2023Comerica Incorporated Annual Report® 2023 Company Highlights
Exceeded three-year goal
(2021-2023) to lend
$5
BILLION
to small businesses, helping
provide funds to more than 15,000
small businesses
43%
of Comerica’s
U.S. employees are
racial/ethnic minorities
53%
of Comerica’s
managers are female
COMERICA CARES PROGRAM NAMED AMERICAN BANKERS ASSOCIATION FOUNDATION COMMUNITY
COMMITMENT AWARDS WINNER FOR VOLUNTEERISM
Opened Business & Innovation Hub
in Frisco, Texas
Launched opening of Comerica
BusinessHQ to serve small businesses
in the Southern sector of Dallas
MORE THAN
105,000
individuals from low- to moderate-income
communities reached by Comerica $ense
financial education programs
$2.9
BILLION
in green loans and commitments
as of 12/31/23
1
Named to Newsweek’s list
of America’s Most Responsible
Companies for fifth
consecutive year
Growth of small
business bankers has
reached
80%
of banking centers
across all markets
Small business bootcamps
supported more than
8,000
entrepreneurs and small
business owners
O
V
E
R
79,000
H
O
U
R
S
of volunteer time equating to more than $2.5
million donated to nonprofits by Comerica
colleagues
Partnered with Ameriprise
Financial for Wealth
Management Investment
Platform
$
L
A
I
C
N
A
N
I
F
RECORD LOANS
(in billions; average)
RECORD NET INTEREST INCOME
(in billions)
2
NONINTEREST INCOME
(in billions)
$53.9
$50.5
$2.51
$2.47
$1.07
$1.08
2022
2023
2022
2023
2022
2023
COMERICA'S CORE VALUES
ONE COMERICA
THE CUSTOMER
COMES FIRST
THE BIGGER
POSSIBLE
A FORCE FOR GOOD
TRUST. ACT. OWN.
1
We believe that growth is
achieved when our colleagues
act with common purpose in
support of shared goals.
We put our customers at the center
of every conversation and make
their satisfaction our highest priority.
We encourage a culture of bold and
relentless curiosity, where any idea
has a chance to be heard.
We value empathy and integrity as
we work to create a more diverse,
inclusive and sustainable workplace,
and world.
Everyone is empowered to do what’s
right, speak up, and be heard, while
being accountable for their actions
and commitments.
1 Loans and commitments are considered green if the following criteria are met: More than 50% of the company's revenues attributed to environmentally beneficial businesses and/or more than 50%
of loan proceeds are dedicated to green purposes or projects. There are 14 green loan categories disclosed in the TCFD and Corporate Responsibility report found at www.comerica.com.
TO OUR SHAREHOLDERS
To my fellow shareholders,
For nearly 175 years, Comerica has proudly raised expectations of what a bank can
be for our customers, businesses, entrepreneurs and communities we serve. Through
disruptive economic cycles, political discord, world wars, and a global pandemic, we have
maintained our stability and strength by focusing on the basics: our relationship-focused
business model and industry-leading expertise in the select products and services we
offer. We are deeply dedicated to supporting our customers’ financial goals and honored
to be their bank of choice.
To guide our success in 2023, we remained committed to our colleagues, customers,
communities and performance. Investing and advancing in each of these areas means we
are delivering for all our stakeholders.
Response to Industry Disruption
Following a strong 2022, the collapse of three regional banks in early March sent
shockwaves throughout the banking industry, leaving customers concerned about the
safety of their deposits. Following the volatility – and the news and social media buzz
Curtis C. Farmer
Chairman, President and Chief Executive Officer
surrounding it – the banking industry found itself in a challenging environment. But, this also presented an opportunity for Comerica to
recalibrate while leaning heavily on our strength as a relationship bank.
During this time, our colleagues rose to the challenge, working diligently with customers, investors and regulators. Leaders and
frontline colleagues met with customers to listen to their concerns and ease their minds. Behind the scenes, we kept priority projects
on track and reinforced key messaging.
While the disruption proved challenging, we once again tested and validated the soundness of our business model. As a leading
bank for business with strong retail and wealth management capabilities, we play a unique role in supporting our customers as a
trusted long-term banking partner. Ultimately, our diversified position across businesses, geographies and products, coupled with
collaboration across the organization led to strong outcomes – including the retention of customer relationships and a strengthened
deposit base – as the regional banking section begins to normalize.
Delivering Solid Financial Performance
Although the economic environment remains uncertain, we observed a cautiously more optimistic trend in customer sentiment at
year-end as we believe many expect less rate pressure in 2024. We continue our commitment to support our customers and remain
confident we will grow alongside them as the economy strengthens.
With 7% growth, we produced our highest level of average annual loans despite deliberate optimization efforts in the second half of
the year. We focused on deposits and were pleased to see stabilization following industry events and ongoing quantitative tightening.
We delivered record net interest income aided by higher rates and loan balances. Our credit quality remained strong, with net charge-
offs well below historical averages. In recognition of the new industry funding paradigm, actions to recalibrate our expense base are
designed to benefit our future as we create capacity for investment and enhance returns.
Despite the industry volatility in 2023, our core business remains unchanged. Our highly regarded approach to credit continued to
perform well. Tailored products are designed to meet the needs of our customers - enhancing revenue and retention. Our deposit
profile has long been a strength, and we expect our investments in products and small business will make this core funding source
even more compelling. We produced a strong year in the face of adversity.
Small Business is Big Business
Comerica has excelled at supporting the needs of businesses and, in 2023, we further prioritized delivering impactful banking
solutions to small businesses. These institutions serve as the economic engines of our local communities, and that is why we
established a three-year, $5 billion small business lending commitment, first announced in May 2021. We proudly exceeded 100% of
that commitment in 2023, delivering meaningful funding to more than 15,000 small businesses. Surpassing our commitment is the
result of a collaborative effort led by our Small Business Banking, Community Development and Business Banking teams, providing
customers and communities with much-needed access to capital.
We launched unique offerings in our Dallas/Fort Worth market that deliver critical resources to entrepreneurs and business owners,
enhancing our services for small businesses. To help
them grow, we introduced:
• Comerica SmallBizCo-op™: This program
provides a set of free and unique service
offerings designed to help small businesses
grow and thrive. Small business clients can
leverage the opportunity to engage clients
or reward colleagues through our sports
ticket inventory, capitalize on free advertising
support from Comerica’s inventory and
discounts on office supplies and technology.
• Comerica CoWorkSpaces™: We offer
complimentary office and meeting space in
select banking centers exclusively for small
business customers. Through a $3 million
investment, we have transformed nearly
10,000 square feet into unique resources for
small business customers to help meet their
growing needs.
In 2023, Comerica introduced Comerica CoWorkSpaces™ as part of its latest
services tailored for small business customers. These spaces provide Comerica
small business customers with free access to office and meeting space.
• SizeUp by Comerica: We help small businesses leverage our data, tapping into competitive market research and insights to
support informed business decisions. From creating benchmarks to understanding consumer spending, we are bringing big
business resources to our small business customers.
The Small Business Banking team leads our support for small business clients and remains dedicated to meeting unmet customer
needs, serving our communities and driving growth. This team supports 80% of banking centers across all markets and reaches
92% of locations serving low- to moderate-income
communities.
One of our newest small business resources,
Comerica BusinessHQ, is empowering underserved
communities by providing access to capital and other
meaningful resources. Leveraging idle real estate,
we opened the doors to the state-of-the-art facility
that provides high-need, high-opportunity small
businesses in the Southern sector of Dallas with the
necessary tools to develop, grow and endure. The
space offers small business owners and entrepreneurs
flexible, temporary workspaces and turnkey access
to high-speed Wi-Fi; information security and privacy;
printing; scanning; large scale projection video
conferencing rooms; as well as space furnished
with equipment for small-scale content creation.
We are extremely proud of this pilot project which
has redefined how a bank can serve the needs of its
community.
Comerica executives join representatives from the Dallas Black Chamber
of Commerce during the official ribbon cutting ceremony of Comerica
BusinessHQ. The new state-of-the-art facility serves as a collaborative space
providing integral services to small businesses in the Southern sector of Dallas.
Investing in Wealth Management
We have a client-centric, high-caliber, planning-based approach to serving our Wealth Management clients. In 2023, we deepened
our commitment by adding new teams and an enhanced array of products. We increased our Wealth Management presence with
the addition of a new private wealth management team in Southern California, consisting of 11 experienced professionals, with
approximately $3 billion in assets.
We also completed our new investment program: Comerica Financial Advisors powered by Ameriprise Financial. Through this strategic
relationship, we will grow our business by providing financial advisors and clients with an enhanced suite of services, including
technological enhancements, varied product offerings, around-the-clock access to support services, and much more. We will also
enhance our risk management culture and engage new and experienced talent, creating greater coverage levels for banking centers to
better serve our retail partners.
Leading the Way
Having the right leadership in place is critical to our success, especially as you look at events like the recent industry disruption and
the ongoing evolution of the regulatory landscape. In 2023, we attracted veteran banking leaders in the areas of Compliance and Risk
Management to complement our tenured, diverse executive leadership team and meaningfully enhance and advance foundational
capabilities across the bank.
We also added select strategic revenue leaders in Middle Market & Business Banking, National & Specialty Businesses and Payments to
our Management Executive Committee further amplifying the voice of the customer in our strategic decision making.
Our Board of Directors also experienced growth in 2023 with the addition of four diverse, experienced executive leaders from various
industries. Our Board continues its crucial role in our efforts to deliver growth for our shareholders, colleagues and communities.
Growing Presence in Newer Markets
We continued investments to selectively broaden Comerica’s presence beyond the primary markets of Michigan, Texas, California,
Arizona and Florida, bringing our core businesses to rapidly growing geographic markets aligned with our strategy. We continued to move
forward with our expansion efforts in the Southeast and Mountain West Markets.
We established an office in Winston-Salem, North Carolina, to accompany our market headquarters location in Raleigh and our office
in Charlotte. A catalyst to our success in the Southeast has been our established Florida market, allowing us to attract experienced
Commercial Banking, Wealth and Private Banking talent to engage new clients in the region.
In the Mountain West, we established the role of Colorado Market President to go along with a team of banking professionals to
develop commercial lending opportunities and engage with area business leaders. Based out of Denver, the team built and added new
relationships, establishing a strong pipeline.
Ongoing Technology and Product Modernization
We live in an increasingly complex digital ecosystem, and exceeding customer expectations related to technology and products remains
paramount. We continued modernizing our core infrastructure, with more than 75% of business applications now running on Cloud
platforms, strengthening cybersecurity and resilience to threats. We also upgraded platforms for customer-facing technologies such as
Treasury Management resources and the Comerica Mobile App.
We continue to nimbly deliver products and ongoing enhancements to customers. In 2023, we delivered intuitive, convenient
experiences for small business customers through the successful launch of Convenient Capital - a fully digital, end-to-end lending
platform – and Zelle for Small Business, which enables faster payments for small businesses.
In addition, we launched Comerica Maximize, the latest solution in our growing suite of value-add offerings to help business customers of
all sizes save time and maximize their cash. Comerica Maximize combines an interest-bearing checking account with cash management
solutions where customers earn interest income while growing and protecting their businesses with basic treasury services.
Optimizing our Banking Center Network
In December 2023, we completed the rollout of Retail Reimagined to banking centers across all our markets. Through Retail
Reimagined, we will compete, thrive and lead in a new era of hyper-competitive banking and elevated consumer/business expectations.
We clarified colleague roles, improved processes, invested in marketing and technology, and built capabilities to deepen and grow our
customer base. The results include better sales productivity.
We continue to update banking center networks to ensure we have the right number of banking centers in the communities we serve,
based on population and traffic patterns. We modernized several physical banking center locations as part of an integrated channel
approach, completing 23 banking center renovations with three relocations in San Antonio, Texas; Arlington, Texas; and greater Los
Angeles. The updated locations have a clean, modern layout and align with our updated branding as well as enhanced operational
efficiencies, amenities and technology.
From the Inside Out
Comerica’s strong workforce and unique company culture are central to our success, and we are committed to providing resources,
spaces and opportunities that attract and retain top talent. To maintain our engaged and inclusive culture, we offer numerous
professional development programs and opportunities, a competitive and cost-effective benefits package, and a hybrid work
environment. All this empowers colleagues to work effectively and productively to execute our objectives while enhancing our culture.
Our comprehensive approach to supporting colleagues and strong culture earned us “Top Workplaces 2023” awards from The Dallas
(cid:211)–fi†•†„ (cid:210)»'› ¿†… (cid:220)»‹fi–•‹ (cid:218)fi»» —fi»››(cid:242)
(cid:201)» ¿·›– ‰–†‹•†«» ‹– ‹fi¿†›”–fi‡ –«fi '–fi(cid:181)(cid:176)·¿‰»› •†‹–
…»›‹•†¿‹•–†› –” ‰‚–•‰» ”–fi ‹–(cid:176) ‹¿·»†‹(cid:242) (cid:209)«fi †»' (cid:218)fi•›‰–(cid:244)
Ì»¨¿ô ´±½¿¬·±² ̸» Þ«·²» ú ײ²±ª¿¬·±² Ø«¾
–(cid:176)»†»… •† (cid:220)»‰»‡(cid:190)»fi (cid:238)(cid:240)(cid:238)(cid:237)(cid:244) ¿†… –«fi †»' (cid:217)fi»¿‹ (cid:212)¿(cid:181)»›
(cid:221)¿‡(cid:176)«› •† (cid:218)¿fi‡•†„‹–† (cid:216)•··›(cid:244) (cid:211)•‰‚•„¿†(cid:244) '•·· –(cid:176)»†
•† ˝(cid:176)fi•†„ (cid:238)(cid:240)(cid:238)(cid:236)(cid:242) (cid:222)–‹‚ ·–‰¿‹•–†› ”»¿‹«fi» »¤(cid:176)¿†…»…
‹»‰‚†–·–„§ ‰¿(cid:176)¿(cid:190)•·•‹•»›(cid:244) •‡(cid:176)fi–“»… ¿‡»†•‹•»› ¿†…
»†»fi„•ƒ•†„ ¿†… ‰–··¿(cid:190)–fi¿‹•“» ›(cid:176)¿‰»› ‹– ‡¿¤•‡•ƒ» ‹‚»•fi
…¿§(cid:244) '‚•·» •··«›‹fi¿‹•†„ ¿† •†“»›‹‡»†‹ •† –«fi ·–†„(cid:243)‹»fi‡
“•›•–† –” •††–“¿‹•–† ¿†… „fi–'‹‚(cid:242)
˝»fi“•†„ ¿› ¿ (cid:218)–fi‰» ”–fi (cid:217)––…
(cid:215)†“»›‹•†„ •† ‹‚» ›‹fi»†„‹‚ –” –«fi ‰–‡‡«†•‹•»› fi»‡¿•†›
¿ ”«†…¿‡»†‹¿· (cid:176)¿fi‹ –” '‚¿‹ ‡–“»› –«fi (cid:190)¿†(cid:181) ”–fi'¿fi…(cid:242)
Ѳ» ±º ±«® ½±®» ª¿´«» ß Ú±®½» º±® Ù±±¼ ®»·²º±®½»
‰–··»¿„«»› ‡¿(cid:181)» ‹– „– (cid:190)»§–†… –«fi ‹fi¿…•‹•–†¿· (cid:190)¿†(cid:181)•†„
›»fi“•‰»›(cid:242) (cid:201)» ›»»(cid:181) ‹– ‰fi»¿‹» (cid:176)–›•‹•“» ‰‚¿†„» ‹– ‚»·(cid:176)
›‹fi»†„‹‚»† –«fi ‰–‡‡«†•‹•»›(cid:242)
‹»¿‡›(cid:244) •†‰·«…•†„ ‹»‰‚†–·–„§ ¿†… (cid:176)fi–…«‰‹ ‡¿†¿„»‡»†‹ ‹– ”fi–†‹(cid:243)·•†» (cid:190)«›•†»››
«†•‹›(cid:242) —‚–‹– ‰fi»…•‹(cid:230) (cid:211)•(cid:181)–† (cid:216)¿¿(cid:181)›‡¿†æ(cid:216)¿¿(cid:181)›‡¿† (cid:211)»…•¿
(cid:209)«fi ‰–··»¿„«»› fi»›(cid:176)–†…»… ‹– ‹‚» ‰¿·· ‹– ›»fi“» •† (cid:238)(cid:240)(cid:238)(cid:237)(cid:242) (cid:219)†„¿„•†„ '•‹‚ ‰–‡‡«†•‹§ (cid:176)¿fi‹†»fi›(cid:244) “–·«†‹»»fi•†„ ‹•‡» ‹– ›‚¿fi» •‡(cid:176)–fi‹¿†‹
‰–‡‡«†•‹•»› (cid:190)§ ¿‡¿››•†„ ‡–fi» ‹‚¿† Ø(cid:231)(cid:244)(cid:240)(cid:240)(cid:240) “–·«†‹»»fi ‚–«fi›(cid:244) ‹fi¿†›·¿‹•†„ ‹– ‡–fi» ‹‚¿† (cid:252)(cid:238)(cid:242)º ‡•··•–† '–fi‹‚ –” ‹•‡»(cid:242)
(cid:219)‡(cid:176)–'»fi•†„ ‹‚fi–«„‚ »…«‰¿‹•–† •† ·–'(cid:243) ‹– ‡–…»fi¿‹»(cid:243)•†‰–‡» ‰–‡‡«†•‹•»› fi»‡¿•†»… ¿ (cid:181)»§ ‡•››•–†(cid:244) ¿†… ‹‚» •‡(cid:176)–fi‹¿†‹ ·»››–†›
•†…•“•…«¿·› ”fi–‡ ·–'(cid:243) ‹– ‡–…»fi¿‹»(cid:243)•†‰–‡» ‰–‡‡«†•‹•»›(cid:242) (cid:215)† ¿……•‹•–†(cid:244) –«fi ‰–··»¿„«»› ›»fi“»… ¿› fi»›–«fi‰»› ”–fi ›‡¿·· (cid:190)«›•†»›› –'†»fi› ¿†…
‡–fi» ‹‚¿† Ł(cid:244)(cid:240)(cid:240)(cid:240) »†‹fi»(cid:176)fi»†»«fi› ¿†… ›‡¿·· (cid:190)«›•†»›› –'†»fi› –† ¿ (cid:176)¿‹‚ ‹– ›«‰‰»››(cid:242)
(cid:209)«fi ‰–‡‡«†•‹§ ‰–‡‡•‹‡»†‹› ¿fi» ‡¿‹‰‚»… (cid:190)§ –«fi
¿(cid:190)–«‹ ‹‚» »†“•fi–†‡»†‹ ¿†… ‰–†‹•†«» ‹– …»·•“»fi –†
‰–‡‡•‹‡»†‹› ‹– ‚»·(cid:176) –«fi ‰–‡‡«†•‹•»› ¿†… (cid:176)·¿†»‹
•† „fi»»† ·–¿†› ¿†… ‰–‡‡•‹‡»†‹›(cid:244) fi»¿‰‚•†„ (cid:252)(cid:238)(cid:242)(cid:231)
¾·´´·±² ¿ êòèû ·²½®»¿» º®±³ îðîîò Þ§ ©±®µ·²¹ ©·¬¸
•†…«›‹fi•»› ¿†… (cid:176)fi–¶»‰‹›(cid:244) '» ‰¿† ¿››•›‹ •† ¿…“¿†‰•†„
(cid:181)»§ •››«»› ›«‰‚ ¿› fi»‰§‰·•†„(cid:244) ›«›‹¿•†¿(cid:190)·» »†»fi„§(cid:244)
„fi»»† (cid:190)«•·…•†„ ¿†… (cid:176)–··«‹•–† fi»…«‰‹•–†(cid:242)
«†…»fi›‹¿†… ¿†… “¿·«» ‹‚» •‡(cid:176)–fi‹¿†‰» –” ‰·»¿fi ¿†…
«†…»fi›‹¿†…¿(cid:190)·» (cid:176)«(cid:190)·•‰ …•›‰·–›«fi»(cid:242) (cid:219)†›«fi•†„ –«fi
‹fi¿†›(cid:176)¿fi»†‰§ –” ‹‚»›» •‡(cid:176)–fi‹¿†‹ ‡»¿›«fi»›(cid:244) ‹‚»
(cid:221)–fi(cid:176)–fi¿‹» ˛»›(cid:176)–†›•(cid:190)•·•‹§ …•“•›•–† •››«»… •‹› (cid:239)º‹‚
¿††«¿· (cid:221)–fi(cid:176)–fi¿‹» ˛»›(cid:176)–†›•(cid:190)•·•‹§ ˛»(cid:176)–fi‹ ¿†…(cid:244) ”–fi ‹‚»
›»‰–†… §»¿fi(cid:244) (cid:176)«(cid:190)·•›‚»… ‹‚» (cid:204)¿›(cid:181) (cid:218)–fi‰» –† (cid:221)·•‡¿‹»(cid:243)
˛»·¿‹»… (cid:218)•†¿†‰•¿· (cid:220)•›‰·–›«fi»› ł(cid:204)(cid:221)(cid:218)(cid:220)(cid:247) ˛»(cid:176)–fi‹ ‹‚¿‹
»‡•››•–†›(cid:242)
(cid:211)»‹fi– (cid:220)»‹fi–•‹ —fi–‡ (cid:220)fi»›› (cid:220)fi•“» ›«(cid:176)(cid:176)–fi‹•†„ (cid:214)¿‰(cid:181)»‹› ”–fi (cid:214)–(cid:190)›(cid:242) (cid:215)† (cid:238)(cid:240)(cid:238)(cid:237)(cid:244) (cid:221)–‡»fi•‰¿
“–·«†‹»»fi› ›»fi“»… ‹‚»•fi ·–‰¿· ‰–‡‡«†•‹•»› (cid:190)§ ¿‡¿››•†„ ‡–fi» ‹‚¿† Ø(cid:231)(cid:244)(cid:240)(cid:240)(cid:240)
“–·«†‹»»fi ‚–«fi›(cid:242)
(cid:221)–‡»fi•‰¿ ‰–··»¿„«»› ›‚¿fi» •† –«fi ‰–‡‡•‹‡»†‹ ”–fi ¿ ›«›‹¿•†¿(cid:190)·» ”«‹«fi» ‹‚fi–«„‚ ‹‚»•fi '–fi(cid:181) '•‹‚ ‹‚» (cid:211)¿›‹»fi –” ˝«›‹¿•†¿(cid:190)•·•‹§ (cid:223)'¿fi»†»››
(cid:176)fi–„fi¿‡(cid:242) (cid:220)»›•„†»… ‹– (cid:176)fi–“•…» ‰–··»¿„«»› '•‹‚ ¿† –(cid:176)(cid:176)–fi‹«†•‹§ ‹– ·»¿fi† ¿†… »†„¿„» •† •‡(cid:176)–fi‹¿†‹ ›«›‹¿•†¿(cid:190)•·•‹§ ‹–(cid:176)•‰›(cid:244) ‹‚» (cid:176)fi–„fi¿‡ ‚¿›
motivated our colleagues with a participation increase of 39% in 2023.
National recognitions by Newsweek naming Comerica to its list of America’s Most Responsible Companies for the fifth consecutive
year and America’s Greenest Companies reflect the importance placed on our corporate responsibility efforts positively impacting our
communities and environment.
At the heart of our success as a bank and recruiting and retaining talent remains our commitment to building a culture that promotes a
diverse, equitable and inclusive workforce. By understanding cultural differences, we are better equipped to serve our customers and
communities and ensure they thrive for years to come. We have implemented proactive measures to enhance diversity in our workforce,
with a focus on creating an inclusive environement that celebrates the unique talents and perspectives of our colleagues.
Like our sustainability program, our efforts to foster a diverse and inclusive workforce have garnered national recognition. Honors
in 2023 include DiversityInc’s Top Noteworthy Companies, Newsweek’s listing of America’s Greatest Workplaces and U.S News &
World Report’s Best Banks Companies to Work For. These recognitions reflect our core value of serving as One Comerica – driven by a
common purpose to support shared goals.
Honoring our Past While Shaping the Future
After a distinctive 2023, we look forward to all that’s ahead in 2024. To guide our success, we identified clear goals aimed at driving solid
financial results, strengthening our risk foundation, positioning our business sustainably, and furthering our vision of innovation. We are
also proud to celebrate Comerica’s 175th anniversary! This is a significant milestone, and we look forward to recognizing our storied
history and legacy across our markets throughout the year.
I would like to thank each of my Comerica colleagues for their tireless contributions in 2023, and for their commitment as we set our
sights high for 2024. Our progress and achievements are entirely made possible thanks to them – the talented, dedicated, driven
colleagues across our organization. Through good and challenging times, they drive our company forward and continue to demonstrate
an unwavering commitment to raising expectations.
Finally, we remain incredibly grateful for our shareholders, whose support is vital. We are concentrating on sustainably increasing
performance, impact and growth, and we look forward to continuing that commitment in the year ahead.
Sincerely,
Curtis C. Farmer
Chairman, President and Chief Executive Officer
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
☒ Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the fiscal year ended December 31, 2023
Or
☐ Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the transition period from __________________________ to __________________________
Commission file number 1-10706
Comerica Incorporated
(Exact Name of Registrant as Specified in Its Charter)
Delaware
(State or Other Jurisdiction of Incorporation)
38-1998421
(IRS Employer Identification Number)
Comerica Bank Tower
1717 Main Street, MC 6404
Dallas, Texas 75201
(Address of Principal Executive Offices) (Zip Code)
(833) 571-0486
(Registrant’s Telephone Number, Including Area Code)
Securities registered pursuant to Section 12(b) of
the Exchange Act:
Title of each class
Common Stock, $5 par value
Trading symbol
CMA
Name of each exchange on which registered
New York Stock Exchange
Securities registered pursuant to Section 12(g) of the
Exchange Act:
None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ý No o
Indicate by check mark if registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes o No ý
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and
(2) has been subject to such filing requirements for the past 90 days. Yes ý No o
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted
pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the
registrant was required to submit such files). Yes ý No o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller
reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting
company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer
Non-accelerated filer
☒
☐
Accelerated filer
Smaller reporting company
Emerging growth company
☐
☐
☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for
complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o
Indicate by check mark whether the registrant has filed a report on and attestation to its management's assessment of the
effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the
registered public accounting firm that prepared or issued its audit report. ý
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the
registrant included in this filing reflect the correction of an error to previously issued financial statements. o
Indicate by check mark whether any of those error corrections are restatements that require a recovery analysis of incentive-based
compensation received by any of the registrant's executive officers during the relevant recovery period pursuant to §240.10D-1(b). o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ý
At June 30, 2023 (the last business day of the registrant’s most recently completed second fiscal quarter), the registrant’s common
stock, $5 par value, held by non-affiliates had an aggregate market value of approximately $5.5 billion based on the closing price on the New
York Stock Exchange on that date of $42.36 per share. For purposes of this Form 10-K only, it has been assumed that all common shares
Comerica’s Trust Department holds for Comerica’s employee plans, and all common shares the registrant’s directors and executive officers
hold, are shares held by affiliates.
At February 26, 2024, the registrant had outstanding 132,489,667 shares of its common stock, $5 par value.
Documents Incorporated by Reference:
Part III: Items 10-14 and Part II Item 5 as to "Equity Compensation Plan Information" —Proxy Statement for the Annual Meeting
of Shareholders to be held April 23, 2024.
TABLE OF CONTENTS
PART I
Item 1. Business.
Item 1A. Risk Factors.
Item 1B. Unresolved Staff Comments.
Item 1C. Cybersecurity
Item 2. Properties.
Item 3. Legal Proceedings.
Item 4. Mine Safety Disclosures.
PART II
Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity
Securities.
Item 6. Reserved.
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk.
Item 8. Financial Statements and Supplementary Data.
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.
Item 9A. Controls and Procedures.
Item 9B. Other Information.
Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections.
PART III
Item 10. Directors, Executive Officers and Corporate Governance.
Item 11. Executive Compensation.
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder
Matters.
Item 13. Certain Relationships and Related Transactions, and Director Independence.
Item 14. Principal Accountant Fees and Services.
PART IV
Item 15. Exhibits and Financial Statement Schedules.
Item 16. Form 10-K Summary.
FINANCIAL REVIEW AND REPORTS
SIGNATURES
1
1
14
26
26
27
27
27
28
28
28
28
28
29
29
29
29
29
29
29
29
30
30
30
31
31
35
F-1
S-1
PART I
Item 1. Business.
GENERAL
Comerica Incorporated (“Comerica”) is a financial services company, incorporated under the laws of the State of
Delaware in 1973, and headquartered in Dallas, Texas. Based on total assets as reported in the most recently filed Consolidated
Financial Statements for Bank Holding Companies (FR Y-9C), it was among the 25 largest commercial United States (“U.S.”)
financial holding companies. As of December 31, 2023, Comerica owned directly or indirectly all the outstanding common
stock of 2 active banking subsidiaries (Comerica Bank, a Texas banking association, and Comerica Bank & Trust, National
Association) as well as non-banking subsidiaries. At December 31, 2023, Comerica had total assets of approximately $85.8
billion, total deposits of approximately $66.8 billion, total loans of approximately $52.1 billion and shareholders’ equity of
approximately $6.4 billion.
Comerica has strategically aligned its operations into three major business segments: the Commercial Bank, the Retail
Bank, and Wealth Management. In addition to the three major business segments, Finance is also reported as a segment.
Comerica operates in five primary geographic markets - Texas, California, Michigan, Arizona and Florida - and
secondarily in several mountain, southeastern, and other states, and in Canada and Mexico.
In 2023, Comerica announced a strategic relationship with Ameriprise to become Comerica’s new investment program
provider. As such, Comerica transitioned support of specific insurance, brokerage and investment advisory activities to
Ameriprise. The new name representing this strategic relationship is Comerica Financial Advisors, powered by Ameriprise
Financial.
We provide information about the net interest income and noninterest income we received from our various classes of
products and services: (1) under the caption, “Analysis of Net Interest Income” in the Financial Section of this report; (2) under
the caption “Rate/Volume Analysis” in the Financial Section of this report; and (3) under the caption “Noninterest Income” in
the Financial Section of this report.
COMPETITION
The financial services business is highly competitive. Comerica and its subsidiaries mainly compete in their primary
and secondary geographic markets, and also compete throughout the continental U.S., Mexico and Canada as they pursue
certain businesses on a national scale that fall outside of the primary markets, such as U.S. Banking, Mortgage Banker,
Environmental Services and National Dealer Services. They have strategically placed offices in faster growing markets where
there is a concentration of customers and industries they serve. Comerica has established commercial offices in North Carolina
and South Carolina, private banking offices in Georgia and made investments in the Mountain West region of the United States.
Comerica is subject to competition with respect to various products and services, including, without limitation,
commercial products such as loans and lines of credit, deposits, cash management (including payments solutions and card
services), capital markets, international trade finance, letters of credit, foreign exchange management and loan syndications;
consumer products such as loans, deposits and origination of mortgage loans and credit cards; and wealth management services
such as comprehensive financial planning, trust and fiduciary services, investment management and advisory, brokerage,
private banking, and business transition planning services.
Comerica competes largely on the basis of industry expertise, the range of products and services offered, pricing and
reputation, convenience, quality of service, responsiveness to customer needs and the overall customer relationship. Comerica's
competitors include financial institutions of all sizes. Some of Comerica's larger competitors, including certain nationwide
banks that have a significant presence in Comerica's markets, may have a broader array of products and structure alternatives
and, due to their size, may more easily absorb credit losses. Some of Comerica's competitors (larger or smaller) may have more
liberal lending policies and aggressive pricing standards for loans, deposits and services.
Increasingly, Comerica competes with other companies based on financial technology and capabilities, such as mobile
banking applications and funds transfer. Further, Comerica's competitors may be subject to significantly different or lesser
regulation due to their asset size or types of products offered. Some competitors may also have the ability to more efficiently
utilize resources to comply with regulations or may be able to more effectively absorb the cost of regulations.
In addition to banks, Comerica and its banking subsidiaries also face competition from financial intermediaries,
including savings and loan associations, consumer and commercial finance companies, leasing companies, venture capital
funds, credit unions, investment banks, insurance companies and securities firms. Competition among providers of financial
products and services continues to increase as technology advances have lowered the barriers to entry for financial technology
companies, with customers having the opportunity to select from a growing variety of traditional and nontraditional
alternatives, including crowdfunding, digital wallets and money transfer services. The ability of non-banks to provide services
previously limited to traditional banks has intensified competition. Because non-banks are not subject to many of the same
1
regulatory restrictions as banks and bank holding companies, they can often operate with greater flexibility and lower cost
structures.
Finally, the industry continues to consolidate, which eliminates some regional and local institutions, while potentially
strengthening acquirers. Comerica believes that the level of competition in all geographic markets will continue to increase in
the future.
SUPERVISION AND REGULATION
Banks, bank holding companies, and other financial institutions are highly regulated at both the state and federal level.
Comerica is subject to supervision and regulation at the federal level by the Board of Governors of the Federal Reserve System
through the Federal Reserve Bank of Dallas (“FRB”) pursuant to the Bank Holding Company Act of 1956, as amended.
Comerica Bank (the "Bank") is chartered by the State of Texas and at the state level is supervised and regulated by the Texas
Department of Banking under the Texas Finance Code and the Texas Administrative Code. The Bank has elected to be a
member of the Federal Reserve System under the Federal Reserve Act and, consequently, is supervised and regulated by the
FRB. Comerica Bank & Trust, National Association is federally chartered and is subject to supervision and regulation by the
Office of the Comptroller of the Currency (“OCC”) pursuant to the National Bank Act. Comerica Bank & Trust, National
Association, by virtue of being a national bank, is also a member of the Federal Reserve System. Furthermore, given that the
Bank is a bank with assets in excess of $10 billion, it is subject to supervision and regulation by the Consumer Financial
Protection Bureau ("CFPB") for purposes of assessing compliance with federal consumer financial laws. The Bank's deposits,
and those of Comerica Bank & Trust, National Association, are insured by the Deposit Insurance Fund (“DIF”) of the Federal
Deposit Insurance Corporation (“FDIC”) to the fullest extent provided by law, and therefore the Bank and Comerica Bank &
Trust, National Association are each also subject to regulation by the FDIC. Certain transactions executed by the Bank are also
subject to regulation by the U.S. Commodity Futures Trading Commission (“CFTC”). The Department of Labor (“DOL”)
regulates financial institutions providing services to plans governed by the Employee Retirement Income Security Act of 1974.
The Bank’s Canada branch is supervised by the Office of the Superintendent of Financial Institutions and its Mexico
representative office is also supervised by the Banco de México. The Bank is also registered in the Cayman Islands and subject
to supervision by the Cayman Islands Monetary Authority.
The FRB supervises non-banking activities conducted by companies directly and indirectly owned by Comerica. In
addition, Comerica’s non-banking subsidiaries are subject to supervision and regulation by various state, federal and self-
regulatory agencies, including, but not limited to, the Financial Industry Regulatory Authority, Inc. (“FINRA”), the Department
of Licensing and Regulatory Affairs of the State of Michigan, the Municipal Securities Rulemaking Board (“MSRB”) and the
Securities and Exchange Commission (“SEC”) (in the case of Comerica Securities, Inc.); the Department of Insurance and
Financial Services of the State of Michigan (in the case of Comerica Insurance Services, Inc.); and the DOL (in the case of
Comerica Securities, Inc. and Comerica Insurance Services, Inc.).
Both the scope of the laws and regulations and intensity of supervision to which banks', bank holding companies' and
financial institutions' businesses are subject continue to increase in response to the 2007-2008 financial crisis, subsequent
events, and other factors such as technological, economic and market changes. Many regulatory changes have occurred as a
result of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (the “Dodd-Frank Act”) and its
implementing regulations, most of which are now in place. In 2018, with the passage of the Economic Growth, Regulatory
Relief and Consumer Protection Act (“EGRRCPA”), as described below, there was some recalibration of the post-financial
crisis framework; however, banks', bank holding companies' and financial institutions' businesses remain subject to extensive
regulation and supervision. The failure of certain banks in the spring of 2023 played a role in another increase in bank
regulation, at least some of which could apply to Comerica.
The Community Reinvestment Act of 1977 (“CRA”) requires U.S. banks to help serve the credit needs of their
communities. If any bank were to receive a rating under the CRA of less than “Satisfactory,” the bank would be prohibited from
engaging in certain activities. Comerica's current CRA rating is "Outstanding." The CRA regulations were substantially
amended in 2023, which may affect future compliance.
Comerica is also subject to the disclosure and regulatory requirements of the Securities Act of 1933, as amended, and
the Securities Exchange Act of 1934, as amended, both as administered by the SEC, as well as the rules of the New York Stock
Exchange.
Described below are material elements of selected laws and regulations applicable to Comerica and its subsidiaries.
The descriptions are not intended to be complete and are qualified in their entirety by reference to the full text of the statutes
and regulations described. Changes in applicable law or regulation, and in their application by regulatory agencies, cannot be
predicted, but they may have a material effect on the business of Comerica and its subsidiaries.
2
Economic Growth, Regulatory Relief and Consumer Protection Act and Recent Developments
On May 24, 2018, EGRRCPA was signed into law. Among other regulatory changes, EGRRCPA amended various
sections of the Dodd-Frank Act, including section 165 of Dodd-Frank Act, which was revised to raise the asset thresholds for
determining the application of enhanced prudential standards for bank holding companies. Under EGRRCPA bank holding
companies with less than $100 billion of consolidated assets, such as Comerica, became exempt from all of the Dodd-Frank
enhanced prudential standards, except risk committee requirements. As a result, Comerica currently is not subject to the
remaining Dodd-Frank Act enhanced prudential standards or certain capital and liquidity rules to large bank holding companies
and depository institutions (the “Tailoring Rules”).
Should Comerica meet or cross the $100 billion asset threshold and thus become a Category IV institution it will be
subject to additional and more stringent regulation, which includes, but is not limited to, enhanced prudential standards for U.S.
banking organizations with $100 to $250 billion of consolidated assets. In addition, Comerica would be required to pay the
supervision and regulation fee assessment under the Dodd-Frank Act.
On July 27, 2023, the FRB, the FDIC, and the OCC issued a proposal, referred to as “Basel III Endgame,” that would
result in significant changes to the U.S. regulatory capital rules under EGRRCPA for banking organizations with total
consolidated assets of $100 billion or more. Comerica's total consolidated assets are below this $100 billion threshold, but
Comerica continues to invest in potential preparation should it meet that threshold or regulators lower that threshold. If
Comerica becomes subject to these requirements or becomes subject to any other new laws or regulations related to capital and
liquidity, such requirements could limit Comerica’s ability to pay dividends or make share repurchases or require Comerica to
reduce business levels or to raise capital, which would have a material adverse effect on Comerica's financial condition and
results of operations.
In addition to laws and regulations focusing principally on asset thresholds, examination ratings also can affect
Comerica. Adverse examination findings can result in confidential or public enforcement actions, which can affect fees, costs,
operational requirements, and growth initiatives, at both Comerica and each of its subsidiary banks.
Requirements for Approval of Activities and Acquisitions
The Gramm-Leach-Bliley Act expanded the activities in which a bank holding company registered as a financial
holding company can engage. A financial holding company may affiliate with securities firms and insurance companies and
engage in activities that are financial in nature or incidental or complementary to activities that are financial in nature. Activities
that are "financial in nature" include, but are not limited to: securities underwriting; securities dealing and market making;
sponsoring mutual funds and investment companies (subject to regulatory requirements described below); insurance
underwriting and agency; merchant banking,; and activities that the FRB determines, in consultation with the Secretary of the
United States Treasury, to be financial in nature or incidental to a financial activity. "Complementary activities" are activities
that the FRB determines upon application to be complementary to a financial activity and that do not pose a substantial risk to
the safety or soundness of depository institutions or the financial system generally. In order to exercise the full benefits of its
status as a bank holding company and a financial holding company, Comerica and each of its depository institution subsidiaries
must be considered “well capitalized” and “well managed.” If at any time a financial holding company or any subsidiary bank is
not considered “well capitalized” or “well managed” under applicable regulatory standards, the law and the FRB limit its ability
to conduct the broader financial activities permissible for financial holding companies, and impose limitations or conditions on
its conduct or activities or those of its bank and non-bank affiliates. If the deficiencies persist, the FRB could order the financial
holding company to divest any subsidiary bank or to cease engaging in any activities permissible for financial holding
companies that are not permissible for bank holding companies, or the financial holding company could elect to conform its
non-banking activities to those permissible for a bank holding company that is not also a financial holding company. Adverse
examinations at the bank-level also could increase costs and limit activities and growth of Comerica Bank & Trust, National
Association and Bank and its subsidiaries.
