Fitch Details Rating Rationale on CMA's Outlook Revision Following Large Regional Bank Review

  Fitch Details Rating Rationale on CMA's Outlook Revision Following Large
  Regional Bank Review

Business Wire

NEW YORK -- October 8, 2013

Following its large regional bank peer review, Fitch Ratings has affirmed
Comerica, Inc. (CMA)'s long-term Issuer Default Rating (IDR) at 'A'. The
Rating Outlook has been revised to Stable from Negative. Please refer to the
release titled 'Fitch Takes Rating Actions on Its Large Regional Bank Group
Following Peer Review' dated Oct. 08, 2013) for a discussion of rating actions
taken on the large regional banks. A complete list of rating actions on CMA
follows at the end of this release.

KEY RATING DRIVERS - IDR & VR

CMA's rating affirmation and Outlook revision to Stable from Negative is
supported by the company's above-peer tangible capital base, improved
fundamentals such as asset quality performance and strong funding profile
evidenced by 43% of noninterest bearing deposits. Capitalization levels are
considered a rating strength as well as the company's consistent credit
performance through various economic cycles. Further, Fitch considers CMA
capital management to be conservative given the company has historically had a
tangible common equity position higher than its large regional peers.

Similar to the industry, CMA has faced credit quality challenges, but
performance has been relatively good to date, reflecting the predominately
commercial composition of the loan book. Fitch notes the recent credit
downturn was tied to real-estate assets. Nonetheless, the company's large
commercial and industrial (C&I) portfolio, which are typically more
susceptible to economic downturns, has performed very well over time despite
exposure to Michigan's local economy and the auto industry. C&I loans are
roughly 56% of total loans. It is the highest share by a wide margin relative
to large regional peers, which on average, C&I accounted for 23% of total
loans. CMA's credit performance related to its C&I book has also performed
better than peers through numerous credit cycles, despite its larger
concentration. Incorporated in the ratings is the expectation of continued
solid credit performance.

CMA's capital position is one of the highest of the peer group with a TCE
ratio of 10.04% and an estimated Tier 1 common (under Basel III) of 10.10% for
2Q'13. Fitch believes CMA's high level of tangible capital is prudent given
the relatively higher risk earning-asset base.

Offsetting, CMA's financial performance continues to lag regional peers given
the prolonged low rate environment and weak economy. Although CMA's earnings
performance is consistent and has slightly improved year-over-year, earnings
are weaker than most peers. In Fitch's opinion, given the prolonged rate
environment, CMA's future results will be more in-line with current
performance reflecting CMA's asset sensitive balance sheet, which is typically
impacted by changing rates given the sizable mix of C&I loans. Offsetting,
when rates do rise, CMA earnings should benefit more than other peers boosting
its current ROA and NIM.

RATING SENSITIVITIES - IDR & VR

CMA's ratings are at the high-end of its rating potential given that financial
performance is marginally in-line with similarly rated financial institutions.

Although not anticipated, ratings could be negatively affected if CMA were to
reduce capital below peer averages while maintaining similar loan mix within a
relatively short-time frame. Further, a payout ratio (including repurchase
activity) exceeding 100% would also put pressure on current ratings.
Additionally, a change to a more aggressive business strategy would also be
viewed negatively.

Fitch has affirmed the following ratings and revised the Outlook to Stable
from Negative:

Comerica Incorporated

Long-term IDR at 'A';

Short-term IDR at 'F1';

Short-term debt at 'F1';

Senior debt at 'A';

Subordinated debt at 'A-';

Support at '5';

Support floor at 'NF'.

Comerica Bank

Long-term IDR at 'A';

Short-term IDR at 'F1';

Short-term Deposits at 'F1';

Support at '5';

Support floor at 'NF'.

Additional information is available at 'www.fitchratings.com'.

Applicable Criteria and Related Research:

--'Fitch Takes Rating Actions on Its Large Regional Bank Group Following Peer
Review' (Oct. 8, 2013).

--'Global Financial Institutions Rating Criteria' (Aug. 15, 2012);

--'Rating FI Subsidiaries and Holding Companies' (Aug. 10, 2012);

--'Assessing and Rating Bank Subordinated and Hybrid Securities' (Dec. 05,
2012)

--'Bank Support: Likely Rating Paths' (Sept. 11, 2013);

--'The Evolving Dynamics of Support for Banks' (Sept. 11, 2013);

--'Risk Radar' (Sept. 5, 2013);

--'U.S. Banking Quarterly Review: 2Q13 (Record Net Income in No-Growth
Environment)' (August 16, 2013)

--'U.S. Banks: Liquidity and Deposit Funding (Diminishing QE Effectiveness and
its Impact on Systemic Liquidity and Funding)' (Aug. 8, 2013);

--'U.S. Bank Mergers and Acquisitions' -- When Will The Catalysts Kick In?
(July 11, 2013)

--'U.S. Banks: Interest Rate Risks (What Happens When Rates Rise)' (June 18,
2013)

--'U.S. Banks -- Home Equity Reset Risk Hitting the Reset Button in 2014'
(April 29, 2013)

--'U.S. Banks: Rationalizing the Branch Network (Witness the Incredible
Shrinking Branch Network)' (Sept. 17, 2012).

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PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK:
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OF THIS SERVICE FOR RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN
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ON THE FITCH WEBSITE.

Contact:

Fitch Ratings
Primary Analyst
Doriana Gamboa, +1 212-908-0865
Director
Fitch Ratings, Inc.
One State Street Plaza
New York, NY 10004
or
Secondary Analyst
Julie Solar, +1 312-368-5472
Senior Director
or
Committee Chairperson
Christopher Wolfe, +1 212-908-0771
Managing Director
or
Media Relations:
Brian Bertsch, +1 212-908-0549
brian.bertsch@fitchratings.com
 
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