202 207 199 Cumulative effect of change in accounting principle, net of tax (8) -- -- Net income $194 $207 $199 Diluted EPS before cumulative effect of change in accounting principle $1.23 $1.25 $1.16 Diluted EPS 1.18 1.25 1.16 Return on average common shareholders' equity 15.33% 16.28% 15.73% Net interest margin 3.80 4.00 4.00 First Quarter 2006 Compared to Fourth Quarter 2005

* On an annualized basis, average loans increased 10 percent, led by 20 percent growth in the Western market, 11 percent growth in the Texas market and 3 percent growth in Midwest & Other Markets (growth rates exclude Financial Services Division loans).

* Net interest margin was 3.80 percent in the first quarter 2006, down from 4.00 percent in the fourth quarter 2005, due to lower noninterest-bearing deposits (principally Financial Services Division), competitive loan pricing, and loan growth in excess of deposit growth.

* Credit quality remained solid, with nonperforming assets declining 13 percent to $141 million at March 31, 2006.

* Noninterest income reflected increased revenue from the investment advisory (up 16 percent), brokerage (up 10 percent) and fiduciary (up 4 percent) businesses; fourth quarter 2005 noninterest income had included a $55 million gain on the sale of businesses.

* Noninterest expenses decreased $38 million, largely explained by lower incentives ($26 million), credit-related costs ($17 million), charitable contributions ($10 million) and customer services expense ($6 million), partially offset by an increase in share-based compensation expense ($9 million) and interest expense on tax liabilities ($23 million) related to completion of an examination of the Corporation's federal tax returns for the years 1996 through 2000, among other items.

* The provision for federal income taxes reflected a decrease ($16 million after tax) from the completion of the examination of the Corporation's federal tax returns for the years 1996 through 2000.

* The quarterly cash dividend was increased by 7.3 percent to $0.59 per share. Comerica has increased its annual dividend for 37 consecutive years.

"Our first quarter financial results reflect solid loan growth across all our businesses and geographic markets," said Ralph W. Babb Jr., chairman and chief executive officer. "Credit quality continued to be excellent. Deposits were down, however, because customers are investing in their businesses, and because of slower real estate activity in our Western Market, which affects title and escrow deposits in our Financial Services Division. Our net interest margin declined, due in part to the decline in deposits."

Net Interest Income

Net interest income was $479 million for the first quarter 2006, compared to $501 million for the fourth quarter 2005 and $460 million for the first quarter 2005. The $22 million decrease in net interest income from the fourth quarter 2005 level resulted principally from a combination of lower noninterest-bearing deposits (mostly in the Financial Services Division), lower loan spreads (including lower fees), and the impact of two less days ($11 million) in the first quarter 2006. Average earning assets of $51.0 billion for the first quarter 2006 increased $1.2 billion from the fourth quarter 2005, primarily the result of a $1.2 billion, or three percent, increase in average loans to $46.5 billion for the first quarter 2006. Average deposits of $41.2 billion for the first quarter 2006 decreased $280 million from the fourth quarter 2005. Total average noninterest-bearing deposits declined $1.5 billion, of which $1.2 billion was in the Financial Services Division, resulting from an overall decline in mortgage financing activity and first quarter seasonality.

The net interest margin was 3.80 percent in the first quarter 2006, compared to 4.00 percent for both the fourth quarter 2005 and the first quarter 2005. The first quarter 2006 net interest margin was impacted by the items described above.

Noninterest Income

Noninterest income was $215 million for the first quarter 2006, compared to $281 million for the fourth quarter 2005 and $210 million for the first quarter 2005. Fee income increased in Wealth & Institutional Management in the first quarter 2006, mostly from new business. Commercial lending fees were seasonally down in the first quarter 2006 compared to the fourth quarter 2005. Other categories of noninterest income are highlighted in the table below. The $66 million decrease in noninterest income in the first quarter 2006 compared to the fourth quarter 2005 was largely due to the net gain on sales of businesses of $55 million in the fourth quarter 2005 from the sale of the Corporation's interest in Framlington Group Limited. In addition, the Corporation recorded a $5 million impairment charge on assets held-for-sale in the first quarter 2006. Risk management hedge ineffectiveness relates to LIBOR and prime interest rate swap hedges and foreign exchange balance sheet hedges, and varies from period to period as rates and rate spreads change.