Federal and state laws impose notice and approval requirements for mergers and acquisitions of other depository
institutions or bank holding companies. In many cases, no FRB approval is required for a financial holding company to acquire
a company engaged in activities that are financial in nature or incidental to activities that are financial in nature, as determined
by the FRB. Prior approval is required before a financial holding company may acquire the beneficial ownership or control of
more than 5% of any class of voting shares or substantially all of the assets of a bank holding company (including another
financial holding company) or a bank. In considering applications for approval of acquisitions, the banking regulators may take
several factors into account, including whether the financial holding company and its subsidiaries are well capitalized and well
managed, are in compliance with anti-money laundering laws and regulations, or have CRA ratings of less than “Satisfactory.”
The Bank's current CRA rating is "Outstanding."
3
Acquisitions of Ownership of Comerica
Acquisitions of Comerica’s voting stock above certain thresholds are subject to prior regulatory notice or approval
under federal banking laws, including the Bank Holding Company Act of 1956 and the Change in Bank Control Act of 1978.
Under the Change in Bank Control Act, a person or entity generally must provide prior notice to the FRB before acquiring the
power to vote 10% or more of a subject company's outstanding common stock. Investors should be aware of these requirements
when acquiring shares of Comerica’s stock.
Capital and Liquidity
Comerica and its bank subsidiaries are subject to risk-based capital requirements and guidelines imposed by the FRB,
FDIC and/or the OCC. In calculating risk-based capital requirements, a depository institution’s or holding company’s assets and
certain specified off-balance sheet items (such as unused commitments and standby letters of credit) are assigned to various risk
categories defined by those agencies, each weighted differently based on the level of risk that is ascribed to such assets or
commitments, based on counterparty type, asset class and maturity. A depository institution’s or bank holding company’s
capital is divided into three tiers: Common Equity Tier 1 (“CET1”), additional Tier 1, and Tier 2. CET1 capital predominantly
includes common shareholders’ equity, less certain deductions for goodwill, intangible assets and deferred tax assets that arise
from net operating losses and tax credit carry-forwards, if any. Additional Tier 1 capital primarily includes any outstanding
noncumulative perpetual preferred stock and related surplus. Comerica has also made the election to permanently exclude
accumulated other comprehensive income related to debt securities classified as available-for-sale, cash flow hedges, and
defined benefit postretirement plans from CET1 capital. Additional Tier 1 capital primarily includes any outstanding
noncumulative perpetual preferred stock and related surplus. Tier 1 capital is equal to CET1 capital plus additional Tier 1
capital. Tier 2 capital primarily includes qualifying subordinated debt and qualifying allowance for credit losses. More
information is set forth under the caption “Capital” in the Financial Section of this report. Total capital is the amount equal to
Tier 1 capital plus Tier 2 Capital.
Entities that engage in trading activities that exceed specified levels also are required to maintain capital to account for
market risk. Market risk includes changes in the market value of trading account, foreign exchange, and commodity positions,
whether resulting from broad market movements (such as changes in the general level of interest rates, equity prices, foreign
exchange rates, or commodity prices) or from position specific factors. From time to time, Comerica’s trading activities may
exceed specified regulatory levels, in which case Comerica adjusts its risk-weighted assets to account for market risk as
required.
Bank holding companies and banks are currently required to maintain a CET1 capital ratio, Tier 1 capital ratio and
total capital ratio equal to at least 4.5 percent, 6 percent and 8 percent of their total risk-weighted assets (including certain off-
balance-sheet items, such as unused commitments and standby letters of credit), respectively. Comerica and its bank
subsidiaries are also required to maintain a minimum capital conservation buffer of 2.5 percent in order to avoid restrictions on
capital distributions and discretionary bonuses, and to maintain a minimum “leverage ratio” (Tier 1 capital to non-risk-adjusted
average total assets) of 4 percent.
To be well capitalized, banks are required to maintain a leverage ratio, CET1 capital ratio, Tier 1 capital ratio and total
capital ratio equal to at least 5.0 percent, 6.5 percent, 8.0 percent and 10.0 percent, respectively. For purposes of the FRB’s
Regulation Y, including determining whether a bank holding company meets the requirements to be a financial holding
company, bank holding companies must maintain a Tier 1 capital ratio of at least 6.0 percent and a total capital ratio of at least
10.0 percent to be well capitalized. The FRB may require bank holding companies to maintain capital ratios substantially in
excess of mandated minimum levels, depending upon general economic conditions and a bank holding company’s particular
condition, risk profile and growth plans.
Failure to be well capitalized or to meet minimum capital requirements could result in certain mandatory and possible
additional discretionary actions by regulators, including restrictions on the ability to pay dividends or otherwise distribute
capital or to receive regulatory approval of applications, or other restrictions on growth.
4
At December 31, 2023, Comerica met all of its minimum risk-based capital ratio and leverage ratio requirements plus
the applicable capital conservation buffer and the applicable well capitalized requirements, as shown in the table below:
(dollar amounts in millions)
December 31, 2023
CET1 capital (minimum $3.4 billion (Consolidated))
Tier 1 capital (minimum $4.6 billion (Consolidated))
Total capital (minimum $6.1 billion (Consolidated))
Risk-weighted assets
Average assets (fourth quarter)
CET1 capital to risk-weighted assets (minimum-4.5%)
Tier 1 capital to risk-weighted assets (minimum-6.0%)
Total capital to risk-weighted assets (minimum-8.0%)
Tier 1 capital to average assets (minimum-4.0%)
Capital conservation buffer (minimum-2.5%)
December 31, 2022
CET1 capital (minimum $3.5 billion (Consolidated))
Tier 1 capital (minimum $4.7 billion (Consolidated))
Total capital (minimum $6.3 billion (Consolidated))
Risk-weighted assets
Average assets (fourth quarter)
CET1 capital to risk-weighted assets (minimum-4.5%)
Tier 1 capital to risk-weighted assets (minimum-6.0%)
Total capital to risk-weighted assets (minimum-8.0%)
Tier 1 capital to average assets (minimum-4.0%)
Capital conservation buffer (minimum-2.5%)
Comerica
Incorporated
(Consolidated)
Comerica
Bank
$
$
$
$
8,414
8,808
10,263
75,901
87,538
11.09 %
11.60
13.52
10.06
5.52
7,884
8,278
9,817
78,871
86,726
10.00 %
10.50
12.45
9.55
4.45
8,007
8,007
9,362
75,783
87,423
10.57 %
10.57
12.35
9.16
4.35
7,801
7,801
9,190
78,781
86,608
9.90 %
9.90
11.67
9.01
3.67
Additional information on the calculation of Comerica’s and its bank subsidiaries’ CET1 capital, Tier 1 capital, total
capital and risk-weighted assets is set forth in the “Capital” section in the Financial Section of this report and Note 20 of the
Notes to Consolidated Financial Statements in the Financial Section of this report.
Federal Deposit Insurance Corporation Improvement Act
The Federal Deposit Insurance Corporation Improvement Act (“FDICIA”) requires, among other things, the federal
banking agencies to take “prompt corrective action” with respect to depository institutions that do not meet certain minimum
capital requirements. FDICIA establishes five capital tiers: “well capitalized,” “adequately capitalized,” “undercapitalized,”
“significantly undercapitalized” and “critically undercapitalized.” An institution that fails to remain well capitalized becomes
subject to a series of restrictions that increase in severity as its capital condition weakens. Such restrictions may include a
prohibition on capital distributions, restrictions on asset growth or restrictions on the ability to receive regulatory approval of
applications. The FDICIA also provides for enhanced supervisory authority over undercapitalized institutions, including
authority for the appointment of a conservator or receiver for the institution.
As an additional means to identify problems in the financial management of depository institutions, FDICIA requires
federal bank regulatory agencies to establish certain non-capital-based safety and soundness standards for institutions any such
agency supervises. The standards relate generally to, among others, earnings, liquidity, operations and management, asset
quality, various risk and management exposures (e.g., credit, operational, market, interest rate, etc.) and executive
compensation. The agencies are authorized to take action against institutions that fail to meet such standards.
FDICIA also contains a variety of other provisions that may affect the operations of depository institutions including
reporting requirements, regulatory standards for real estate lending, “truth in savings” provisions, the requirement that a
depository institution give 90 days prior notice to customers and regulatory authorities before closing any domestic branch, and
a prohibition on the acceptance or renewal of brokered deposits by depository institutions that are not well capitalized or are
adequately capitalized and have not received a waiver from the FDIC.
Dividends
Comerica Incorporated is a legal entity separate and distinct from its banking and other subsidiaries. Since Comerica’s
consolidated net income and liquidity consists largely of net income of and dividends received from Comerica’s bank
subsidiaries, Comerica’s ability to pay dividends and repurchase shares depends upon its receipt of dividends from these
subsidiaries. There are statutory and regulatory requirements applicable to the payment of dividends by subsidiary banks to
5
Comerica, as well as by Comerica to its shareholders. Certain, but not all, of these requirements are discussed below. No
assurances can be given that Comerica’s bank subsidiaries will, in any circumstances, pay dividends to Comerica.
Banks are required by federal law to obtain the prior approval of the FRB and/or the OCC, as the case may be, for the
declaration and payment of dividends, if the total of all dividends declared by the board of directors of such bank in any
calendar year will exceed the total of (i) such bank's net income (as defined and interpreted by regulation) for that year plus
(ii) the retained net income (as defined and interpreted by regulation) for the preceding two years, less any required transfers to
surplus or to fund the retirement of preferred stock. At January 1, 2024, Comerica's subsidiary banks could declare aggregate
dividends of approximately $400 million from retained net profits of the preceding two years. Comerica's subsidiary banks
declared dividends of $675 million in 2023, $1.0 billion in 2022 and $852 million in 2021.
Furthermore, federal regulatory agencies can prohibit a bank or bank holding company from paying dividends under
circumstances in which such payment could be deemed an unsafe and unsound banking practice. Under the FDICIA “prompt
corrective action” regime discussed above, a bank is specifically prohibited from paying dividends to its parent company if
payment would result in the bank becoming “undercapitalized.” In addition, the Bank is also subject to limitations under Texas
state law regarding the amount of earnings that may be paid out as dividends to Comerica and requires prior approval for
payments of dividends that exceed certain levels.
FRB supervisory guidance generally provides that a bank holding company should not maintain its existing rate of
dividends on common stock unless (1) the organization’s net income over the past year has been sufficient to fully fund the
dividends, (2) the prospective rate of earnings retention appears consistent with the organization's capital needs, asset quality
and overall financial condition and (3) the organization will continue to meet minimum required capital adequacy ratios. The
supervisory guidance also provides that a bank holding company should inform the FRB reasonably in advance of declaring or
paying a dividend that exceeds earnings for the period for which the dividend is being paid or that could result in a material
adverse change to the bank holding company’s capital structure. The guidance suggests that bank holding companies consult
with the FRB before redeeming or repurchasing capital instruments, or materially increasing dividends. In addition, FRB
regulation requires bank holding companies to provide notice to or obtain approval from the FRB prior to purchasing or
redeeming equity securities under certain circumstances.
Transactions with Affiliates
Federal banking laws and regulations impose qualitative standards and quantitative limitations upon certain
transactions between a bank and its affiliates, on the one hand, and Comerica’s affiliate insured depository institutions, on the
other. For example, Section 23A of the Federal Reserve Act limits the aggregate outstanding amount of any insured depository
institution’s loans and other “covered transactions” with any particular nonbank affiliate (including financial subsidiaries) to no
more than 10% of the institution’s total capital and limits the aggregate outstanding amount of any insured depository
institution’s covered transactions with all of its nonbank affiliates to no more than 20% of its total capital. “Covered
transactions” are defined by statute to include (i) a loan or extension of credit to an affiliate, (ii) a purchase of securities issued
by an affiliate, (iii) a purchase of assets (unless otherwise exempted by the FRB) from the affiliate, (iv) the acceptance of
securities issued by the affiliate as collateral for a loan, (v) the issuance of a guarantee, acceptance or letter of credit on behalf
of an affiliate and (vi) securities borrowing or lending transactions and derivative transactions with an affiliate, to the extent that
either causes a bank or its affiliate to have credit exposure to the securities borrowing/lending or derivative counterparty.
Section 23A of the Federal Reserve Act also generally requires that an insured depository institution’s loans to its nonbank
affiliates be, at a minimum, 100% secured, and Section 23B of the Federal Reserve Act generally requires that an insured
depository institution’s transactions with its nonbank affiliates be on terms and under circumstances that are substantially the
same or at least as favorable as those prevailing for comparable transactions with nonaffiliates.
Loans to Insiders
Federal Reserve Act and Regulation O restrictions on loans to directors, executive officers, principal stockholders and
their related interests (collectively, “insiders”) apply to all insured institutions and their subsidiaries and holding companies.
These restrictions include conditions that must be met before insider loans can be made, limits on loans to an individual insider
and an aggregate limitation on all loans to insiders and their related interests. These loans cannot exceed the institution’s total
unimpaired capital and surplus, and the Federal Reserve Board may determine that a lesser amount is appropriate. Insiders are
subject to enforcement actions for knowingly accepting loans in violation of applicable restrictions. The Dodd-Frank Act
amended the statutes placing limitations on loans to insiders by including credit exposures to the person arising from a
derivatives transaction, repurchase agreement, reverse repurchase agreement, securities lending transaction or securities
borrowing transaction between the member bank and the person within the definition of an extension of credit.
Federal Laws Applicable to Credit Transactions
Comerica's loan operations are subject to federal laws and implementing regulations applicable to credit transactions,
such as the Truth-In-Lending Act, the Home Mortgage Disclosure Act of 1975, the Equal Credit Opportunity Act, the Fair
6
Credit Reporting Act of 1978-,("FCRA"), the Fair Debt Collection Practices Act, the Servicemembers Civil Relief Act, the
Dodd-Frank Act and rules and regulations of the various federal agencies charged with the responsibility of implementing these
federal laws. State usury laws and federal laws concerning interest rates apply to interest and other charges collected or
contracted for by Comerica.
Federal Laws Applicable to Deposit Operations
Comerica's deposit operations are subject to multiple federal laws, including the Right to Financial Privacy Act, the
Truth in Savings Act and the Electronic Funds Transfer Act. The Dodd-Frank Act amended the Electronic Funds Transfer Act
to, among other things, give the Federal Reserve Board the authority to establish rules regarding interchange fees charged for
electronic debit transactions by payment card issuers having assets over $10 billion and to enforce a new statutory requirement
that such fees be reasonable and proportional to the actual cost of a transaction to the issuer. The FRB is currently soliciting
comments on a proposal to lower the maximum interchange fee a large debit card issuer can receive for a debit card transaction.
Data Privacy and Cybersecurity Regulation
Comerica is subject to many U.S. federal, U.S. state and international laws and regulations governing consumer data
privacy protection, which require, among other things, maintaining policies and procedures to protect the non-public
confidential information of customers and employees. The privacy provisions of the Gramm-Leach-Bliley Act generally
prohibit financial institutions from disclosing nonpublic personal financial information of consumer customers to third parties
for certain purposes (primarily marketing) unless customers have the opportunity to “opt out” of the disclosure. Other laws and
regulations, at the international, federal and state levels, limit Comerica’s ability to share certain information with affiliates and
non-affiliates for marketing and/or non-marketing purposes, or to contact customers with marketing offers. The Gramm-Leach-
Bliley Act also requires banks to implement a comprehensive information security program that includes administrative,
technical and physical safeguards to ensure the security and confidentiality of customer records and information.
Federal banking and securities regulations also impose certain requirements on Comerica and its subsidiary banks in
the event of a cyber- or computer-related security incident. In 2021, the federal banking regulators issued the interagency rule
for Computer-Security Incident Notification Requirements for Banking Organizations and Their Service Providers, which
became effective on April 1, 2022. The rule requires a bank to notify its primary federal regulator of certain cybersecurity
incidents within thirty-six (36) hours after the bank determines that a cybersecurity incident has occurred. The rule defines what
constitutes a reportable incident and also requires bank service providers to provide notice to their respective banking
organization customers of certain cybersecurity incidents. The SEC recently issued a Cybersecurity Risk Management,
Strategy, Governance, and Incident Disclosure rule, which became effective in December of 2023, and which requires that a
registered company file a Form 8-K to disclose the occurrence of a material cybersecurity incident within four (4) business days
of determining that such an incident has occurred. The rule also requires that a registered company include certain information
regarding its information security program as part of its annual Form 10-K filing, including a discussion of its processes for
assessing, identifying, and managing material risks from cybersecurity threats and a description of oversight and management
of cybersecurity threats at the board and management levels.
Data privacy and data protection are also areas of increasing state legislative focus. For example, the California
Consumer Privacy Act of 2018, as amended by the California Privacy Rights Act of 2020 (collectively, the “CCPA”), applies to
for-profit businesses that conduct business in California and meet certain revenue or data collection thresholds. The CCPA
gives consumers the right to request disclosure of information collected about them, and whether that information has been sold
or shared with others, the right to request deletion of personal information (subject to certain exceptions), the right to opt out of
the sale of the consumer’s personal information, and the right not to be discriminated against for exercising these rights. The
CCPA contains several exemptions, including an exemption applicable to information that is collected, processed, sold or
disclosed pursuant to the Gramm-Leach-Bliley Act. Comerica has a physical footprint in California and is required to comply
with the CCPA. Similar laws may also be adopted by other states. The federal government may also pass data privacy or data
protection legislation.
Like other lenders, the Bank and other of Comerica’s subsidiaries use credit bureau data in their underwriting
activities. Use of such data is regulated under the FCRA and the FCRA also regulates reporting information to credit bureaus,
prescreening individuals for credit offers, sharing of information between affiliates, and using affiliate data for marketing
purposes. Similar state laws may impose additional requirements on Comerica and its subsidiaries.
FDIC Insurance Assessments
The DIF provides deposit insurance coverage for certain deposits up to $250,000 per depositor in each deposit account
category. Comerica's subsidiary banks are subject to FDIC deposit insurance assessments to maintain the DIF. The FDIC
imposes a risk-based deposit premium assessment system, where the assessment rates for an insured depository institution are
determined by an assessment rate calculator, which is based on a number of elements to measure the risk each institution poses
to the DIF. The assessment rate is applied to total average assets less tangible equity. Under the current system, premiums are
7
assessed quarterly and could increase if, for example, criticized loans and/or other higher risk assets increase or balance sheet
liquidity decreases, or a bank's supervisory ratings worsen. For 2023, Comerica’s FDIC insurance expense totaled $180 million.
On October 18, 2022, the FDIC finalized a rule that would increase initial base deposit insurance assessment rates by 2
basis points, beginning with the first quarterly assessment period of 2023. The FDIC, as required under the Federal Deposit
Insurance Act, established a plan in September 2020 to restore the DIF reserve ratio to meet or exceed the statutory minimum of
1.35 percent within eight years. This plan did not include an increase in the deposit insurance assessment rate. Based on the
FDIC’s recent projections, however, the FDIC determined that the DIF reserve ratio is at risk of not reaching the statutory
minimum by the statutory deadline of September 30, 2028 without increasing the deposit insurance assessment rates. The
increased assessment would improve the likelihood that the DIF reserve ratio would reach the required minimum by the
statutory deadline, consistent with the FDIC’s Amended Restoration Plan. The rule became effective as of January 1, 2023.
As a result of bank failures during early 2023, regulators invoked a "systemic risk exception" in an effort to strengthen
public confidence in the banking system and protect depositors. As required by law, the FDIC announced that any losses to the
DIF to support uninsured depositors will be recovered by a special assessment on banking organizations. On November 16,
2023, the FDIC adopted a final rule to implement this special assessment based on a banking organization’s estimated
uninsured deposits as of December 31, 2022, excluding the first $5 billion in estimated uninsured deposits. Comerica recorded
an expense of $109 million as a result of this special assessment during the year ended December 31, 2023.
Anti-Money Laundering Regulations
Comerica is subject to several federal laws that are designed to combat money laundering, terrorist financing, and
transactions with persons, companies or foreign governments designated by U.S. authorities ("AML laws"). This category of
laws includes the Currency and Foreign Transactions Reporting Act of 170, as amended (the "Bank Secrecy Act"), the Money
Laundering Control Act, and the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and
Obstruct Terrorism Act of 2001, or USA PATRIOT Act.
The AML laws and their implementing regulations require insured depository institutions, broker-dealers, and certain
other financial institutions to have policies, procedures, and controls to detect, prevent, and report money laundering and
terrorist financing. The AML laws and their regulations also provide for information sharing, subject to conditions, between
federal law enforcement agencies and financial institutions, as well as among financial institutions, for counter-terrorism
purposes. Federal banking regulators are required, when reviewing bank holding company acquisition and bank merger
applications, to take into account the effectiveness of the anti-money laundering activities of the applicants. To comply with
these obligations, Comerica and its various operating units have implemented appropriate internal practices, procedures, and
controls.
The Anti-Money Laundering Act of 2020 (the “AML 2020 Act”) was enacted as part of the National Defense
Authorization Act for Fiscal Year 2021. The AML 2020 Act is the most significant revision to the AML laws since the USA
PATRIOT Act. The AML 2020 Act clarifies and streamlines the Bank Secrecy Act and AML obligations in the following
ways: it requires U.S. entities and entities doing business in the United States to report into a national registry maintained by the
Financial Crimes Enforcement Network (“FinCEN”) certain beneficial ownership information, subject to exceptions;
modernizes the statutory definition of “financial institution” to include (i) entities that provide services involving “value that
substitutes for currency,” which includes stored value and virtual currencies and (ii) any person engaged in the trade of
antiquities, including an advisor, consultant or any other person who deals in the sale of antiquities; enhances penalties for Bank
Secrecy Act and AML violations, including claw back of bonuses; increases AML whistleblower awards and expands
whistleblower protections; requires the Secretary of the Treasury to establish and update every four years National AML
Priorities, which are incorporated into the Bank Secrecy Act compliance programs at financial institutions subject to the Bank
Secrecy Act; among other amendments. Implementing regulations concerning certain provisions of the AML 2020 Act have
been proposed by FinCEN, but not all have been finalized. On September 29, 2022, FinCEN issued a final rule establishing a
beneficial ownership information reporting requirement under the Corporate Transparency Act (CTA), which was passed as
part of the AML 2020 Act. The rule, which became effective January 1, 2024, requires most entities created in or registered to
do business in the United States, subject to certain exceptions, to report information about their beneficial owners to FinCEN.
8
Office of Foreign Assets Control Regulation
The Office of Foreign Assets Control (“OFAC”) is responsible for administering economic sanctions that affect
transactions with designated foreign countries, nationals and others, as defined by various Executive Orders and Acts of
Congress. OFAC-administered sanctions take many different forms. For example, sanctions may include: (1) restrictions on
trade with or investment in a sanctioned country, including prohibitions against direct or indirect imports from and exports to a
sanctioned country and prohibitions on U.S. persons engaging in financial transactions relating to, making investments in, or
providing investment-related advice or assistance to, a sanctioned country; and (2) a blocking of assets in which the government
or “specially designated nationals” of the sanctioned country have an interest, by prohibiting transfers of property subject to
U.S. jurisdiction (including property in the possession or control of U.S. persons). OFAC also publishes lists of persons,
organizations, and countries suspected of aiding, harboring or engaging in terrorist acts, known as Specially Designated
Nationals and Blocked Persons. Blocked assets (e.g., property and bank deposits) cannot be paid out, withdrawn, set off or
transferred in any manner without a license from OFAC. Failure to comply with these sanctions could have serious legal and
reputational consequences.
Interstate Banking and Branching
The Interstate Banking and Branching Efficiency Act (the “Interstate Act”), as amended by the Dodd-Frank Act,
permits a bank holding company, with FRB approval, to acquire banking institutions located in states other than the bank
holding company's home state without regard to whether the transaction is prohibited under state law, but subject to any state
requirement that the bank has been organized and operating for a minimum period of time, not to exceed five years, and the
requirement that the bank holding company, prior to and following the proposed acquisition, control no more than 10 percent of
the total amount of deposits of insured depository institutions in the U.S. and no more than 30 percent of such deposits in that
state (or such amount as established by state law if such amount is lower than 30 percent). The Interstate Act, as amended, also
authorizes banks to operate branch offices outside their home states by merging with out-of-state banks, purchasing branches in
other states and by establishing de novo branches in other states, subject to various conditions. In the case of purchasing
branches in a state in which it does not already have banking operations, de novo interstate branching is permissible if under the
law of the state in which the branch is to be located, a state bank chartered by that state would be permitted to establish the
branch.
Source of Strength and Cross-Guarantee Requirements
Federal law and FRB regulations require that bank holding companies serve as a source of strength to each subsidiary
bank and commit resources to support each subsidiary bank. This support may be required at times when a bank holding
company may not be able to provide such support without adversely affecting its ability to meet other obligations. The FRB
may require a bank holding company to make capital injections into a troubled subsidiary bank and may charge the bank
holding company with engaging in unsafe and unsound practices if the bank holding company fails to commit resources to such
a subsidiary bank or if it undertakes actions that the FRB believes might jeopardize the bank holding company’s ability to
commit resources to such subsidiary bank. Under these requirements, Comerica may in the future be required to provide
financial assistance to its subsidiary banks should they experience financial distress. Capital loans by Comerica to its subsidiary
banks would be subordinate in right of payment to deposits and certain other debts of the subsidiary banks. In the event of
Comerica’s bankruptcy, any commitment by Comerica to a federal bank regulatory agency to maintain the capital of its
subsidiary banks would be assumed by the bankruptcy trustee and entitled to a priority of payment.
Similarly, under the cross-guarantee provisions of the Federal Deposit Insurance Act, in the event of a loss suffered or
anticipated by the FDIC (either as a result of the failure of a banking subsidiary or related to FDIC assistance provided to such a
subsidiary in danger of failure), the other banking subsidiaries may be assessed for the FDIC’s loss, subject to certain
exceptions. An FDIC cross-guarantee claim against a depository institution is superior in right of payment to claims of the
holding company and its affiliates against such depository institution.
Supervisory and Enforcement Powers of Federal and State Banking Agencies
The FRB and other federal and state banking agencies have broad supervisory and enforcement powers, including,
without limitation, and as prescribed to each agency by applicable law, the power to conduct examinations and investigations,
impose nonpublic supervisory agreements, issue cease and desist orders, terminate deposit insurance, impose substantial fines
and other civil penalties and appoint a conservator or receiver. Failure to comply with applicable laws or regulations could
subject Comerica or its banking subsidiaries, as well as officers and directors of these organizations, to administrative sanctions
and potentially substantial civil and criminal penalties. Bank regulators regularly examine the operations of bank holding
companies and banks, and the results of these examinations, as well as certain supervisory and enforcement actions, are
confidential and may not be made public. Regulatory and supervisory scrutiny of regional banking organizations has recently
increased as a result of the bank failures in the spring of 2023.
9
Resolution Plans
As a depository institution with $50 billion or more of total consolidated assets, the Bank is required to periodically
file a resolution plan with the FDIC. On April 16, 2019, the FDIC released an advanced notice of proposed rulemaking
(“ANPR”) with respect to the FDIC’s bank resolution plan requirements meant to better tailor bank resolution plans to a firm’s
size, complexity and risk profile. In connection with this rulemaking, the FDIC placed a moratorium on resolution plans until
the rulemaking process was complete.
On June 25, 2021, the FDIC lifted the moratorium on resolution plan submissions for institutions with $100 billion or
more in total assets. Under the FDIC’s Statement on Resolution Plans for IDIs, an institution will be required to submit
resolution plans when it has $100 billion or more in total assets as determined based upon the average of the institution’s four
most recent Reports of Condition and Income.
On August 29, 2023, the FDIC released a proposed rule that would require insured depository institutions with assets
of at least $50 billion but less than $100 billion, such as the Bank, to submit resolution-related informational filings. Comerica
is monitoring the development of this proposal.
Incentive-Based Compensation
Comerica is subject to guidance issued by the FRB, OCC and FDIC intended to ensure that the incentive compensation
policies of banking organizations do not undermine the safety and soundness of such organizations by encouraging excessive
risk-taking. The guidance, which covers senior executives as well as other employees who, either individually or as part of a
group, have the ability to expose the banking organization to material amounts of risk, is based upon the key principles that a
banking organization's incentive compensation arrangements (i) should provide employees incentives that appropriately balance
risk and financial results in a manner that does not encourage employees to expose their organizations to imprudent risk; (ii)
should be compatible with effective controls and risk-management; and (iii) should be supported by strong corporate
governance, including active and effective oversight by the organization's board of directors. Banking organizations are
expected to review regularly their incentive compensation arrangements based on these three principles. Where there are
deficiencies in the incentive compensation arrangements, they should be promptly addressed. Enforcement actions may be
taken against a banking organization if its incentive compensation arrangements, or related risk-management control or
governance processes, pose a risk to the organization's safety and soundness, particularly if the organization is not taking
prompt and effective measures to correct the deficiencies. Similar to other large banking organizations, Comerica has been
subject to a continuing review of incentive compensation policies and practices by representatives of the FRB, the Federal
Reserve Bank of Dallas and the Texas Department of Banking since 2011. As part of that review, Comerica has undertaken a
thorough analysis of all the incentive compensation programs throughout the organization, the individuals covered by each plan
and the risks inherent in each plan’s design and implementation. Comerica has determined that risks arising from employee
compensation plans are not reasonably likely to have a material adverse effect on Comerica. It is Comerica’s intent to continue
monitoring regulations and best practices for sound incentive compensation practices.
In 2016, the FRB, OCC and several other federal financial regulators revised and re-proposed rules to implement
Section 956 of the Dodd-Frank Act. Section 956 directed regulators to jointly prescribe regulations or guidelines prohibiting
incentive-based payment arrangements, or any feature of any such arrangement, at covered financial institutions that encourage
inappropriate risks by providing excessive compensation or that could lead to a material financial loss. This proposal would
supplement the final guidance issued by the banking agencies in June 2010. Consistent with the Dodd-Frank Act, the proposed
rule would impose heightened standards for institutions with $50 billion or more in total consolidated assets, which includes
Comerica. For these larger institutions, the proposed rule would require the deferral of at least 40 percent of incentive-based
payments for designated executives and significant risk-takers who individually have the ability to expose the institution to
possible losses that are substantial in relation to the institution's size, capital or overall risk tolerance. Moreover, incentive-based
compensation of these individuals would be subject to potential clawback for seven years following vesting. Further, the rule
would impose enhanced risk management controls and governance and internal policy and procedure requirements with respect
to incentive compensation. Comerica is monitoring the development of this proposal.
The Volcker Rule
Comerica is prohibited under the Volcker Rule from (1) engaging in short-term proprietary trading for its own account
and (2) having certain ownership interests in and relationships with hedge funds or private equity funds ("Covered Funds"). The
Volcker Rule regulations contain exemptions for market-making, hedging, underwriting and trading in U.S. government and
agency obligations, and permit certain ownership interests in certain types of Covered Funds to be retained. They also permit
the offering and sponsoring of Covered Funds under certain conditions. The Volcker Rule regulations impose significant
compliance and reporting obligations on banking entities.
Comerica has compliance programs required by the Volcker Rule and has either divested or received extensions for
any holdings in Covered Funds.
10
In October 2019, the five federal agencies with rulemaking authority with respect to the Volcker Rule finalized
changes designed to simplify compliance with the Volcker Rule. The final rule formalized a three-tiered approach to
compliance program requirements for banking entities based on their level of trading activity. As a banking entity with
“moderate” trading assets and liabilities (less than $20 billion), Comerica is subject to simplified compliance requirements. In
June 2020, regulators finalized a rule further modifying the Volcker Rule’s prohibition on banking entities investing in or
sponsoring Covered Funds. The final rule modifies three areas of the rule by: streamlining the covered funds portion of the rule;
addressing the extraterritorial treatment of certain foreign funds; and permitting banking entities to offer financial services and
engage in other activities that do not raise concerns that the Volcker Rule was intended to address. Comerica continues to
follow Volcker Rule developments.
Derivative Transactions
As a state member bank, the Bank may engage in derivative transactions, as permitted by applicable Texas and federal
law. Title VII of the Dodd-Frank Act contains a comprehensive framework for over-the-counter (“OTC”) derivatives
transactions. Even though many of the requirements do not impact Comerica directly, since the Bank does not meet the
definition of swap dealer or major swap participant, Comerica continues to review and evaluate the extent to which such
requirements impact its business indirectly. On November 5, 2018, the CFTC issued a final rule that sets the permanent
aggregate gross notional amount threshold for the de minimis exception from the definition of swap dealer at $8 billion in swap
dealing activity entered into by a person over the preceding 12 months. Comerica's swap dealing activities for purposes of the
de minimis exception are currently below this threshold.
The initial margin requirements for non-centrally cleared swaps and security-based swaps were effective for
Comerica’s swap and security-based swap counterparties that are swap dealers or major swap participants on September 1,
2022, and such counterparties are required to collect initial margin from Comerica. The initial margin requirements were issued
for the purpose of ensuring safety and soundness of swap trading in light of the risk to the financial system associated with non-
cleared swaps activity.
Consumer Financial Protection Bureau and Certain Recent Consumer Finance Regulations
Comerica is subject to regulation by the CFPB, which has broad rule-making authority for a wide range of consumer
protection laws that apply to all banks and savings institutions and possesses examination and enforcement authority over all
banks and savings institutions with more than $10 billion in assets, including the Bank, and their depository affiliates. Among
other things, the CFPB is focused on reducing or eliminating so-called "junk fees" which include some sources of bank fee
revenue.
Comerica is also subject to certain state consumer protection laws, and under the Dodd-Frank Act, state attorneys
general and other state officials are empowered to enforce certain federal consumer protection laws and regulations. In recent
years, state authorities have increased their focus on and enforcement of consumer protection rules. These federal and state
consumer protection laws apply to a broad range of Comerica’s activities and to various aspects of its business and include laws
relating to interest rates, fair lending, disclosures of credit terms and estimated transaction costs to consumer borrowers, debt
collection practices, the use of and the provision of information to consumer reporting agencies, and the prohibition of unfair,
deceptive or abusive acts or practices in connection with the offer, sale or provision of consumer financial products and
services.
UNDERWRITING APPROACH
The loan portfolio is a primary source of profitability and risk, so proper loan underwriting is critical to Comerica's
long-term financial success. Comerica extends credit to businesses, individuals and public entities based on sound lending
principles and consistent with prudent banking practice. During the loan underwriting process, a qualitative and quantitative
analysis of potential credit facilities is performed, and the credit risks associated with each relationship are evaluated. Important
factors considered as part of the underwriting process for new loans and loan renewals include:
•
•
•
•
•
People: Including the competence, integrity and succession planning of customers.
Purpose: The legal, logical and productive purposes of the credit facility.
Payment: Including the source, timing and probability of payment.
Protection: Including obtaining alternative sources of repayment, securing the loan, as appropriate, with
collateral and/or third-party guarantees and ensuring appropriate legal documentation is obtained.
Perspective: The risk/reward relationship and pricing elements (cost of funds; servicing costs; time value of
money; credit risk).
Comerica prices credit facilities to reflect risk, the related costs and the expected return, while maintaining
competitiveness with other financial institutions. Loans with variable and fixed rates are underwritten to achieve expected risk-
11
adjusted returns on the credit facilities and for the full relationship including the borrower's ability to repay the principal and
interest based on such rates.
Credit Approval and Monitoring
Approval of new loan exposure and oversight and monitoring of Comerica's loan portfolio is the joint responsibility of
the Credit Risk Management and Decisioning department and the Credit Underwriting department (collectively referred to as
“Credit”), plus the business units (“Line”). Credit assists the Line with underwriting by providing objective financial analysis,
including an assessment of the borrower's business model, balance sheet, cash flow and collateral. The approval of new loan
exposure is the joint responsibility of Credit Risk Management and Decisioning and the Line. Each commercial borrower
relationship is assigned an internal risk rating by Credit Risk Management and Decisioning. Further, Credit updates the
assigned internal risk rating as new information becomes available as a result of periodic reviews of credit quality, a change in
borrower performance or approval of new loan exposure. The goal of the internal risk rating framework is to support
Comerica's risk management capability, including its ability to identify and manage changes in the credit risk profile of its
portfolio, predict future losses and price the loans appropriately for risk. Finally, the Line and Credit (including its Credit
Analytics and Strategy department) work together to insure the overall credit risk within the loan portfolio is consistent with the
Bank’s Credit Risk Appetite.
Credit Policy
Comerica maintains a comprehensive set of credit policies. Comerica's credit policies provide Line and Credit
Personnel with a framework of sound underwriting practices and potential loan structures. These credit policies also provide the
framework for loan committee approval authorities based on its internal risk-rating system and establish maximum exposure
limits based on risk ratings and Comerica's legal lending limit. Credit, in conjunction with the Line, monitors compliance with
the credit policies and modifies the existing policies as necessary. New or modified policies/guidelines require approval by the
Strategic Credit Committee, chaired by Comerica's Chief Credit Officer and comprised of senior credit, market and risk
management executives.
Commercial Loan Portfolio
Commercial loans are underwritten using a comprehensive analysis of the borrower's operations. The underwriting
process includes an analysis of some or all of the factors listed below:
•
•
•
•
•
•
•
•
The borrower's business model and industry characteristics.
Periodic review of financial statements including financial statements audited by an independent certified
public accountant when appropriate.
The proforma financial condition including financial projections.
The borrower's sources and uses of funds.
The borrower's debt service capacity.
The guarantor's financial strength.
A comprehensive review of the quality and value of collateral, including independent third-party appraisals of
machinery and equipment and commercial real estate, as appropriate, to determine the advance rates.
Physical inspection of collateral and audits of receivables, as appropriate.
For additional information specific to certain businesses within our commercial portfolio, please see the caption
“Concentrations of Credit Risk" in the Financial Section of this report.
Commercial Real Estate (CRE) Loan Portfolio
Comerica's CRE loan portfolio consists of real estate construction and commercial mortgage loans and includes loans
to real estate developers and investors and loans secured by owner-occupied real estate. Comerica's CRE loan underwriting
policies are consistent with the approach described above and provide maximum loan-to-value ratios that limit the size of a loan
to a maximum percentage of the value of the real estate collateral securing the loan. The loan-to-value percentage varies by the
type of collateral and is limited by advance rates established by our regulators. Our loan-to-value limitations are, in certain
cases, more restrictive than those required by regulators and are influenced by other risk factors such as the financial strength of
the borrower or guarantor, the equity provided to the project and the viability of the project itself. CRE loans generally require
cash equity. CRE loans are normally originated with full recourse or limited recourse to all principals and owners. There are
limitations to the size of a single project loan and to the aggregate dollar exposure to a single guarantor. For additional
information specific to our CRE loan portfolio, please see the caption “Commercial Real Estate Lending” in the Financial
Section of this report.
12
Consumer and Residential Mortgage Loan Portfolios
Comerica's consumer and residential mortgage loan underwriting includes an assessment of each borrower's personal
financial condition, including a review of credit reports and related FICO scores (a type of credit score used to assess an
applicant's credit risk) and verification of income and assets, as applicable. After origination, internal risk ratings are assigned
based on payment status and product type.
Comerica does not originate subprime loans. Although a standard industry definition for subprime loans (including
subprime mortgage loans) does not exist, Comerica defines subprime loans as specific product offerings for higher risk
borrowers, including individuals with one or a combination of high credit risk factors. These credit factors include low FICO
scores, poor patterns of payment history, high debt-to-income ratios and elevated loan-to-value. Comerica generally considers
subprime FICO scores to be those below 620 on a secured basis (excluding loans with cash or near-cash collateral and adequate
income to make payments) and below 660 for unsecured loans. Residential mortgage loans retained in the portfolio are largely
relationship based. The remaining loans are typically eligible to be sold on the secondary market. Adjustable-rate loans are
limited to standard conventional loan programs. For additional information specific to our residential real estate loan portfolio,
please see the caption “Residential Real Estate Lending” in the Financial Section of this report.
HUMAN CAPITAL RESOURCES
Comerica’s relationship banking strategy relies heavily on the personal relationships and the quality of service
provided by employees. Accordingly, Comerica aims to attract, develop and retain employees who can drive financial and
strategic growth objectives and build long-term shareholder value. Key items related to Comerica’s human capital resources are
described below.
