Comerica Inc. said Wednesday that it will take a $4.7 million charge in the fourth quarter to cover costs of the early redemption of $500 million of trust-preferred securities.
The $56 billion-asset Dallas company said regulatory reform prompted it to fully redeem the 6.576% securities at par, plus accrued and unpaid distributions to the redemption date. The law says that trust-preferred securities can no longer be counted as Tier 1 capital but grandfathers in existing trust-preferreds at companies with less than $15 billion of assets.
"The recently signed Dodd-Frank Act changes the treatment of this type of security, so it is no longer an effective form of equity capital for us," said Ralph W. Babb Jr., chairman and chief executive officer, in a press release. "Elimination of these higher-cost securities will result in significant interest savings for us."