(in millions) 1st Qtr '06 4th Qtr '05 1st Qtr '05 Net gain on sales of businesses $-- $55 $-- Other noninterest income Impairment on assets held-for-sale (5) -- -- Risk management hedge ineffectiveness (2) 6 (5) Noninterest Expenses

Noninterest expenses were $449 million for the first quarter 2006, compared to $487 million for the fourth quarter 2005 and $374 million for the first quarter 2005. Certain categories of noninterest expenses are highlighted in the table below. Share-based compensation increased $9 million, primarily from the adoption of the requisite service period provision of SFAS No. 123(R) for annual share-based grants. Customer services expense varies from period-to-period as a result of changes in the level of noninterest-bearing deposits in the Corporation's Financial Services Division, the earnings credit allowance provided on these deposits, and a competitive environment. The provision for credit losses on lending-related commitments was $13 million, increasing the allowance for credit losses on lending-related commitments for exposure to the automotive industry.

(in millions) 1st Qtr '06 4th Qtr '05 1st Qtr '05 Salaries Salaries - regular $155 $155 $144 Severance 1 3 1 Incentives 29 55 35 Share-based compensation 21 12 9 Total salaries 206 225 189 Employee benefits - pension expense 12 8 8 Customer services 13 19 11 Provision for credit losses on lending-related commitments 13 25 (3) Other noninterest expenses Interest on tax liabilities 26 3 2 Charitable contributions 1 11 -- Other real estate expense 4 9 1 Tax-related Items

During the first quarter 2006, the Internal Revenue Service (IRS) completed the examination of the Corporation's federal tax returns for the years 1996 through 2000. The benefits of certain types of structured lease transactions and a series of loans to foreign borrowers were disallowed by the IRS. The Corporation intends to defend its tax position on these two matters. Interest expense (included in noninterest expenses) and tax reserves were adjusted to reflect an updated assessment of reserves for these two items and final resolution of all other matters for those tax years. The effect of these adjustments decreased federal taxes ($16 million after-tax) and caused the increase in interest on tax liabilities ($23 million, $15 million after- tax). The effective tax rate for the remaining periods in 2006 is expected to be about 31 percent.

Change in Accounting Principle - Transition Adjustment

SFAS No. 123(R), adopted on January 1, 2006, affected the accounting for grants of options and restricted shares in Munder Capital Management (Munder). The amortization expense now must be based on current valuations of Munder, instead of valuations at the original grant date. The $8 million after-tax change in accounting principle on January 1, 2006 cumulatively recorded the new accounting. After a further valuation change at the end of March 2006, certain provisions in Munder's option and restricted share plans were amended to eliminate the need for future adjustments to the amortization expense.

Credit Quality

"Consistently solid credit quality metrics in the first quarter 2006 resulted in a $36 million decline in the allowance for credit losses from the fourth quarter," said Babb. "Nonperforming assets continued to improve from already low levels."

(dollar amounts in millions) 1st Qtr '06 4th Qtr '05 1st Qtr '05 Net loan charge-offs $17 $22 $38 Net lending-related commitment charge-offs 5 6 -- Total net credit-related charge-offs 22 28 38 Net loan charge-offs/Average total loans 0.14% 0.20% 0.36% Provision for loan losses $(27) $(20) $1 Provision for credit losses on lending-related commitments 13 25 (3) Total provision for credit losses (14) 5 (2) Nonperforming assets (NPAs) 141 162 311 NPAs/Total loans, other real estate & nonaccrual debt securities 0.32% 0.37% 0.75% Allowance for loan losses $472 $516 $636 Allowance for credit losses on lending-related commitments* 41 33 18 Total allowance for credit losses 513 549 654 Allowance for loan losses/Total loans 1.06% 1.19% 1.52% Allowance for loan losses/NPAs 334 319 204

*Included in "Accrued expenses and other liabilities" on the consolidated balance sheets

During the first quarter 2006, $20 million of loans greater than $2 million were transferred to nonaccrual status, a decrease of $8 million from the fourth quarter 2005. Nonperforming assets were $141 million at March 31, 2006, a decrease of $21 million from December 31, 2005.