Structure. As of December 31, 2023, Comerica and its subsidiaries had 7,496 full-time and 367 part-time employees,
primarily located in Comerica’s primary markets of Michigan, Texas, California, Arizona, Florida and North Carolina.
Comerica’s Chief Administrative Officer and Chief Human Resources Officer reports directly to the Chairman, President and
CEO and manages all aspects of the employee experience, including talent acquisition, diversity and inclusion, learning and
development, talent management, compensation and benefits.
The Governance, Compensation and Nominating Committee of the Board reviews Comerica’s human capital
management strategy and talent development program, including recruitment, evaluations and development activities. This
Committee also reviews Comerica’s employee diversity, equity and inclusion initiatives, as well as the results of those
initiatives. The full Board, either directly or through one or more of its committees, is provided annual workforce updates. To
enhance the Board’s understanding of Comerica's talent pipeline, the Board routinely meets with high-potential employees in
formal and informal settings.
Productivity. Comerica carefully manages the size of its workforce and reallocates resources as needed. As of
December 31, 2023, Comerica’s total employee headcount, on a full-time equivalent basis, was 13 percent lower than as of
December 31, 2015. Additionally, for 2023, Comerica managed an average of $16 million of loans and deposits per employee.
Diversity Comerica has an organization-wide focus on an inclusive workforce that resembles the communities that it
serves. As of December 31, 2023, Comerica’s U.S. colleagues had the following attributes:
Employees
Officials and Managers(1)
Executive Officers(2)
(1) Based on EEO-1 job classifications.
(2) Using Securities and Exchange Commission definition.
Female (%)
63
53
37
Minority (%)
43
31
21
Forbes recognized Comerica as "One of Dallas-Fort Worth's Top Workplaces." Newsweek listed Comerica in its 2024
list of America’s Greatest Workplaces for Diversity. The Hispanic Association on Corporate Responsibility rated Comerica
with five stars – the highest marking – in the category of governance in its 2023 Corporate Inclusion Index. Human Rights
Campaign's Corporate Equality Index (for LGBTQ+ equality) once again gave Comerica a perfect score of 100% in 2023.
Comerica has thirteen Employee Resource Groups (ERGs), consisting of employees with common interests organized
to promote professional development, social networking, awareness and inclusion, social impact and talent attraction and
retention. The ERGs help support and sustain Comerica's diversity and inclusion model. These groups include All Abilities and
Allies; Comerica African American Network; Comerica Asian and Pacific Islander Network; Comerica Asian Indian
Association; Comerica Young Professionals Network; Comerica Quantitative Professionals Network; Jewish Heritage; PRISM
– LGBTQ+; Mi Gente; The European Connection; Veteran’s Leadership Network; Women’s Forum; and Women in
Technology.
13
Compensation and Benefits. Comerica strives to provide pay, benefits and programs that help meet the varying needs
of its employees. Compensation and benefits include market-competitive pay, retirement programs, broad-based bonuses, an
employee stock purchase plan, health and welfare benefits, an employee assistance program, financial counseling, paid time off,
family leave and flexible work schedules. In 2023, Comerica kept its minimum wage at $18 per hour. Additionally, for 2023,
Comerica held the proportion that employees pay for their medical and dental benefits steady, absorbing proportional cost
increases. Comerica periodically examines the main components of compensation, like salaries and bonuses, by grade level and
position to ensure similar positions receive similar pay to the extent other factors can be equalized (e.g., time in position,
performance, education). Comerica also considers equitable benefits and looks at policies and practices that potentially drive
inequities. Solicitation of salary history from applicants is prohibited.
Attraction, Development and Retention. Comerica measures the success of its talent acquisition strategy on speed and
quality of acquisition, diversity of its applicant pool, and new colleague retention. In addition, overall performance metrics are
tracked for each key business line. Sourcing strategies and support structures are evaluated and modified to ensure that
performance targets are met consistently.
Comerica operates and continues to evolve multiple internal programs to support the development and retention of its
colleagues, including Comerica University, internal Leadership Development, Emerging Leaders, and Senior Leadership
programs designed to develop high potential employees, a Future-Ready Technology skills program to help re- and up-skill
Technology colleagues, a Managing Essentials Certificate series for managers and organizational change management learning
for all colleagues. In 2023, over 14,000 skills-based titles were offered to Comerica colleagues and an average of around 24
hours of training per employee were completed. Comerica also supports its employees’ involvement in external development
programs and volunteerism. All full-time colleagues are granted up to 8 hours of PTO annually, and all part-time colleagues are
granted up to 4 hours of PTO annually to use for volunteer events. This includes volunteer opportunities related and unrelated
to Comerica.
Comerica’s investment in its employees has resulted in a long-tenured workforce, with average tenure of around 12
years of service. Of the approximately 2,330 open employee positions filled in 2023, 61% were filled by external hires and 39%
positions were filled by internal hires. Employee turnover for 2023 was approximately 15%. In 2023, Comerica conducted its
third enterprise-wide employee engagement survey, with approximately 85% of colleagues participating.
AVAILABLE INFORMATION
Comerica maintains an Internet website at www.comerica.com where the Annual Report on Form 10-K, Quarterly
Reports on Form 10-Q, Current Reports on Form 8-K and all amendments to those reports are available without charge, as soon
as reasonably practicable after those reports are filed with or furnished to the SEC. Investors should regularly review that
website because Comerica regularly and routinely posts other important information there, particularly in the "Investor
Relations" portion of the website.
The Code of Business Conduct and Ethics for Employees, the Code of Business Conduct and Ethics for Members of
the Board of Directors and the Senior Financial Officer Code of Ethics adopted by Comerica are also available on the Internet
website and are available in print to any shareholder who requests them. Such requests should be made in writing to the
Corporate Secretary at Comerica Incorporated, Comerica Bank Tower, 1717 Main Street, MC 6404, Dallas, Texas 75201.
In addition, pursuant to regulations adopted by the FRB, Comerica makes additional regulatory capital-related
disclosures. Under these regulations, Comerica satisfies a portion of these requirements through postings on its website, and
Comerica has done so and expects to continue to do so without also providing disclosure of this information through filings
with the SEC.
Where we have included web addresses in this report, such as our web address and the web address of the SEC, we
have included those web addresses as inactive textual references only. Except as specifically incorporated by reference into this
report, information on those websites is not part hereof.
Item 1A. Risk Factors.
This report includes forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. In
addition, Comerica may make other written and oral communications from time to time that contain such statements. All
statements regarding Comerica's expected financial position, strategies and growth prospects and general economic conditions
Comerica expects to exist in the future are forward-looking statements. The words, “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 track,” “trend,” “objective,” “looks forward,” “projects,” “models” 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.
14
Comerica cautions that forward-looking statements are subject to numerous assumptions, risks and uncertainties,
which change over time. Forward-looking statements speak only as of the date the statement is made, and 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. Actual results could differ materially from those anticipated in forward-looking
statements and future results could differ materially from historical performance.
In addition to factors mentioned elsewhere in this report or previously disclosed in Comerica's SEC reports (accessible
on the SEC's website at www.sec.gov or on Comerica's website at www.comerica.com), the factors contained below, among
others, could cause actual results to differ materially from forward-looking statements, and future results could differ materially
from historical performance.
CREDIT RISK
•
Changes in customer behavior due to outside factors may adversely impact Comerica's business, financial
condition and results of operations.
As a financial institution, the Corporation's principal activity is lending to and accepting deposits from businesses and
individuals. The primary source of revenue is net interest income, which is principally derived from the difference
between interest earned on loans and investment securities and interest paid on deposits and other funding sources. The
Corporation also provides other products and services that meet the financial needs of customers which generate
noninterest income, the Corporation's secondary source of revenue. Growth in loans, deposits and noninterest income
is affected by many factors, including economic conditions in the markets the Corporation serves, the financial
requirements and economic health of customers and the ability to add new customers and/or increase the number of
products used by current customers. Success in providing products and services depends on the financial needs of
customers and the types of products desired.
Individual, economic, political, industry-specific conditions and other factors outside of Comerica's control, such as
pandemics, inflation, military conflicts, labor shortages, supply chain constraints, fuel prices, energy costs, tariffs, real
estate values or other factors that affect customer income levels, could alter predicted customer borrowing, repayment,
investment and deposit practices. Such a change in these practices could materially adversely affect Comerica's ability
to anticipate business needs and meet regulatory requirements.
Further, difficult economic conditions, such as a recession, may negatively affect consumer confidence levels. A
decrease in consumer confidence levels would likely aggravate the adverse effects of these difficult market conditions
on Comerica, Comerica's customers and others in the financial institutions industry.
Unfavorable developments concerning credit quality could adversely affect Comerica's financial results.
Although Comerica regularly reviews credit exposure related to its customers and various industry sectors in which it
has business relationships, default risk may arise from events or circumstances that are difficult to detect or foresee.
Under such circumstances, as occurred during and as a result of the COVID-19 pandemic and may reoccur due to
other pandemics or crises, Comerica could experience an increase in the level of provision for credit losses and reserve
for credit losses, which could adversely affect Comerica's financial results. Additionally, some of Comerica's loan
portfolios have higher risk profiles relative to the rest of our portfolio, such as Technology and Life Sciences,
automotive production and the leveraged transactions book. These loan portfolios have higher levels of criticized loans
than the general population, and further migration could lead to an adverse effect on credit metrics and Comerica's
financial results. For more information, please see "Leveraged Loans” and "Automotive Lending - Production" in of
the Financial Section of this report.
•
Declines in the businesses or industries of Comerica's customers could cause increased credit losses or
decreased loan balances, which could adversely affect Comerica.
Comerica's business customer base consists, in part, of customers in volatile businesses and industries such as the
automotive, commercial real estate, residential real estate and energy industries. These industries are sensitive to
global economic conditions, supply chain factors and/or commodities prices. Additionally, certain segments of the
commercial real estate industry have been under pressure due to rapidly rising interest rates, shifts in demand (i.e.,
office, retail), labor and materials shortages and capital markets volatility. Finally, energy prices continue to fluctuate
and energy companies are expected to experience environmental pressure over the long-term. Any decline in one of
these businesses or industries could cause increased credit losses or reduced loan demand, which in turn could
adversely affect Comerica. As a regional banking organization, our credit risks (and many other of our risks) may be
exacerbated by events or factors that disproportionately affect the markets in which we operate, accept deposits, make
loans or invest. For more information regarding certain of Comerica's lines of business, please see "Concentrations of
15
Credit Risk," "Commercial Real Estate Lending," "Automotive Lending - Dealer," "Automotive Lending -
Production," "Residential Real Estate Lending," and “Energy Lending” in the Financial Section of this report.
MARKET RISK
•
•
Governmental monetary and fiscal policies may adversely affect the financial services industry, and therefore
impact Comerica's financial condition and results of operations.
Monetary and fiscal policies of various governmental and regulatory agencies, in particular the FRB, affect the
financial services industry, directly and indirectly. The FRB regulates the supply of money and credit in the U.S., and
its monetary policies determine in large part Comerica's cost of funds for lending and investing and the return that can
be earned on such loans and investments. Changes in such policies, including changes in interest rates or changes in
the FRB's balance sheet, influence the origination of loans, the value of investments, the generation of deposits and the
rates received on loans and investment securities and paid on deposits. Changes in monetary and fiscal policies are
beyond Comerica's control and difficult to predict. Comerica's financial condition and results of operations could be
materially adversely impacted by changes in governmental monetary and fiscal policies.
Fluctuations in interest rates and their impact on deposit pricing could adversely affect Comerica's net interest
income and balance sheet.
The operations of financial institutions such as Comerica are dependent to a large degree on net interest income, which
is the difference between interest income from loans and investments and interest expense on deposits and borrowings.
Prevailing economic conditions and the trade, fiscal and monetary policies of the federal government and various
regulatory agencies all affect market rates of interest and the availability and cost of credit, which in turn significantly
affect financial institutions' net interest income and the market value of its investment securities. The Federal Reserve
raised interest rates four times in 2023; if the Federal Reserve lowers interest rates in the future, it will adversely affect
the interest income Comerica earns on loans and investments. Further, while Comerica has taken steps to reduce its
interest rate sensitivity, those actions, such as the execution of Comerica's hedging strategy, do not fully eliminate
interest rate risk. For a discussion of Comerica's interest rate sensitivity and risk management strategies, please see,
“Market and Liquidity Risk” in the Financial Section of this report.
Deposits make up a large portion of Comerica’s funding portfolio. Comerica's funding costs may increase if it raises
deposit rates to avoid losing customer deposits, as we did in 2023, or if it loses customer deposits and must rely on
more expensive sources of funding.
Volatility in interest rates can also result in disintermediation, which is the flow of funds away from financial
institutions into direct investments, such as federal government and corporate securities and other investment vehicles,
which generally pay higher rates of return than financial institutions. Comerica's financial results could be materially
adversely impacted by changes in financial market conditions.
•
Comerica's transition away from the Bloomberg Short-Term Bank Yield Index, or "BSBY," could adversely
affect its financial results.
On November 15, 2023, Bloomberg Index Services Limited announced it will discontinue publishing BSBY on
November 15, 2024. Comerica is transitioning a number of arrangements to other rates, primarily Secured Overnight
Financing Rate (“SOFR”).
As a result of this transition, interest rates on our floating rate loans, derivatives, and other financial instruments tied to
BSBY rates, as well as the revenue and expenses associated with those financial instruments, may be adversely
affected. As Comerica works through the complicated product transitions involved, Comerica’s relationships with its
customers may suffer. Comerica may need to make additional efforts to retain customers, avoid disruptions to
customer service and ensure the products continue to fulfill their intended purposes for customers. Comerica may also
be harmed by operational errors, inconsistencies or inefficiencies inherent in making these transitions. Further,
Comerica’s transition could prompt inquiries or other actions from regulators. It could also result in disputes with
counterparties regarding the terms of the arrangements Comerica seeks to change.
LIQUIDITY RISK
•
Comerica must maintain adequate sources of funding and liquidity to meet regulatory expectations, support its
operations and fund outstanding liabilities.
Comerica’s liquidity and ability to fund and run its business could be materially adversely affected by a variety of
conditions and factors, including financial and credit market disruptions and volatility, a lack of market or customer
confidence in financial markets in general, or deposit competition based on interest rates, which may result in a loss of
16
customer deposits or outflows of cash or collateral and/or adversely affect Comerica's ability to access capital markets
on favorable terms.
Other conditions and factors that could materially adversely affect Comerica’s liquidity and funding include a lack of
market or customer confidence in, or negative news about, Comerica or the financial services industry generally which
also may result in a loss of deposits and/or negatively affect Comerica's ability to access the capital markets; the loss of
customer deposits to alternative investments; counterparty availability; interest rate fluctuations; general economic
conditions; and the legal, regulatory, accounting and tax environments governing Comerica's funding transactions.
Many of the above conditions and factors may be caused by events over which Comerica has little or no control. There
can be no assurance that significant disruption and volatility in the financial markets will not occur in the future. As
occurred following the collapse of certain banks early in 2023, the failure of other financial institutions could cause
deposit outflows if customers were to spread deposits among several different banks to maximize their FDIC
insurance, move deposits to banks deemed "too big to fail," or remove deposits from the U.S. financial system entirely.
Comerica has a high percentage of uninsured deposits and relies on its deposit base for liquidity. Further, Comerica's
customers may be adversely impacted by such conditions, which could have a negative impact on Comerica's business,
financial condition and results of operations.
Additionally, if Comerica is for these or any other reason unable to continue to fund assets through customer bank
deposits or access funding sources on favorable terms, or if Comerica suffers an increase in borrowing costs or
otherwise fails to manage liquidity effectively, Comerica’s liquidity, operating margins, financial condition and results
of operations may be materially adversely affected.
Management is not currently engaged in repurchasing shares and will continue to monitor various factors, including
the Corporation's earnings generation, capital needs to fund future loan growth, regulatory changes and market
conditions, before resuming the share repurchase program. At all times, Comerica may be unable to generate sufficient
returns to repurchase shares, or may choose to devote capital to other uses rather than repurchase shares.
•
Reduction in our credit ratings could adversely affect Comerica and/or the holders of its securities.
Rating agencies regularly evaluate Comerica, and their ratings are based on a number of factors, including Comerica's
financial strength as well as factors not entirely within its control, such as conditions affecting the financial services
industry generally. Following banking industry disruptions in early 2023, Moody's downgraded the Corporation and
Bank's credit ratings and changed the Corporation and Bank's outlooks to Negative related to uncertainty in the
banking industry; Moody's also lowered the macro profile of the U.S. banking system, reflecting general concern
around the banking industry as a whole. Similarly following those disruptions, Standard & Poor's downgraded the
Corporation and Bank's credit ratings while reaffirming their outlooks at Stable, and Fitch changed the Corporation's
and the Bank's outlooks to Negative, noting relatively higher usage of brokered deposits and wholesale funding. There
can be no assurance that Comerica will maintain its current ratings. While recent credit rating actions have had little to
no detrimental impact on Comerica's profitability, borrowing costs, or ability to access the capital markets, future
downgrades to Comerica's or its subsidiaries' credit ratings could adversely affect Comerica's profitability, borrowing
costs, or ability to access the capital markets or otherwise have a negative effect on Comerica's results of operations or
financial condition. If such a reduction placed Comerica's or its subsidiaries' credit ratings below investment grade, it
could also create obligations or liabilities under the terms of existing arrangements that could increase Comerica's
costs under such arrangements. Additionally, a downgrade of the credit rating of any particular security issued by
Comerica or its subsidiaries could negatively affect the ability of the holders of that security to sell the securities and
the prices at which any such securities may be sold.
•
The soundness of other financial institutions could adversely affect Comerica.
Comerica's ability to engage in routine funding transactions could be adversely affected by the actions and commercial
soundness of other financial institutions. Financial services institutions are interrelated as a result of trading, clearing,
counterparty or other relationships. Comerica has exposure to many different industries and counterparties, and it
routinely executes transactions with counterparties in the financial industry, including brokers and dealers, commercial
banks, investment banks, mutual and hedge funds, and other institutional clients. As a result, defaults by, or even
rumors or questions about, one or more financial services institutions, or the financial services industry generally, have
led, and may further lead, to market-wide liquidity problems and could lead to losses or defaults by us or by other
institutions. Many of these transactions could expose Comerica to credit risk in the event of default of its counterparty
or client. In addition, Comerica's credit risk may be impacted when the collateral held by it cannot be monetized or is
liquidated at prices not sufficient to recover the full amount of the financial instrument exposure due to Comerica.
Further, volatility in the banking industry may lead to greater reliance on third parties that provide money market or
deposit sweep services. In addition, many of these transactions could expose Comerica to credit risk in the event of
17
default of its counterparty or client. There is no assurance that any such losses would not adversely affect, possibly
materially, Comerica.
TECHNOLOGY RISK
•
Comerica faces security risks, including denial of service attacks, hacking, social engineering attacks targeting
Comerica’s colleagues and customers, malware intrusion or data corruption attempts, and identity theft that
could result in the disclosure of confidential information, adversely affect its business or reputation, and create
significant legal and financial exposure.
Comerica’s computer systems and network infrastructure and those of third parties, on which Comerica is highly
dependent, are subject to security risks and could be susceptible to cyber attacks, such as denial of service attacks,
hacking, terrorist activities or identity theft. Comerica’s business relies on the secure processing, transmission, storage
and retrieval of confidential, proprietary and other information in its computer and data management systems and
networks, and in the computer and data management systems and networks of third parties. In addition, to access
Comerica’s network, products and services, its customers and other third parties may use personal mobile devices or
computing devices that are outside of its network environment and are subject to their own cybersecurity risks.
Cyber attacks could include computer viruses, malicious or destructive code, phishing attacks, denial of service or
information, ransomware, improper access by employees or vendors, attacks on personal email of employees, ransom
demands to not expose security vulnerabilities in Comerica's systems or the systems of third parties, or other security
breaches, and could result in the destruction or exfiltration of data and systems. As cyber threats continue to evolve,
Comerica may be required to expend significant additional resources to continue to modify or enhance its protective
measures or to investigate and remediate any information security vulnerabilities or incidents. Despite efforts to ensure
the integrity of Comerica’s systems and implement controls, processes, policies and other protective measures,
Comerica may not be able to anticipate all security breaches. Nor may it (or the third parties whose systems we rely
upon) be able to implement guaranteed preventive measures against such security breaches. Cyber threats are rapidly
evolving and Comerica may not be able to anticipate or prevent all such attacks and could be held liable for any
security breach or loss.
Although Comerica has programs in place related to business continuity, disaster recovery and information security to
maintain the confidentiality, integrity, and availability of its systems, business applications and customer information,
such disruptions may still give rise to interruptions in service to customers and loss or liability to Comerica, including
loss of customer data. Like other financial services firms, Comerica and its third party providers continue to be the
subject of cyber attacks. Although to this date Comerica has not experienced any material losses or other material
consequences related to cyber attacks, future cyber attacks could be more disruptive and damaging, and Comerica may
not be able to anticipate or prevent all such attacks. Further, cyber attacks may not be detected in a timely manner.
Cyber attacks or other information or security breaches, whether directed at Comerica or third parties, may result in a
material loss or have material consequences. Furthermore, the public perception that a cyber attack on Comerica’s
systems has been successful, whether or not this perception is correct, may damage its reputation with customers and
third parties with whom it does business. Hacking of personal information and identity theft risks, in particular, could
cause serious reputational harm. A successful penetration or circumvention of system security could cause Comerica
serious negative consequences, including loss of customers and business opportunities, costs associated with
maintaining business relationships after an attack or breach; significant business disruption to Comerica’s operations
and business, misappropriation, exposure, or destruction of its confidential information, intellectual property, funds,
and/or those of its customers; or damage to Comerica’s or Comerica’s customers’ and/or third parties’ computers or
systems, and could result in a violation of applicable privacy laws and other laws, litigation exposure, regulatory fines,
penalties or intervention, loss of confidence in Comerica’s security measures, reputational damage, reimbursement or
other compensatory costs, additional compliance costs, and could adversely impact its results of operations, liquidity
and financial condition. In addition, although Comerica maintains insurance coverage that may cover certain cyber
losses (subject to policy terms and conditions), we may not have adequate insurance coverage to compensate for losses
from a cybersecurity event.
•
Cybersecurity and data privacy are areas of heightened legislative and regulatory focus.
As cybersecurity and data privacy risks for banking organizations and the broader financial system have significantly
increased in recent years, cybersecurity and data privacy issues have become the subject of increasing legislative and
regulatory focus. The federal bank regulatory agencies have proposed enhanced cyber risk management standards,
which would apply to a wide range of large financial institutions and their third-party service providers, including
Comerica and its bank subsidiaries, and would focus on cyber risk governance and management, management of
internal and external dependencies, and incident response, cyber resilience and situational awareness. Several states
have also proposed or adopted cybersecurity legislation and regulations, which require, among other things,
18
notification to affected individuals when there has been a security breach of their personal data. For more information
regarding cybersecurity regulation, refer to the “Supervision and Regulation” section of this report.
Comerica receives, maintains and stores non-public personal information of Comerica’s customers and counterparties,
including, but not limited to, personally identifiable information and personal financial information. The sharing, use,
disclosure and protection of this information are governed by federal and state law. Both personally identifiable
information and personal financial information is increasingly subject to legislation and regulation, the intent of which
is to protect the privacy of personal information that is collected and handled. For example, the CCPA applies to for-
profit businesses that conduct business in California and meet certain revenue or data collection thresholds, including
Comerica. For more information regarding data privacy regulation, refer to the “Supervision and Regulation” section
of this report.
Comerica may become subject to new legislation or regulation concerning cybersecurity or the privacy of personally
identifiable information and personal financial information or of any other information Comerica may store or
maintain. Comerica could be adversely affected if new legislation or regulations are adopted or if existing legislation
or regulations are modified such that Comerica is required to alter its systems or require changes to its business
practices or privacy policies. If cybersecurity, data privacy, data protection, data transfer or data retention laws are
implemented, interpreted or applied in a manner inconsistent with Comerica’s current practices, it may be subject to
fines, litigation or regulatory enforcement actions or ordered to change its business practices, policies or systems in a
manner that adversely impacts Comerica’s operating results.
OPERATIONAL RISK
•
Comerica’s operational or security systems or infrastructure, or those of third parties, could fail or be
breached, which could disrupt Comerica’s business and adversely impact Comerica’s results of operations,
liquidity and financial condition, as well as cause legal or reputational harm.
The potential for operational risk exposure exists throughout Comerica’s business and, as a result of its interactions
with, and reliance on, third parties, is not limited to Comerica’s own internal operational functions. Comerica's
operations rely on the secure processing, storage and transmission of confidential and other information on its
technology systems and networks. These networks are subject to infrastructure failures, ongoing system maintenance
and upgrades and planned network outages. Comerica's use of mobile and cloud technologies, as well as its hybrid
work options permitting remote work, can heighten these and other operational risks. Any failure, interruption or
breach in security of these systems could result in failures or disruptions in Comerica's customer relationship
management, general ledger, deposit, loan and other systems.
Comerica relies on its employees and third parties in its day-to-day and ongoing operations, who may, as a result of
human error, misconduct, malfeasance or failure, or breach of Comerica’s or of third-party systems or infrastructure,
expose Comerica to risk. For example, Comerica’s ability to conduct business may be adversely affected by any
significant disruptions to Comerica or to third parties with whom Comerica interacts or upon whom it relies. Although
Comerica has programs in place related to business continuity, disaster recovery and information security to maintain
the confidentiality, integrity and availability of its systems, business applications and customer information, such
disruptions may still give rise to interruptions in service to customers and loss or liability to Comerica, including loss
of customer data. In addition, Comerica’s ability to implement backup systems and other safeguards with respect to
third-party systems is more limited than with respect to its own systems.
Comerica’s financial, accounting, data processing, backup or other operating or security systems and infrastructure
may fail to operate properly or become disabled or damaged as a result of a number of factors, including events that
are wholly or partially beyond its control, which could adversely affect its ability to process transactions or provide
services. Such events may include sudden increases in customer transaction volume and/or customer activity;
electrical, telecommunications or other major physical infrastructure outages; natural disasters such as earthquakes,
tornadoes, hurricanes and floods; disease pandemics; cyber attacks; and events arising from local or larger scale
political or social matters, including wars and terrorist acts.
The occurrence of any failure or interruption in Comerica's operations or information systems, or any security breach,
could cause reputational damage, jeopardize the confidentiality of customer information, result in a loss of customer
business, subject Comerica to regulatory intervention or expose it to civil litigation and financial loss or liability, any
of which could have a material adverse effect on Comerica.
19
•
•
Comerica relies on other companies to provide certain key components of its delivery systems, and certain
failures could materially adversely affect operations.
Comerica faces the risk of operational disruption, failure or capacity constraints due to its dependency on third party
vendors for components of its delivery systems. Third party vendors provide certain key components of Comerica's
delivery systems, such as cloud-based computing, networking and storage services, cash services, payment processing
services, recording and monitoring services, internet connections and network access, clearing agency services, card
processing services and trust processing services. While Comerica conducts due diligence prior to engaging with third
party vendors and performs ongoing monitoring of vendor controls, it does not control their operations. Further, while
Comerica's vendor management policies and practices are designed to comply with current regulations, these policies
and practices cannot eliminate this risk. In this context, any vendor failure to properly deliver these services could
adversely affect Comerica’s business operations, and result in financial loss, reputational harm, and/or regulatory
action.
Legal and regulatory proceedings and related matters with respect to the financial services industry, including
those directly involving Comerica and its subsidiaries, could adversely affect Comerica or the financial services
industry in general.
Comerica has been, and may in the future be, subject to various legal and regulatory proceedings. It is inherently
difficult to assess the outcome of these matters, and there can be no assurance that Comerica will prevail in any
proceeding or litigation. Any such matter could result in substantial cost and diversion of Comerica's efforts, which by
itself could have a material adverse effect on Comerica's financial condition and operating results. Further, adverse
determinations in such matters could result in fines or actions by Comerica's regulators that could materially adversely
affect Comerica's business, financial condition or results of operations.
Comerica establishes reserves for legal claims when payments associated with the claims become probable and the
costs can be reasonably estimated. Comerica may still incur legal costs for a matter even if it has not established a
reserve. In addition, due to the inherent subjectivity of the assessments and unpredictability of the outcome of legal
proceedings, the actual cost of resolving a legal claim may be substantially higher than any amounts reserved for that
matter. The ultimate resolution of a pending legal proceeding, depending on the remedy sought and granted, could
adversely affect Comerica's results of operations and financial condition.
•
Comerica may incur losses due to fraud.
Fraudulent activity can take many forms and has escalated as more tools for accessing financial services emerge, such
as real-time payments. Fraud schemes are broad and continuously evolving. Examples include but are not limited to:
debit card/credit card fraud, check fraud, mechanical devices attached to ATM machines, social engineering and
phishing attacks to obtain personal information, impersonation of clients through the use of falsified or stolen
credentials, employee fraud, information theft and other malfeasance. Increased deployment of technologies, such as
chip card technology, defray and reduce aspects of fraud; however, criminals are turning to other sources to steal
personally identifiable information in order to impersonate the consumer to commit fraud. Many of these data
compromises have been widely reported in the media. Further, as a result of the increased sophistication of fraud
activity, Comerica continues to invest in systems, resources, and controls to detect and prevent fraud. This will result
in continued ongoing investments in the future.
•
Controls and procedures may not prevent or detect all errors or acts of fraud.
Controls and procedures are designed to provide reasonable assurance that information required to be disclosed in
reports Comerica files or submits under the Exchange Act is accurately accumulated and communicated to
management, and recorded, processed, summarized, and reported within the time periods specified in the SEC's rules
and forms. Disclosure controls and procedures or internal controls and procedures, no matter how well conceived and
operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met, due to
certain inherent limitations. These limitations include the realities that judgments in decision making can be faulty, that
alternative reasoned judgments can be drawn, that breakdowns can occur because of an error or mistake, or that
controls may be fraudulently circumvented. Accordingly, because of the inherent limitations in control systems,
misstatements due to error or fraud may occur and not be detected.
COMPLIANCE RISK
•
Changes in regulation or oversight, or changes in Comerica’s status with respect to existing regulations or
oversight, may have a material adverse impact on Comerica's operations.
Comerica is subject to extensive regulation, supervision and examination by the U.S. Treasury, the Texas Department
of Banking, the FDIC, the FRB, the OCC, the CFPB, the CFTC, the SEC, FINRA, DOL, MSRB and other regulatory
20
bodies. Such regulation and supervision governs and limits the activities in which Comerica may engage. Regulatory
authorities have extensive discretion in their supervisory and enforcement activities, including the imposition of
restrictions on Comerica's operations and ability to make acquisitions, investigations and limitations related to
Comerica's securities, the classification of Comerica's assets and determination of the level of Comerica's allowance
for loan losses. Any change in such regulation and oversight, whether in the form of regulatory policy, regulations,
legislation, changed interpretations or supervisory action, may have a material adverse impact on Comerica's business,
financial condition or results of operations. The impact of any future legislation or regulatory actions may adversely
affect Comerica's businesses or operations.
Further, even if such regulations or oversight do not change, Comerica's business may develop such that it may be
subject to increased regulatory requirements. For example, if Comerica's asset size increases in the future and exceeds
$100 billion in average total consolidated assets calculated over four consecutive financial quarters, Comerica will
become a Category IV institution. Category IV institutions ($100 to $250 billion in assets) under the Tailoring Rules
are subject to additional requirements, such as certain enhanced prudential standards and monitoring and reporting
certain risk-based indicators. Under the Tailoring Rules, Category IV firms are, among other things, subject to (1)
supervisory capital stress testing on a biennial basis, (2) requirements to develop and maintain a capital plan on an
annual basis and (3) certain liquidity risk management and risk committee requirements, including liquidity buffer and
liquidity stress testing requirements. Comerica would also incur additional assessments under Regulation TT. If
Comerica becomes subject to enhanced prudential standards, it will face more stringent requirements or limitations on
its business, as well as increased compliance costs, and, depending on its levels of capital and liquidity, stress test
results and other factors, may be limited in the types of activities it may conduct and be limited as to how it utilizes
capital. Further, Comerica may be subject to heightened expectations, which could result in additional regulatory
scrutiny, higher penalties, and more severe consequences if it is unable to meet those expectations. In particular,on
July 27, 2023, the FRB, the FDIC, and the OCC issued a proposal, referred to as “Basel III Endgame,” that would
result in significant changes to the U.S. regulatory capital rules for banking organizations with total consolidated assets
of $100 billion or more. As of December 31, 2023, the Corporation had total assets of $85.8 billion. While Basel III
Endgame would not apply to Comerica as currently proposed, if Comerica becomes subject to those requirements or
becomes subject to any other new laws or regulations related to capital and liquidity, such requirements could limit
Comerica’s ability to pay dividends or make share repurchases or require Comerica to reduce business levels or to
raise capital, which would have a material adverse effect on Comerica’s financial condition and results of operations.
•
Compliance with stringent capital requirements may adversely affect Comerica.
Comerica is required to satisfy stringent regulatory capital standards, as set forth in the “Supervision and Regulation”
section of this report. These requirements, and any other new laws or regulations related to capital and liquidity, or any
existing requirements that Comerica becomes subject to as a result of its increased asset size, could adversely affect
Comerica's ability to pay dividends or make share repurchases, or could require Comerica to reduce business levels or
to raise capital, including in ways that may adversely affect its results of operations or financial condition and/or
existing shareholders. Maintaining higher levels of capital may reduce Comerica's profitability and otherwise
adversely affect its business, financial condition, or results of operations.
•
Changes to tax law or regulations, or changes to administrative or judicial interpretations of tax law
regulations, could adversely affect Comerica.
Federal income tax treatment of corporations may be clarified and/or modified by legislative, administrative or judicial
changes or interpretations at any time. Any such changes could adversely affect Comerica, either directly, or indirectly
as a result of effects on Comerica's customers.
STRATEGIC RISK
•
Damage to Comerica’s reputation could damage its businesses.
Reputational risk is an increasing concern for businesses as customers are interested in doing business with companies
they admire and trust. Such risks include compliance issues, operational challenges, or a strategic, high profile event.
Comerica's business is based on the trust of its customers, communities, and entire value chain, which makes
managing reputational risk extremely important. News or other publicity that impairs Comerica's reputation, or the
reputation of the financial services industry generally, can therefore cause significant harm to Comerica’s business and
prospects. Further, adverse publicity or negative information posted on social media websites regarding Comerica,
whether or not true, may result in harm to Comerica’s prospects.
21
•
Comerica may not be able to utilize technology to efficiently and effectively develop, market, and deliver new
products and services to its customers.
The financial services industry experiences rapid technological change with regular introductions of new technology-
driven products and services. The ability to access and use technology is an increasingly important competitive factor
in the financial services industry, and having the right technology is a critically important component to customer
satisfaction. As well, the efficient and effective utilization of technology enables financial institutions to reduce costs.
Comerica's future success depends, in part, upon its ability to address the needs of its customers by using technology to
market and deliver products and services that will satisfy customer demands, meet regulatory requirements, and create
additional efficiencies in Comerica's operations. Comerica may not be able to effectively develop new technology-
driven products and services or be successful in marketing or supporting these products and services to its customers,
which could have a material adverse impact on Comerica's financial condition and results of operations.
•
Competitive product and pricing pressures within Comerica's markets may change.
Comerica operates in a very competitive environment, which is characterized by competition from a number of other
financial institutions in each market in which it operates. Comerica competes largely on the basis of industry expertise,
the range of products and services offered, pricing and reputation, convenience, quality of service, responsiveness to
customer needs and the overall customer relationship. Comerica's competitors include financial institutions of all sizes.
Some of Comerica's larger competitors, including certain nationwide banks that have a significant presence in
Comerica's markets, may have a broader array of products and structure alternatives and, due to their size, may more
easily absorb credit losses. Some of Comerica's competitors (larger or smaller) may have more liberal lending policies
and and aggressive pricing standards for loans, deposits and services. Increasingly, Comerica competes with other
companies based on financial technology and capabilities, such as mobile banking applications and funds transfer.
Additionally, the financial services industry is subject to extensive regulation. For more information, see the
“Supervision and Regulation” section of this report. Such regulations may require significant additional investments in
technology, personnel or other resources or place limitations on the ability of financial institutions, including
Comerica, to engage in certain activities. Comerica's competitors may be subject to significantly different or lesser
regulation due to their asset size or types of products offered. Some competitors may also have the ability to more
efficiently utilize resources to comply with regulations or may be able to more effectively absorb the cost of
regulations.
In addition to banks, Comerica and its banking subsidiaries also face competition from financial intermediaries,
including savings and loan associations, consumer and commercial finance companies, leasing companies, venture
capital funds, credit unions, investment banks, insurance companies and securities firms. Competition among providers
of financial products and services continues to increase as technology advances have lowered the barriers to entry for
financial technology companies, with customers having the opportunity to select from a growing variety of traditional
and nontraditional alternatives, including crowdfunding, digital wallets and money transfer services. The ability of
non-banks to provide services previously limited to traditional banks has intensified competition. Because non-banks
are not subject to many of the same regulatory restrictions as banks and bank holding companies, they can often
operate with greater flexibility and lower cost structures.
If Comerica is unable to compete effectively in products and pricing in its markets, business could decline, which
could have a material adverse effect on Comerica's business, financial condition or results of operations.
•
The introduction, implementation, withdrawal, success and timing of business initiatives and strategies may be
less successful or may be different than anticipated, which could adversely affect Comerica's business.
Comerica makes certain projections and develops plans and strategies for its banking and financial products. If
Comerica does not accurately determine demand for its banking and financial product needs, it could result in
Comerica incurring significant expenses without the anticipated increases in revenue, which could result in a material
adverse effect on its business. Comerica has expanded its presence in the Southeastern and Mountain West regions of
the U.S.; if Comerica's expansion is not successful, it could adversely impact Comerica's expenses. Comerica recently
put in place a strategic relationship with Ameriprise to become Comerica’s new investment program provider; if the
relationship is not successful, it could adversely impact Comerica's reputation or results.
•
Management's ability to maintain and expand customer relationships may differ from expectations.
The financial services industry is very competitive. Comerica not only vies for business opportunities with new
customers, but also competes to maintain and expand the relationships it has with its existing customers. While
management believes that it can continue to grow many of these relationships, Comerica will continue to experience
pressures to maintain these relationships as its competitors attempt to capture its customers. Failure to create new
22
customer relationships and to maintain and expand existing customer relationships to the extent anticipated may
adversely impact Comerica's earnings.
•
Management's ability to retain key officers and employees may change.
Comerica's future operating results depend substantially upon the continued service of its executive officers and key
personnel. Comerica's future operating results also depend in significant part upon its ability to attract and retain
qualified management, financial, technical, marketing, sales and support personnel. Competition for qualified
personnel is intense, and Comerica cannot ensure success in attracting or retaining qualified personnel. There may be
only a limited number of persons with the requisite skills to serve in these positions, and it may be increasingly
difficult for Comerica to hire personnel over time. The increased prevalence of remote work environments has
intensified the competition for talent as job opportunities may be less constrained by physical geography.
Further, Comerica's ability to retain key officers and employees may be impacted by legislation and regulation
affecting the financial services industry. In 2016, the FRB, OCC and several other federal financial regulators revised
and re-proposed rules to implement Section 956 of the Dodd-Frank Act. Section 956 directed regulators to jointly
prescribe regulations or guidelines prohibiting incentive-based payment arrangements, or any feature of any such
arrangement, at covered financial institutions that encourage inappropriate risks by providing excessive compensation
or that could lead to a material financial loss. Consistent with the Dodd-Frank Act, the proposed rule would impose
heightened standards for institutions with $50 billion or more in total consolidated assets, which includes Comerica.
For these larger institutions, the proposed rule would require the deferral of at least 40 percent of incentive-based
payments for designated executives and significant risk-takers who individually have the ability to expose the
institution to possible losses that are substantial in relation to the institution's size, capital or overall risk tolerance.
Moreover, incentive-based compensation of these individuals would be subject to potential clawback for seven years
following vesting. Further, the rule imposes enhanced risk management controls and governance and internal policy
and procedure requirements with respect to incentive compensation. Accordingly, Comerica may be at a disadvantage
to offer competitive compensation compared to other financial institutions (as referenced above) or companies in other
industries, which may not be subject to the same requirements.
Comerica's business, financial condition or results of operations could be materially adversely affected by the loss of
any of its key employees, or Comerica's inability to attract and retain skilled employees.
•
Any future strategic acquisitions or divestitures may present certain risks to Comerica's business and
operations.
Difficulties in capitalizing on the opportunities presented by a future acquisition may prevent Comerica from fully
achieving the expected benefits from the acquisition, or may cause the achievement of such expectations to take longer
to realize than expected.
Further, the assimilation of any acquired entity's customers and markets could result in higher than expected deposit
attrition, loss of key employees, disruption of Comerica's businesses or the businesses of the acquired entity or
otherwise adversely affect Comerica's ability to maintain relationships with customers and employees or achieve the
anticipated benefits of the acquisition. These matters could have an adverse effect on Comerica for an undetermined
period. Comerica would be subject to similar risks and difficulties in connection with any future decisions to downsize,
sell or close units or otherwise change the business mix of Comerica.
GENERAL RISK
•
General political, economic or industry conditions, either domestically or internationally, may be less favorable
than expected.
Economic, financial market, political, and industry-specific developments may affect the financial services industry,
both directly and indirectly. The economic environment and market conditions in which Comerica operates, at the
local, domestic, and international levels, continue to be uncertain. The U.S. economy faces uncertainties from elevated
interest rates, persistent inflation, the end of fiscal stimulus, subdued housing market activity and weak export demand.
It also faces downside risks from geopolitical conflicts around the globe, including those involving Venezuela; the
Israel-Hamas War and its spread to Yemen, Lebanon, and/or other parts of the Middle East; the Ukraine-Russia War
and its effects in Europe; tensions between Taiwan and mainland China; threats from North Korea; and the possibility
of other geopolitical shocks.
Domestically, the elevated budget deficit, the possibility of a federal government shutdown and/or debt ceiling crisis,
as well as broader issues surrounding the federal budgeting process and governance, may contribute to a possibility
downgrade of the U.S. sovereign credit rating, potentially causing knock-on effects for the broader economy and
financial system that could include a recession.
23
The Federal Reserve has rapidly tightened monetary policies during the recovery from the 2020 recession, including
both increases in interest rates and reductions in the size of the central bank’s balance sheet, which contribute to the
risk of a monetary policy error.
Fiscal and industrial policies to support the growth of targeted industries could have unanticipated effects or change
unexpectedly, causing volatility in the economic performance of these industries or other parts of the economy. These
effects could impact the energy industry, manufacturing, construction, auto manufacturing and retailing, or potentially
other industries. Prices of energy products and services, as well as other commodities, are subject to large and
unanticipated fluctuations caused by changes to supply and demand conditions, which could directly or indirectly
affect Comerica’s business and/or clients.
Rapid changes to the economy have impacted demand for residential and commercial real estate, including single-
family and multifamily residential properties, as well as office, industrial, and retail commercial real estate properties.
These changes could affect the economic health of downtowns in major cities and other regions where economic
activity has changed in recent years, and could impact real estate prices, construction activity, and/or sales.
Adverse economic conditions related a potential recession, including changes in inflation, unemployment, or interest
rates, may, directly and indirectly, adversely affect Comerica. Furthermore, changes in trade policies or other
economic policies, state and local municipal finances, federal government finances and the U.S. federal debt, are
outside of our control and may affect the operating environment affecting Comerica.
•
Inflation could negatively impact Comerica's business, profitability and stock price.
Prolonged periods of inflation may impact Comerica profitability by negatively impacting its fixed costs and expenses,
including increasing funding costs and expense related to talent acquisition and retention, and negatively impacting the
demand for its products and services. Additionally, inflation may lead to a decrease in consumer and clients purchasing
power and negatively affect the need or demand for Comerica's products and services. If significant inflation
continues, Comerica's business could be negatively affected by, among other things, increased default rates leading to
credit losses which could decrease the appetite for new credit extensions. These inflationary pressures could result in
missed earnings and budgetary projections causing Comerica's stock price to suffer.
•
Methods of reducing risk exposures might not be effective.
The Corporation assumes various types of risk as a result of conducting business in the normal course. Instruments,
systems and strategies used to hedge or otherwise manage exposure to various types of credit, market, liquidity,
technology, operational, compliance, financial reporting and strategic risks could be less effective than anticipated.
The Corporation's enterprise risk management framework provides a process for identifying, measuring, controlling
and managing risks, and Comerica's management expends significant effort and resources in risk management.
Nevertheless, Comerica may not be able to effectively mitigate its risk exposures in particular market environments or
against particular types of risk, which could have a material adverse impact on Comerica's business, financial
condition or results of operations. The Corporation also utilizes various asset and liability management strategies to
manage net interest income exposure to interest rate risk; these may not always be completely effective.
For more information regarding risk management, please see "Risk Management" in the Financial Section of this
report.
•
Catastrophic events, including pandemics, may adversely affect the general economy, financial and capital
markets, specific industries, and Comerica.
Acts of terrorism, cyber-terrorism, political unrest, war, civil disturbance, armed regional and international hostilities
and international responses to these hostilities, natural disasters (including tornadoes, hurricanes, earthquakes, fires,
droughts and floods), global health risks or pandemics, or the threat of or perceived potential for these events could
have a negative impact on us. Comerica’s business continuity and disaster recovery plans may not be successful upon
the occurrence of one of these scenarios, and a significant catastrophic event anywhere in the world could materially
adversely affect Comerica's operating results.
In particular, certain of the regions where Comerica operates, including California, Texas, and Florida, are known for
being vulnerable to natural disasters. These types of natural catastrophic events have at times disrupted the local
economies, Comerica's business and customers, and have caused physical damage to Comerica's property in these
regions.
Dangerous, potentially deadly, and easily-transmitted viruses and other pathogens, and government and social
reactions to such epidemics and pandemics have affected, and may again affect, international trade (including supply
chains and export levels), travel, employee productivity, and other economic activities. These potential events may
24
•
•
•
negatively impact Comerica's and/or its clients’ costs, demand for its clients’ products, and/or the U.S. economy or
certain sectors thereof and, thus, adversely affect Comerica's business, financial condition, and results of operations.
Further, catastrophic events may have an impact on Comerica's customers and in turn, on Comerica.
In addition, these events have had and may continue to have an adverse impact on the U.S. and world economy in
general and consumer confidence and spending in particular, which could harm Comerica's operations. Any of these
events could increase volatility in the U.S. and world financial markets, which could harm Comerica's stock price and
may limit the capital resources available to Comerica and its customers. This could have a material adverse impact on
Comerica's operating results, revenues and costs and may result in increased volatility in the market price of
Comerica's common stock.
Climate change manifesting as physical or transition risks could adversely affect Comerica's operations,
businesses and customers.
There is an increasing concern over the risks of climate change and related environmental sustainability matters. The
physical risks of climate change include discrete events, such as flooding and wildfires, and longer term shifts in
climate patterns, such as extreme heat, sea level rise, and more frequent and prolonged drought. Such events could
disrupt Comerica's operations or those of its clients or third parties on which it relies, including through direct damage
to assets and indirect impacts from supply chain disruption and market volatility. Additionally, transitioning to a low
carbon economy may entail extensive policy, legal, technology, and market initiatives. Transition risks, including
changes in consumer preferences and additional regulatory requirements or taxes, could increase expenses and
undermine business strategies. In addition, Comerica's reputation and client relationships may be damaged as a result
of practices related to climate change, including its involvement, or its clients’ involvement, in certain industries or
projects associated with causing or exacerbating climate change, as well as any decisions Comerica makes to continue
to conduct or change its activities in response to considerations relating to climate change, including the setting of
climate-related goals, commitments and targets. As climate risk is interconnected with all key risk types, Comerica is
advancing its processes to embed climate risk considerations into risk management strategies such as market, credit
and operational risks; however, because the timing and severity of climate change may not be predictable, risk
management strategies may not be effective in mitigating climate risk exposure.
Changes in accounting standards could materially impact Comerica's financial statements.
From time to time accounting standards setters change the financial accounting and reporting standards that govern the
preparation of Comerica’s financial statements. These changes can be difficult to predict and can materially impact
how Comerica records and reports its financial condition and results of operations. In some cases, Comerica could be
required to apply a new or revised standard retroactively, resulting in changes to previously reported financial results,
or a cumulative charge to retained earnings.
Comerica's accounting estimates and processes are critical to the reporting of financial condition and results of
operations. They require management to make estimates about matters that are uncertain.
Accounting estimates and processes are fundamental to how Comerica records and reports its financial condition and
results of operations. Management must exercise judgment in selecting and applying many of these accounting
estimates and processes so they comply with U.S. Generally Accepted Accounting Principles ("GAAP"). In some
cases, management must select an accounting policy or method to apply from two or more alternatives, any of which
may be reasonable under the circumstances, yet may result in the Company reporting materially different results than
would have been reported under a different alternative.
Management has identified certain accounting estimates as being critical because they require management's judgment
to make difficult, subjective or complex judgments about matters that are uncertain. Materially different amounts could
be reported under different conditions or using different assumptions or estimates. Comerica has established detailed
policies and control procedures that are intended to ensure these critical accounting estimates and judgments are well
controlled and applied consistently. In addition, the policies and procedures are intended to ensure that the process for
changing methodologies occurs in an appropriate manner. Because of the uncertainty surrounding management's
judgments and the estimates pertaining to these matters, Comerica cannot guarantee that it will not be required to
adjust accounting policies or restate prior period financial statements. For example, our allowances for credit losses,
fair value measurement, goodwill valuation and impairment, pension plan accounting, and provisions for income taxes
may prove faulty or inaccurate. See “Critical Accounting Estimates” in the Financial Section of this report and Note 1
of the Notes to Consolidated Financial Statements in the Financial Section of this report.
25
•
Comerica's stock price can be volatile.
Stock price volatility may make it more difficult for shareholders to resell their common stock when they want and at
prices they find attractive. Comerica's stock price can fluctuate significantly in response to a variety of factors
including, among other things:
•
•
•
•
•
•
•
•
•
•
•
•
Actual or anticipated variations in quarterly results of operations.
Recommendations or projections by securities analysts.
Operating and stock price performance of other companies that investors deem comparable to Comerica.
News reports relating to trends, concerns and other issues in the financial services industry.
Perceptions in the marketplace regarding Comerica and/or its competitors.
New technology used, or services offered, by competitors.
Significant acquisitions or business combinations, strategic partnerships, joint ventures or capital
commitments by or involving Comerica or its competitors.
Changes in dividends and capital returns.
Changes in government regulations.
Cyclical fluctuations.
Geopolitical conditions such as acts or threats of terrorism or military conflicts.
Activity by short sellers and changing government restrictions on such activity.
General market fluctuations, including real or anticipated changes in the strength of the economy; industry factors and
general economic and political conditions and events, such as economic slowdowns or recessions; interest rate
changes, oil price volatility or credit loss trends, among other factors, could also cause Comerica's stock price to
decrease regardless of operating results.
For the above and other reasons, the market price of Comerica's securities may not accurately reflect the underlying
value of the securities, and investors should consider this before relying on the market prices of Comerica's securities
when making an investment decision.
•
An investment in Comerica's equity securities is not insured or guaranteed by the FDIC.
Investments in Comerica’s common or preferred stock are not deposits or other obligations of a bank or savings
association and are not insured or guaranteed by the FDIC or any other governmental agency.
Item 1B. Unresolved Staff Comments.
None.
Item 1C. Cybersecurity.
Managing technology risks, including risks related to cybersecurity, is an integral part of Comerica’s enterprise risk
management framework and processes. As such, Comerica uses a library of processes, risks and controls to assess, identify and
manage cybersecurity risks. Comerica measures such risks in part by estimating the likelihood and potential impact of incidents.
Comerica seeks to manage such these risks by designing, documenting, and implementing controls, testing those controls
through compliance assessments and internal and external audits and, in some cases, by transferring the risk in whole or in part
through methods such as insurance. When an incident occurs, Comerica works to remediate the incident while complying with
its regulatory obligations, and then evaluate the remediation for effectiveness. Comerica communicates on risk management
matters through documented policies and procedures, management and Board committee reporting, and training and other
employee communications.
For a description of how cybersecurity risks may materially affect Comerica’s business strategy or results, see "Item
1A. Risk Factors.” No cybersecurity threat risks during the fiscal year ended December 31, 2023 materially affected or were
reasonably likely to materially affect Comerica’s financial condition or results of operations.
Comerica engages information technology risk management employees with experience and expertise in cybersecurity.
The organization consists of professionals in identity and access management, cyber defense operations, security engineering
and information technology governance, risk and compliance. An Executive Vice President/ Chief Information Security Officer
(with over 25 years’ experience in cybersecurity risk management) and a Chief Information Officer (with over 27 years’
experience in technology risk management) lead this team. Each reports directly to the Senior Executive Vice President / Chief
Operating Officer, who reports directly to Comerica’s Chief Executive Officer and the Board of Directors. In addition,
Comerica engages third parties from time to time to assess, manage and respond to cybersecurity risks through risk assessment,
penetration testing, incident response, threat intelligence, education, and managed security services.
26
Comerica also oversees and identifies risks from threats to third parties, such as service providers, through efforts such
as monitoring, risk assessments, audits, contractual due diligence and third-party security standards.
Senior management at Comerica governs risk management and is informed about, and monitors the prevention,
detection, mitigation and mediation of cybersecurity incidents, in part through working review committees on which our Chief
Information Security Officer and/or Chief Information Officer serve. Each review committee receives risk management reports
appropriate to its scope of review, covering matters such as assessment results, risk ratings and critical issues. They report
significant matters to enterprise-wide risk committees overseeing the broad scope of risk management for the enterprise as
appropriate. Through these and other efforts, senior management makes decisions and sets priorities in allocating resources to
address risk management issues.
The Board’s Enterprise Risk Committee oversees all of Comerica’s risk management policies, procedures and
practices, including those related to cybersecurity. Senior management generally reports quarterly, or more often as necessary,
to the Enterprise Risk Committee on technology risks, including risks from cybersecurity threats. The Board’s Audit Committee
and the Board as a whole also receive such reports as part of their risk management oversight roles. Board members have direct
access to senior management (and others, at their request) on matters related to cybersecurity threats and may direct questions
to senior management and request further information as they see fit to fulfill their oversight responsibilities.
Item 2. Properties.
The executive offices of Comerica are located in the Comerica Bank Tower, 1717 Main Street, Dallas, Texas 75201.
Comerica's Michigan headquarters are located at 411 W. Lafayette, Detroit, Michigan 48226. As of December 31, 2023,
Comerica, through its banking affiliates, operated at a total of 529 banking centers, trust services locations, and/or loan
production or other financial services offices, primarily in Texas, Michigan, California, Florida and Arizona. Of those, 209
were owned and 320 were leased. As of December 31, 2023, affiliates also operated from owned spaces in Michigan as well as
leased spaces in Delaware, Colorado, Georgia, Illinois, Massachusetts, Minnesota, New Jersey, New York, North Carolina,
South Carolina, Tennessee and Washington, as well as in Mexico and Ontario, Canada.
Item 3. Legal Proceedings.
Please see the Notes to Consolidated Financial Statements in the Financial Section of this report.
Item 4. Mine Safety Disclosures.
Not applicable.
27
PART II
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity
Securities.
Market Information, Holders of Common Stock and Dividends
The common stock of Comerica Incorporated is traded on the New York Stock Exchange (NYSE Trading Symbol:
CMA). At February 26, 2024, there were approximately 7,857 record holders of Comerica's common stock.
Subject to approval of the Board of Directors, applicable regulatory requirements and the Series A Preferred Stock
dividend preference, Comerica expects to continue a policy of paying regular cash dividends on a quarterly basis. A discussion
of dividend restrictions applicable to Comerica is set forth in Notes 13 and 20 of the Notes to Consolidated Financial
Statements starting on pages F-82 and F-93, respectively, of the Financial Section of this report, in the "Capital" section starting
on page F-16 of the Financial Section of this report and in the “Supervision and Regulation” section of this report.
Equity Compensation Plan Information
The response to this item will be included in Comerica's definitive Proxy Statement relating to the Annual Meeting of
Shareholders, which sections are hereby incorporated by reference.
Performance Graph
Our performance graph is available under the caption "Performance Graph" on page F-2 of the Financial Section of
this report.
Purchases of Equity Securities by the Issuer and Affiliated Purchasers
As of December 31, 2023, a total of 97.2 million shares have been authorized for repurchase under the share
repurchase program since its inception in 2010. There is no expiration date for Comerica's share repurchase program.
The following table summarizes Comerica's share repurchase activity for the year ended December 31, 2023.
(shares in thousands)
Total first quarter 2023
Total second quarter 2023
Total third quarter 2023
October 2023
November 2023
December 2023
Total fourth quarter 2023
Total 2023
Total Number of Shares
Purchased as
Part of Publicly
Announced Repurchase
Plans or Programs
—
—
—
—
—
—
—
—
Remaining Share
Repurchase
Authorization (a)
4,997
4,997
4,997
4,997
4,997
4,997
4,997
4,997
Total Number
of Shares
Purchased (b)
Average Price
Paid Per
Share
31 $
3
3
3
—
—
3
40 $
72.78
42.36
43.37
40.60
—
—
40.60
65.89
(a) Maximum number of shares that may yet be purchased under the publicly announced plans or programs.
(b)
Includes approximately 40,000 shares (including 3,000 shares in the quarter ended December 31, 2023) purchased related to deferred
compensation plans during the year ended December 31, 2023. These transactions are not considered part of Comerica's repurchase
program.
Item 6. [Reserved]
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
Reference is made to the sections entitled “2023 Overview,” “Results of Operations," "Strategic Lines of Business,"
"Balance Sheet and Capital Funds Analysis," "Risk Management," "Critical Accounting Estimates," "Supplemental Financial
Data" and "Forward-Looking Statements" on pages F-3 through F-41 of the Financial Section of this report.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk.
Reference is made to the subheadings entitled “Market and Liquidity Risk,” “Operational Risk,” "Technology Risk,"
“Compliance Risk” and “Strategic Risk” on pages F-27 through F-34 of the Financial Section of this report.
28
Item 8. Financial Statements and Supplementary Data.
Reference is made to the sections entitled “Consolidated Balance Sheets,” “Consolidated Statements of Income,”
“Consolidated Statements of Comprehensive Income,” “Consolidated Statements of Changes in Shareholders' Equity,”
“Consolidated Statements of Cash Flows,” “Notes to Consolidated Financial Statements,” “Report of Management,” and
“Reports of Independent Registered Public Accounting Firm,” (PCAOB ID: 42) on pages F-42 through F-107 of the Financial
Section of this report.
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.
None.
Item 9A. Controls and Procedures.
Disclosure Controls and Procedures
As required by Rule 13a-15(b) of the Exchange Act, management, including the Chief Executive Officer and Chief
Financial Officer, conducted an evaluation as of the end of the period covered by this Annual Report on Form 10-K, of the
effectiveness of our disclosure controls and procedures as defined in Exchange Act Rule 13a-15(e). Based on that evaluation,
the Chief Executive Officer and Chief Financial Officer concluded that Comerica's disclosure controls and procedures were
effective as of the end of the period covered by this Annual Report on Form 10-K.
Internal Control over Financial Reporting
Management's annual report on internal control over financial reporting and the related attestation report of Comerica's
registered public accounting firm are included on pages F-104 and F-105 in the Financial Section of this report.
As required by Rule 13a-15(d) of the Exchange Act, management, including the Chief Executive Officer and Chief
Financial Officer, conducted an evaluation of our internal control over financial reporting to determine whether any changes
occurred during the last quarter of the fiscal year covered by this Annual Report on Form 10-K that have materially affected, or
are reasonably likely to materially affect, Comerica's internal control over financial reporting. Based on that evaluation, the
Chief Executive Officer and Chief Financial Officer concluded that there has been no such change during the last quarter of the
fiscal year covered by this Annual Report on Form 10-K that has materially affected, or is reasonably likely to materially affect,
Comerica's internal control over financial reporting.
Item 9B. Other Information.
None.
Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections.
None.
PART III
Item 10. Directors, Executive Officers and Corporate Governance.
Comerica has a Senior Financial Officer Code of Ethics that applies to the Chief Executive Officer, the Chief Financial
Officer, the Chief Accounting Officer and the Treasurer. The Senior Financial Officer Code of Ethics is available on Comerica's
website at www.comerica.com. If any substantive amendments are made to the Senior Financial Officer Code of Ethics or if
Comerica grants any waiver, including any implicit waiver, from a provision of the Senior Financial Officer Code of Ethics to
the Chief Executive Officer, the Chief Financial Officer, the Chief Accounting Officer or the Treasurer, we will disclose the
nature of such amendment or waiver on our website.
The remainder of the response to this item will be included in Comerica's definitive Proxy Statement relating to the
Annual Meeting of Shareholders, which sections are hereby incorporated by reference.
Item 11. Executive Compensation.
The response to this item will be included in Comerica's definitive Proxy Statement relating to the Annual Meeting of
Shareholders, which sections are hereby incorporated by reference.
29
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.
The response to this item will be included in Comerica's definitive Proxy Statement relating to the Annual Meeting of
Shareholders, which sections are hereby incorporated by reference.
Item 13. Certain Relationships and Related Transactions, and Director Independence.
The response to this item will be included in Comerica's definitive Proxy Statement relating to the Annual Meeting of
Shareholders, which sections are hereby incorporated by reference.
Item 14. Principal Accountant Fees and Services.
The response to this item will be included in Comerica's definitive Proxy Statement relating to the Annual Meeting of
Shareholders, which sections are hereby incorporated by reference.
30
PART IV
Item 15. Exhibits and Financial Statement Schedules.
Note Regarding Reliance on Statements in Our Contracts and Other Exhibits: We include agreements and other
exhibits to this Annual Report on Form 10-K to provide information regarding their terms and not to provide any other factual
or disclosure information about us, our subsidiaries or affiliates, or the other parties to the agreements, or for any other purpose.
The agreements and other exhibits contain representations and warranties by each of the parties to the applicable agreement.
These representations and warranties have been made solely for the benefit of the other parties to the applicable agreement or
other arrangement and (i) should not in all instances be treated as categorical statements of fact, but rather as a way of allocating
the risk to one of the parties if those statements prove to be inaccurate; (ii) have in many cases been qualified by disclosures that
were made to the other party in connection with the negotiation of the applicable agreement, which disclosures are not
necessarily reflected in the agreement; (iii) may apply standards of materiality in a way that is different from what may be
viewed as material to investors; and (iv) were made only as of the date of the applicable agreement or other exhibit, or such
other date or dates as may be specified in the document and are subject to more recent developments. Accordingly, these
representations and warranties may not describe the actual state of affairs as of the date they were made or at any other time.
The following documents are filed as a part of this report:
1.
2.
3.
2
3.1
3.2
3.3
3.4
4
4.1
4.2
9
Financial Statements: The financial statements that are filed as part of this report are included in the Financial
Section on pages F-42 through F-107.
All of the schedules for which provision is made in the applicable accounting regulations of the SEC are either
not required under the related instruction, the required information is contained elsewhere in the Form 10-K, or
the schedules are inapplicable and therefore have been omitted.
Exhibits:
(not applicable)
Restated Certificate of Incorporation of Comerica Incorporated (filed as Exhibit 3.2 to Registrant's Current Report
on Form 8-K dated August 4, 2010, and incorporated herein by reference).
Certificate of Amendment to Restated Certificate of Incorporation of Comerica Incorporated (filed as Exhibit 3.2
to Registrant's Quarterly Report on Form 10-Q for the quarter ended March 31, 2011, and incorporated herein by
reference).
Amended and Restated Bylaws of Comerica Incorporated (filed as Exhibit 3.3 to Registrant's Current Report on
Form 8-K dated November 3, 2020, and incorporated herein by reference).
Certificate of Designations of 5.625% Fixed-Rate Reset Non-Cumulative Perpetual Preferred Stock, Series A,
dated May 26, 2020, of Comerica Incorporated (including the form of 5.625% Fixed-Rate Reset Non-Cumulative
Perpetual Preferred Stock, Series A Certificate of Comerica Incorporated attached as Exhibit A thereto) (filed as
Exhibit 3.1 to Registrant's Current Report on Form 8-K dated May 26, 2020, and incorporated herein by
reference).
[Reference is made to Exhibits 3.1, 3.2, 3.3 and 3.4 in respect of instruments defining the rights of security
holders. In accordance with Regulation S-K Item No. 601(b)(4)(iii), the Registrant is not filing copies of
instruments defining the rights of holders of long-term debt because none of those instruments authorizes debt in
excess of 10% of the total assets of the Registrant and its subsidiaries on a consolidated basis. The Registrant
hereby agrees to furnish a copy of any such instrument to the SEC upon request.]
Deposit Agreement, dated May 26, 2020, among Comerica Incorporated, Computershare Inc., Computershare
Trust Company, N.A. and the holders from time to time of the depositary receipts issued thereunder (including
the form of depositary share receipt attached as Exhibit A thereto) (filed as Exhibit 4.1 to Registrant's Current
Report on Form 8-K dated May 26, 2020, and incorporated herein by reference).
Description of Registrant's Securities
(not applicable)
10.1†
Comerica Incorporated Amended and Restated 2018 Long-Term Incentive Plan (filed as Exhibit 10.1 to
Registrant’s Quarterly Report on Form 10-Q for the quarter ended March 30, 2021, and incorporated herein by
reference).
A† Form of Standard Comerica Incorporated Restricted Stock Unit Agreement (cliff vesting) under the Comerica
Incorporated 2018 Long-Term Incentive Plan (filed as Exhibit 10.2 to Registrant's Current Report on Form 8-K
dated April 24, 2018, and incorporated herein by reference).
31
B† Form of Standard Comerica Incorporated Restricted Stock Unit Agreement (non-cliff vesting) under the
Comerica Incorporated 2018 Long-Term Incentive Plan (filed as Exhibit 10.3 to Registrant's Current Report on
Form 8-K dated April 24, 2018, and incorporated herein by reference).
C† Form of Standard Comerica Incorporated Restricted Stock Unit Agreement (2020 non-cliff vesting) under the
Comerica Incorporated 2018 Long-Term Incentive Plan (filed as Exhibit 10.1I to Registrant's Current Report on
Form 8-K dated November 3, 2020, and incorporated herein by reference).
D† Form of Standard Comerica Incorporated Restricted Stock Unit Agreement (2-year cliff vesting) under the
Comerica Incorporated 2018 Long-Term Incentive Plan (filed as Exhibit 10.1H to Registrant's Quarterly Report
on Form 10-Q for the quarter ended June 30, 2020, and incorporated herein by reference).
E† Form of Standard Comerica Incorporated Restricted Stock Unit Agreement (2021 three-year non-cliff vesting)
under the Comerica Incorporated 2018 Long-Term Incentive Plan (filed as Exhibit 10.1K to Registrant's
Quarterly Report on Form 10-Q for the quarter ended March 31, 2021, and incorporated herein by reference).
F† Form of Standard Comerica Incorporated Restricted Stock Unit Agreement (non-cliff vesting without retirement
provisions) under the Comerica Incorporated 2018 Long-Term Incentive Plan (filed as Exhibit 10.1N to
Registrant's Quarterly Report on Form 10-Q for the quarter ended March 31, 2022, and incorporated herein by
reference).
G† Form of Standard Comerica Incorporated Restricted Stock Unit Agreement (Director Version) under the
Comerica Incorporated 2018 Long-Term Incentive Plan (filed as Exhibit 10.1L to Registrant's Quarterly Report
on Form 10-Q for the quarter ended June 30, 2021, and incorporated herein by reference).
H† Form of Standard Comerica Incorporated Senior Executive Long-Term Performance Restricted Stock Unit Award
Agreement under the Comerica Incorporated 2018 Long-Term Incentive Plan (2020 version) (filed as Exhibit
10.1G to Registrant's Annual Report on Form 10-K for the year ended December 31, 2020, and incorporated
herein by reference).
I† Form of Standard Comerica Incorporated Senior Executive Long-Term Performance Restricted Stock Unit Award
Agreement under the Comerica Incorporated 2018 Long-Term Incentive Plan (2022 version) (filed as Exhibit
10.1H to Registrant's Annual Report on Form 10-K for the year ended December 31, 2021, and incorporated
herein by reference).
J† Form of Standard Comerica Incorporated Senior Executive Long-Term Performance Restricted Stock Unit Award
Agreement under the Comerica Incorporated 2018 Long-Term Incentive Plan (2023 version) (filed as Exhibit
10.1N to Registrant's Current Report on Form 8-K dated January 24, 2023, and incorporated herein by reference).
K† Form of Standard Comerica Incorporated Restricted Stock Agreement (cliff vesting) under the Comerica
Incorporated 2018 Long-Term Incentive Plan (filed as Exhibit 10.6 to Registrant's Current Report on Form 8-K
dated April 24, 2018, and incorporated herein by reference).
L† Form of Standard Comerica Incorporated Restricted Stock Agreement (non-cliff vesting) under the Comerica
Incorporated 2018 Long-Term Incentive Plan (filed as Exhibit 10.7 to Registrant's Current Report on Form 8-K
dated April 24, 2018, and incorporated herein by reference).
M† Form of Standard Comerica Incorporated Non-Qualified Stock Option Agreement under the Comerica
Incorporated 2018 Long-Term Incentive Plan (filed as Exhibit 10.4 to Registrant's Current Report on Form 8-K
dated April 24, 2018, and incorporated herein by reference).
N† Form of Standard Comerica Incorporated Restricted Stock Unit Award Agreement under the Comerica
Incorporated 2018 Long-Term Incentive Plan (2023 non-cliff 2-3-4 version).
10.2†
Comerica Incorporated 2006 Amended and Restated Long-Term Incentive Plan (filed as Exhibit 10.1 to
Registrant's Annual Report on Form 10-K for the year ended December 31, 2016, and incorporated herein by
reference).
A† Form of Standard Comerica Incorporated Non-Qualified Stock Option Agreement under the Comerica
Incorporated Amended and Restated 2006 Long-Term Incentive Plan (2012 version) (filed as Exhibit 10.1C to
Registrant's Annual Report on Form 10-K for the year ended December 31, 2011, and incorporated herein by
reference).
B† Form of Standard Comerica Incorporated Non-Qualified Stock Option Agreement under the Comerica
Incorporated Amended and Restated 2006 Long-Term Incentive Plan (2014 version) (filed as Exhibit 10.1 to
Registrant's Current Report on Form 8-K dated January 21, 2014, and incorporated herein by reference).
C† Form of Standard Comerica Incorporated Non-Qualified Stock Option Agreement under the Comerica
Incorporated Amended and Restated 2006 Long-Term Incentive Plan (2014 version 2) (filed as Exhibit 10.1 to
Registrant's Current Report on Form 8-K dated July 22, 2014, and incorporated herein by reference).
32
D† Form of Standard Comerica Incorporated Non-Qualified Stock Option Agreement under the Comerica
Incorporated Amended and Restated 2006 Long-Term Incentive Plan (2015 version) (filed as Exhibit 10.2 to
Registrant's Current Report on Form 8-K dated November 10, 2015, and incorporated herein by reference).
E† Form of Standard Comerica Incorporated Non-Qualified Stock Option Agreement under the Comerica
Incorporated Amended and Restated 2006 Long-Term Incentive Plan (2017 version) (filed as Exhibit 10.1G to
Registrant's Annual Report on Form 10-K for the year ended December 31, 2016, and incorporated herein by
reference).
F† Form of Standard Comerica Incorporated Restricted Stock Unit Award Agreement under the Amended and
Restated Comerica Incorporated 2006 Long-Term Incentive Plan (2018 version - non-cliff vesting) (filed as
Exhibit 10.2 to Registrant's Current Report on Form 8-K dated November 8, 2017, and incorporated herein by
reference).
10.3†
10.4†
10.5†
10.6†
10.7†
10.8†
10.9†
Comerica Incorporated 2016 Management Incentive Plan (filed as Exhibit 10.1 to Registrant's Current Report on
Form 8-K dated May 2, 2016, and incorporated herein by reference).
Form of Standard Comerica Incorporated No Sale Agreement under the Comerica Incorporated Amended and
Restated Management Incentive Plan (filed as Exhibit 10.5 to Registrant's Quarterly Report on Form 10-Q for the
quarter ended September 30, 2004, and incorporated herein by reference).
Supplemental Retirement Income Account Plan (formerly known as the Amended and Restated Benefit
Equalization Plan for Employees of Comerica Incorporated) (amended and restated October 13, 2016, with
amendments effective January 1, 2017) (filed as Exhibit 10.1 to Registrant's Current Report on Form 8-K dated
January 24, 2017, and incorporated herein by reference).
1999 Comerica Incorporated Amended and Restated Deferred Compensation Plan (amended and restated
effective December 31, 2022) (filed as Exhibit 10.7 to Registrant's Current Report on Form 8-K dated November
8, 2022, and incorporated herein by reference).
1999 Comerica Incorporated Amended and Restated Common Stock Deferred Incentive Award Plan (amended
and restated effective December 31, 2022) (filed as Exhibit 10.8 to Registrant's Current Report on Form 8-K
dated November 8, 2022, and incorporated herein by reference).
Amended and Restated Comerica Incorporated Non-Employee Director Fee Deferral Plan (amended and restated
effective July 1, 2020) (filed as Exhibit 10.11 to Registrant's Quarterly Report on Form 10-Q for the quarter
ended June 30, 2020, and incorporated herein by reference).
Amended and Restated Comerica Incorporated Common Stock Non-Employee Director Fee Deferral Plan
(amended and restated effective July 1, 2020)(filed as Exhibit 10.12 to Registrant's Quarterly Report on Form 10-
Q for the quarter ended June 30, 2020, and incorporated herein by reference).
10.10†
Comerica Incorporated Amended and Restated Incentive Plan for Non-Employee Directors (amended and
restated effective May 15, 2014) (filed as Exhibit 10.3 to Registrant's Quarterly Report on Form 10-Q for the
quarter ended March 31, 2015, and incorporated herein by reference).
A† Form of Standard Comerica Incorporated Non-Employee Director Restricted Stock Unit Agreement under the
Comerica Incorporated Amended and Restated Incentive Plan for Non-Employee Directors (filed as Exhibit 10.2
to Registrant's Quarterly Report on Form 10-Q for the quarter ended June 30, 2005, and incorporated herein by
reference).
B† Form of Standard Comerica Incorporated Non-Employee Director Restricted Stock Unit Agreement under the
Comerica Incorporated Amended and Restated Incentive Plan for Non-Employee Directors (Version 2) (filed as
Exhibit 10.6 to Registrant's Quarterly Report on Form 10-Q for the quarter ended June 30, 2006, and incorporated
herein by reference).
C† Form of Standard Comerica Incorporated Non-Employee Director Restricted Stock Unit Agreement under the
Comerica Incorporated Amended and Restated Incentive Plan for Non-Employee Directors (Version 2.5) (filed as
Exhibit 10.48 to Registrant's Annual Report on Form 10-K for the year ended December 31, 2010, and
incorporated herein by reference).
D† Form of Standard Comerica Incorporated Non-Employee Director Restricted Stock Unit Agreement under the
Comerica Incorporated Amended and Restated Incentive Plan for Non-Employee Directors (Version 3) (filed as
Exhibit 10.1 to Registrant's Quarterly Report on Form 10-Q for the quarter ended June 30, 2009, and incorporated
herein by reference).
E† Form of Standard Comerica Incorporated Non-Employee Director Restricted Stock Unit Agreement under the
Comerica Incorporated Amended and Restated Incentive Plan for Non-Employee Directors (Version 4) (filed as
Exhibit 10.4 to Registrant's Quarterly Report on Form 10-Q for the quarter ended June 30, 2011, and incorporated
herein by reference).
33
10.11†
2015 Comerica Incorporated Incentive Plan for Non-Employee Directors (filed as Exhibit 10.4 to Registrant's
Quarterly Report on Form 10-Q for the quarter ended March 31, 2015, and incorporated herein by reference).
A† Form of Standard Comerica Incorporated Non-Employee Director Restricted Stock Unit Agreement under the
2015 Comerica Incorporated Incentive Plan for Non-Employee Directors (filed as Exhibit 10.1 to Registrant's
Quarterly Report on Form 10-Q for the quarter ended September 30, 2015, and incorporated herein by reference).
10.12†
10.13†
10.14†
10.15†
10.16†
Form of Indemnification Agreement between Comerica Incorporated and certain of its directors and officers
(filed as Exhibit 10.6 to Registrant's Annual Report on Form 10-K for the year ended December 31, 2002, and
incorporated herein by reference).
Supplemental Pension and Retiree Medical Agreement with Ralph W. Babb Jr. (filed as Exhibit 10.2 to
Registrant's Quarterly Report on Form 10-Q for the quarter ended June 30, 1998, and incorporated herein by
reference).
Restrictive Covenants and General Release Agreement by and between John D. Buchanan and Comerica
Incorporated dated May 12, 2022 (filed as Exhibit 10.1 to Registrant's Current Report on Form 8-K dated May
12, 2022, and incorporated herein by reference.)
Form of Change of Control Employment Agreement (BE4 and Higher Version without gross-up or window
period-current) (filed as Exhibit 10.10 to Registrant's Quarterly Report on Form 10-Q for the quarter ended March
31, 2018, and incorporated herein by reference).
A† Schedule of Named Executive Officers Party to Change of Control Employment Agreement (BE4 and Higher
Version without gross-up or window period-current).
Form of Change of Control Employment Agreement (BE4 and Higher Version without gross-up or window
period-2015 version) (filed as Exhibit 10.2 to Registrant's Quarterly Report on Form 10-Q for the quarter ended
September 30, 2015, and incorporated herein by reference).
A† Schedule of Named Executive Officers Party to Change of Control Employment Agreement (BE4 and Higher
Version without gross-up or window period-2015 version).
10.17†
Form of Change of Control Employment Agreement (BE4 and Higher Version) (filed as Exhibit 10.1 to
Registrant's Current Report on Form 8-K dated November 18, 2008, and incorporated herein by reference).
A† Schedule of Named Executive Officers Party to Change of Control Employment Agreement (BE4 and Higher
Version).
10.18†
10.19†
13
14
16
18
21
22
23.1
24
31.1
31.2
32
33
34
Form of Change of Control Employment Agreement (BE4 and Higher Version without gross-up or window
period-2009 version) (filed as Exhibit 10.42 to Registrant's Annual Report on Form 10-K for the year ended
December 31, 2009, and incorporated herein by reference).
Form of Change of Control Employment Agreement (BE2-BE3 Version) (filed as Exhibit 10.22 to Registrant's
Annual Report on Form 10-K for the year ended December 31, 2019, and incorporated herein by reference).
(not applicable)
(not applicable)
(not applicable)
(not applicable)
Subsidiaries of Registrant.
(not applicable)
Consent of Ernst & Young LLP.
(not applicable)
Chairman, President and CEO Rule 13a-14(a)/15d-14(a) Certification of Periodic Report (pursuant to Section 302
of the Sarbanes-Oxley Act of 2002).
Senior Executive Vice President and CFO Rule 13a-14(a)/15d-14(a) Certification of Periodic Report (pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002).
Section 1350 Certification of Periodic Report (pursuant to Section 906 of the Sarbanes-Oxley Act of 2002).
(not applicable)
(not applicable)
34
35
95
96
99
101
104
†
(not applicable)
(not applicable)
(not applicable)
(not applicable)
Financial statements from the Registrant's Annual Report on Form 10-K for the year ended December 31, 2023,
formatted in Inline XBRL: (i) the Consolidated Balance Sheets, (ii) the Consolidated Statements of Income,
(iii) the Consolidated Statements of Changes in Shareholders' Equity, (iv) the Consolidated Statements of Cash
Flows and (v) the Notes to Consolidated Financial Statements.
The cover page from the Registrant's Annual Report on Form 10-K for the year ended December 31, 2023,
formatted in Inline XBRL (included in Exhibit 101).
Management contract or compensatory plan or arrangement.
File No. for all filings under Exchange Act, unless otherwise noted: 1-10706.
Item 16. Form 10-K Summary.
Not applicable.