Balance Sheet and Capital Management

Total assets and common shareholders' equity were $56.4 billion and $5.1 billion, respectively, at March 31, 2006, compared to $53.0 billion and $5.1 billion, respectively, at December 31, 2005. There were approximately 162 million shares outstanding at March 31, 2006, compared to approximately 163 million shares outstanding at December 31, 2005. In the first quarter 2006, approximately 1.5 million shares were repurchased in the open market for $86 million. Comerica's first quarter 2006 estimated tier 1 common, tier 1 and total risk-based capital ratios were 7.70 percent, 8.28 percent and 11.74 percent, respectively.

Full Year 2006 Outlook

* Mid-to-high single digit average loan growth excluding Financial Services Division loans

* Average full year net interest margin of about 3.80 to 3.85 percent

* Credit-related net charge-offs of 20 to 25 basis points of average loans and, for the remainder of 2006, a provision for credit losses consistent with credit-related net charge-offs

* Low-single digit noninterest income growth, excluding net gain on sales of businesses

* Low-single digit noninterest expense growth, excluding the provision for credit losses on lending-related commitments (included in above outlook for the provision for credit losses)

* Active capital management Business Segments

Comerica's operations are strategically aligned into three major business segments: the Business Bank, the Retail Bank (formerly known as Small Business & Personal Financial Services), and Wealth & Institutional Management. The Finance Division also is included as a segment. In the first quarter 2006, the Corporation allocated (including prior periods) the portion of the allowance for loan losses based on industry-specific and international risks, previously included in the Other category, to the three major business segments. The financial results below are based on the internal business unit structure of the Corporation and methodologies in effect at March 31, 2006 and are presented on a fully taxable equivalent (FTE) basis.

The following table presents net income (loss) by business segment. (dollar amounts in millions) 1st Qtr '06 4th Qtr '05 1st Qtr '05 Business Bank $144 77% $135 67% $172 71% Retail Bank 36 19 30 14 45 19 Wealth & Institutional Management 8 4 38 19 25 10 188 100% 203 100% 242 100% Finance (3) (4) (30) Other* 9 8 (13) Total $194 $207 $199

* Includes items not directly associated with the three major business segments or the Finance Division

Net income for the Business Bank was $144 million for the first quarter 2006, compared to $135 million for the fourth quarter 2005. Net interest income (FTE) of $314 million in the first quarter 2006 decreased $23 million from the fourth quarter 2005, principally due to a combination of lower demand deposits (mostly in the Financial Services Division), lower loan spreads (including lower fees), and the impact of two less days in the first quarter 2006. Average loans of $36.9 billion in the first quarter 2006 increased $1.0 billion, or 12 percent on an annualized basis, compared to the fourth quarter 2005, primarily due to increases in loans in the National Dealer Services, Middle Market, and Commercial Real Estate businesses. Average deposits of $18.9 billion in the first quarter 2006 decreased $1.7 billion compared to the fourth quarter 2005, primarily due to a decrease in noninterest-bearing deposits in the Financial Services Division. The first quarter 2006 net interest margin of 3.45 percent decreased 27 basis points, primarily due to the items described above. As a result of loan growth and a smaller benefit from improving credit quality trends, the provision for loan losses increased $18 million from a negative $31 million in the fourth quarter 2005 to a negative $13 million in the first quarter 2006. Noninterest income of $63 million in the first quarter 2006 decreased $8 million from the fourth quarter 2005, primarily due to a $5 million impairment charge on assets held-for-sale recorded in the first quarter 2006. First quarter 2006 noninterest expenses of $187 million decreased $39 million from the fourth quarter 2005, primarily due to decreases in the provision for credit losses on lending-related commitments, incentive-related costs, corporate overhead expenses, and customer services expense.

Net income for the Retail Bank was $36 million for the first quarter 2006, compared to $30 million for the fourth quarter 2005. Net interest income (FTE) of $155 million in the first quarter 2006 decreased $2 million, primarily due to the impact of two less days in the first quarter 2006. Average loans of $6.0 billion in the first quarter 2006 increased $125 million, or nine percent on an annualized basis, compared to the fourth quarter 2005. Average deposits of $16.7 billion in the first quarter 2006 were relatively unchanged compared to the fourth quarter 2005. The first quarter 2006 net interest margin increased four basis points to 3.75 percent. Noninterest expenses of $145 million in the first quarter 2006 declined $9 million from the fourth quarter 2005, due in part to a decline in corporate overhead expenses.

Net income for Wealth & Institutional Management was $8 million for the first quarter 2006, compared to $38 million for the fourth quarter 2005. Net interest income (FTE) of $38 million in the first quarter 2006 decreased $1 million compared to the fourth quarter 2005. First quarter 2006 average loans of $3.5 billion increased $60 million, or seven percent on an annualized basis, and average deposits of $2.5 billion declined $77 million compared to the fourth quarter 2005. The first quarter 2006 net interest margin of 4.36 percent decreased eight basis points compared to the fourth quarter 2005 as loans grew and deposits declined. First quarter 2006 noninterest income of $84 million decreased $53 million from the fourth quarter 2005, primarily due to a $55 million net gain on the sale of the Corporation's interest in Framlington Group Limited in the fourth quarter 2005. First quarter 2006 noninterest expenses of $98 million decreased $16 million compared to the fourth quarter 2005, primarily due to decreases in incentive-related costs, other real estate expenses, and corporate overhead expenses. In addition, there was an $8 million, net of tax, transition adjustment related to the adoption of SFAS No. 123(R) recorded in the first quarter 2006 associated with Munder Capital Management.

Geographic Market Segments

Comerica also provides market segment results for four primary geographic markets: Midwest & Other Markets, Western, Texas and Florida. The financial results below are based on methodologies in effect at March 31, 2006 and are presented on a FTE basis.

The following table presents net income (loss) by market segment. (dollar amounts in millions) 1st Qtr '06 4th Qtr '05 1st Qtr '05 Midwest & Other Markets $102 55% $118 58% $141 58% Western 61 32 64 32 77 32 Texas 21 11 19 9 21 9 Florida 4 2 2 1 3 1 188 100% 203 100% 242 100% Finance & Other* 6 4 (43) Total $194 $207 $199

* Includes items not directly associated with the four primary geographic markets

Net income for the Midwest & Other Markets was $102 million in the first quarter 2006, compared to $118 million in the fourth quarter 2005. Net interest income (FTE) of $266 million in the first quarter 2006 decreased $6 million from the fourth quarter 2005, principally due to a combination of lower deposits, lower loan spreads, and the impact of two less days in the first quarter 2006. Average loans of $23.7 billion in the first quarter 2006 increased $203 million, or three percent on an annualized basis, compared to the fourth quarter 2005. Average deposits in the first quarter 2006 of $18.7 billion decreased $167 million compared to the fourth quarter 2005. The first quarter 2006 net interest margin decreased two basis points to 4.53 percent. The provision for loan losses increased $15 million, primarily due to loan growth and a smaller benefit from improving credit quality trends in the first quarter 2006 compared to the fourth quarter 2005. Noninterest income of $147 million in the first quarter 2006 decreased $56 million compared to the fourth quarter 2005, primarily due to a $55 million gain on the sale of the Corporation's interest in Framlington Group Limited in the fourth quarter 2005, and a $5 million impairment on assets held-for-sale in the first quarter 2006. First quarter 2006 noninterest expenses of $263 million decreased $43 million compared to the fourth quarter 2005, primarily due to decreases in the provision for credit losses on lending-related commitments, incentive-related costs, and corporate overhead expenses. In addition, there was an $8 million, net of tax, transition adjustment related to the adoption of SFAS No. 123(R) recorded in the first quarter 2006 associated with Munder Capital Management.