35
FINANCIAL REVIEW AND REPORTS
Comerica Incorporated and Subsidiaries
Performance Graph
2023 Overview
Results of Operations
Strategic Lines of Business
Balance Sheet and Capital Funds Analysis
Risk Management
Critical Accounting Estimates
Supplemental Financial Data
Forward-Looking Statements
Consolidated Financial Statements:
Consolidated Balance Sheets
Consolidated Statements of Income
Consolidated Statements of Comprehensive Income
Consolidated Statements of Changes in Shareholders’ Equity
Consolidated Statements of Cash Flows
Notes to Consolidated Financial Statements
Report of Management
Reports of Independent Registered Public Accounting Firm
F-2
F-3
F-3
F-9
F-12
F-18
F-35
F-39
F-40
F-42
F-43
F-44
F-45
F-46
F-47
F-104
F-105
F-1
PERFORMANCE GRAPH
The graph shown below compares the total returns (assuming reinvestment of dividends) of Comerica Incorporated
common stock, the S&P 500 Index and the KBW Bank Index. The graph assumes $100 invested in Comerica Incorporated
common stock (returns based on stock prices per the NYSE) and each of the indices on December 31, 2018 and the
reinvestment of all dividends during the periods presented.
Comerica Incorporated
KBW Bank Index
S&P 500 Index
2018
100
100
100
2019
108
136
131
2020
90
122
156
2021
146
169
200
2022
116
133
164
2023
103
132
207
The performance shown on the graph is not necessarily indicative of future performance.
F-2
Comparison of Five Year Cumulative Total ReturnAmong Comerica Incorporated, KBW Bank and S&P 500 Index(Assumes $100 Invested on 12/31/18 and Reinvestment of Dividends)Comerica Incorporated KBW Bank IndexS&P 500 Index201820192020202120222023$50$75$100$125$150$175$200$225$250 2023 OVERVIEW
Comerica Incorporated (the Corporation) is a financial holding company headquartered in Dallas, Texas. The
Corporation's major business segments are the Commercial Bank, the Retail Bank and Wealth Management. Information about
the activities of the Corporation's business segments is provided in Note 22 to the consolidated financial statements.
As a financial institution, the Corporation's principal activity is lending to and accepting deposits from businesses and
individuals. The primary source of revenue is net interest income, which is principally derived from the difference between
interest earned on loans and investment securities and interest paid on deposits and other funding sources. The Corporation also
provides other products and services that meet the financial needs of customers which generate noninterest income, the
Corporation's secondary source of revenue. Growth in loans, deposits and noninterest income is affected by many factors,
including economic conditions in the markets the Corporation serves, the financial requirements and economic health of
customers and the ability to add new customers and/or increase the number of products used by current customers. Success in
providing products and services depends on the financial needs of customers and the types of products desired.
The accounting and reporting policies of the Corporation and its subsidiaries conform to generally accepted accounting
principles (GAAP) in the United States (U.S.). The Corporation's consolidated financial statements are prepared based on the
application of accounting policies, the most significant of which are described in Note 1 to the consolidated financial
statements. When necessary, the Corporation uses reasonable assumptions to develop estimates that affect the consolidated
results of operations. The most critical of these estimates are discussed in the “Critical Accounting Estimates” section of this
financial review.
Full-Year 2023 compared to Full-Year 2022
•
•
•
•
•
•
•
•
•
•
•
Net income decreased $270 million to $881 million, driven by increases in noninterest expenses and provision for
credit losses, partially offset by an increase in net interest income due to higher short-term rates and loan growth.
Diluted net income per common share was $6.44 in 2023 compared to $8.47 in 2022.
Average loans increased $3.4 billion, or 7 percent, to $53.9 billion, and included increases in Commercial Real Estate,
National Dealer Services, Corporate Banking, Wealth Management and Environmental Services, partially offset by
declines in Mortgage Banker Finance related to the planned exit from this line of business and Equity Fund Services.
Average securities decreased $1.6 billion, or 8 percent, to $17.4 billion, reflecting unrealized losses and maturities of
Treasury securities, partially offset by the full-year impact of mortgage-backed securities purchased during 2022.
Average deposits decreased $9.5 billion, or 13 percent, to $66.0 billion. Average noninterest-bearing deposits, which
decreased $11.1 billion, or 27 percent, were impacted by customer diversification efforts following the banking
industry disruption in the first quarter of 2023, partially offset by an increase in average interest-bearing deposits of
$1.7 billion, or 5 percent, primarily due to increases in brokered time deposits and customer certificates of deposit.
Average short-term borrowings increased $6.8 billion to $7.2 billion, while average medium- and long-term debt
increased $3.0 billion to $5.8 billion, reflecting higher Federal Home Loan Bank (FHLB) advances.
Net interest income increased $48 million to $2.5 billion, and the net interest margin increased 4 basis points to 3.06
percent, largely due to higher short-term rates and average loan growth, partly offset by an increase in average
borrowings and interest-bearing deposits.
The provision for credit losses increased $29 million to $89 million, reflecting average loan growth, an uncertain
economic outlook and credit migration, as well as changes in portfolio composition.
Noninterest income increased $10 million to $1.1 billion, reflecting increases in deferred compensation asset returns
(offset in noninterest expenses), FHLB stock dividends, brokerage fees, card fees, commercial lending fees and letter
of credit fees, partially offset by decreases in risk management hedging income, service charges on deposit accounts
and capital markets income.
Noninterest expenses increased $361 million to $2.4 billion, primarily due to increases in FDIC insurance expense,
salaries and benefits expense, non-salary pension expense, outside processing fee expense, litigation and regulatory-
related expenses, consulting fees, software expense and legal fees, partially offset by gains on the sale of real estate
during the current year.
The Corporation declared common dividends of $2.84 per share, returning $375 million to common shareholders.
Additionally, the Corporation declared $23 million in preferred dividends.
The following provides a comparative discussion of the Corporation's consolidated results of operations for 2023
compared to 2022. A comparative discussion of results for 2022 compared to 2021 is provided in the "Results of Operations"
section beginning on page F-3 of the Corporation's 2022 Annual Report.
RESULTS OF OPERATIONS
F-3
2023
2022
2021
Average
Balance
Interest
$ 30,009 $ 1,651
Average
Average
Rate
Interest
Balance
5.51% $ 29,846 $ 1,278
Average
Average
Rate
Interest
Balance
4.28% $ 29,283 $ 1,009
Average
Rate
3.45%
Analysis of Net Interest Income
(dollar amounts in millions)
Years Ended December 31
Commercial loans (a) (b)
Real estate construction loans
Commercial mortgage loans
Lease financing (c)
International loans
Residential mortgage loans
Consumer loans
Total loans (d)
Mortgage-backed securities (e)
U.S. Treasury securities (f)
Total investment securities
Interest-bearing deposits with banks (g)
Other short-term investments
4,041
13,697
776
1,226
1,877
2,277
330
981
37
98
66
177
53,903
3,340
15,546
1,896
17,442
7,530
339
421
9
430
392
13
Total earning assets
79,214
4,175
Cash and due from banks
Allowance for loan losses
Accrued income and other assets
Total assets
1,214
(658)
7,424
$ 87,194
Money market and interest-bearing checking deposits (h) $ 26,054
2,774
Savings deposits
2,708
Customer certificates of deposit
3,577
Other time deposits
23
Foreign office time deposits
35,136
Total interest-bearing deposits
Federal funds purchased
Other short-term borrowings
Medium- and long-term debt
Total interest-bearing sources
Noninterest-bearing deposits
Accrued expenses and other liabilities
Shareholders’ equity
Total liabilities and shareholders’ equity
29
7,189
5,847
48,201
30,882
2,516
5,595
$ 87,194
627
6
75
183
1
892
1
390
378
1,661
8.16
7.17
4.72
7.96
3.54
7.76
6.20
2.28
0.47
2.10
5.21
3.72
5.08
2.39
0.21
2.77
5.13
4.02
2.52
4.77
5.41
6.47
3.43
5.07
4.22
3.12
4.46
3.16
4.49
4.27
2.14
0.98
1.97
1.02
0.81
3.27
0.33
0.05
0.30
4.17
1.05
0.30
3.28
4.08
3.07
0.56
2,607
12,135
680
1,246
1,776
2,170
132
513
21
56
56
97
50,460
2,153
16,199
2,816
19,015
9,376
174
385
29
414
104
1
79,025
2,672
1,481
(569)
7,335
$ 87,272
$ 28,347
3,304
1,756
16
40
33,463
82
354
2,818
36,717
42,018
2,086
6,451
$ 87,272
94
2
5
1
—
102
3
14
87
206
3,609
10,610
596
1,063
1,813
2,109
123
305
(2)
33
55
71
49,083
1,594
11,747
3,977
15,724
18,729
183
224
56
280
27
—
83,719
1,901
3.40
2.88
(0.37)
3.14
3.04
3.34
3.25
1.92
1.42
1.79
0.14
0.22
2.27
1,006
(729)
6,156
$ 90,152
$ 31,063
3,018
2,110
—
49
36,240
2
—
3,035
39,277
41,441
1,481
7,953
$ 90,152
18
—
4
—
—
22
—
—
35
57
0.06
0.01
0.21
—
0.08
0.06
—
—
1.11
0.14
Net interest income/rate spread
$ 2,514
1.65
$ 2,466
2.71
$ 1,844
2.13
Impact of net noninterest-bearing sources of funds
Net interest margin (as a percentage of average earning
assets)
1.41
3.06%
0.31
3.02%
0.08
2.21%
(a)
(b)
(c)
Interest income on commercial loans included (expense) income related to swap settlements of $(602) million, $(25) million and
$95 million for the years ended December 31, 2023, 2022 and 2021, respectively.
Included Paycheck Protection Program (PPP) loans with average balances of $30 million, $147 million and $2.3 billion, interest income
of $1 million, $11 million and $111 million and average yields of 1.65%, 7.25% and 4.77% for the years ended December 31, 2023,
2022 and 2021, respectively.
Included residual value adjustments totaling $6 million, $3 million, and $20 million, which impacted the average yield on loans by 1
basis point, 1 basis point and 4 basis points for the years ended December 31, 2023, 2022 and 2021, respectively.
(d) Nonaccrual loans are included in average balances reported and in the calculation of average rates.
(e) Average balances included $(2.9) billion, $(1.8) billion and $61 million of unrealized (losses) gains for the years ended December 31,
2023, 2022 and 2021, respectively; yields calculated gross of these unrealized gains and losses.
(f) Average balances included $(115) million, $(117) million and $27 million of unrealized (losses) gains for the years ended December 31,
2023, 2022 and 2021, respectively; yields calculated gross of these unrealized gains and losses.
(g) Average balances included $5 million, excluded $769 million and excluded $375 million of collateral posted and netted against
derivative liability positions for the years ended December 31, 2023, 2022 and 2021, respectively; yields calculated gross of derivative
netting amounts.
(h) Average balances excluded $195 million, $128 million and $156 million of collateral received and netted against derivative asset
positions for the years ended December 31, 2023, 2022 and 2021, respectively; yields calculated gross of derivative netting amounts.
F-4
Rate/Volume Analysis
(in millions)
Years Ended December 31
Interest Income:
Commercial loans
Real estate construction loans
Commercial mortgage loans
Lease financing
International loans
Residential mortgage loans
Consumer loans
Total loans
Mortgage-backed securities
U.S. Treasury securities
Total investment securities
Interest-bearing deposits with banks
Other short-term investments
Total interest income
Interest Expense:
Money market and interest-bearing checking deposits
Savings deposits
Customer certificates of deposit
Other time deposits
Foreign office time deposits
Total interest-bearing deposits
Federal funds purchased
Other short term borrowings
Medium- and long-term debt
Total interest expense
Increase
(Decrease)
Due to Rate
(a)
2023/2022
Increase
(Decrease)
Due to
Volume (a)
Net
Increase
(Decrease)
Increase
(Decrease)
Due to Rate
(a)
2022/2021
Increase
(Decrease)
Due to
Volume (a)
Net
Increase
(Decrease)
$
$
362
86
357
11
43
7
71
937
10
(15)
(5)
420
6
1,358
459
5
44
—
1
509
1
5
138
653
$
11
112
111
5
(1)
3
9
250
26
(5)
21
(132)
6
145
74
(1)
26
182
—
281
(3)
371
153
802
$
373
198
468
16
42
10
80
1,187
36
(20)
16
288
12
1,503
533
4
70
182
1
790
(2)
376
291
1,455
$
244
60
143
21
14
2
24
508
5
(17)
(12)
170
1
667
85
2
2
—
—
89
—
—
43
132
25
(51)
65
2
9
(1)
2
51
156
(10)
146
(93)
—
104
(9)
—
(1)
1
—
(9)
3
14
9
17
87
$
269
9
208
23
23
1
26
559
161
(27)
134
77
1
771
76
2
1
1
—
80
3
14
52
149
$
622
Net interest income
$
705
$
(657)
$
48
$
535
$
(a)
Impact of other portfolio dynamics and interest rate swaps reflected as part of rate impact, rate/volume variances are allocated to
variances due to volume.
Net interest income is the difference between interest earned on assets and interest paid on liabilities. Gains and losses
related to risk management interest rate swaps that convert fixed rate debt to a floating rate and qualify as fair value hedges are
included in interest expense on medium- and long-term debt. Additionally, the portion of gains and losses on risk management
interest rate swaps that convert variable-rate loans to fixed rates through cash flow hedges that relate to the earnings effect of
the hedged loans during the period are included in loan interest income.
Refer to the Analysis of Net Interest Income and the Rate/Volume Analysis tables above for an analysis of net interest
income for the years ended December 31, 2023, 2022 and 2021 and details of the components of the change in net interest
income for 2023 compared to 2022 as well as 2022 compared to 2021.
Net interest income was $2.5 billion for the year ended December 31, 2023, an increase of $48 million compared to the
year ended December 31, 2022. The increase in net interest income reflected the net benefit from higher short-term rates and
loan growth, partially offset by increased balances of interest-bearing deposits and borrowings. Net interest margin increased 4
basis points to 3.06 percent for the year ended December 31, 2023, reflecting higher short-term rates, partially offset by higher-
cost funding sources.
Average earning assets of $79.2 billion were relatively stable compared to the prior year and included $3.4 billion in
loan growth, partially offset by declines of $1.8 billion in interest-bearing deposits with banks and $1.6 billion in investment
securities. Average interest-bearing funding sources increased $11.5 billion, driven by increases of $6.8 billion in short-term
borrowings, $3.0 billion in medium- and long-term debt and $1.7 billion in interest-bearing deposits.
F-5
The Corporation utilizes various asset and liability management strategies to manage net interest income exposure to
interest rate risk. Refer to the “Market and Liquidity Risk” section of this financial review for additional information regarding
the Corporation's asset and liability management policies and the “Balance Sheet and Capital Funds Analysis” section for
further discussion on changes in earning assets and interest-bearing liabilities.
Provision for Credit Losses
The provision for credit losses increased $29 million to $89 million, reflecting average loan growth, an uncertain
economic outlook and credit migration, as well as changes in portfolio composition. Net loan charge-offs increased $5 million
to $22 million, or 0.04 percent of average total loans for the year ended December 31, 2023, compared to $17 million, or 0.03
percent of average total loans for the year ended December 31, 2022, with net charge-offs in Corporate Banking, Business
Banking and Technology and Life Sciences partially offset by net recoveries in general Middle Market. The provision for credit
losses on lending-related commitments was a benefit of $11 million for the year ended December 31, 2023, compared to an
expense of $21 million for the year ended December 31, 2022.
An analysis of the allowance for credit losses and a summary of nonperforming assets are presented under the "Credit
Risk" subheading in the "Risk Management" section of this financial review. For information regarding methodology used in
the determination of allowance for credit losses, refer to Note 1 to the consolidated financial statements.
Noninterest Income
$
2023
2022
2021
(in millions)
Years Ended December 31
Card fees
Fiduciary income (a)
Service charges on deposit accounts
Capital markets income (b)
Commercial lending fees (b)
Bank-owned life insurance
Letter of credit fees
Brokerage fees (a)
Risk management hedging (loss) income (b)
Other noninterest income (a), (b), (c)
298
231
195
146
68
43
40
14
—
88
1,123
(a) 2023 results include changes in presentation consistent with contractual terms with new investment program partner resulting in a net
$2 million increase to brokerage fees with corresponding decreases of $2 million each in fiduciary income, other noninterest income and
commission costs (recorded within salaries and benefits expense).
280 $
235
185
147
72
46
42
30
(42)
83
1,078 $
273 $
233
195
154
68
47
38
21
8
31
1,068 $
Total noninterest income
$
(b) Effective January 1, 2023, the Corporation reported derivative income, syndication agent fees (previously a component of commercial
lending fees) and investment banking fees (previously a component of other noninterest income) as a combined item captioned by capital
markets income on the Consolidated Statements of Income. Beginning with fourth quarter 2023, risk management hedging income
(previously a component of other noninterest income) was presented as a separate item on the Consolidated Statements of Income. Prior
periods have been adjusted to conform to this presentation, and the changes do not impact total noninterest income.
(c) The table below provides further details on certain categories included in other noninterest income.
Noninterest income increased $10 million to $1.1 billion, reflecting increases in other noninterest income, brokerage
fees, card fees, commercial lending fees and letter of credit fees, partially offset by decreases in risk management hedging
income, service charges on deposit accounts and capital markets income. Other noninterest income included increases in
deferred compensation asset returns (offset in noninterest expenses) and FHLB stock dividends.
Brokerage fees are commissions earned for facilitating securities transactions for customers as well as other brokerage
services provided. In November 2023, the Corporation transitioned support of its retail brokerage business, including specific
insurance, brokerage and investment advisory activities previously conducted by the Corporation's broker-dealer subsidiary, to
Ameriprise Financial Institutions Group, an independent financial services broker. Since this transition, brokerage fees include
income from sales of select investment products of an independent financial services broker, net of commissions passed through
to employees licensed by the independent broker to sell their products. Brokerage fees increased $9 million, or 47 percent,
reflecting the impact of the Corporation's new investment program partner as well as increased money market funds revenue
related to higher short-term rates as well as elevated transactional revenue for personal trusts.
Card fees consist primarily of interchange and other fee income earned on government prepaid card, commercial card,
debit/Automated Teller Machine (ATM) card and merchant payment processing services. Card fees increased $7 million, or 2
percent, reflecting higher processing volumes in merchant services and ATM network bonuses, partially offset by a one-time
government card vendor incentive received in 2022.
Commercial lending fees include fees assessed on the unused portion of lines of credit (unused commitment fees) and
loan servicing fees. These fees increased $4 million, or 6 percent, driven by higher commitment fees from growth in loan
F-6
commitments, partially offset by a decrease in Mortgage Banker Finance service charges due to the mostly completed planned
exit from this line of business.
Letter of credit fees increased $4 million, or 11 percent, reflecting an increase in standby letters of credit activity.
Risk management hedging income declined $50 million, resulting from a $91 million net loss related to Bloomberg
Short-Term Bank Yield Index (BSBY) cessation, which was partially offset by a $41 million increase in price alignment
income received on collateral posted for centrally cleared risk management positions. Refer to the "BSBY Cessation"
subheading in the "Market and Liquidity Risk" section of this financial review, as well as Note 8 to the consolidated financial
statements, for further discussion of de-designated interest rate hedges.
Service charges on deposit accounts consist primarily of charges on retail and business accounts, including fees for
treasury management services. Service charges on deposit accounts decreased $10 million, or 5 percent, reflecting declines in
volume-based deposit fees and the elimination of certain consumer account fees as well as an increase in earnings credit
allowances provided to customers that reduced their service charges.
Capital markets income consists of net gains and losses recognized on customer-initiated derivative instruments, net of
the impact of offsetting positions, syndication agent fees, investment banking fees and merger and acquisition advisory fees.
Capital markets income decreased $7 million, or 5 percent, primarily due to unfavorable credit valuation adjustments, lower
interest rate and energy derivative income and a decline in syndication agent fees, partially offset by increases in advisory fees
and foreign exchange derivative income.
Other noninterest income increased $52 million, as detailed below, driven by increases in deferred compensation asset
returns (offset in noninterest expenses) and FHLB stock dividends due to higher rates and additional stock acquired during the
year.
(in millions)
Years Ended December 31
FHLB and FRB stock dividends
Deferred compensation asset returns (a)
Securities trading income
Insurance commissions
All other noninterest income
Other noninterest income
1
14
7
11
55
88
(a) Compensation deferred by the Corporation's officers and directors is invested based on investment selections of the officers and
directors. Income earned on these assets is reported in noninterest income and the offsetting change in deferred compensation plan
liabilities is reported in salaries and benefits expense.
30 $
13
13
12
15
83 $
(18)
13
13
20
31 $
2023
2022
2021
3 $
$
$
Noninterest Expenses
(in millions)
Years Ended December 31
Salaries and benefits expense
Outside processing fee expense
FDIC insurance expense
Occupancy expense
Software expense
Equipment expense
Advertising expense
Other noninterest expenses
Total noninterest expenses
2023
2022
2021
$
$
1,306 $
277
180
171
171
50
40
164
2,359 $
1,208 $
251
31
175
161
50
38
84
1,998 $
1,133
266
22
161
155
50
35
39
1,861
Noninterest expenses increased $361 million to $2.4 billion, primarily due to increases in FDIC insurance expense,
salaries and benefits expense, other noninterest expenses, outside processing fee expenses and software expense.
FDIC insurance expense increased $149 million, reflecting $109 million in additional expense resulting from the FDIC
Board of Directors' November 2023 approval of a special assessment to recover the loss to the Deposit Insurance Fund (DIF)
following the failures of Silicon Valley Bank and Signature Bank. In February 2024, the FDIC indicated that it now expects a
larger loss to the DIF than originally estimated and that it plans to provide institutions with an updated estimate of their total
special assessment amount with its first quarter 2024 special assessment invoice, to be released in June 2024. This updated
special assessment total may result in additional FDIC expense to be recorded later this year.
F-7
Salaries and benefits expense increased $98 million, or 8 percent, reflecting increases from annual merit increases and
staff additions, temporary labor and deferred compensation expense (offset in other noninterest income), partially offset by a
decrease in incentive compensation.
Other noninterest expenses increased $80 million, or 95 percent, including increases in non-salary pension expense,
litigation and regulatory-related expenses, consulting fees and legal fees, partially offset by a net gain on fixed asset disposals,
which included gains on real estate and asset impairments.
Outside processing fee expense increased $26 million, or 10 percent, reflecting an increase in state program costs and
data processing conversion costs, partially offset by lower card fulfillment fees and a decline in volume of government card
transactions tied to card fee revenues.
Software expenses increased $10 million, or 6 percent, driven by higher cloud computing costs and an increase in
rental and maintenance fees.
The above detail includes expenses for certain modernization initiatives related to the transformation of the retail
banking delivery model, alignment of corporate facilities and optimization of technology platforms. Modernization-related
expenses totaled $6 million during 2023, compared to $38 million during 2022, and were comprised of transitional real estate
costs (reported in occupancy expense), severance and contract labor (reported in salaries and benefits expense) as well as gains
on sale of real estate assets, asset impairments and contract termination costs (reported in other noninterest expenses). The
above detail also includes $25 million of severance costs during 2023 related to expense recalibration initiatives intended to
enhance earnings power and create capacity for strategic and risk management initiatives.
Income Taxes and Related Items
The provision for income taxes was $263 million in 2023, compared to $325 million in 2022. Net deferred tax assets
were $1.0 billion at December 31, 2023, compared to $1.1 billion at December 31, 2022. Refer to Note 18 to the consolidated
financial statements for information about the components of net deferred tax assets. Deferred tax assets of $1.3 billion were
evaluated for realization and it was determined that a valuation allowance of $6 million for federal foreign tax credits and
certain state net operating loss (NOL) carryforwards was needed at December 31, 2023. For further information on the
Corporation’s valuation policy for deferred tax assets, refer to Note 1 of the consolidated financial statements.
F-8
STRATEGIC LINES OF BUSINESS
The Corporation has strategically aligned its operations into three major business segments: the Commercial Bank, the
Retail Bank and Wealth Management. These business segments are differentiated based on the type of customer and the related
products and services provided. In addition to the three major business segments, the Finance Division is also reported as a
segment. The Other category includes items not directly associated with the business segments or the Finance segment. The
performance of the business segments is not comparable with the Corporation's consolidated results and is not necessarily
comparable with similar information for any other financial institution. Additionally, because of the interrelationships of the
various segments, the information presented is not indicative of how the segments would perform if they operated as
independent entities. Note 22 to the consolidated financial statements describes the Corporation's segment reporting
methodology as well as the business activities of each business segment and presents financial results of the business segments
for the years ended December 31, 2023, 2022 and 2021.
The Corporation's management accounting system assigns balance sheet and income statement items to each segment
using certain methodologies, which are regularly reviewed and refined. These methodologies may be modified as the
management accounting system is enhanced and changes occur in the organizational structure and/or product lines.
Net interest income for each segment reflects the interest income generated by earning assets less interest expense on
interest-bearing liabilities plus the net impact from associated internal funds transfer pricing (FTP) funding credits and charges.
The FTP methodology allocates credits to each business segment for deposits and other funds provided as well as charges for
loans and other assets being funded. FTP crediting rates on deposits and other funds provided reflect the long-term value of
deposits and other funding sources based on their implied maturities. Due to the longer-term nature of implied maturities, FTP
crediting rates are generally less volatile than changes in interest rates observed in the market. FTP charge rates for funding
loans and other assets reflect a matched cost of funds based on the pricing and duration characteristics of the assets. As a result
of applying matched funding, interest revenue for each segment resulting from loans and other assets is generally not impacted
by changes in interest rates. Therefore, net interest income for each segment primarily reflects the volume of loans and other
earning assets at the spread over the matched cost of funds, as well as the volume of deposits at the associated FTP crediting
rates. Generally, in periods of rising interest rates, FTP charge rates for funding loans and FTP crediting rates on deposits will
increase, with FTP crediting rates for deposits typically repricing at a slower pace than FTP charge rates for funding loans.
The following table presents net income (loss) by business segment.
(dollar amounts in millions)
Years Ended December 31
Commercial Bank
Retail Bank
Wealth Management
Finance
Other
Total
2023
2022
2021
$
$
1,116
176
90
1,382
(504)
3
881
81 % $
13
6
100 %
$
1,057
79
106
1,242
(98)
7
1,151
85 % $
6
9
100 %
$
1,328
40
125
1,493
(331)
6
1,168
89 %
3
8
100 %
F-9
The following sections present a summary of the performance of each of the Corporation's business segments for 2023
compared to 2022.
Commercial Bank
(dollar amounts in millions)
Earnings summary:
Net interest income
Provision for credit losses
Noninterest income
Noninterest expenses
Provision for income taxes
Net income
Net charge-offs
Selected average balances:
Loans
Deposits
n/m - not meaningful
Years Ended December 31,
2022
2023
Change
Percent
Change
$
$
$
$
2,051
90
603
1,106
342
1,116
20
46,435
33,019
$
$
$
$
1,761
32
607
964
315
1,057
21
43,481
42,584
$
$
$
$
290
58
(4)
142
27
59
(1)
2,954
(9,565)
16 %
n/m
(1)
15
8
5
(3)
7 %
(22)
Average loans increased $3.0 billion and included increases in Commercial Real Estate, National Dealer Services,
Corporate Banking and Environmental Services, partially offset by decreases in Mortgage Banker Finance related to planned
exit from this business and Equity Fund Services. Average deposits decreased $9.6 billion, with declines in all deposit
categories reflecting customer diversification efforts following the banking industry disruption in the first quarter of 2023. This
decline was primarily driven by decreases in noninterest-bearing and money market deposits, with the largest declines in
general Middle Market, Technology and Life Sciences, Business Banking, Commercial Real Estate, Corporate Banking and
National Dealer Services.
The Commercial Bank's net income increased $59 million to $1.1 billion. Net interest income increased $290 million
due to increased loan income as well as higher FTP crediting rates on deposits related to the increase in short-term interest rates,
partially offset by higher allocated net FTP charges. The provision for credit losses increased $58 million to $90 million,
reflecting loan growth, an uncertain economic outlook and credit migration. Net credit-related charge-offs were $20 million,
relatively stable compared to the prior year, with net charge-offs in Corporate Banking, Business Banking and Technology and
Life Sciences partially offset by net recoveries in general Middle Market. Noninterest income decreased $4 million, primarily
due to lower capital markets income and service charges on deposit accounts, partially offset by higher securities trading
income and commercial lending fees. Noninterest expenses increased $142 million, primarily reflecting increases in FDIC
insurance expense (related to special assessment), salaries and benefits expense and outside processing fee expense.
Retail Bank
(dollar amounts in millions)
Earnings summary:
Net interest income
Provision for credit losses
Noninterest income
Noninterest expenses
Provision for income taxes
Net income
Net charge-offs (recoveries)
Selected average balances:
Loans
Deposits
n/m - not meaningful
Years Ended December 31,
2022
2023
Change
Percent
Change
$
$
$
$
846
3
119
728
58
176
1
2,236
24,363
$
$
$
$
680
11
122
690
22
79
(1)
2,063
26,672
$
$
$
$
166
(8)
(3)
38
36
97
2
173
(2,309)
25 %
(76)
(2)
6
n/m
n/m
n/m
8%
(9)
F-10
Average loans increased $173 million while average deposits decreased $2.3 billion, reflecting decreases in all deposit
categories with the exception of time deposits. The Retail Bank's net income increased $97 million to $176 million. Net interest
income increased $166 million to $846 million, primarily due to higher FTP crediting rates on deposits. Noninterest income
was relatively stable, while noninterest expenses increased $38 million, primarily due to increases in FDIC insurance expense
(related to special assessment), partially offset by decreases in occupancy and consulting expenses.
Wealth Management
(dollar amounts in millions)
Earnings summary:
Net interest income
Provision for credit losses
Noninterest income
Noninterest expenses
Provision for income taxes
Net income
Net charge-offs (recoveries)
Selected average balances:
Loans
Deposits
n/m - not meaningful
Years Ended December 31,
2022
2023
Change
Percent
Change
$
$
$
$
208
(6)
307
402
29
90
1
5,232
4,130
$
$
$
$
$
$
$
$
199
9
298
348
34
106
(3)
4,906
5,439
9
(15)
9
54
(5)
(16)
4
326
(1,309)
4 %
n/m
3
16
(12)
(17) %
n/m
7%
(24)
Average loans remained relatively stable while average deposits decreased $1.3 billion, reflecting decreases in all
deposit categories with the exception of time deposits. Wealth Management's net income decreased $16 million to $90 million.
Net interest income increased $9 million to $208 million, primarily due to higher loan income, partially offset by an increase in
allocated net FTP charges. Noninterest income increased $9 million to $307 million, primarily driven by investment fees, while
noninterest expenses increased $54 million, reflecting increases in salaries and benefits expense, consulting expenses, outside
processing fee expense and FDIC insurance expense (related to special assessment).
Finance & Other
(dollar amounts in millions)
Earnings summary:
Net interest expense
Provision for credit losses
Noninterest income
Noninterest expenses
Benefit for income taxes
Net loss
Selected average balances:
Loans
Deposits
n/m - not meaningful
Years Ended December 31,
2022
2023
Change
Percent
Change
$
$
$
(591)
2
49
123
(166)
(501)
—
4,506
$
$
$
$
$
$
(174)
8
41
(4)
(46)
(91)
10
786
(417)
(6)
8
127
(120)
(410)
(10)
3,720
n/m
(81)
20
n/m
n/m
n/m
(100%)
n/m
Average deposits, which primarily consist of centrally-managed brokered time deposits fully insured by the FDIC,
increased $3.7 billion. Net loss for the Finance and Other category increased $410 million to $501 million. Net interest expense
increased $417 million to $591 million, reflecting the impact of interest rate swaps (which are centrally managed) as well as
increased balances from higher-cost funding sources. Noninterest income increased $8 million to $49 million, primarily due to
higher investment fees and FHLB stock dividends, partially offset by a decrease in risk management hedging income (BSBY
cessation). Noninterest expenses increased $127 million, reflecting higher salaries and benefits expense and FDIC insurance
expense (special assessment), partially offset by gains on the sale of real estate.
F-11
The following table lists the Corporation's banking centers by geographic market.
December 31
Michigan
Texas
California
Other Markets:
Arizona
Florida
Canada
Total Other Markets
Total
Earning Assets
Period-End Loans
(in millions)
December 31
Commercial loans
Real estate construction loans
Commercial mortgage loans
Lease financing
International loans
Residential mortgage loans
Consumer loans:
Home equity
Other consumer
Total consumer loans
Total loans
2023
2022
2021
176
116
92
16
7
1
24
408
177
115
92
17
8
1
26
410
188
124
95
17
8
1
26
433
BALANCE SHEET AND CAPITAL FUNDS ANALYSIS
2023
2022
Change
$
$
27,251 $
5,083
13,686
807
1,102
1,889
1,792
503
2,295
52,113 $
30,909
3,105
13,306
760
1,197
1,814
1,776
535
2,311
53,402
$
$
(3,658)
1,978
380
47
(95)
75
16
(32)
(16)
(1,289)
Percent
Change
(12) %
64
3
6
(8)
4
1
(6)
(1)
(2) %
On a period-end basis, total loans decreased $1.3 billion to $52.1 billion at December 31, 2023, compared to
$53.4 billion at December 31, 2022.
Average Loans
(in millions)
Years Ended December 31
Average Loans By Loan Type:
Commercial loans
Real estate construction loans
Commercial mortgage loans
Lease financing
International loans
Residential mortgage loans
Consumer loans:
Home equity
Other consumer
Total consumer loans
Total loans
2023
2022
Change
Percent
Change
$
30,009 $
4,041
13,697
776
1,226
1,877
1,775
502
2,277
$
53,903 $
29,846 $
2,607
12,135
680
1,246
1,776
1,634
536
2,170
50,460 $
163
1,434
1,562
96
(20)
101
141
(34)
107
3,443
1 %
55
13
14
(2)
6
9
(6)
5
7 %
F-12
(in millions)
Years Ended December 31
Average Loans By Business Line:
General Middle Market
National Dealer Services
Equity Fund Services
Environmental Services
Energy
Entertainment
Technology and Life Sciences
Total Middle Market
Commercial Real Estate
Corporate Banking
Business Banking
Mortgage Banker Finance
Total Commercial Bank
Total Retail Bank
Total Wealth Management
Total Finance and Other
Total loans
2023
2022
Change
Percent
Change
$
$
12,568 $
5,775
3,001
2,366
1,480
1,153
865
27,208
9,085
6,044
3,150
945
46,432
2,237
5,232
2
53,903 $
12,686 $
4,633
3,345
2,119
1,387
1,141
909
26,220
6,898
5,528
3,256
1,579
43,481
2,063
4,906
10
50,460 $
(118)
1,142
(344)
247
93
12
(44)
988
2,187
516
(106)
(634)
2,951
174
326
(8)
3,443
(1) %
25
(10)
12
7
1
(5)
4
32
9
(3)
(40)
7
8
7
(92)
7 %
Average total loans increased $3.4 billion to $53.9 billion in 2023, compared to $50.5 billion in 2022, which included
a $2.2 billion increase in Commercial Real Estate, which generally serves real estate developers and investors. National Dealer
Services, which provides floor plan inventory financing and commercial mortgages to auto dealerships, increased by
$1.1 billion, while Corporate Banking, which serves companies with revenues generally over $500 million, increased by $516
million. These increases were partially offset by a $634 million decline in Mortgage Banker Finance due to the mostly
completed planned exit from this line of business.
Investment Securities
(in millions)
December 31
U.S. Treasury securities
Residential mortgage-backed securities (a)
Commercial mortgage-backed securities (a)
Total investment securities
2023
2022
Change
$
$
1,605 $
10,519
4,745
16,869 $
2,664 $
11,655
4,693
19,012 $
(1,059)
(1,136)
52
(2,143)
Percent
Change
(40) %
(10)
1 %
(11) %
(a)
Issued and/or guaranteed by U.S. government agencies or U.S. government-sponsored enterprises.
n/m - not meaningful
On a period-end basis, investment securities were $16.9 billion at December 31, 2023, a decrease of $2.1 billion from
$19.0 billion at December 31, 2022, due to maturities of Treasury securities and paydowns of mortgage-backed securities,
partially offset by an improvement in unrealized losses, from $3.0 billion at December 31, 2022 to $2.7 billion at December 31,
2023. At December 31, 2023, the effective duration of the Corporation's securities portfolio was approximately 5.5 years. On an
average basis, investment securities decreased $1.6 billion to $17.4 billion in 2023, compared to $19.0 billion in 2022, primarily
due to unrealized losses and maturities of Treasury securities.
(weighted average yield) (a)
December 31, 2023
Maturity (c)
Within 1 year
1-5 Years
5-10 Years
After 10 Years
Total
U.S. Treasury
securities
Residential
mortgage-backed
securities (b)
Commercial
mortgage-backed
securities (b)
Total investment
securities
0.23 %
0.29
—
—
0.26 %
1.1
3.76 %
2.19
1.93
1.96
1.96 %
26.2
— %
1.66
2.97
—
2.96 %
8.1
0.25 %
0.66
2.93
1.96
2.08 %
19.1
Weighted Average Maturity (years)
(a) Weighted average yields are calculated on the basis of yield to maturity based on the carrying value of each debt security, aggregated by type and
agency.
Issued and/or guaranteed by U.S. government agencies or U.S. government-sponsored enterprises.
(b)
(c) Based on final contractual maturity.
F-13
Interest-Bearing Deposits with Banks and Other Short-Term Investments
Interest-bearing deposits with banks, which are mostly used to manage liquidity requirements of the Corporation,
primarily include deposits with the Federal Reserve Bank (FRB) and also include deposits with banks in developed countries or
international banking facilities of foreign banks located in the United States. On a period-end basis, interest-bearing deposits
with banks increased $3.5 billion to $8.1 billion at December 31, 2023. On an average basis, interest-bearing deposits with
banks decreased $1.8 billion to $7.5 billion in 2023.
Other short-term investments include federal funds sold, trading securities, money market investments and loans held-
for-sale. Substantially all trading securities are deferred compensation plan assets. Loans held-for-sale include variable-rate
demand notes for which the Corporation has purchased the underlying bonds as well as residential mortgage loans originated
with management's intention to sell and, from time to time, other loans that are transferred to held-for-sale. On a period-end
basis, other short-term investments increased $242 million to $399 million at December 31, 2023, which was driven by the
above-referenced variable-rate demand notes. On an average basis, other short-term investments increased $165 million to $339
million in 2023.
Deposits and Borrowed Funds
Period-End Deposits and Borrowed Funds
(in millions)
Years Ended December 31
Noninterest-bearing deposits
Money market and interest-bearing checking deposits
Savings deposits
Customer certificates of deposit
Other time deposits
Foreign office time deposits
Total deposits
Short-term borrowings
Medium- and long-term debt
Total borrowed funds
n/m - not meaningful
2023
2022
Change
Percent
Change
$
$
$
$
27,849 $
28,246
2,381
3,723
4,550
13
66,762 $
3,565 $
6,206
9,771 $
39,945 $
26,290
3,225
1,762
124
51
71,397 $
3,211 $
3,024
6,235 $
(12,096)
1,956
(844)
1,961
4,426
(38)
(4,635)
354
3,182
3,536
(30) %
7
(26)
n/m
n/m
(75)
(6) %
11 %
n/m
57 %
On a period-end basis, total deposits decreased $4.6 billion to $66.8 billion at December 31, 2023, compared to $71.4
billion at December 31, 2022, reflecting a decrease of $12.1 billion in noninterest-bearing deposits, partially offset by a $7.5
billion increase in interest-bearing deposits.
Uninsured deposits are defined as the portion of deposit accounts in U.S. offices that exceed the FDIC insurance limit
and amounts in any other uninsured investment or deposit account that are classified as deposits and are not subject to any
federal or state deposit insurance regimes. Total uninsured deposits were $31.5 billion and $45.5 billion at December 31, 2023
and 2022, respectively, as calculated per regulatory guidance. The portion of domestic time deposits in excess of insurance
limits was $797 million and $370 million at December 31, 2023 and 2022, respectively. Time deposits otherwise uninsured,
which consist of foreign office time deposits and all mature in three months or less, totaled $13 million at December 31, 2023,
compared to $51 million at December 31, 2022.
On a period-end basis, short-term borrowings totaled $3.6 billion at December 31, 2023, compared to $3.2 billion at
December 31, 2022, and included federal funds purchased and short-term Federal Home Loan Bank (FHLB) advances. On a
period-end basis, total medium- and long-term debt totaled $6.2 billion at December 31, 2023, an increase of $3.2 billion from
$3.0 billion at December 31, 2022. The Corporation uses medium- and long-term debt, which includes medium- and long-term
senior notes, subordinated notes and FHLB advances, to provide funding for earning assets, liquidity and regulatory capital.
F-14
Average Deposits and Borrowed Funds
(in millions)
Years Ended December 31
Noninterest-bearing deposits
Money market and interest-bearing checking deposits
Savings deposits
Customer certificates of deposit
Other time deposits
Foreign office time deposits
Total deposits
Short-term borrowings
Medium- and long-term debt
Total borrowed funds
n/m - not meaningful
(in millions)
Years Ended December 31,
Average Deposits By Business Line:
General Middle Market
Technology and Life Sciences
National Dealer Services
Equity Fund Services
Energy
Environmental Services
Entertainment
Total Middle Market
Corporate Banking
Business Banking
Commercial Real Estate
Mortgage Banker Finance
Total Commercial Bank
Total Retail Bank
Total Wealth Management
Total Finance and Other
Total deposits
n/m - not meaningful
2023
2022
Change
Percent
Change
30,882 $
26,054
2,774
2,708
3,577
23
66,018 $
7,218 $
5,847
13,065 $
42,018 $
28,347
3,304
1,756
16
40
75,481 $
436 $
2,818
3,254 $
(11,136)
(2,293)
(530)
952
3,561
(17)
(9,463)
6,782
3,029
9,811
(27) %
(8)
(16)
54
n/m
(42)
(13) %
n/m
n/m
n/m
2023
2022
Change
Percent
Change
16,962 $
3,607
1,022
976
574
361
268
23,770
3,788
3,569
1,582
310
33,019
24,363
4,130
4,506
66,018 $
20,409 $
6,483 $
1,526
1,175
1,000
344
267
31,204
4,381
4,289
2,175
535
42,584
26,672
5,439
786
75,481 $
(3,447)
(2,876)
(504)
(199)
(426)
17
1
(7,434)
(593)
(720)
(593)
(225)
(9,565)
(2,309)
(1,309)
3,720
(9,463)
(17) %
(44)
(33)
(17)
(43)
5
—
(24)
(14)
(17)
(27)
(42)
(22)
(9)
(24)
n/m
(13) %
$
$
$
$
$
$
Average deposits decreased $9.5 billion to $66.0 billion in 2023, compared to $75.5 billion in 2022, reflecting an
$11.1 billion decrease in noninterest-bearing deposits, partially offset by a $1.7 billion increase in interest-bearing deposits. The
decline in noninterest-bearing deposits reflected customer diversification efforts following the banking industry disruption in
the first quarter of 2023 as well as a shift in deposit mix from noninterest-bearing to interest-bearing due to the current higher
interest rate environment, while the increase in interest-bearing deposits was primarily due to increases in brokered time
deposits and customer certificates of deposit.
Average short-term borrowings increased by $6.8 billion to $7.2 billion in 2023, compared to $436 million in 2022,
while average medium- and long-term debt increased $3.0 billion to $5.8 billion in 2023, compared to $2.8 billion in 2022,
primarily driven by FHLB advances, partially offset by $850 million in senior notes that matured in the third quarter of 2023.
Further information on medium- and long-term debt is provided in Note 12 to the consolidated financial statements.
F-15
Capital
Total shareholders' equity increased $1.2 billion to $6.4 billion at December 31, 2023, compared to $5.2 billion at
December 31, 2022. The following table presents a summary of changes in total shareholders' equity in 2023.
(in millions)
Balance at January 1, 2023
Net income
Cash dividends declared on common stock
Cash dividends declared on preferred stock
Other comprehensive income, net of tax:
Investment securities
Cash flow hedges
Defined benefit and other postretirement plans
Total other comprehensive income, net of tax
Net issuance of common stock under employee stock plans
Share-based compensation
Balance at December 31, 2023
$
276
337
81
$
$
5,181
881
(375)
(23)
694
(4)
52
6,406
The following table summarizes the Corporation’s repurchase activity for the year ended December 31, 2023.
(shares in thousands)
First Quarter 2023
Second Quarter 2023
Third Quarter 2023
Fourth Quarter 2023
Total 2023
Total Number of Shares
Purchased as
Part of Publicly Announced
Repurchase Plans or Programs
Remaining Share
Repurchase
Authorization (a)
Total Number
of Shares
Purchased (b)
Average Price
Paid Per
Share
—
—
—
—
—
4,997
4,997
4,997
4,997
4,997
31 $
3
3
3
40
72.78
42.36
43.37
40.60
65.89
(a) Maximum number of shares that may be repurchased under the publicly announced plans or programs.
(b) Includes approximately 40,000 shares purchased related to deferred compensation plans during the year ended December 31, 2023 and is
not considered part of the Corporation's repurchase program.
Since the inception of the Corporation's share repurchase program in 2010, a total of 97.2 million shares have been
authorized for repurchase. There is no expiration date for the share repurchase program. Management is not currently engaged
in repurchasing shares and will continue to monitor various factors, including the Corporation's earnings generation, capital
needs to fund future loan growth, regulatory changes and market conditions, before resuming the share repurchase program.
The Corporation continues to target a Common Equity Tier 1 (CET1) capital ratio of approximately 10 percent with
active capital management. At December 31, 2023, the Corporation's CET1 capital ratio was 11.09 percent, a increase of 109
basis points compared to December 31, 2022.
The Corporation is subject to the capital adequacy standards under the Basel III regulatory framework (Basel III). This
regulatory framework establishes comprehensive methodologies for calculating regulatory capital and risk-weighted assets
(RWA). Basel III also set minimum capital ratios as well as overall capital adequacy standards.
Under Basel III, regulatory capital comprises CET1 capital, additional Tier 1 capital and Tier 2 capital. CET1 capital
predominantly includes common shareholders' equity, less certain deductions for goodwill, intangible assets and deferred tax
assets that arise from net operating losses and tax credit carry-forwards. Additionally, the Corporation has elected to
permanently exclude capital in accumulated other comprehensive income (AOCI) related to debt classified as available-for-sale
as well as for cash flow hedges and defined benefit postretirement plans from CET1, an option available to standardized
approach entities under Basel III. Tier 1 capital incrementally includes noncumulative perpetual preferred stock. Tier 2 capital
includes Tier 1 capital as well as subordinated debt qualifying as Tier 2 and qualifying allowance for credit losses.
F-16
The Corporation computes RWA using the standardized approach. Under the standardized approach, RWA is
generally based on supervisory risk-weightings which vary by counterparty type and asset class. Under the Basel III
standardized approach, capital is required for credit risk RWA, to cover the risk of unexpected losses due to failure of a
customer or counterparty to meet its financial obligations in accordance with contractual terms; and if trading assets and
liabilities exceed certain thresholds, capital is also required for market risk RWA, to cover the risk of losses due to adverse
market movements or from position-specific factors.
The following table presents the minimum ratios required.
4.5 %
6.0
8.0
2.5
4.0
Common equity tier 1 capital to risk-weighted assets
Tier 1 capital to risk-weighted assets
Total capital to risk-weighted assets
Capital conservation buffer (a)
Tier 1 capital to adjusted average assets (leverage ratio)
(a)
In addition to the minimum risk-based capital requirements, the Corporation is required to maintain a minimum capital conservation
buffer, in the form of common equity tier 1 capital, in order to avoid restrictions on capital distributions and discretionary bonuses.
The Corporation's capital ratios exceeded minimum regulatory requirements as follows:
December 31, 2023
December 31, 2022
(dollar amounts in millions)
Common equity tier 1 (a)
Tier 1 risk-based (a)
Total risk-based
Leverage
Common shareholders' equity
Tangible common equity (a)
Risk-weighted assets
(a) See Supplemental Financial Data section for reconciliations of non-GAAP financial measures and regulatory ratios.
Capital/Assets
8,414
$
8,808
10,263
8,808
6,012
5,369
75,901
Ratio
11.09 % $
11.60
13.52
10.06
7.00
6.30
Capital/Assets
7,884
8,278
9,817
8,278
4,787
4,143
78,871
Ratio
10.00 %
10.50
12.45
9.55
5.60
4.89
At December 31, 2023, the Corporation and its U.S. banking subsidiaries exceeded the capital ratios required for an
institution to be considered “well capitalized” by the standards developed under the Federal Deposit Insurance Corporation
Improvement Act of 1991. Refer to Note 20 to the consolidated financial statements for further discussion of regulatory capital
requirements, capital ratio calculations and restrictions on the ability of the Corporation's banking subsidiaries to transfer assets
to the Corporation.
The common shareholders' equity ratio increased 140 basis points to 7.00 percent at December 31, 2023, primarily due
to lower unrealized losses on investment securities available-for-sale and the Corporation's cash flow hedge portfolio. The
unrealized losses in the Corporation's available-for-sale investment security portfolio, which are due to market valuations since
the time of initial acquisition, are not expected to be realized. The tangible common equity ratio, which excludes goodwill and
other intangible assets, increased 141 basis points to 6.30 percent for the same reasons discussed above. Common shareholders'
equity included $3.0 billion in accumulated other comprehensive losses, with approximately $2.3 billion of those losses relating
to balances recorded in total assets, comprised of valuation adjustments to available-for-sale securities and pension assets, as
well as related deferred tax assets. These amounts impacted the common shareholders' equity ratio by 328 basis points; the
impact on the tangible common equity ratio using the same calculation method was 332 basis points.
Basel III Endgame Framework
On July 27, 2023, the federal banking agencies issued a notice of proposed rulemaking, commonly referred to as Basel
III Endgame (the Capital Proposal) that would significantly increase the capital requirements applicable to large banking
organizations with total assets of $100 billion or more. The Capital Proposal would align the regulatory capital calculation and
the calculation of risk-weighted assets across large banking organizations subject to the Capital Proposal and require Category
III and IV banking organizations to include most components of AOCI, including net unrealized gains and losses on available-
for-sale securities, in their regulatory capital ratios. The Capital Proposal is subject to a public comment period, which ended on
January 16, 2024, and, if adopted, would include a three-year transition period beginning July 1, 2025. As of December 31,
2023, the Corporation had total assets of $85.8 billion. While the Capital Proposal would not apply to the Corporation as it is
currently proposed, if the Corporation becomes subject to the requirements of the Capital Proposal in the future or becomes
subject to any other new laws or regulations related to capital and liquidity, such requirements could limit the Corporation’s
ability to pay dividends or make share repurchases or require Comerica to reduce business levels or to raise capital, which
would have a material adverse effect on the Corporation’s financial condition and results of operations. If subject to the Capital
Proposal, the estimated impact related to proposed inclusion of most components of AOCI would be an approximate 300 basis
point decrease to common equity tier-1 capital based on December 31, 2023 financials.
F-17
RISK MANAGEMENT
The Corporation assumes various types of risk as a result of conducting business in the normal course. The
Corporation's enterprise risk management framework provides a process for identifying, measuring, controlling and managing
these risks. This framework incorporates a risk assessment process, a collection of risk committees that manage the
Corporation's major risk elements and a risk appetite statement that outlines the levels and types of risks the Corporation
accepts. The Corporation continuously enhances its enterprise risk framework with additional processes, tools and systems
designed to not only provide management with deeper insight into the various existing and emerging risks in accordance with
its appetite for risk, but also to improve the Corporation's ability to control those risks and ensure that appropriate consideration
is received for the risks taken.
The Corporation’s front line employees, the first line of defense, are responsible for the day-to-day management and
ownership of risks, including the identification, assessment, measurement and control of risks encountered as a part of the
normal course of business. Each of the major risk categories are further monitored and measured by specialized risk managers
in the second line of defense within the Enterprise Risk Division, who provide oversight as well as independent and effective
challenge and guidance for the risk management activities of the organization. The Enterprise Risk Division, led by the Chief
Risk Officer, is responsible for designing and managing the Corporation’s enterprise risk management framework and ensures
effective risk management oversight. Risk management committees serve as a point of review and escalation for those risks
which may have risk interdependencies or where risk levels may be nearing the limits outlined in the Corporation’s risk appetite
statement. These committees comprise senior and executive management that represent views from both the lines of business
and risk management. Internal Audit, the third line of defense, monitors and assesses the overall effectiveness of the risk
management framework on an ongoing basis and provides an independent, objective assessment of the Corporation’s ability to
manage and control risk to management and the Audit Committee of the Board.
The Enterprise Risk and Return Committee, chaired by the Chief Risk Officer, is established by the Enterprise Risk
Committee of the Board and responsible for governance over the risk management framework, providing oversight in managing
the Corporation's aggregate risk position and reporting on the comprehensive portfolio of risks as well as the potential impact
these risks can have on the Corporation's risk profile and resulting capital level. Capital provides the primary buffer for risk and
also serves as a measuring tool when evaluating risk. The Enterprise Risk and Return Committee is principally composed of
senior officers and executives representing the different risk areas and business units who are appointed by the Chairman and
Chief Executive Officer of the Corporation.
The Board's Enterprise Risk Committee meets quarterly and is chartered to assist the Board in promoting the best
interests of the Corporation by overseeing policies and risk practices relating to enterprise-wide risk and ensuring compliance
with bank regulatory obligations. Members of the Enterprise Risk Committee are selected such that the committee comprises
individuals whose experiences and qualifications can lead to broad and informed views on risk matters facing the Corporation
and the financial services industry. These include, but are not limited to, existing and emerging risk matters related to credit,
market, liquidity, operational, technology, compliance and strategic conditions. A comprehensive risk report is submitted to the
Enterprise Risk Committee each quarter providing management's view of the Corporation's aggregate risk position.
Further discussion and analyses of each major risk area are included in the following sub-sections of the Risk
Management section in this financial review.
Credit Risk
Credit risk represents the risk of loss due to failure of a customer or counterparty to meet its financial obligations in
accordance with contractual terms. Credit risk is found in all activities where success depends on counterparty, issuer or
borrower performance. It arises any time funds are extended, committed, invested or otherwise exposed, whether reflected on or
off the balance sheet. The governance structure is administered through the Strategic Credit Committee. The Strategic Credit
Committee is chaired by the Chief Credit Officer and approves recommendations to address credit risk matters through credit
policy, credit risk management practices and required credit risk actions. The Strategic Credit Committee also ensures a
comprehensive reporting of credit risk levels and trends, including exception levels, along with identification and mitigation of
emerging risks. In order to facilitate the corporate credit risk management process, various other corporate functions provide the
resources for the Strategic Credit Committee to carry out its responsibilities. The Corporation manages credit risk through
underwriting and periodically reviewing and approving its credit exposures in accordance with established credit policies and
guidelines. Additionally, the Corporation manages credit risk through loan portfolio diversification, limiting exposure to any
single industry, customer or guarantor, and selling participations and/or syndicating credit exposures above those levels it
deems prudent to third parties.
The Credit Division manages credit policy and provides the resources to manage the line of business transactional
credit risk, assuring that all exposure is risk rated according to the requirements of the credit risk rating policy and providing
F-18
business segment reporting support as necessary. The Enterprise Risk Division provides credible and well-documented
challenge of overall portfolio credit risk, and other credit-related attributes of the Corporation's loan portfolios, with a particular
emphasis on all attendant modeled results. The Corporation's Asset Quality Review function, a division of Internal Audit, audits
the accuracy of internal risk ratings that are assigned by the lending and credit groups. The Special Assets Group is responsible
for managing the recovery process on distressed or defaulted loans and loan sales.
Credit Analytics and Strategy, within the Credit Division, provides comprehensive reporting on portfolio credit risk
levels and trends, continuous assessment and verification of risk rating models, quarterly calculation of the allowance for loan
losses and the allowance for credit losses on lending-related commitments and calculations of both expected and unexpected
loss.
Allowance for Credit Losses
The allowance for credit losses includes both the allowance for loan losses and the allowance for credit losses on
lending-related commitments. The allowance for credit losses increased by $67 million from $661 million at December 31,
2022 to $728 million at December 31, 2023, reflecting an uncertain economic outlook and credit migration, as well as changes
in portfolio composition.
The following table presents metrics of the allowance for credit losses and nonperforming loans.
December 31,
Allowance for credit losses as a percentage of total loans
Allowance for credit losses as a multiple of total nonaccrual loans
Allowance for credit losses as a multiple of total nonperforming loans
2023
1.40%
4.1x
4.1x
2022
1.24%
2.8x
2.7x
The economic forecasts informing the current expected credit loss (CECL) model reflect the cumulative effects of the
Federal Reserve Bank's tight monetary policy that are weighing on the real economy, as well as several years of elevated
inflation that have largely depleted excess savings that households accumulated during the pandemic. Energy prices are
projected to level off amid crosswinds from the Russia-Ukraine conflict, rising U.S. crude production and weak demand from
China and other major foreign economies. Residential and commercial real estate property prices face headwinds from the long
and variable lags by which the Federal Reserve Bank's tighter monetary policy affect real asset prices.
Downside risks to growth from geopolitical risks, a potential government shutdown, the restart of student loan
payments and less expansionary fiscal policy are projected to collectively contribute to slower growth in 2024. Price pressures
are forecasted to gradually return to pre-pandemic norms as a modest margin of slack opens in the economy's productive
capacity. The Federal Reserve Bank's aggressive tightening of monetary policy, including rapid increases in interest rates and
reductions in the size of its balance sheet, contribute to elevated risk of a policy error or recession.
These factors shaped the 2-year reasonable and supportable forecast used by the Corporation in its CECL estimate at
December 31, 2023. The U.S. economy is projected to grow at a below-trend rate through 2024 before gradually normalizing to
its trend growth rate. Certain economic variables, like oil prices, are expected to increase in the short term before decreasing as
inflation normalizes. Forecasts for other key economic variables are generally consistent with those of Gross Domestic Product
(GDP), while interest rate forecasts reflect market expectations and recent guidance from the Federal Reserve Bank. The
following table summarizes select economic variables representative of the economic forecasts used to develop the allowance
for credit losses estimate at December 31, 2023.
Economic Variable
Real GDP growth
Unemployment rate
Corporate BBB bond to 10-year Treasury bond spreads
Oil Prices
Base Forecast
Gradual growth to a peak near 3 percent in second quarter 2025
before returning to a growth rate of around 2 percent.
Remains near 4 percent throughout the forecast period.
Spreads widen to 2.4 percent by third quarter 2024 before
normalizing to 2 percent by the end of the forecast period.
Prices increase from current levels to $84 dollars in first quarter
2024 before declining to $76 by the end of the forecast period.
Due to the high degree of uncertainty regarding recessionary pressures, persistent inflation, continued high interest
rates and other tail risks to the outlook, management considered other economic scenarios to make appropriate qualitative
adjustments for certain sectors of its lending portfolio, including more benign as well as more severe scenarios.
F-19
Refer to Note 1 to the consolidated financial statements for a discussion of the methodology used in the determination
of the allowance for credit losses.
Allowance for Loan Losses
The allowance for loan losses represents management’s estimates of current expected credit losses in the Corporation’s
loan portfolio. The allowance for loan losses increased $78 million to $688 million at December 31, 2023, compared to
$610 million at December 31, 2022.
Collective loss estimates are determined by applying reserve factors, designed to estimate current expected credit
losses, to amortized cost balances over the remaining contractual life of the collectively evaluated portfolio. Loans with similar
risk characteristics are aggregated into homogeneous pools. The allowance for loan losses also includes qualitative adjustments
to bring the allowance to the level management believes is appropriate based on factors that have not otherwise been fully
accounted for, including adjustments for foresight risk, input imprecisions and model imprecision. Credit losses for loans that
no longer share risk characteristics with the loan pools are estimated on an individual basis. Individual credit loss estimates are
typically performed for nonaccrual loans and are based on one of several methods, including the estimated fair value of the
underlying collateral, observable market value of similar debt or the present value of expected cash flows.
Allowance for Credit Losses on Lending-Related Commitments
The allowance for credit losses on lending-related commitments estimates current expected credit losses on collective
pools of letters of credit and unused commitments to extend credit based on reserve factors, determined in a manner similar to
business loans, multiplied by a probability of draw estimate based on historical experience and credit risk, applied to
commitment amounts. The allowance for credit losses on lending-related commitments totaled $40 million and $51 million at
December 31, 2023 and December 31, 2022, respectively.
F-20
Analysis of the Allowance for Credit Losses
The table below details net charge-offs (recoveries) as a percentage of total loans by loan category.
2023
2022
2021
(dollar amounts in millions)
Commercial
Commercial mortgage
International
Residential mortgage
Consumer
Total loans
$
Net Loan
Charge-Offs
(Recoveries)
$
Net Charge-Offs
(Recoveries)
Ratio (a)
Net Loan
Charge-Offs
(Recoveries)
Net Charge-Offs
(Recoveries)
Ratio (a)
Net Loan
Charge-Offs
(Recoveries)
Net Charge-Offs
(Recoveries)
Ratio (a)
0.03 % $
(0.01)
1.06
—
0.04
0.04 % $
18
—
—
(1)
—
17
0.06% $
—
—
(0.03)
—
0.03% $
(15)
2
4
(2)
1
(10)
(0.05%)
0.02
0.38
(0.11)
0.05
(0.02%)
9
(1)
13
—
1
22
(a) Net charge-offs (recoveries) as a percentage of related average loans outstanding.
Net loan charge-offs totaled $22 million for the year ended December 31, 2023, a $5 million increase from net loan
charge-offs of $17 million for the year ended December 31, 2022. See "Provision for Credit Losses" in the "Results of
Operations" section of this financial review for more information about net loan charge-offs.
Allocation of the Allowance for Credit Losses
(dollar amounts in millions)
December 31,
Allowance for loan losses
Business loans
Commercial
Real estate construction
Commercial mortgage
Lease financing
International
Total business loans
Retail loans
Residential mortgage
Consumer
Total retail loans
Total loans
2023
2022
Allocated
Allowance
Allowance
Ratio (a) % (b)
Allocated
Allowance
Allowance
Ratio (a) % (b)
$
303
71
226
12
8
620
28
40
68
688
31
9
40
728
1.11%
1.39
1.66
1.44
0.71
1.29
1.50
1.74
1.63
1.32%
52% $
10
26
2
2
92
4
4
8
100% $
1.40%
$
287
38
200
6
10
541
32
37
69
610
40
11
51
661
58%
6
25
1
2
92
4
4
8
100%
0.93%
1.24
1.51
0.78
0.79
1.10
1.74
1.61
1.67
1.14
1.24 %
Allowance for credit losses on lending-related commitments
Business commitments
Retail commitments
Total commitments
Allowance for credit losses
$
(a) Allocated allowance as a percentage of related loans outstanding.
(b) Loans outstanding as a percentage of total loans.
For additional information regarding the allowance for credit losses, refer to the "Critical Accounting Estimates"
section of this financial review and Notes 1 and 4 to the consolidated financial statements.
Nonperforming Assets
Nonperforming assets include loans on nonaccrual status and foreclosed assets. Effective January 1, 2023, the
Corporation prospectively adopted the provisions of Accounting Standards Update No. 2022-02, "Financial Instruments -
Credit Losses (Topic 326): Troubled Debt Restructuring and Vintage Disclosures", which eliminated the accounting for TDRs.
Refer to Note 1 to the consolidated financial statements for further information. At December 31, 2022, reduced-rate loans
represented TDRs which had been renegotiated to less than their original contractual rates.
F-21
The following table presents a summary of nonperforming assets and past due loans.
Summary of Nonperforming Assets and Past Due Loans
(dollar amounts in millions)
December 31
Nonaccrual loans
Reduced-rate loans
Total nonperforming loans
Foreclosed property
Total nonperforming assets
Nonaccrual loans as a percentage of total loans
Nonperforming loans as a percentage of total loans
Nonperforming assets as a percentage of total loans and foreclosed property
Loans past due 90 days or more and still accruing
2023
2022
$
$
$
178
n/a
178
—
178
0.34%
0.34
0.34
20
$
$
$
240
4
244
—
244
0.45%
0.46
0.46
23
Nonperforming assets decreased $66 million to $178 million at December 31, 2023, from $244 million at
December 31, 2022. The decrease in nonperforming assets primarily reflected decreases of $33 million in nonaccrual business
loans and $29 million in nonaccrual retail loans. Nonperforming loans were 0.34 percent of total loans at December 31, 2023,
compared to 0.46 percent at December 31, 2022. For further information regarding the composition of nonaccrual loans, refer to
Note 4 to the consolidated financial statements.
The following table presents a summary of changes in nonaccrual loans.
(in millions)
Years Ended December 31
Balance at beginning of period
Loans transferred to nonaccrual (a)
Nonaccrual loan gross charge-offs
Loans transferred to accrual status (a)
Nonaccrual loans sold
Payments/other (b)
Balance at end of period
(a) Based on an analysis of nonaccrual loans with book balances greater than $2 million.
(b)
2023
2022
$
$
240 $
94
(62)
(14)
(5)
(75)
178 $
264
132
(68)
(11)
(15)
(62)
240
Includes net changes related to nonaccrual loans with balances less than or equal to $2 million, payments on nonaccrual loans with
book balances greater than $2 million and transfers of nonaccrual loans to foreclosed property.
There were 16 borrowers with a balance greater than $2 million, totaling $94 million, transferred to nonaccrual status
in 2023, a decrease of 7 borrowers compared to 23 borrowers totaling $132 million in 2022. For further information about the
composition of loans transferred to nonaccrual during the current period, refer to the nonaccrual information by industry
category table below.
The following table presents the composition of nonaccrual loans by balance and the related number of borrowers at
December 31, 2023 and 2022.
(dollar amounts in millions)
Under $2 million
$2 million - $5 million
$5 million - $10 million
$10 million - $25 million
Total
2023
2022
Number of
Borrowers
Balance
Number of
Borrowers
Balance
457 $
11
5
4
477 $
50
35
35
58
178
475 $
14
8
5
502 $
60
46
58
76
240
F-22
The following table presents a summary of nonaccrual loans at December 31, 2023 and loans transferred to nonaccrual
and net loan charge-offs (recoveries) for the year ended December 31, 2023, based on North American Industry Classification
System (NAICS) categories.
December 31, 2023
Year Ended December 31, 2023
(dollar amounts in millions)
Loans Transferred to
Nonaccrual (a)
Net Loan Charge-Offs
(Recoveries)
$
Nonaccrual Loans
Industry Category
Manufacturing
Real Estate & Home Builders
Residential Mortgage
Transportation & Warehousing
Information & Communication
Services
Wholesale Trade
Arts, Entertainment & Recreation
Mining, Quarrying and Oil & Gas Extraction
Management of Companies and Enterprises
Retail Trade
Other (b)
Total
(a) Based on an analysis of nonaccrual loans with book balances greater than $2 million.
(b) Other category includes other industry categories with smaller impacts, as well as consumer, excluding residential mortgage and certain
23 % $
21
11
9
7
4
3
3
2
2
1
14
100 % $
28 % $
29
—
5
12
7
12
—
—
4
—
3
23 %
(45)
—
23
18
22
50
—
(5)
—
—
14
100 %
5
(10)
—
5
4
5
11
—
(1)
—
—
3
22
42
38
19
16
13
7
6
6
4
4
1
22
178
26
27
—
5
12
7
11
—
—
3
—
3
94
100 % $
$
personal purpose nonaccrual loans and net charge-offs.
Loans past due 90 days or more and still accruing interest generally represent loans that are well-collateralized and in
the process of collection. Loans past due 90 days or more decreased $3 million to $20 million at December 31, 2023, compared
to $23 million at December 31, 2022. Loans past due 30-89 days decreased $180 million to $198 million at December 31, 2023,
compared to $378 million at December 31, 2022. Loans past due 30 days or more and still accruing interest as a percentage of
total loans were 0.42 percent and 0.75 percent at December 31, 2023 and December 31, 2022, respectively. An aging analysis
of loans included in Note 4 to the consolidated financial statements provides further information about the balances comprising
past due loans.
The following table presents a summary of total criticized loans. The Corporation's criticized list is consistent with the
Special Mention, Substandard and Doubtful categories defined by regulatory authorities. Criticized loans on nonaccrual status
are individually subjected to quarterly credit quality reviews, and the Corporation may establish specific allowances for such
loans. A table of loans by credit quality indicator included in Note 4 to the consolidated financial statements provides further
information about the balances comprising total criticized loans.
(dollar amounts in millions)
December 31
Total criticized loans
As a percentage of total loans
2023
2022
$
2,405
$
4.6%
1,572
2.9%
The $833 million increase in criticized loans during the year ended December 31, 2023 was primarily driven by
Commercial Real Estate and general Middle Market.
For further information regarding the Corporation's nonperforming assets policies, refer to Notes 1 and 4 to the
consolidated financial statements.
Concentrations of Credit Risk
Concentrations of credit risk may exist when a number of borrowers are engaged in similar activities, or activities in
the same geographic region, and have similar economic characteristics that would cause them to be similarly impacted by
changes in economic or other conditions. The Corporation has concentrations of credit risk with the commercial real estate and
automotive industries. All other industry concentrations, as defined by management, individually represented less than 10
percent of total loans at December 31, 2023.
F-23
Commercial Real Estate Lending
At December 31, 2023, the Corporation's commercial real estate portfolio represented 36 percent of total loans. The
following table summarizes the Corporation's commercial real estate loan portfolio by loan category.
December 31, 2023
December 31, 2022
Commercial
Real Estate
Commercial
Real Estate
(in millions)
Real estate construction loans
Commercial mortgage loans
Total commercial real estate
(a) Primarily loans to real estate developers.
(b) Primarily loans secured by owner-occupied real estate.
$
business line (a) Other (b)
4,570 $
$
4,727
9,297 $ 9,472 $ 18,769 $
Total
513 $ 5,083 $
13,686
business line (a) Other (b)
600 $ 3,105
2,505 $
4,681
13,306
8,625
7,186 $ 9,225 $ 16,411
8,959
Total
The Corporation limits risk inherent in its commercial real estate lending activities by monitoring borrowers directly
involved in the commercial real estate markets and adhering to conservative policies on loan-to-value ratios for such loans.
Commercial real estate loans, consisting of real estate construction and commercial mortgage loans, totaled $18.8 billion at
December 31, 2023. Commercial real estate loans made to borrowers in the Commercial Real Estate business line, which
includes loans to real estate developers, totaled $9.3 billion, or 50 percent of total commercial real estate loans, an increase of
$2.1 billion compared to December 31, 2022. The Commercial Real Estate business line at December 31, 2023 was
predominantly secured by multi-family and industrial properties, comprising 46 percent and 34 percent of the portfolio,
respectively, with only 6 percent secured by office properties. Commercial real estate loans in other business lines totaled $9.5
billion, or 50 percent of total commercial real estate loans, at December 31, 2023, an increase of $247 million compared to
December 31, 2022. These loans consisted primarily of owner-occupied commercial mortgages, which bear credit
characteristics similar to non-commercial real estate business loans. Generally, loans previously reported as real estate
construction are classified as commercial mortgage loans upon receipt of a certificate of occupancy.
The real estate construction loan portfolio primarily contains loans made to long-tenured customers with satisfactory
completion experience. Criticized real estate construction loans in the Commercial Real Estate business line totaled $86 million
at December 31, 2023 compared to none at December 31, 2022. In other business lines, criticized real estate construction loans
totaled $12 million at December 31, 2023, compared to $3 million at December 31, 2022. There were no real estate
construction loan net charge-offs in the years ended December 31, 2023 and 2022.
Commercial mortgage loans are loans where the primary collateral is a lien on any real property and are primarily
loans secured by owner-occupied real estate. Real property is generally considered primary collateral if the value of that
collateral represents more than 50 percent of the commitment at loan approval. Loans in the commercial mortgage portfolio
generally mature within three to five years. Criticized commercial mortgage loans in the Commercial Real Estate business line
totaled $378 million and $16 million at December 31, 2023 and 2022, respectively, with the increase primarily in multi-family
properties. In other business lines, $395 million and $151 million of commercial mortgage loans were criticized at
December 31, 2023 and 2022, respectively. Commercial mortgage loan net recoveries were $1 million in 2023, compared to no
net charge-offs in 2022.
Automotive Lending - Dealer:
The following table presents a summary of dealer loans.
(in millions)
Dealer:
Floor plan
Other
Total dealer
December 31, 2023
December 31, 2022
Loans
Outstanding
Percent of
Total Loans
Loans
Outstanding
Percent of
Total Loans
$
$
2,313
3,878
6,191
$
11.9% $
1,379
3,988
5,367
10.1%
Substantially all dealer loans are in the National Dealer Services business line and primarily include floor plan
financing and other loans to automotive dealerships. Floor plan loans, included in commercial loans in the Consolidated
Balance Sheets, totaled $2.3 billion at December 31, 2023, an increase of $934 million compared to $1.4 billion at
December 31, 2022, resulting from increasing vehicle levels due to supply chain improvements. At December 31, 2023 and
2022, other loans in the National Dealer Services business line totaled $3.9 billion and $4.0 billion, respectively, including $2.2
billion and $2.3 billion of owner-occupied commercial real estate mortgage loans, respectively.
There were no nonaccrual dealer loans at both December 31, 2023, and 2022. Additionally, there were no net charge-
offs of dealer loans in either of the years ended December 31, 2023 and 2022.
F-24
Automotive Lending- Production:
The following table presents a summary of loans to borrowers involved with automotive production.
(in millions)
Production:
Domestic
Foreign
Total production
December 31, 2023
December 31, 2022
Loans
Outstanding
Percent of
Total Loans
Loans
Outstanding
Percent of
Total Loans
$
$
591
257
848
$
1.6% $
797
271
1,068
2.0%
Loans to borrowers involved with automotive production, primarily Tier 1 and Tier 2 suppliers, totaled $848 million at
December 31, 2023 and $1.1 billion at December 31, 2022. These borrowers have faced, and could face in the future, financial
difficulties due to disruptions in auto production, issues with supply chains and logistics operations and impacts resulting from
labor union strikes. As such, management continues to monitor this portfolio.
Nonaccrual loans to borrowers involved with automotive production totaled $17 million in at December 31, 2023,
compared to $5 million at December 31, 2022. Automotive production loan net charge-offs totaled $7 million for the year
ended December 31, 2023, compared to $2 million for the same period in 2022.
For further information regarding significant group concentrations of credit risk, refer to Note 5 to the consolidated
financial statements.
Residential Real Estate Lending
At December 31, 2023, residential real estate loans represented 7 percent of total loans. The following table
summarizes the Corporation's residential mortgage and home equity loan portfolios by geographic market.
(dollar amounts in millions)
Geographic market:
Michigan
California
Texas
Other Markets
Total
Residential
Mortgage
Loans
December 31, 2023
Percent
Home
of
Equity
Total
Loans
Percent
of
Total
Residential
Mortgage
Loans
December 31, 2022
Percent
Home
of
Equity
Total
Loans
Percent
of
Total
$
$
548
871
272
198
1,889
29% $
46
14
11
100% $
444
911
351
86
1,792
25% $
51
20
4
100% $
497
866
258
193
1,814
27% $
48
14
11
100% $
487
852
354
83
1,776
27%
48
20
5
100%
Residential real estate loans, which consist of traditional residential mortgages and home equity loans and lines of
credit, totaled $3.7 billion at December 31, 2023. The residential real estate portfolio is principally located within the
Corporation's primary geographic markets. Substantially all residential real estate loans past due 90 days or more are placed on
nonaccrual status, and substantially all junior lien home equity loans that are current or less than 90 days past due are placed on
nonaccrual status if full collection of the senior position is in doubt. At no later than 180 days past due, such loans are charged
off to current appraised values less costs to sell.
Residential mortgages totaled $1.9 billion at December 31, 2023, and were primarily larger, variable-rate mortgages
originated and retained for certain private banking relationship customers. Of the $1.9 billion of residential mortgage loans
outstanding, $19 million were on nonaccrual status at December 31, 2023, a decrease of $34 million compared to December 31,
2022. The home equity portfolio totaled $1.8 billion at December 31, 2023, of which 96 percent was outstanding under
primarily variable-rate, interest-only home equity lines of credit, 3 percent were in amortizing status and 1 percent were closed-
end home equity loans. Of the $1.8 billion of home equity loans outstanding, $21 million were on nonaccrual status at
December 31, 2023, an increase of $6 million compared to December 31, 2022. A majority of the home equity portfolio was
secured by junior liens at December 31, 2023.
Energy Lending
The Corporation has a portfolio of Energy loans that are included entirely in commercial loans in the Consolidated
Balance Sheets. Customers in the Corporation's Energy business line (approximately 120 relationships) are engaged in
exploration and production (E&P) and midstream. E&P generally includes such activities as searching for potential oil and gas
fields, drilling exploratory wells and operating active wells. Commitments to E&P borrowers are generally subject to semi-
annual borrowing base re-determinations based on a variety of factors including updated prices (reflecting market and
competitive conditions), energy reserve levels and the impact of hedging. The midstream sector is generally involved in the
F-25
transportation, storage and marketing of crude and/or refined oil and gas products. The Corporation's energy services customers
provide products and services primarily to the E&P segment. Approximately 94% of loans in the Energy business line are
Shared National Credits (SNC), which are facilities greater than or equal to $100 million shared by three or more federally
supervised institutions, reflecting the Corporation's focus on larger middle market companies that have financing needs that
generally exceed internal individual borrower credit risk limits. The Corporation seeks to develop full relationships with SNC
borrowers.
The following table summarizes information about loans in the Corporation's Energy business line.
(dollar amounts in millions)
2023
2022
Outstandings
December 31
Exploration and production (E&P) $ 1,070
312
Midstream
$ 1,382
Total Energy business line
(a)
Includes nonaccrual loans.
Nonaccrual Criticized (a)
$
77% $
23
100% $
4
—
4
$
4
—
4
Outstandings
$ 1,162
253
$ 1,415
82% $
18
100% $
Nonaccrual Criticized (a)
$
7
—
7
$
12
—
12
Loans in the Energy business line totaled $1.4 billion, or 3 percent of total loans, at December 31, 2023, a decrease of
$33 million compared to December 31, 2022. Total exposure, including unused commitments to extend credit and letters of
credit, was $3.3 billion (a utilization rate of 42 percent) and $3.4 billion (a utilization of 43 percent) at December 31, 2023 and
December 31, 2022, respectively. Nonaccrual Energy loans decreased $3 million to $4 million at December 31, 2023, compared
to $7 million at December 31, 2022. Criticized Energy loans decreased $8 million to $4 million at December 31, 2023,
compared to $12 million at December 31, 2022. Energy net recoveries were $1 million for the year ended December 31, 2023,
compared to net charge-offs of $3 million for the year ended December 31, 2022.
Leveraged Loans
Certain loans in the Corporation's commercial portfolio are considered leveraged transactions. These loans are
typically used for mergers, acquisitions, business recapitalizations, refinancing and equity buyouts. To help mitigate the risk
associated with these loans, the Corporation focuses on middle market companies with highly capable management teams,
strong sponsors and solid track records of financial performance. Industries prone to cyclical downturns and acquisitions with a
high degree of integration risk are generally avoided. Other considerations include the sufficiency of collateral, the level of
balance sheet leverage and the adequacy of financial covenants. During the underwriting process, cash flows are stress-tested to
evaluate the borrowers' abilities to handle economic downturns and an increase in interest rates.
The FDIC defines higher-risk commercial and industrial (HR C&I) loans for assessment purposes as loans generally
with leverage of four times total debt to earnings before interest, taxes and depreciation (EBITDA) as well as three times senior
debt to EBITDA, excluding certain collateralized loans.
The following table summarizes information about HR C&I loans, which represented 5 percent and 6 percent of total
loans at December 31, 2023 and December 31, 2022, respectively.
(in millions)
December 31
Outstandings
Criticized
Net loan charge-offs recorded during the years ended December 31,
$
2023
2022
2,814 $
332
5
3,120
393
20
F-26
Market and Liquidity Risk
Market risk represents the risk of loss due to adverse movement in prices, including interest rates, foreign exchange
rates, commodity prices and equity prices. Liquidity risk represents the risk that the Corporation does not have sufficient access
to funds to maintain its normal operations at all times or does not have the ability to raise or borrow funds at a reasonable cost
at all times.
The Asset Liability Management Committee (ALCO) of the Corporation establishes and monitors compliance with the
policies and risk limits pertaining to market and liquidity risk management activities. ALCO meets regularly to discuss and
review market and liquidity risk management strategies and consists of executive and senior management from various areas of
the Corporation, including treasury, finance, economics, lending, deposit gathering and risk management. Corporate Treasury
mitigates market and liquidity risk under the direction of ALCO through the actions it takes to manage the Corporation's
market, liquidity and capital positions.