Net income for the Western market was $61 million for the first quarter 2006, compared to $64 million for the fourth quarter 2005. Net interest income (FTE) of $169 million in the first quarter 2006 decreased $19 million from the fourth quarter 2005, primarily due to a $1.5 billion decrease in average Financial Services Division deposits and the impact of two less days in the first quarter 2006. Excluding the Financial Services Division, average loans of $12.8 billion in the first quarter 2006 increased $618 million, or 20 percent on an annualized basis, primarily due to an increase in the National Dealer Services business. Average deposits of $15.4 billion in the first quarter 2006 decreased $1.6 billion compared to the fourth quarter 2005, primarily due to a decrease in noninterest-bearing deposits in the Financial Services Division. The first quarter 2006 net interest margin decreased four basis points to 4.33 percent. Noninterest income of $28 million in the first quarter 2006 decreased $5 million compared to the fourth quarter 2005, and was due to smaller amounts spread across several categories. First quarter noninterest expenses of $109 million decreased $15 million from the fourth quarter 2005, primarily due to decreases in customer services expense, incentive-related costs, and corporate overhead expenses.

Net income for the Texas market was $21 million for the first quarter 2006, compared to $19 million for the fourth quarter 2005. First quarter 2006 net interest income (FTE) of $61 million declined $2 million compared to the fourth quarter 2005. Average loan balances of $5.4 billion in the first quarter 2006 increased $139 million, or 11 percent on an annualized basis, compared to fourth quarter 2005. Average deposit balances of $3.7 billion in the first quarter 2006 decreased $44 million compared to the fourth quarter 2005. The first quarter 2006 net interest margin of 4.55 percent declined 18 basis points, primarily due to lower loan spreads. Noninterest expenses of $50 million for the first quarter 2006 decreased $5 million compared to the fourth quarter 2005, primarily due to lower corporate overhead expenses and incentive-related costs.

Net income for the Florida market was $4 million for the first quarter 2006, compared to $2 million for the fourth quarter 2005. First quarter 2006 net interest income (FTE) of $11 million increased $1 million compared to the fourth quarter 2005. Average loans of $1.6 billion in the first quarter 2006 increased $119 million, or 32 percent on an annualized basis, while average deposits of $307 million in the first quarter 2006 were flat compared to the fourth quarter 2005. The first quarter 2006 net interest margin of 2.80 percent increased 10 basis points.

Conference Call and Webcast

Comerica will host a conference call to review first quarter 2006 financial results at 8 a.m. ET Wednesday, April 19, 2006. Interested parties may access the conference call by calling (706) 679-5261 (event ID No. 6764003). The call and supplemental financial information can also be accessed on the Internet at http://www.comerica.com/ . A replay of the conference call will be available approximately two hours following the call through Wednesday, May 17, 2006. The conference call replay can be accessed by calling (800) 642-1687 or (706) 645-9291 (event ID No. 6764003). A replay of the Webcast can also be accessed via Comerica's "Investor Relations" page at http://www.comerica.com/ .

Comerica Incorporated is a financial services company headquartered in Detroit, strategically aligned into three major business segments: the Business Bank, the Retail Bank, and Wealth & Institutional Management. Comerica focuses on relationships and helping businesses and people to be successful. Comerica Bank locations can be found in Michigan, California, Texas, Florida and Arizona, with select businesses operating in several other states, and Canada and Mexico.