The Corporation performs monthly liquidity stress testing to evaluate its ability to meet funding needs in hypothetical
stressed environments. Such environments cover a series of scenarios, including both idiosyncratic and market-wide in nature,
which vary in terms of duration and severity. Recent events have created greater uncertainty with respect to normal deposit
patterns. Following the March 2023 banking industry disruption, the Corporation activated its contingency funding plan by
increasing its cash position through wholesale funding channels and brokered deposits. The Corporation's evaluation as of
December 31, 2023 projected that sufficient sources of liquidity were available under each series of events.
In addition to assessing liquidity risk on a consolidated basis, Corporate Treasury also monitors the parent company's
liquidity and has established liquidity coverage requirements for meeting expected obligations without the support of additional
dividends from subsidiaries. ALCO's policy on liquidity risk management requires the parent company to maintain sufficient
liquidity to meet expected cash obligations, such as debt service, dividend payments and normal operating expenses, over a
period of no less than 12 months. The Corporation had liquid assets of $1.4 billion on an unconsolidated basis at December 31,
2023.
Corporate Treasury and the Enterprise Risk Division support ALCO in measuring, monitoring and managing interest
rate risk as well as all other market risks. Key activities encompass: (i) providing information and analyses of the Corporation's
balance sheet structure and measurement of interest rate and all other market risks; (ii) monitoring and reporting of the
Corporation's positions relative to established policy limits and guidelines; (iii) developing and presenting analyses and
strategies to adjust risk positions; (iv) reviewing and presenting policies and authorizations for approval; and (v) monitoring of
industry trends and analytical tools to be used in the management of interest rate and all other market and liquidity risks.
Interest Rate Risk
Net interest income is the primary source of revenue for the Corporation. Interest rate risk arises in the normal course
of business due to differences in the repricing and cash flow characteristics of assets and liabilities, primarily through the
Corporation's core business activities of extending loans and acquiring deposits. The Corporation's balance sheet is
predominantly characterized by floating-rate loans funded by core deposits. Including the impact of interest rate swaps
converting floating-rate loans to fixed, the Corporation's loan composition at December 31, 2023 was 40 percent fixed-rate, 51
percent overnight to 30-day rate, 6 percent 90-day and greater rates and 3 percent prime. The composition of the loan portfolio
creates sensitivity to interest rate movements due to the imbalance between the faster repricing of the floating-rate loan
portfolio versus deposit products. In addition, the growth and/or contraction in the Corporation's loans and deposits may lead to
changes in sensitivity to interest rate movements in the absence of mitigating actions. Examples of such actions are purchasing
fixed-rate investment securities, which provide liquidity to the balance sheet and act to mitigate the inherent interest rate
sensitivity, as well as hedging with interest rate swaps and options. Other mitigating factors include interest rate floors on a
portion of the loan portfolio.
The Corporation actively manages its exposure to interest rate risk with the principal objective of optimizing net
interest income and the economic value of equity while operating within acceptable limits established for interest rate risk and
maintaining adequate levels of funding and liquidity.
Since no single measurement system satisfies all management objectives, a combination of techniques is used to
manage interest rate risk. These techniques examine the impact of interest rate risk on net interest income and the economic
value of equity under a variety of alternative scenarios, including changes in the level, slope and shape of the yield curve
utilizing multiple simulation analyses. Simulation analyses produce only estimates of net interest income as the assumptions
used are inherently uncertain. Actual results may differ from simulated results due to many factors, including, but not limited
to, the timing, magnitude and frequency of changes in interest rates, market conditions, regulatory impacts and management
strategies.
F-27
Sensitivity of Net Interest Income to Changes in Interest Rates
The analysis of the impact of changes in interest rates on net interest income under various interest rate scenarios is
management's principal risk management technique. Management models a base-case net interest income under an unchanged
interest rate environment using a static balance sheet and generates sensitivity scenarios by changing certain model
assumptions. Each scenario includes assumptions such as loan growth, investment security prepayment levels, depositor
behavior and overall balance sheet mix and growth which are in line with historical patterns. Additionally, the analysis assumes
that all loan hedges qualify for hedge accounting. Changes in actual economic activity may result in a materially different
interest rate environment as well as a balance sheet structure that is different from the changes management included in its
simulation analysis. Model assumptions in the sensitivity scenarios at December 31, 2023 included for the rising rate scenarios,
a modest increase in loan balances and a moderate decrease in deposit balances, and for the declining rate scenarios, a modest
decrease in loan balances and a moderate increase in deposit balances. In addition, both scenarios assumed loan spreads held at
current levels, an incremental interest-bearing deposit beta of approximately 48%, deposit mix shifts based on historical
observations, partial reinvestment of securities portfolio cash flows and no additions to interest rate swaps.
The average balance of the securities portfolio included in the analysis was $17.4 billion for the year ended December
31, 2023 with an average yield of 2.10% and effective duration of 5.5 years.
The table below details components of the variable-rate loan swap portfolio at December 31, 2023.
(dollar amounts in millions)
Swaps under contract at December 31, 2023 (c)
Weighted average notional active per period:
Variable-Rate Loan Swaps (a)
Notional Amount
$
24,850
Weighted Average
Yield
2.49%
Years to Maturity (b)
3.9
Full year 2023
Full year 2024
Full year 2025
Included $7.0 billion in swaps which no longer qualified for cash flow hedging designation following BSBY cessation. In January 2024,
$4.2 billion of these swaps were re-designated, with the remaining expected to be re-designated in early 2024.
22,372
23,575
22,973
2.38
2.50
2.57
3.5
3.9
4.1
(a)
(b) Years to maturity calculated from a starting date of December 31, 2023.
(c)
Includes forward starting swaps of $2.0 billion starting in 2024. Excluding forward starting swaps, the weighted average yield was
2.43%.
The analysis also includes interest rate swaps that convert $6.3 billion of fixed-rate medium- and long-term debt to
variable rates through fair value hedges. Additionally, included in this analysis are $15.5 billion of loans that were subject to an
average interest rate floor of 52 basis points at December 31, 2023. This base-case net interest income is then compared against
interest rate scenarios in which short-term rates rise or decline 100 or 200 basis points (with a floor of zero percent) in a linear,
non-parallel fashion from the base case over 12 months, resulting in an average change of 50 or 100 basis points over the
period.
The table below, as of December 31, 2023 and 2022, displays the estimated impact on net interest income during the
next 12 months by relating the base case scenario results to those from the rising and declining rate scenarios described above.
Estimated Annual Change
(dollar amounts in millions)
December 31
Change in Interest Rates:
Rising 100 basis points
(50 basis points on average)
Declining 100 basis points
(50 basis points on average)
Rising 200 basis points
(100 basis points on average)
Declining 200 basis points
(100 basis points on average)
2023
Amount
%
$
(36)
(2%)
23
(87)
33
1
(4)
1
Change in Interest Rates:
Rising 100 basis points
(50 basis points on average)
Declining 100 basis points
(50 basis points on average)
Rising 200 basis points
(100 basis points on average)
Declining 200 basis points
(100 basis points on average)
2022
Amount
%
$
10
—%
(72)
(7)
(156)
(2)
—
(5)
In both the 100 and 200 basis point scenarios, sensitivity to declining interest rates shifted from reducing net interest
income at December 31, 2022 to benefiting net interest income at December 31, 2023, resulting from a decline in non-maturity
deposits, partially offset by an increase in time deposits. In the 100 basis point scenario, sensitivity to rising interest rates
shifted from benefiting net interest income at December 31, 2022 to reducing net interest income at December 31, 2023, while
in the 200 basis point scenario, negative sensitivity to rising interest rates increased compared to December 31, 2022, resulting
from the change in liability mix that occurred in 2023.
F-28
At December 31, 2023, additional sensitivity scenarios applied the rising and declining 100 basis point scenario
assumptions with a 60% incremental deposit beta relative to the base case scenario to assess the impact of the Corporation's
deposit beta assumptions. In these rising and declining scenarios, net interest income decreased by $65 million and increased by
$44 million, respectively, due to a more rapid repricing pace compared to the standard model assumptions. All scenarios
presented for December 31, 2023 reflected a change in balance sheet composition following the March 2023 banking industry
disruption, as the balance sheet maintained a higher concentration of cash as well as increased wholesale funding and brokered
deposits, which contributed to the decrease in net interest income in all scenarios presented.
Sensitivity of Economic Value of Equity to Changes in Interest Rates
In addition to the simulation analysis on net interest income, an economic value of equity analysis provides an
alternative view of the interest rate risk position. The economic value of equity is the difference between the estimate of the
economic value of the Corporation's financial assets, liabilities and off-balance sheet instruments, derived through discounting
cash flows based on actual rates at the end of the period, and the estimated economic value after applying the estimated impact
of rate movements. The Corporation primarily monitors the percentage change on the base-case economic value of equity. The
economic value of equity analysis is based on an immediate parallel 100 or 200 basis point shock with a floor of zero percent.
The table below, as of December 31, 2023 and December 31, 2022, displays the estimated impact on the economic
value of equity from the interest rate scenario described above.
(dollar amounts in millions)
December 31
Change in Interest Rates:
2023
Amount
%
Rising 100 basis points
Declining 100 basis points
Rising 200 basis points
Declining 200 basis points
$
(567)
794
(1,254)
1,363
Change in Interest Rates:
(4%)
6
(10)
11
Rising 100 basis points
Declining 100 basis points
Rising 200 basis points
Declining 200 basis points
2022
Amount
%
$
(417)
627
(978)
1,033
(3%)
4
(7)
7
The negative sensitivity of the economic value of equity to rising rates increased from December 31, 2022 to
December 31, 2023 due to deposit runoff and adjustments to deposit behavioral assumptions, partially offset by a declining
notional amount of cash flow swaps and a smaller securities portfolio. Sensitivity to declining rates increased the economic
value of equity due to the same factors.
Loans by Maturity and Interest Rate Sensitivity
The contractual maturity distribution of the loan portfolio is presented below.
(in millions)
December 31, 2023
Commercial loans
Real estate construction loans
Commercial mortgage loans
Lease financing
International loans
Residential mortgage loans
Consumer loans
Total
(a)
Within One
Year (a)
After One
But Within
Five Years
Loans Maturing
After Five But
Within Fifteen
Years
After Fifteen
Years
Total
$
$
10,616 $
1,192
2,784
270
508
5
487
15,862 $
15,535
3,612
7,707
383
518
7
152
27,914 $
$967 $
275
3,169
154
76
215
73
4,929 $
133 $
4
26
—
—
1,662
1,583
3,408 $
27,251
5,083
13,686
807
1,102
1,889
2,295
52,113
Includes demand loans, loans having no stated repayment schedule or maturity and overdrafts.
F-29
The interest rate composition of loans with a maturity date over one year are presented below based on contractual
terms.
(in millions)
December 31, 2023
Commercial loans
Real estate construction loans
Commercial mortgage loans
Lease financing
International loans
Residential mortgage loans
Consumer loans
Total
Loans Maturing After One Year
Predetermined
(Fixed) Interest
Rate
Floating
Interest Rate
Total
$
$
375 $
74
1,524
286
3
522
28
2,812 $
16,260 $
3,817
9,378
251
591
1,362
1,780
33,439 $
16,635
3,891
10,902
537
594
1,884
1,808
36,251
Risk Management Derivative Instruments
The Corporation uses investment securities and derivative instruments as asset and liability management tools with the
overall objective of managing the volatility of net interest income from changes in interest rates. These tools assist management
in achieving the desired interest rate risk management objectives. Activity related to derivative instruments currently involves
interest rate swaps effectively converting fixed-rate medium- and long-term debt to a floating rate as well as variable rate loans
to a fixed rate. Notional activity for 2023 included the impact of LIBOR transition for centrally-cleared swaps, where LIBOR-
based swaps were replaced with short-dated LIBOR bridge swaps that matured in 2023 and surviving forward-starting Secured
Overnight Financing Rate (SOFR) swaps.
(in millions)
Risk Management Notional Activity
Balance at January 1, 2022
Additions
Maturities/amortizations
Balance at December 31, 2022
Additions
Maturities/amortizations
Terminations
Balance at December 31, 2023
Interest
Rate
Contracts
Foreign
Exchange
Contracts
$
$
$
10,700 $
20,850
(1,800)
29,750 $
17,100
(9,150)
(6,550)
31,150 $
452 $
8,638
(8,698)
392 $
9,534
(9,366)
—
560 $
Totals
11,152
29,488
(10,498)
30,142
26,634
(18,516)
(6,550)
31,710
The notional amount of risk management interest rate swaps totaled $31.2 billion at December 31, 2023, which
included cash flow swaps that convert $24.9 billion of variable-rate loans to a fixed rate as well as fair value swaps that convert
$6.3 billion of fixed-rate medium- and long-term debt to a floating rate. Risk management interest rate swaps generated $715
million of net interest expense for the year ended December 31, 2023, compared to no impact for the year ended December 31,
2022. Of the $24.9 billion of cash flow swaps, $7.0 billion were un-designated for accounting purposes as of December 31,
2023. Refer to Note 8 to the consolidated financial statements for further discussion of de-designated interest rate hedges.
In addition to interest rate swaps, the Corporation employs various other types of derivative instruments as offsetting
positions to mitigate exposures to foreign currency risks associated with specific assets and liabilities (e.g., customer loans or
deposits denominated in foreign currencies). Such instruments may include foreign exchange spot and forward contracts as well
as foreign exchange swap agreements.
Further information regarding risk management derivative instruments is provided in Note 8 to the consolidated
financial statements.
F-30
Customer-Initiated and Other Derivative Instruments
(in millions)
Customer-Initiated and Other Notional Activity
Balance at January 1, 2022
Additions
Maturities/amortizations
Terminations
Balance at December 31, 2022
Additions
Maturities/amortizations
Terminations
Balance at December 31, 2023
Interest
Rate
Contracts
Energy
Derivative
Contracts
Foreign
Exchange
Contracts
$
$
$
21,000 $
7,593
(3,017)
(5,278)
20,298 $
16,207
(5,651)
(8,384)
22,470 $
7,770 $
14,145
(6,002)
(1,392)
14,521 $
11,510
(10,761)
(1,464)
13,806 $
1,716 $
42,017
(41,029)
—
2,704 $
44,060
(44,013)
—
2,751 $
Totals
30,486
63,755
(50,048)
(6,670)
37,523
71,777
(60,425)
(9,848)
39,027
The Corporation sells and purchases interest rate caps and floors and enters into foreign exchange contracts, interest
rate swaps and energy derivative contracts to accommodate the needs of customers requesting such services. Changes in the fair
value of customer-initiated and other derivatives are recognized in earnings as they occur. To limit the market risk of these
activities, the Corporation generally takes offsetting positions with dealers. The notional amounts of offsetting positions are
included in the table above. Customer-initiated and other notional activity represented 55 percent of total interest rate, energy
and foreign exchange contracts at both December 31, 2023 and 2022, respectively.
Further information regarding customer-initiated and other derivative instruments is provided in Note 8 to the
consolidated financial statements.
LIBOR Transition
On July 27, 2017, the United Kingdom’s Financial Conduct Authority (FCA), which regulates LIBOR, publicly
announced that it intends to stop persuading or compelling banks to submit LIBOR rates after 2021. Effective March 2021, the
FCA confirmed that certain LIBOR tenors would no longer be supported after December 31, 2021 and that the remaining
tenors, including those most commonly used by the Corporation, would no longer be supported after June 30, 2023. The
Corporation had substantial exposure to LIBOR-based products, ceased originating LIBOR-based products in the fourth quarter
2021 and has worked to remediate its outstanding LIBOR contracts. As of December 31, 2023, LIBOR transition was
substantially complete.
BSBY Cessation
On November 15, 2023, the Bloomberg Index Services Limited (Bloomberg) announced that it will discontinue
publishing the BSBY on November 15, 2024; accordingly, the Corporation was required to “de-designate” $7.0 billion of
interest rate swaps used in cash flow hedges of certain BSBY-indexed loans and reclassify amounts recognized in accumulated
other comprehensive income into earnings. For each de-designated swap, settlement of interest payments and changes in fair
value are recorded as risk management hedging losses within other noninterest income instead of net interest income until the
swap is re-designated. In January 2024, $4.2 billion of these swaps were re-designated, with the remaining expected to be re-
designated in early 2024. The net impact of BSBY cessation to interest income on commercial loans was a $3 million benefit
for the year ended December 31, 2023. Additionally, the Corporation recognized a net loss of $91 million in other noninterest
income. Refer to Note 8 to the consolidated financial statements for further discussion of de-designated interest rate hedges.
At December 31, 2023, the Corporation had $33.0 billion of exposure to BSBY-based products, including $21.7
billion in loans and $11.3 billion in interest rate swaps. The Corporation is currently evaluating contracts to ensure appropriate
fallback language is included, and will remediate contracts as necessary. The Corporation expects that the majority of BSBY-
based contracts will organically transition to SOFR over the upcoming year, with any remaining contracts transitioning to
SOFR through fallback language at the first repricing date after BSBY cessation occurs in November 2024.
Sources of Liquidity
The Corporation maintains a liquidity position that it believes will adequately satisfy its financial obligations while
taking into account potential commitment draws and deposit run-off that may occur in the normal course of business. The
majority of the Corporation's balance sheet is funded by customer deposits. Cash flows from loan repayments, increases in
deposit accounts (including brokered deposits), activity in the securities portfolio and wholesale funding channels serve as the
Corporation's primary liquidity sources.
The Corporation satisfies incremental liquidity needs with either liquid assets or external funding sources. Available
liquidity includes cash, FHLB advances and Federal Reserve Bank (FRB) borrowing, comprised of borrowing through the
discount window and the newly established Bank Term Funding Program (BTFP). The Corporation has pledged its investment
securities portfolio to access wholesale funding as needed and does not intend to sell or restructure securities at this time.
F-31
The Bank is a member of the FHLB of Dallas, Texas, which provides short- and long-term funding to its members
through advances collateralized by real estate-related loans, certain government agency-backed securities and other eligible
assets. Actual borrowing capacity is contingent on the amount of collateral pledged to the FHLB and the fair value of pledged
assets, as well as applicable FHLB haircuts.
At December 31, 2023, the Bank had pledged real estate-related loans totaling $21.9 billion and investment securities
totaling $6.6 billion to the FHLB, which provided for up to $17.1 billion of collateralized borrowing with the FHLB.
The FRB provides liquidity through its discount window, where banks may borrow funds based on the discounted fair
value of pledged assets. Additionally, in March 2023, the FRB established the BTFP in response to the 2023 industry
disruption, offering loans with up to one year in maturity to eligible depository institutions in exchange for pledged collateral in
the form of U.S Treasuries, agency debt and mortgage-backed securities and other qualifying assets. Unlike other funding
sources, borrowing capacity under the BTFP is based on the par value, not fair value, of collateral.
At December 31, 2023, the Bank had pledged loans totaling $24.6 billion and investment securities totaling $7.7
billion to the FRB, which provided for up to $21.0 billion and $9.3 billion of collateralized borrowing through the discount
window and BTFP program, respectively. The Bank did not rely on the BTFP facility as a funding source, except to perform an
operational test at the onset, and does not plan to use the facility before its announced expiration on March 11, 2024. Total
available collateralized borrowings with the FRB was $30.3 billion at December 31, 2023.
The table below details the Corporation's sources of available liquidity at December 31, 2023.
(dollar amounts in millions)
Cash on deposit with FRB (a)
FHLB
FRB:
BTFP
Discount Window
Total available liquidity
(a) Included in interest-bearing deposits with banks on the Consolidated Balance Sheet.
9,328
20,953
—
—
Total Capacity
Borrowings
Outstanding
Available Liquidity
$
17,081
$
7,550
$
$
7,860
9,531
9,328
20,953
47,672
The Corporation may also use brokered deposits and external debt as additional sources of funding, and maintains a
shelf registration statement with the Securities and Exchange Commission through which it may issue securities.The ability of
the Corporation and the Bank to raise unsecured funding at competitive rates is impacted by rating agencies' views of the credit
quality, liquidity, capital, earnings and other relevant factors related to the Corporation and the Bank. As of December 31, 2023,
the three major rating agencies had assigned the following ratings to long-term senior unsecured obligations of the Corporation
and the Bank, as well as long-term deposits at the Bank. A security rating is not a recommendation to buy, sell, or hold
securities and may be subject to revision or withdrawal at any time by the assigning rating agency. Each rating should be
evaluated independently of any other rating.
Comerica Incorporated Comerica Bank
Debt Ratings
December 31, 2023
Moody’s Investors Service
Fitch Ratings
Standard and Poor’s
Rating
Rating
Outlook
Baa1
A-
BBB
Baa1
A-
BBB+
Negative
Negative
Stable
Deposit Ratings
Comerica Bank
Rating
A1
A
not rated
Deposit Concentrations and Uninsured Deposits
The Corporation's focus is commercial customers, and accordingly, it has a larger percentage of uninsured deposits
relative to financial institutions with a higher consumer focus. These deposits are well-diversified between geographies,
industries and customers. At December 31, 2023, the Retail Bank and general Middle Market segments, both highly diversified
and granular, accounted for 37% and 27% of the total deposit base, respectively.
Uninsured deposits are defined as the portion of deposit accounts in U.S. offices that exceed the FDIC insurance limit
and amounts in any other uninsured investment or deposit account that are classified as deposits and are not subject to any
federal or state deposit insurance regimes.
F-32
(Dollar amount in millions)
Total uninsured deposits, as calculated per regulatory guidelines
Less: affiliate deposits
Total uninsured deposits, excluding affiliate deposits
December 31, 2023
December 31, 2022
Amount
Percentage of
total deposits
Amount
$
$
31,485
(4,064)
27,421
47 % $
41 % $
45,492
(4,458)
41,034
Percentage of
total deposits
64 %
57 %
Time deposits otherwise uninsured, which consist of foreign office time deposits, totaled $13 million at December 31,
2023 and all mature in three months or less. Collateralized deposits, consisting of trust deposits as well as deposits of public
entities and state and local government agencies, totaled $687 million at December 31, 2023, compared to $843 million at
December 31, 2022.
Potential Uses of Liquidity
Various financial obligations such as contractual obligations, unfunded commitments and deposit withdrawals may
require future cash payments by the Corporation. Certain obligations are recognized on the Consolidated Balance Sheets, while
others are off-balance sheet under U.S. generally accepted accounting principles.
The following table summarizes the Corporation's material noncancelable contractual obligations and future required
minimum payments. Refer to Notes 10, 11, 12, and 25 to the consolidated financial statements for further information regarding
these contractual obligations.
Selected Contractual Obligations
(in millions)
December 31, 2023
Deposits without a stated maturity (a)
Certificates of deposit and other deposits with a stated
maturity (a)
Short-term borrowings (a)
Medium- and long-term debt (a)
Operating leases
Total contractual obligations
Medium- and long-term debt (parent company only) (a) (b) $
Minimum Payments Due by Period
1-3
Years
Less than
1 Year
4-5
Years
More than
5 Years
Total
$ 58,476 $ 58,476
8,286
3,565
6,300
460
8,177 $
3,565
500
70
$ 77,087 $ 70,788 $
— $
800 $
88 $
—
2,750
129
2,967 $
250 $
18 $
—
2,000
92
2,110 $
— $
3
—
1,050
169
1,222
550
(a) Deposits and borrowings exclude accrued interest.
(b) Parent company only amounts are included in the medium- and long-term debt minimum payments above.
In addition to contractual obligations, other commercial commitments of the Corporation impact liquidity. These
include unused commitments to extend credit, standby letters of credit and financial guarantees, and commercial letters of
credit. The following table summarizes the Corporation's commercial commitments and expected expiration dates by period.
Commercial Commitments
(in millions)
December 31, 2023
Unused commitments to extend credit
Standby letters of credit and financial guarantees
Commercial letters of credit
Total commercial commitments
Expected Expiration Dates by Period
1-3
Less than
Years
1 Year
4-5
Years
More than
5 Years
Total
$ 31,385 $
3,586
48
8,091 $ 12,497 $
3,196
48
231
—
$ 35,019 $ 11,335 $ 12,728 $
6,986 $
158
—
7,144 $
3,811
1
—
3,812
Since many of these commitments expire without being fully drawn, and each customer must continue to meet the
conditions established in the contract, the total amount of these commercial commitments does not necessarily represent the
future cash requirements of the Corporation. Refer to Note 8 to the consolidated financial statements for a further discussion of
these commercial commitments.
Other Market Risks
Market risk related to the Corporation's trading instruments is not significant, as trading activities are limited. Certain
components of the Corporation's noninterest income, primarily fiduciary income, are at risk to fluctuations in the market values
of underlying assets, particularly equity and debt securities. Other components of noninterest income, primarily brokerage fees,
are at risk to changes in the volume of market activity.
F-33
Operational Risk
Operational risk represents the risk of loss resulting from inadequate or failed internal processes and people, or from
external events, excluding in most cases those driven by technology (see Technology Risk below). The Corporation's definition
of operational risk includes fraud; employment practice and workplace safety; clients, products and business practice; business
continuity or disaster recovery; execution, delivery, and process management; third party and model risks. The definition does
not include strategic or reputational risks. Although operational losses are experienced by all companies and are routinely
incurred in business operations, the Corporation recognizes the need to identify and control operational losses and seeks to limit
losses to a level deemed appropriate by management, as outlined in the Corporation’s risk appetite statement. The appropriate
risk level is determined through consideration of the nature of the Corporation's business and the environment in which it
operates, in combination with the impact from, and the possible impact on, other risks faced by the Corporation. Operational
risk is mitigated through a system of internal controls that are designed to keep operating risks at appropriate levels. The
Operational Risk Management Committee monitors risk management techniques and systems. The Corporation has developed a
framework that includes a centralized operational risk reporting function in the Enterprise Risk Division and business/support
unit risk liaisons responsible for managing operational risk specific to the respective business lines.
Technology Risk
Technology risk represents the risk of loss or adverse outcomes arising from the people, processes, applications and
infrastructure that support the technology environment. The Corporation's definition of technology risk includes technology
delivery risk, technology investment risk, cybersecurity risk, information security risk and information management risk.
Technology risk is inclusive of the risks associated with the execution of technology processes and activities by third-party
contractors and suppliers to the Corporation. Other risk types may materialize in the event of a technology risk event, such as
the risk of a financial reporting error or regulatory non-compliance, and the impact of such risks are highly interdependent with
operational risk.
The Technology Risk Committee, comprising senior and executive business unit managers, as well as managers
responsible for technology, cybersecurity, information security and enterprise risk management, oversees technology risk. The
Technology Risk Committee also ensures that appropriate actions are implemented in business units to mitigate risk to an
acceptable level.
Compliance Risk
Compliance risk represents the risk of sanctions or financial loss resulting from the Corporation's failure to comply
with all applicable laws, regulations and standards of good banking practice. The impact of such risks is highly interdependent
with strategic risk, as the reputational impact from compliance breaches can be severe. Activities which may expose the
Corporation to compliance risk include, but are not limited to, those dealing with the prevention of money laundering, privacy
and data protection, community reinvestment initiatives, fair lending, consumer protection, employment and tax matters, over-
the-counter derivative activities and other regulated activities.
The Enterprise-Wide Compliance Committee, comprising senior and executive business unit managers, as well as
managers responsible for compliance, audit and overall risk, oversees compliance risk. This enterprise-wide approach provides
a consistent view of compliance across the organization. The Enterprise-Wide Compliance Committee also ensures that
appropriate actions are implemented in business units to mitigate risk to an acceptable level.
Strategic Risk
Strategic risk represents the risk of inadequate returns or possible losses due to impairment of reputation, failure to
fully develop and execute business plans, failure to assess current and new opportunities in business, markets and products,
failure to determine appropriate consideration for risks accepted, and any other event not identified in the defined risk
categories of credit, market and liquidity, operational, technology or compliance risks. Mitigation of the various risk elements
that represent strategic risk is achieved through numerous metrics and initiatives to help the Corporation better understand,
measure and report on such risks.
F-34
CRITICAL ACCOUNTING ESTIMATES
The Corporation’s consolidated financial statements are prepared based on the application of accounting policies, the
most significant of which are described in Note 1. These policies require numerous estimates and strategic or economic
assumptions, which may prove inaccurate or subject to variations. Changes in underlying factors, assumptions or estimates
could have a material impact on the Corporation’s future financial condition and results of operations. At December 31, 2023,
the most critical of these estimates related to the allowance for credit losses, fair value measurement, goodwill, pension plan
accounting and income taxes. These estimates were reviewed with the Audit Committee of the Corporation’s Board of
Directors and are discussed more fully below.
ALLOWANCE FOR CREDIT LOSSES
In accordance with CECL, the allowance for credit losses, which includes both the allowance for loan losses and the
allowance for credit losses on lending-related commitments, is calculated with the objective of maintaining a reserve for current
expected credit losses over the remaining contractual life of the portfolio. The Corporation uses loss factors, based on estimated
probability of default for internal risk ratings and loss given default, to determine the allowance for credit losses for the majority
of its portfolio. Management applies loss factors to pools of loans and lending-related commitments with similar risk
characteristics, calibrates these factors using economic forecasts and incorporates qualitative adjustments. For further discussion
of the methodology used in the determination of the allowance for credit losses, refer to Note 1 to the consolidated financial
statements. For further discussion on the economic forecast incorporated into the 2023 model, refer to the “Risk Management”
section of this financial review.
Management's determination of the appropriateness of the allowance is based on periodic evaluations of the loan
portfolio, lending-related commitments, current as well as forecasted economic factors and other relevant information. The
calculation is inherently subjective and requires management to exercise significant judgment in developing assumptions for the
estimate, the most significant of which are the loan risk rating process, development of economic forecasts and application of
qualitative adjustments. Sensitivities are disclosed to demonstrate how changes in loan risk ratings and economic forecast
scenarios may impact the allowance for credit losses. Sensitivities only consider changes to each specific assumption in
isolation and their impact to the quantitative modeled results. They do not contemplate impacts to the qualitative framework.
Loan Risk Rating Process
Reserve factors are applied to pools of loans based on risk characteristics, including the Corporation's internal risk
rating system; therefore, loss estimates are highly dependent on the accuracy of the risk rating assigned to each loan. The
inherent imprecision in the risk rating system resulting from inaccuracy in assigning and/or entering risk ratings in the loan
accounting system is monitored by the Corporation's asset quality review function. Changes to internal risk ratings, beyond the
forecasted migration inherent in the credit models, would result in a different estimated allowance for credit losses. To
illustrate, if 5 percent of the individual risk ratings were adjusted down by one rating across all pools, the allowance for loan
losses as of December 31, 2023 would change by approximately $6 million.
Forecasted Economic Variables
Management utilizes models through which historical reserve factor estimates are calibrated to economic forecasts
over the reasonable and supportable forecast period based on the projected performance of specific economic variables that
statistically correlate with the probability of default and loss given default pools. Loss estimates revert to historical loss
experience for contractual lives beyond the forecast period. Management selects economic variables it believes to be most
relevant based on the composition of the loan portfolio and customer base, including forecasted levels of employment, gross
domestic product, corporate bond and treasury spreads, industrial production levels, consumer and commercial real estate price
indices as well as housing statistics.
The allowance for credit losses is highly sensitive to the economic forecasts used to develop the estimate. Due to the
high level of uncertainty regarding significant assumptions, the Corporation evaluated a range of economic scenarios, including
a more severe economic forecast scenario, with varying responses to current economic risks. The following table summarizes
the more severe forecast scenario for the economic variables that are most impactful.
F-35
Economic Variable
Real GDP growth
Unemployment rate
Corporate BBB bond to 10-year Treasury bond spreads
Oil Prices
More Severe Forecast
Contracts through third quarter 2024, peaking at a decline of 3.5
percent annualized in second quarter 2024, subsequently improving
to a 2.2 percent annual growth rate by the end of the forecast period.
Increases to 7.7 percent by first quarter 2025 followed by a gradual
decline to 6.9 percent by the end of the forecast period.
Spreads widen to a peak of over 4.2 percent before gradually
narrowing to 2.3 percent by the end of the forecast period.
Decline to $53 per barrel by first quarter 2025 before increasing to
$61 per barrel by the end of the forecast period.
Selecting a different forecast in the current environment could result in a significantly different estimated allowance
for credit losses. To illustrate, absent model overlays and other qualitative adjustments that are part of the quarterly reserving
process, if the Corporation selected the more severe scenario to inform its models, the allowance for credit losses as of
December 31, 2023 would increase by approximately $376 million. However, factoring in model overlays and qualitative
adjustments could result in a materially different estimate under a more severe scenario.
Qualitative Adjustments and Model Overlays
The Corporation includes qualitative adjustments, as appropriate, intended to capture the impact of uncertainties not
reflected in the quantitative estimate, including foresight risk, model imprecisions and input imprecisions. Qualitative
adjustments for foresight risk reflect the inherent imprecision in economic forecasts and may be included based on
management’s evaluation of different forecast scenarios, ranging from more benign to more severe, and known recent events
impacting the Corporation’s portfolio. Model imprecision adjustments and model overlays may be included to mitigate known
limitations in the quantitative models. Input imprecision includes adjustments for portfolios where recent historical losses
exceed expected losses or known recent events are expected to alter risk ratings once evidence is acquired, as well as a
qualitative assessment of the lending environment, including underwriting standards, current economic and political conditions,
and other factors affecting credit quality. Qualitative reserves at December 31, 2023 primarily included adjustments for
uncertainties related to forecasted economic variables.
Other Considerations
To the extent actual outcomes differ from management estimates, additional provision for credit losses may be
required that would adversely impact earnings in future periods. The allowance is assigned to business segments, and any
earnings impact resulting from actual outcomes differing from management estimates would primarily affect the Commercial
Bank segment.
FAIR VALUE MEASUREMENT
Investment securities available-for-sale, derivatives and deferred compensation plan assets and associated liabilities are
recorded at fair value on a recurring basis. Additionally, from time to time, other assets and liabilities may be recorded at fair
value on a nonrecurring basis, such as impaired loans that have been measured based on the fair value of the underlying
collateral, loans held-for-sale recorded at the lower of cost or market, other real estate (primarily foreclosed property),
nonmarketable equity securities and certain other assets and liabilities. Nonrecurring fair value adjustments typically involve
write-downs of individual assets or application of lower of cost or fair value accounting.
Fair value is an estimate of the exchange price that would be received to sell an asset or paid to transfer a liability in an
orderly transaction (i.e., not a forced transaction, such as a liquidation or distressed sale) between market participants at the
measurement date and is based on the assumptions market participants would use when pricing an asset or liability. Fair value
measurement and disclosure guidance establishes a three-level hierarchy for disclosure of assets and liabilities recorded at fair
value. Notes 1 and 2 to the consolidated financial statements include information about the fair value hierarchy, the extent to
which fair value is used to measure assets and liabilities, as well as the valuation methodologies and key inputs used.
At December 31, 2023, assets and liabilities measured using observable inputs that are classified as Level 1 or Level 2
represented substantially all of total assets and liabilities recorded at fair value, respectively. Valuations generated from model-
based techniques that use at least one significant assumption not observable in the market are considered Level 3 and reflect
estimates of assumptions market participants would use in pricing the asset or liability. The valuation of Level 3 assets and
liabilities are considered critical accounting estimates.
F-36
GOODWILL
Goodwill is initially recorded as the excess of the purchase price over the fair value of the net assets acquired in a
business combination and is subsequently evaluated at least annually for impairment. Goodwill impairment testing is performed
at the reporting unit level, equivalent to a business segment or one level below. The Corporation has three reporting units: the
Commercial Bank, the Retail Bank, and Wealth Management. At December 31, 2023 and 2022, goodwill totaled $635 million,
including $473 million allocated to the Commercial Bank, $101 million allocated to the Retail Bank, and $61 million allocated
to Wealth Management.
The Corporation performs its annual evaluation of goodwill impairment in the third quarter of each year and may elect
to perform a quantitative impairment analysis or first conduct a qualitative analysis to determine if a quantitative analysis is
necessary. Additionally, the Corporation evaluates goodwill impairment on an interim basis if events or changes in
circumstances between annual tests indicate additional testing may be warranted to determine if goodwill might be impaired.
During the third quarter of 2023, the Corporation elected to perform a quantitative impairment analysis. The estimated
fair values of the reporting units were determined using a blend of two commonly used valuation techniques: the market
approach and the income approach. For the market approach, valuations of reporting units considered a combination of earnings
and equity multiples from companies with characteristics similar to the reporting unit. Since the fair values determined under
the market approach are representative of noncontrolling interests, the valuations incorporated a control premium. For the
income approach, estimated future cash flows were derived from internal forecasts and economic expectations for each
reporting unit. In the short- and mid-term, forecasts incorporated current economic conditions and impacts of expected
monetary policy decisions by the Federal Reserve Bank. Long-term projections reflected normalized rate and credit
environments, as well as a long-term rate of return for each reporting unit. Projections were discounted using an applicable
discount rate to calculate the fair value. The discount rate was based on the imputed cost of equity capital for each reporting
unit, which incorporates the risk-free rate of return, a market equity risk premium, potential stock volatility, and a size risk
premium. The discount rate further reflected the uncertainty of current economic conditions and potential impacts to the
forecasted financial information.
The combined fair value of all units was compared to the Corporation's market capitalization for reasonableness. At
the conclusion of the quantitative impairment test in the third quarter 2023, the estimated fair values of all reporting units
substantially exceeded their carrying amounts, including goodwill. The Corporation performed a hypothetical sensitivity
analysis to evaluate the impact to the estimated fair value of each reporting unit from an adverse change in the discount rate. A
100 basis point increase in the discount rate would result in the fair value of each reporting unit to continue to substantially
exceed its carrying value.
The Corporation continues to monitor economic conditions that could significantly impact the impairment analysis and
result in future goodwill impairment charges that, if incurred, could have a material adverse effect on the Corporation's results
of operations in the period such charges are recognized. Additionally, any new legislative or regulatory changes not anticipated
in management's expectations may cause the fair value of one or more of the reporting units to fall below the carrying value,
resulting in a goodwill impairment charge. Any impairment charge would not affect the Corporation's regulatory capital ratios,
tangible common equity ratio or liquidity position.
PENSION PLAN ACCOUNTING
The Corporation has a qualified and a non-qualified defined benefit pension plan. Effective January 1, 2017, benefits
are calculated using a cash balance formula based on years of service, age, compensation and an interest credit based on the 30-
year Treasury rate. Participants under age 60 as of December 31, 2016 are eligible to receive a frozen final average pay benefit
in addition to amounts earned under the cash balance formula. Participants age 60 or older as of December 31, 2016 continue to
be eligible for a final average pay benefit. The Corporation makes assumptions concerning future events that will determine the
amount and timing of required benefit payments, funding requirements and defined benefit pension expense. The major
assumptions are the discount rate used in determining the current benefit obligation, the long-term rate of return expected on
plan assets, mix of assets within the portfolio and the projected mortality rate.
The discount rate is determined by matching the expected cash flows of the pension plans to a portfolio of high quality
corporate bonds as of the measurement date, December 31. The long-term rate of return expected on plan assets is set after
considering both long-term returns in the general market and long-term returns experienced by the assets in the plan. The
current target asset allocation model for the plans is provided in Note 17 to the consolidated financial statements. The expected
returns on these various asset categories are blended to derive one long-term return assumption. The assets are primarily
invested in certain collective investment funds, common stocks, U.S. Treasury and other U.S. government agency securities, as
well as corporate and municipal bonds and notes. Mortality rate assumptions are based on mortality tables published by third
F-37
parties such as the Society of Actuaries, considering other available information including historical data as well as studies and
publications from reputable sources.
The Corporation reviews its pension plan assumptions on an annual basis with its actuarial consultants to determine if
the assumptions are reasonable and adjusts the assumptions to reflect changes in future expectations. The major assumptions
used to calculate 2024 and 2023 defined benefit plan pension expense (benefit) were as follows:
Discount rate
Long-term rate of return on plan assets
Mortality table:
Base table (a)
Mortality improvement scale (a)
Issued by the Society of Actuaries
(a)
2024
5.33%
6.75%
Pri-2012
MP-2020
2023
5.60 %
6.50 %
Pri-2012
MP-2020
Defined benefit plan benefit is expected to increase $19 million to approximately $45 million in 2024, compared to a
benefit of $26 million in 2023. This includes service cost expense of $37 million and a benefit from other components of $82
million. Service costs are included in salaries and benefits expense, while the benefit from other components are included in
other noninterest expenses on the Consolidated Statements of Income.