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," "feels," "expects," "estimates," "seeks," "strives," "plans," "intends," "outlook," "forecast," "position," "target," "mission," "assume," "achievable," "potential," "strategy," "goal," "aspiration," "outcome," "continue," "remain," "maintain," "trend," "objective" 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 the pace of an economic recovery and related changes in employment levels, the effects of war and other armed conflicts or acts of terrorism, the effects of natural disasters including, but not limited to, hurricanes, tornadoes, earthquakes and floods, the implementation of Comerica's strategies and business models, management's ability to maintain and expand customer relationships, management's ability to retain key officers and employees, changes in the accounting treatment of any particular item, the impact of regulatory examinations, declines or other changes in the businesses or industries in which Comerica has a concentration of loans, including, but not limited to, automotive production, the anticipated performance of any new banking centers, the entry of new competitors in Comerica's markets, changes in the level of fee income, changes in applicable laws and regulations, including those concerning taxes, banking, securities and insurance, changes in trade, monetary and fiscal policies, including the interest rate policies of the Board of Governors of the Federal Reserve System, fluctuations in inflation or interest rates, changes in general economic conditions and related credit and market conditions and adverse conditions in the stock market. Comerica cautions that the foregoing list of factors is not exclusive. 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 Comerica Incorporated and Subsidiaries Three Months Ended March 31, December 31, March 31, (in millions, except per share data) 2006 2005 2005 PER SHARE AND COMMON STOCK DATA Diluted income before cumulative effect of change in accounting principle $1.23 $1.25 $1.16 Diluted net income 1.18 1.25 1.16 Cash dividends declared 0.59 0.55 0.55 Common shareholders' equity (at period end) 31.39 31.11 29.81 Average diluted shares (in thousands) 164,057 165,738 171,382 KEY RATIOS Return on average common shareholders' equity 15.33% 16.28% 15.73% Return on average assets 1.41 1.53 1.57 Average common shareholders' equity as a percentage of average assets 9.17 9.42 9.99 Tier 1 common capital ratio * 7.70 7.86 8.04 Tier 1 risk-based capital ratio * 8.28 8.46 8.66 Total risk-based capital ratio * 11.74 11.75 12.49 Leverage ratio * 9.90 9.99 10.50 AVERAGE BALANCES Commercial loans $26,620 $25,666 $23,248 Real estate construction loans 3,530 3,416 3,052 Commercial mortgage loans 8,998 8,799 8,315 Residential mortgage loans 1,492 1,465 1,310 Consumer loans 2,660 2,675 2,734 Lease financing 1,298 1,288 1,261 International loans 1,881 1,940 2,235 Total loans 46,479 45,249 42,155 Earning assets 50,977 49,764 46,645 Total assets 55,277 54,130 50,750 Interest-bearing deposits 27,589 26,320 25,662 Total interest-bearing liabilities 35,371 32,683 30,380 Noninterest-bearing deposits 13,609 15,158 14,120 Common shareholders' equity 5,072 5,101 5,072 NET INTEREST INCOME Net interest income (fully taxable equivalent basis) $480 $502 $461 Fully taxable equivalent adjustment 1 1 1 Net interest margin 3.80% 4.00% 4.00% CREDIT QUALITY Nonaccrual loans $122 $138 $269 Other real estate 19 24 42 Total nonperforming assets 141 162 311 Loans past due 90 days or more and still accruing 16 16 23 Gross loan charge-offs 25 38 46 Loan recoveries 8 16 8 Net loan charge-offs 17 22 38 Net lending-related commitment charge-offs 5 6 - Total net credit-related charge-offs 22 28 38 Allowance for loan losses 472 516 636 Allowance for credit losses on lending-related commitments 41 33 18 Total allowance for credit losses 513 549 654 Allowance for loan losses as a percentage of total loans 1.06% 1.19% 1.52% Net loan charge-offs as a percentage of average total loans 0.14 0.20 0.36 Nonperforming assets as a percentage of total loans, other real estate and nonaccrual debt securities 0.32 0.37 0.75 Allowance for loan losses as a percentage of total nonperforming assets 334 319 204 ADDITIONAL DATA Goodwill $213 $213 $247 Other intangibles 1 1 1 Loan servicing rights 17 19 19 Deferred mutual fund distribution costs 6 6 7 * March 31, 2006 ratios are estimated CONSOLIDATED BALANCE SHEETS Comerica Incorporated and Subsidiaries March 31, December 31, March 31, (in millions, except share data) 2006 2005 2005 ASSETS Cash and due from banks $1,685 $1,609 $1,835 Short-term investments 3,027 1,159 3,794 Investment securities available-for-sale 4,251 4,240 3,687 Commercial loans 24,738 23,545 22,780 Real estate construction loans 3,679 3,482 3,035 Commercial mortgage loans 9,146 8,867 8,415 Residential mortgage loans 1,516 1,485 1,335 Consumer loans 2,607 2,697 2,700 Lease financing 1,292 1,295 1,262 International loans 1,761 1,876 2,209 Total loans 44,739 43,247 41,736 Less allowance for loan losses (472) (516) (636) Net loans 44,267 42,731 41,100 Premises and equipment 516 510 463 Customers' liability on acceptances outstanding 60 59 40 Accrued income and other assets 2,635 2,705 2,591 Total assets $56,441 $53,013 $53,510 LIABILITIES AND SHAREHOLDERS' EQUITY Noninterest-bearing deposits $15,772 $15,666 $17,216 Interest-bearing deposits 28,324 26,765 25,490 Total deposits 44,096 42,431 42,706 Short-term borrowings 1,901 302 408 Acceptances outstanding 60 59 40 Accrued expenses and other liabilities 1,228 1,192 1,043 Medium- and long-term debt 4,062 3,961 4,283 Total liabilities 51,347 47,945 48,480 Common stock - $5 par value: Authorized - 325,000,000 shares Issued - 178,735,252 shares at 3/31/06, 12/31/05 and 3/31/05 894 894 894 Capital surplus 466 461 433 Accumulated other comprehensive loss (198) (170) (154) Retained earnings 4,880 4,796 4,427 Less cost of common stock in treasury - 16,461,565 shares at 3/31/06, 15,834,985 shares at 12/31/05 and 9,988,453 shares at 3/31/05 (948) (913) (570) Total shareholders' equity 5,094 5,068 5,030 Total liabilities and shareholders' equity $56,441 $53,013 $53,510 CONSOLIDATED STATEMENTS OF INCOME Comerica Incorporated and Subsidiaries Three Months Ended March 31, (in millions, except per share data) 2006 2005 INTEREST INCOME Interest and fees on loans $723 $566 Interest on investment securities 44 35 Interest on short-term investments 5 6 Total interest income 772 607 INTEREST EXPENSE Interest on deposits 199 108 Interest on short-term borrowings 42 3 Interest on medium- and long-term debt 52 36 Total interest expense 293 147 Net interest income 479 460 Provision for loan losses (27) 1 Net interest income after provision for loan losses 506 459 NONINTEREST INCOME Service charges on deposit accounts 54 54 Fiduciary income 45 46 Commercial lending fees 15 12 Letter of credit fees 16 20 Foreign exchange income 10 9 Brokerage fees 10 8 Investment advisory revenue, net 17 10 Card fees 11 9 Bank-owned life insurance 13 9 Warrant income 1 2 Net securities losses (2) - Other noninterest income 25 31 Total noninterest income 215 210 NONINTEREST EXPENSES Salaries 206 189 Employee benefits 51 47 Total salaries and employee benefits 257 236 Net occupancy expense 31 32 Equipment expense 14 14 Outside processing fee expense 21 17 Software expense 14 12 Customer services 13 11 Litigation and operational losses 1 3 Provision for credit losses on lending-related commitments 13 (3) Other noninterest expenses 85 52 Total noninterest expenses 449 374 Income before income taxes and cumulative effect of change in accounting principle 272 295 Provision for income taxes 70 96 Income before cumulative effect of change in accounting principle 202 199 Cumulative effect of change in accounting principle, net of tax (8) - NET INCOME $194 $199 Basic earnings per common share: Income before cumulative effect of change in accounting principle $1.25 $1.18 Net income 1.20 1.18 Diluted earnings per common share: Income before cumulative effect of change in accounting principle 1.23 1.16 Net income 1.18 1.16 Cash dividends declared on common stock 96 93 Dividends per common share 0.59 0.55