The Corporation’s pension plan is most sensitive to changes in discount rate and long-term rate of return. A change to
the discount rate implies a corresponding change in interest rates that affect the value of the plan’s fixed income assets. An
increase of 25 basis points to the discount rate, including the effect of higher interest rates on the plan’s fixed income assets,
would result in a net increase to pension expense of $6 million, while a decrease of 25 basis points would reduce pension
expense by $6 million. Increasing the long-term rate of return by 25 basis points would reduce pension expense by $7 million,
while a decrease of 25 basis points would increase pension expense by $7 million.
Due to the long-term nature of pension plan assumptions, actual results may differ significantly from the actuarial-
based estimates. Differences resulting in actuarial gains or losses are required to be recorded in shareholders' equity as part of
accumulated other comprehensive loss and amortized to defined benefit pension expense in future years. Refer to Note 17 to the
consolidated financial statements for further information.
INCOME TAXES
The provision for income taxes is the sum of income taxes due for the current year and deferred taxes. Deferred taxes
arise from temporary differences between the income tax basis and financial accounting basis of assets and liabilities. Accrued
taxes represent the net estimated amount due to or to be received from taxing jurisdictions, currently or in the future, and are
included in accrued income and other assets or accrued expenses and other liabilities on the Consolidated Balance Sheets.
Included in net deferred taxes are deferred tax assets. Deferred tax assets are evaluated for realization based on
available evidence of projected future reversals of existing taxable temporary differences, assumptions made regarding future
events and, when applicable, state loss carryback capacity. A valuation allowance is provided when it is more-likely-than-not
that some portion of the deferred tax asset will not be realized. Determining whether deferred tax assets are realizable is
subjective and requires the use of significant judgment.
The Corporation assesses the relative risks and merits of tax positions for various transactions after considering
statutes, regulations, judicial precedent and other available information and maintains tax accruals consistent with these
assessments. This assessment is complex and requires judgment. The Corporation is subject to audit by taxing authorities that
could question and/or challenge the tax positions taken by the Corporation. Changes in the estimate of accrued taxes occur due
to changes in tax law, interpretations of existing tax laws, new judicial or regulatory guidance, the status of examinations
conducted by taxing authorities that impact the relative risks and merits of tax positions taken by the Corporation. These
changes, when they occur, impact the estimate of accrued taxes and could be significant to the operating results of the
Corporation. For further information on tax accruals and related risks, see Note 18 to the consolidated financial statements.
F-38
SUPPLEMENTAL FINANCIAL DATA
The Corporation believes non-GAAP measures are meaningful because they reflect adjustments commonly made by
management, investors, regulators and analysts to evaluate the adequacy of common equity and performance trends. Tangible
common equity is used by the Corporation to measure the quality of capital and the return relative to balance sheet risk.
Common equity tier 1 capital ratio removes preferred stock from the Tier 1 capital ratio as defined by and calculated in
conformity with bank regulations. The tangible common equity ratio removes the effect of intangible assets from capital and
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.
The following table provides a reconciliation of non-GAAP financial measures and regulatory ratios used in this
financial review with financial measures defined by GAAP.
2023
2022
$ 8,808
$
8,278
394
$ 8,414
$ 75,901
394
7,884
$
$ 78,871
11.60 %
11.09
10.50 %
10.00
$ 6,406
$
5,181
394
$ 6,012
394
4,787
$
635
8
$ 5,369
$ 85,834
635
9
4,143
$
$ 85,406
635
8
$ 85,191
635
9
$ 84,762
7.00 %
6.30
5.60 %
4.89
$ 6,012
5,369
132
$ 45.58
40.70
$
$
4,787
4,143
131
36.55
31.62
(dollar amounts in millions)
December 31
Common Equity Tier 1 Capital:
Tier 1 capital
Less:
Fixed-rate reset non-cumulative perpetual preferred stock
Common equity tier 1 capital
Risk-weighted assets
Tier 1 capital ratio
Common equity tier 1 capital ratio
Tangible Common Equity Ratio:
Total shareholders' equity
Less:
Fixed-rate reset non-cumulative perpetual preferred stock
Common shareholders' equity
Less:
Goodwill
Other intangible assets
Tangible common equity
Total assets
Less:
Goodwill
Other intangible assets
Tangible assets
Common equity ratio
Tangible common equity ratio
Tangible Common Equity per Share of Common Stock:
Common shareholders' equity
Tangible common equity
Shares of common stock outstanding (in millions)
Common shareholders' equity per share of common stock
Tangible common equity per share of common stock
F-39
FORWARD-LOOKING STATEMENTS
This report includes forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. In
addition, the Corporation may make other written and oral communications from time to time that contain such statements. All
statements regarding the Corporation's expected financial position, strategies and growth prospects as well as general economic
conditions expected to exist in the future are forward-looking statements. The words, “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 track," “trend,” “objective,” “looks forward,” "projects," "models" 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 the Corporation or its management, are intended to identify forward-looking statements. The
Corporation cautions that forward-looking statements are subject to numerous assumptions, risks and uncertainties, which
change over time. Forward-looking statements speak only as of the date the statement is made, and the Corporation 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. Actual results could differ materially from those anticipated in forward-looking
statements and future results could differ materially from historical performance.
In addition to factors mentioned elsewhere in this report or previously disclosed in the Corporation's SEC reports
(accessible on the SEC's website at www.sec.gov or on the Corporation's website at www.comerica.com), actual results could
differ materially from forward-looking statements and future results could differ materially from historical performance due to a
variety of reasons, including but not limited to, the following factors:
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
changes in customer behavior may adversely impact the Corporation's business, financial condition and results of
operations;
unfavorable developments concerning credit quality could adversely affect the Corporation's financial results;
declines in the businesses or industries of the Corporation's customers could cause increased credit losses or decreased loan
balances, which could adversely affect the Corporation;
governmental monetary and fiscal policies may adversely affect the financial services industry, and therefore impact the
Corporation's financial condition and results of operations;
fluctuations in interest rates and their impact on deposit pricing could adversely affect the Corporation's net interest income
and balance sheet;
the Corporation's transition away from the Bloomberg Short-Term Bank Yield Index could adversely affect its financial
results;
the Corporation must maintain adequate sources of funding and liquidity to meet regulatory expectations, support its
operations and fund outstanding liabilities;
reduction in the Corporation's credit ratings could adversely affect the Corporation and/or the holders of its securities;
the soundness of other financial institutions could adversely affect the Corporation;
security risks, including denial of service attacks, hacking, social engineering attacks targeting the Corporation’s colleagues
and customers, malware intrusion or data corruption attempts, and identity theft, could result in the disclosure of
confidential information, adversely affect its business or reputation, and create significant legal and financial exposure;
cybersecurity and data privacy are areas of heightened legislative and regulatory focus;
the Corporation’s operational or security systems or infrastructure, or those of third parties, could fail or be breached, ,
which could disrupt Comerica’s business and adversely impact the Corporation’s results of operations, liquidity and
financial condition, as well as cause legal or reputational harm;
the Corporation relies on other companies to provide certain key components of its delivery systems, and certain failures
could materially adversely affect operations;
legal and regulatory proceedings and related financial services industry matters, including those directly involving the
Corporation and its subsidiaries, could adversely affect the Corporation or the financial services industry in general;
the Corporation may incur losses due to fraud;
controls and procedures may fail to prevent or detect all errors or acts of fraud;
changes in regulation or oversight, or changes in Comerica’s status with respect to existing regulations or oversight, may
have a material adverse impact on the Corporation's operations;
compliance with more stringent capital requirements may adversely affect the Corporation;
changes to tax law or regulations, or changes to administrative or judicial interpretations of tax law or regulations, could
adversely affect the Corporation;
F-40
•
•
•
•
damage to the Corporation’s reputation could damage its businesses;
the Corporation may not be able to utilize technology to develop, market and deliver new products and services to its
customers;
competitive product and pricing pressures within the Corporation's markets may change;
the introduction, implementation, withdrawal, success and timing of business initiatives and strategies may be less
successful or may be different than anticipated, which could adversely affect the Corporation's business;
• management's ability to maintain and expand customer relationships may differ from expectations;
• management's ability to retain key officers and employees may change;
•
•
•
any future strategic acquisitions or divestitures may present certain risks to the Corporation's business and operations;
general political, economic or industry conditions, either domestically or internationally, may be less favorable than
expected;
inflation could negatively impact the Corporation's business, profitability and stock price;
• methods of reducing risk exposures might not be effective;
•
•
•
•
•
•
catastrophic events, including pandemics, may adversely affect the general economy, financial and capital markets, specific
industries, and the Corporation;
climate change manifesting as physical or transition risks could adversely affect the Corporation's operations, businesses
and customers;
changes in accounting standards could materially impact the Corporation's financial statements;
the Corporation's accounting policies and processes are critical to the reporting of financial condition and results of
operations and require management to make estimates about matters that are uncertain;
the Corporation's stock price can be volatile; and
an investment in the Corporations' equity securities is not insured or guaranteed by the FDIC.
F-41
CONSOLIDATED BALANCE SHEETS
Comerica Incorporated and Subsidiaries
(in millions, except share data)
December 31
ASSETS
Cash and due from banks
Interest-bearing deposits with banks
Other short-term investments
Investment securities available-for-sale
Commercial loans
Real estate construction loans
Commercial mortgage loans
Lease financing
International loans
Residential mortgage loans
Consumer loans
Total loans
Allowance for loan losses
Net loans
Premises and equipment
Accrued income and other assets
Total assets
LIABILITIES AND SHAREHOLDERS’ EQUITY
Noninterest-bearing deposits
Money market and interest-bearing checking deposits
Savings deposits
Customer certificates of deposit
Other time deposits
Foreign office time deposits
Total interest-bearing deposits
Total deposits
Short-term borrowings
Accrued expenses and other liabilities
Medium- and long-term debt
Total liabilities
Fixed-rate reset non-cumulative perpetual preferred stock, series A, no par value, $100,000
liquidation preference per share:
Authorized - 4,000 shares
Issued - 4,000 shares
Common stock - $5 par value:
Authorized - 325,000,000 shares
Issued - 228,164,824 shares
Capital surplus
Accumulated other comprehensive loss
Retained earnings
Less cost of common stock in treasury - 96,266,568 shares at 12/31/2023 and 97,197,962 shares
at 12/31/2022
Total shareholders’ equity
Total liabilities and shareholders’ equity
See notes to consolidated financial statements.
F-42
$
$
$
2023
2022
$
1,443 $
8,059
399
16,869
27,251
5,083
13,686
807
1,102
1,889
2,295
52,113
(688)
51,425
445
7,194
85,834 $
27,849 $
28,246
2,381
3,723
4,550
13
38,913
66,762
3,565
2,895
6,206
79,428
1,758
4,524
157
19,012
30,909
3,105
13,306
760
1,197
1,814
2,311
53,402
(610)
52,792
400
6,763
85,406
39,945
26,290
3,225
1,762
124
51
31,452
71,397
3,211
2,593
3,024
80,225
394
394
1,141
2,224
(3,048)
11,727
(6,032)
6,406
85,834 $
1,141
2,220
(3,742)
11,258
(6,090)
5,181
85,406
CONSOLIDATED STATEMENTS OF INCOME
Comerica Incorporated and Subsidiaries
(in millions, except per share data)
Years Ended December 31
INTEREST INCOME
Interest and fees on loans
Interest on investment securities
Interest on short-term investments
Total interest income
INTEREST EXPENSE
Interest on deposits
Interest on short-term borrowings
Interest on medium- and long-term debt
Total interest expense
Net interest income
Provision for credit losses
Net interest income after provision for credit losses
NONINTEREST INCOME
Card fees
Fiduciary income
Service charges on deposit accounts
Capital markets income
Commercial lending fees
Bank-owned life insurance
Letter of credit fees
Brokerage fees
Risk management hedging (loss) income
Other noninterest income
Total noninterest income
NONINTEREST EXPENSES
Salaries and benefits expense
Outside processing fee expense
FDIC insurance expense
Occupancy expense
Software expense
Equipment expense
Advertising expense
Other noninterest expenses
Total noninterest expenses
Income before income taxes
Provision for income taxes
NET INCOME
Less:
Income allocated to participating securities
Preferred stock dividends
Net income attributable to common shares
Earnings per common share:
Basic
Diluted
Cash dividends declared on common stock
Cash dividends declared per common share
See notes to consolidated financial statements.
2023
2022
2021
$
3,340 $
430
405
4,175
2,153 $
414
105
2,672
892
391
378
1,661
2,514
89
2,425
280
235
185
147
72
46
42
30
(42)
83
1,078
1,306
277
180
171
171
50
40
164
2,359
1,144
263
881
102
17
87
206
2,466
60
2,406
273
233
195
154
68
47
38
21
8
31
1,068
1,208
251
31
175
161
50
38
84
1,998
1,476
325
1,151
$
$
4
23
854 $
6.47 $
6.44
375
2.84
6
23
1,122 $
8.56 $
8.47
356
2.72
F-43
1,594
280
27
1,901
22
—
35
57
1,844
(384)
2,228
298
231
195
146
68
43
40
14
—
88
1,123
1,133
266
22
161
155
50
35
39
1,861
1,490
322
1,168
5
23
1,140
8.45
8.35
365
2.72
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Comerica Incorporated and Subsidiaries
(in millions)
Years Ended December 31
NET INCOME
OTHER COMPREHENSIVE INCOME (LOSS)
Unrealized gains (losses) on investment securities:
Net unrealized holding gains (losses) arising during the period
Change in net unrealized gains (losses) before income taxes
Net gains (losses) on cash flow hedges:
Net cash flow hedge gains (losses) arising during the period before income taxes
Reclassification of loss related to de-designation of derivatives to other
noninterest income
Less:
Net cash flow hedge (losses) gains recognized in interest and fees on loans
before taxes
Amortization of unrealized losses related to de-designated derivatives included
in interest and fees on loans
Change in net cash flow hedge gains (losses) before income taxes
Defined benefit pension and other postretirement plans adjustment:
Actuarial gain (loss) arising during the period
Prior service credit arising during the period
Adjustments for amounts recognized as components of net periodic benefit cost:
Amortization of actuarial net loss
Amortization of prior service credit
Change in defined benefit pension and other postretirement plans adjustment
before income taxes
Total other comprehensive income (loss) before income taxes
Provision (benefit) for income taxes
Total other comprehensive income (loss), net of tax
COMPREHENSIVE INCOME (LOSS)
See notes to consolidated financial statements.
2023
2022
2021
$
881 $
1,151 $
1,168
361
361
34
(2,903)
(2,903)
(1,329)
(195)
—
(576)
(26)
441
96
—
36
(23)
109
911
217
694
(25)
—
(1,304)
(415)
—
28
(23)
(410)
(4,617)
(1,087)
(3,530)
$
1,575 $
(2,379) $
(406)
(406)
(35)
—
95
—
(130)
159
1
40
(25)
175
(361)
(85)
(276)
892
F-44
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY
Comerica Incorporated and Subsidiaries
Nonredeemable
Preferred
Stock
Common Stock
Shares
Accumulated
Other
Total
Capital Comprehensive Retained Treasury Shareholders'
Outstanding Amount Surplus
Income (Loss) Earnings
Stock
Equity
$
394
139.2 $ 1,141 $ 2,185 $
64 $
9,727 $ (5,461) $
(in millions, except per share data)
BALANCE AT DECEMBER 31, 2020
Net income
Other comprehensive loss, net of tax
Cash dividends declared on common stock ($2.72 per
share)
Cash dividends declared on preferred stock
Purchase of common stock
Net issuance of common stock under employee stock
plans
Share-based compensation
—
—
—
—
—
—
—
—
—
—
—
(9.5)
1.0
—
—
—
—
—
—
—
—
—
—
—
—
(24)
(27)
41
Net income
Other comprehensive loss, net of tax
Cash dividends declared on common stock ($2.72 per
share)
Cash dividends declared on preferred stock
Purchase of common stock
Net issuance of common stock under employee stock
plans
Share-based compensation
—
—
—
—
—
—
—
—
—
—
—
(0.4)
0.7
—
—
—
—
—
—
—
—
—
—
—
—
—
(15)
60
—
1,168
(276)
—
—
—
—
—
—
—
—
—
(365)
(23)
—
(699)
(13)
—
65
—
(356)
(23)
—
(36)
(8)
—
41
—
—
—
—
—
—
—
—
—
—
—
—
1,151
(3,530)
—
8,050
1,168
(276)
(365)
(23)
(723)
25
41
7,897
1,151
(3,530)
(356)
(23)
(36)
18
60
BALANCE AT DECEMBER 31, 2021
$
394
130.7 $ 1,141 $ 2,175 $
(212) $ 10,494 $ (6,095) $
BALANCE AT DECEMBER 31, 2022
$
394
131.0 $ 1,141 $ 2,220 $
(3,742) $ 11,258 $ (6,090) $
5,181
Net income
Other comprehensive income, net of tax
Cash dividends declared on common stock ($2.84 per
share)
Cash dividends declared on preferred stock
Net issuance of common stock under employee stock
plans
Share-based compensation
—
—
—
—
—
—
—
—
—
—
0.9
—
—
—
—
—
—
—
—
—
—
—
(48)
52
—
694
—
—
—
—
881
—
(375)
(23)
(14)
—
—
—
—
—
58
—
881
694
(375)
(23)
(4)
52
BALANCE AT DECEMBER 31, 2023
$
394
131.9 $ 1,141 $ 2,224 $
(3,048) $ 11,727 $ (6,032) $
6,406
See notes to consolidated financial statements.
F-45
CONSOLIDATED STATEMENTS OF CASH FLOWS
Comerica Incorporated and Subsidiaries
(in millions)
Years Ended December 31
OPERATING ACTIVITIES
2023
2022
2021
Net income
Adjustments to reconcile net income to net cash provided by operating activities:
$
881 $
1,151 $
1,168
Provision for credit losses
(Benefit) provision for deferred income taxes
Depreciation and amortization
Net periodic defined benefit credit
Share-based compensation expense
Net amortization of securities
Net gains on sales of foreclosed and other bank property
Net change in:
Accrued income receivable
Accrued expenses payable
Other, net
Net cash provided by operating activities
INVESTING ACTIVITIES
Investment securities available-for-sale:
Maturities and redemptions
Purchases
Net change in loans
Proceeds from sales of foreclosed and other bank property
Net increase in premises and equipment
Federal Home Loan Bank stock:
Purchases
Redemptions
Proceeds from bank-owned life insurance settlements
Other, net
Net cash provided by (used in) investing activities
FINANCING ACTIVITIES
Net change in:
Deposits
Short-term borrowings
Medium- and long-term debt:
Maturities and redemptions
Issuances and advances
Cash dividends paid on preferred stock
Common stock:
Repurchases
Cash dividends paid
Issuances under employee stock plans
Other, net
Net cash (used in) provided by financing activities
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period
Interest paid
Income taxes paid
See notes to consolidated financial statements.
89
(92)
87
(27)
52
19
(36)
(65)
348
(5)
1,251
2,485
—
1,265
44
(153)
(504)
325
30
2
3,494
60
(27)
92
(91)
60
30
(2)
(152)
131
(614)
638
2,511
(7,470)
(4,824)
3
(82)
(131)
—
39
2
(9,952)
(4,634)
354
(850)
4,000
(23)
(17)
(371)
18
(2)
(1,525)
3,220
6,282
9,502 $
1,449 $
317
(10,401)
3,211
—
500
(23)
(43)
(353)
28
(2)
(7,083)
(16,397)
22,679
6,282 $
130 $
277
$
$
(384)
79
99
(81)
41
36
—
13
132
(469)
634
5,536
(7,936)
4,067
8
(70)
—
115
16
(13)
1,723
8,438
—
(2,800)
—
(23)
(729)
(369)
34
4
4,555
6,912
15,767
22,679
57
157
F-46
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Comerica Incorporated and Subsidiaries
NOTE 1 - BASIS OF PRESENTATION AND ACCOUNTING POLICIES
Organization
Comerica Incorporated (the Corporation) is a registered financial holding company headquartered in Dallas, Texas.
The Corporation’s major business segments are the Commercial Bank, the Retail Bank and Wealth Management. For further
discussion of each business segment, refer to Note 22. The Corporation and its banking subsidiaries are regulated at both the
state and federal levels.
The accounting and reporting policies of the Corporation conform to United States (U.S.) generally accepted
accounting principles (GAAP). The preparation of financial statements in conformity with GAAP requires management to
make estimates and assumptions that affect reported amounts and disclosures. Actual results could differ from these estimates.
Certain amounts in the financial statements for prior years have been reclassified to conform to the current financial statement
presentation.
The following summarizes the significant accounting policies of the Corporation applied in the preparation of the
accompanying consolidated financial statements.
Principles of Consolidation
The consolidated financial statements include the accounts of the Corporation and the accounts of those subsidiaries
that are majority owned and in which the Corporation has a controlling financial interest. The Corporation consolidates entities
not determined to be variable interest entities (VIEs) when it holds a controlling financial interest and applies the cost or equity
method when it holds less than a controlling financial interest. In consolidation, all significant intercompany accounts and
transactions are eliminated. The results of operations of companies acquired are included from the date of acquisition.
The Corporation holds investments in certain legal entities that are considered VIEs. In general, a VIE is an entity that
either (1) has an insufficient amount of equity to carry out its principal activities without additional subordinated financial
support, (2) has a group of equity owners that are unable to make significant decisions about its activities, or (3) has a group of
equity owners that do not have the obligation to absorb losses or the right to receive returns generated by its operations. If any
of these characteristics are present, the entity is subject to a variable interests consolidation model, and consolidation is based
on variable interests, not on voting interests. Variable interests are defined as contractual ownership or other economic interests
in an entity that change with fluctuations in the entity’s net asset value. The primary beneficiary is required to consolidate the
VIE as it has both the power to direct the activities of the VIE that most significantly impact the entity’s economic performance
and the obligation to absorb losses or the right to receive benefits that could be significant to the VIE. The maximum potential
exposure to losses relative to investments in VIEs is generally limited to the sum of the outstanding book basis and unfunded
commitments for future investments.
The Corporation evaluates its investments in VIEs, both at inception and when there is a change in circumstances that
requires reconsideration, to determine if the Corporation is the primary beneficiary and consolidation is required. The
Corporation accounts for unconsolidated VIEs using either the proportional, cost or equity method. These investments comprise
investments in community development projects which generate tax credits to their investors and are included in accrued
income and other assets on the Consolidated Balance Sheets.
The proportional method is used for investments in affordable housing projects that qualify for the low-income
housing tax credit (LIHTC). The equity method is used for other investments where the Corporation has the ability to exercise
significant influence over an entity’s operations and financial policies. Other unconsolidated equity investments that do not
meet the criteria to be accounted for under the equity method are accounted for under the cost method. Amortization and other
write-downs of LIHTC investments are presented on a net basis as a component of the provision for income taxes, while
income, amortization and write-downs from cost and equity method investments are recorded in other noninterest income on
the Consolidated Statements of Income.
See Note 9 for additional information about the Corporation’s involvement with VIEs.
Assets held in an agency or fiduciary capacity are not assets of the Corporation and are not included in the
consolidated financial statements.
F-47
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Comerica Incorporated and Subsidiaries
Fair Value Measurements
The Corporation utilizes fair value measurements to record fair value adjustments to certain assets and liabilities and to
determine fair value disclosures. The determination of fair values of financial instruments often requires the use of estimates. In
cases where quoted market values in an active market are not available, the Corporation uses present value techniques and other
valuation methods to estimate the fair values of its financial instruments. These valuation methods require considerable
judgment and the resulting estimates of fair value can be significantly affected by the assumptions made and methods used.
Fair value is an estimate of the exchange price that would be received to sell an asset or paid to transfer a liability in an
orderly transaction (i.e., not a forced transaction, such as a liquidation or distressed sale) between market participants at the
measurement date. Fair value is based on the assumptions market participants would use when pricing an asset or liability.
Investment securities available-for-sale, derivatives, deferred compensation plans and equity securities with readily
determinable fair values (primarily money market mutual funds) are recorded at fair value on a recurring basis. Additionally,
from time to time, the Corporation may be required to record other assets and liabilities at fair value on a nonrecurring basis,
such as impaired loans, loans held for sale, other real estate (primarily foreclosed property), nonmarketable equity securities and
certain other assets and liabilities. These nonrecurring fair value adjustments typically involve write-downs of individual assets
or application of lower of cost or fair value accounting.
Fair value measurements and disclosures guidance establishes a three-level fair value hierarchy based on the markets
in which the assets and liabilities are traded and the reliability of the assumptions used to determine fair value. The fair value
hierarchy gives the highest priority to quoted prices in active markets and the lowest priority to unobservable data. Fair value
measurements are separately disclosed by level within the fair value hierarchy. For assets and liabilities recorded at fair value, it
is the Corporation’s policy to maximize the use of observable inputs and minimize the use of unobservable inputs when
developing fair value measurements.
Level 1
Valuation is based on quoted prices for identical instruments traded in active markets.
Level 2
Level 3
Valuation is based on quoted prices for similar instruments in active markets, quoted prices for identical
or similar instruments in markets that are less active, and model-based valuation techniques for which all
significant assumptions are observable in the market.
Valuation is generated from model-based techniques that use at least one significant assumption not
observable in the market. These unobservable assumptions reflect estimates of assumptions that market
participants would use in pricing the asset or liability. Valuation techniques include use of option pricing
models, discounted cash flow models and similar techniques.
The Corporation generally utilizes third-party pricing services to value Level 1 and Level 2 securities. Management
reviews the methodologies and assumptions used by the third-party pricing services and evaluates the values provided,
principally by comparison with other available market quotes for similar instruments and/or analysis based on internal models
using available third-party market data. The Corporation may occasionally adjust certain values provided by the third-party
pricing service when management believes, as the result of its review, that the adjusted price most appropriately reflects the fair
value of the particular security.
Fair value measurements for assets and liabilities where limited or no observable market data exists are based
primarily upon estimates, often calculated based on the economic and competitive environment, the characteristics of the asset
or liability and other factors. Therefore, the results cannot be determined with precision and may not be realized in an actual
sale or immediate settlement of the asset or liability. Additionally, there may be inherent weaknesses in any calculation
technique, so that changes in the underlying assumptions used, including discount rates and estimates of future cash flows,
could significantly affect the results of current or future values.
Following are descriptions of the valuation methodologies and key inputs used to measure financial assets and
liabilities recorded at fair value, as well as a description of the methods and significant assumptions used to estimate fair value
disclosures for financial instruments not recorded at fair value in their entirety on a recurring basis. The descriptions include an
indication of the level of the fair value hierarchy in which the assets or liabilities are classified.
Deferred compensation plan assets and liabilities as well as equity securities with a readily determinable fair value
The Corporation holds a portfolio of securities that includes equity securities and assets held related to deferred
compensation plans. Securities and associated deferred compensation plan liabilities are recorded at fair value on a recurring
basis and included in other short-term investments and accrued expenses and other liabilities, respectively, on the Consolidated
Balance Sheets. Level 1 securities include assets related to deferred compensation plans, which are invested in mutual funds,
U.S. Treasury securities that are traded by dealers or brokers in active over-the-counter markets and other securities traded on
F-48
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Comerica Incorporated and Subsidiaries
an active exchange, such as the New York Stock Exchange. Level 2 securities include municipal bonds and mortgage-backed
securities issued by U.S. government-sponsored entities and corporate debt securities. Deferred compensation plan liabilities
represent the fair value of the obligation to the plan participant, which corresponds to the fair value of the invested assets. The
methods used to value equity securities and deferred compensation plan assets are the same as the methods used to value
investment securities, discussed below.
Investment securities available-for-sale
Investment securities available-for-sale are recorded at fair value on a recurring basis. Level 1 securities include those
traded on an active exchange, such as the New York Stock Exchange, U.S. Treasury securities that are traded by dealers or
brokers in active over-the-counter markets and money market funds. Level 2 securities include mortgage-backed securities
issued by U.S. government agencies and U.S. government-sponsored entities, as well as corporate debt securities. The fair value
of Level 2 securities is determined using quoted prices of securities with similar characteristics, or pricing models based on
observable market data inputs, primarily interest rates, spreads and prepayment information.
Securities classified as Level 3 represent securities in less liquid markets requiring significant management
assumptions when determining fair value.
Loans held-for-sale
Loans held-for-sale, included in other short-term investments on the Consolidated Balance Sheets, are recorded at the
lower of cost or fair value. Loans held-for-sale may be carried at fair value on a nonrecurring basis when fair value is less than
cost. When the fair value is based on what secondary markets are currently offering for portfolios with similar characteristics,
the loans are classified as Level 2. When secondary market information is not available, the fair value is estimated based on the
repricing frequency of the loans and estimated credit risk using internally-developed lifetime loss estimates, resulting in the
loans being classified as Level 3.
Loans
The Corporation does not record loans at fair value on a recurring basis. However, an individual allowance may be
established for a loan that no longer shares risk characteristics with loan pools, typically collateral-dependent loans for which
reserves are based on the fair value of the underlying collateral. Such loan values are reported as nonrecurring fair value
measurements. Collateral values supporting individually evaluated loans are evaluated quarterly. When management determines
that the fair value of the collateral requires additional adjustments, either as a result of non-current appraisal value or when there
is no observable market price, the Corporation classifies the loan as Level 3.
Derivative assets and derivative liabilities
Derivative instruments held or issued for risk management or customer-initiated activities are traded in over-the-
counter markets where quoted market prices are not readily available. Fair value for over-the-counter derivative instruments is
measured on a recurring basis using internally developed models primarily based on market observable inputs, such as yield
curves and option volatilities. The Corporation manages credit risk on its derivative positions based on whether the derivatives
are settled through a clearinghouse or bilaterally with each counterparty. For derivative positions settled on a counterparty-by-
counterparty basis, the Corporation calculates credit valuation adjustments, included in the fair value of these instruments, on
the basis of its relationships at the counterparty portfolio or master netting agreement level. These credit valuation adjustments
are determined by applying a credit spread for the counterparty or the Corporation, as appropriate, to the total expected
exposure of the derivative after considering collateral and other master netting arrangements. These adjustments, which are
considered Level 3 inputs, are based on estimates of current credit spreads to evaluate the likelihood of default. When credit
valuation adjustments are significant to the overall fair value of a derivative, the Corporation classifies the over-the-counter
derivative valuation in Level 3 of the fair value hierarchy; otherwise, over-the-counter derivative valuations are classified in
Level 2.
Other real estate
Other real estate is included in accrued income and other assets on the Consolidated Balance Sheets and includes
primarily foreclosed property. Foreclosed property is initially recorded at fair value, less costs to sell, at the date of legal title
transfer to the Corporation, establishing a new cost basis. Subsequently, foreclosed property is carried at the lower of cost or
fair value, less costs to sell. Other real estate may be carried at fair value on a nonrecurring basis when fair value is less than
cost. Fair value is based upon independent market prices, appraised value or management's estimate of the value of the
property. When management determines that the fair value of other real estate requires additional adjustments, either as a result
F-49
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Comerica Incorporated and Subsidiaries
of a non-current appraisal or when there is no observable market price, the Corporation classifies the other real estate as Level
3.
For further information about fair value measurements refer to Note 2.
Other Short-Term Investments
Other short-term investments include deferred compensation plan assets, certificates of deposits, equity securities with
a readily determinable fair value and loans held-for-sale.
Deferred compensation plan assets and equity securities are carried at fair value. Realized and unrealized gains or
losses are included in other noninterest income on the Consolidated Statements of Income.
Loans held-for-sale include variable-rate demand notes, residential mortgages originated with the intent to sell and
occasionally other loans transferred to held-for-sale. Loans held-for-sale are carried at the lower of cost or fair value. Fair value
is determined in the aggregate for each portfolio. Changes in fair value and gains or losses upon sale are included in other
noninterest income on the Consolidated Statements of Income.
Investment Securities
Debt securities are classified as trading, available-for-sale (AFS) or held-to-maturity. Trading securities are recorded at
fair value, with unrealized gains and losses included in noninterest income on the Consolidated Statements of Income. AFS
securities are recorded at fair value, with unrealized gains and losses, net of income taxes, reported as a separate component of
other comprehensive income (OCI). Securities for which management has the intent and ability to hold to maturity are
classified as held-to-maturity and recorded at amortized cost. Interest income is recognized using the interest method.
Substantially all of the Corporation's investment securities are classified as AFS at December 31, 2023 and 2022.
An AFS security is impaired if its fair value is less than amortized cost. Credit-related impairment is recognized as an
allowance to investment securities available-for-sale on the Consolidated Balance Sheets with a corresponding adjustment to
provision for credit losses on the Consolidated Statements of Income. Non-credit-related impairment is recognized as a
component of OCI. If the Corporation intends to sell an impaired AFS security or more likely than not will be required to sell
that security before recovering its amortized cost basis, the entire impairment amount is recognized in earnings with
corresponding adjustment to the security's amortized cost basis.
For certain types of AFS securities, such as U.S. Treasuries and other securities with government guarantees, the
Corporation generally expects zero credit losses. The zero-loss expectation applies to all the Corporation’s securities and no
allowance for credit losses was recorded on its AFS securities portfolio at December 31, 2023.
Gains or losses on the sale of securities are computed based on the adjusted cost of the specific security sold.
For further information on investment securities, refer to Note 3.
Loans
Loans and leases originated and held for investment are recorded at the principal balance outstanding, net of unearned
income, charge-offs and unamortized deferred fees and costs. Interest income is recognized on loans and leases using the
interest method.
Effective January 1, 2023, the Corporation assesses all loan modifications to determine whether one is granted to a
borrower experiencing financial difficulty, regardless of whether the modified loan terms include a concession. Modifications
granted to borrowers experiencing financial difficulty may be in the form of an interest rate reduction, an other-than-
insignificant payment delay, a term extension, principal forgiveness or a combination thereof (collectively referred to as
Financially Distressed Modifications or FDMs). Prior to 2023, the Corporation assessed all loan modifications to determine
whether a restructuring constituted a troubled debt restructuring (TDR). A restructuring was considered a TDR when a
borrower was experiencing financial difficulty and the Corporation granted a concession to the borrower.
Certain types of modifications related to COVID-19 that were granted during 2020 and 2021 were excluded from TDR
accounting. See Note 1 in the 2021 10-K for additional information.
Effective January 1, 2020, the Corporation adopted ASU No. 2020-04 "Reference Rate Reform (Topic 848):
Facilitation of the Effects of Reference Rate Reform on Financial Reporting," (ASU 2020-04). Typically, entities must evaluate
whether a loan contract modification results in a modified loan or a new loan for accounting purposes. Topic 848 allows entities
to bypass this evaluation for qualifying modifications related to reference rate reform. The Corporation applied the relief
F-50
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Comerica Incorporated and Subsidiaries
provided by Topic 848 to qualifying contract modifications transitioning away from LIBOR. After LIBOR transition was
substantially complete in third quarter 2023, the Corporation no longer applied the relief guidance.
Loan Origination Fees and Costs
Substantially all loan origination fees and costs are deferred and amortized to net interest income over the life of the
related loan or over the commitment period as a yield adjustment. Net deferred income on originated loans, including unearned
income and unamortized costs, fees, premiums and discounts, totaled $94 million and $118 million at December 31, 2023 and
2022, respectively.
Loan fees on unused commitments and net origination fees related to loans sold are recognized in noninterest income.
Allowance for Credit Losses
The allowance for credit losses includes both the allowance for loan losses and the allowance for credit losses on
lending-related commitments.
The Corporation disaggregates the loan portfolio into segments for purposes of determining the allowance for credit
losses. These segments are based on the level at which the Corporation develops, documents and applies a systematic
methodology to determine the allowance for credit losses. The Corporation's portfolio segments are business loans and retail
loans. Business loans include the commercial, real estate construction, commercial mortgage, lease financing and international
loan portfolios. Retail loans consist of residential mortgage and consumer loans, including home equity loans.
Current expected credit losses are estimated over the contractual life of the loan portfolio, considering all available
relevant information, including historical and current conditions as well as reasonable and supportable forecasts of future
events.
For further information on the Allowance for Credit Losses, refer to Note 4.
Allowance for Loan Losses
The allowance for loan losses is estimated on a quarterly basis and represents management’s estimates of current
expected credit losses in the Corporation’s loan portfolio. Pools of loans with similar risk characteristics are collectively
evaluated while loans that no longer share risk characteristics with loan pools are evaluated individually.
Collective loss estimates are determined by applying loss factors, designed to estimate current expected credit losses,
to amortized cost balances over the remaining contractual life of the collectively evaluated portfolio. Loans with similar risk
characteristics are aggregated into homogeneous pools. Business loans are assigned to pools based primarily on business line
and the Corporation’s internal risk rating system. For retail loans, pools are based on loan type, past due status and credit
scores. Loss factors are based on an estimated probability of default for each pool, set to a default horizon based on contractual
life, and loss given default. Historical estimates are calibrated to economic forecasts over the reasonable and supportable
forecast period based on the projected performance of specific economic variables that statistically correlate with each of the
probability of default and loss given default pools. At least annually, management considers different models when estimating
credit losses, selecting ones that most reasonably forecast credit losses in the relevant economic environment.
The calculation of current expected credit losses is inherently subjective, as it requires management to exercise
judgment in determining appropriate factors used to determine the allowance. Some of the most significant factors in the
quantitative allowance estimate are assigning internal risk ratings to loans, selecting the economic forecasts used to calibrate the
reserve factors and determining the reasonable and supportable forecast period.
•
•
•
Internal Risk Ratings: Loss factors are dependent on loan risk ratings for business loans. Risk ratings are assigned at
origination, based on inherent credit risk, and updated based on new information that becomes available, periodic reviews
of credit quality, a change in borrower performance or modifications to lending agreements.
Economic Forecasts: Management selects economic variables it believes to be most relevant based on the composition of
the loan portfolio and customer base, including forecasted levels of employment, gross domestic product, corporate bond
and treasury spreads, industrial production levels, consumer and commercial real estate price indices as well as housing
statistics. Different economic forecast scenarios ranging from more benign to more severe are evaluated each reporting
period to forecast losses over the contractual life of the loan portfolio.
Forecast Period: Economic forecasts are applied over the period management believes it can estimate reasonable and
supportable forecasts. Forecast periods may be adjusted in response to changes in the economic environment. To estimate
losses for contractual periods that extend beyond the forecast horizon, the Corporation reverts to an average historical loss
F-51
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Comerica Incorporated and Subsidiaries
experience. The Corporation typically forecasts economic variables over a two-year horizon, followed by an immediate
reversion to an average historical loss experience that generally incorporates a full economic cycle. Management reviews
this methodology on at least an annual basis.
The allowance for loan losses also includes qualitative adjustments to bring the allowance to the level management
believes is appropriate based on factors that have not otherwise been fully accounted for, including adjustments for foresight
risk, input imprecision and model imprecision. Foresight risk reflects the inherent imprecision in forecasting economic
variables, including determining the depth and duration of economic cycles and their impact to relevant economic variables.
The Corporation may make qualitative adjustments based on its evaluation of different forecast scenarios and known recent
events impacting relevant economic variables. Input imprecision factors address the risk that certain model inputs may not
reflect all available information including (i) risk factors that have not been fully addressed in internal risk ratings, (ii) changes
in lending policies and procedures, (iii) changes in the level and quality of experience held by lending management, (iv)
imprecision in the risk rating system and (v) limitations in data available for certain loan portfolios. Model imprecision
considers known model limitations and model updates not yet fully reflected in the quantitative estimate.
The determination of the appropriate qualitative adjustment is based on management's analysis of current and expected
economic conditions and their impact to the portfolio, as well as internal credit risk movements and a qualitative assessment of
the lending environment, including underwriting standards. Management recognizes the sensitivity of various assumptions
made in the quantitative modeling of expected losses and may adjust reserves depending upon the level of uncertainty that
currently exists in one or more assumptions.
Credit losses for loans that no longer share risk characteristics with the loan pools are estimated on an individual basis.
Individual credit loss estimates are typically performed for nonaccrual loans and are based on one of several methods, including
the estimated fair value of the underlying collateral, observable market value of similar debt or the present value of expected
cash flows. The Corporation considers certain loans to be collateral-dependent if the borrower is experiencing financial
difficulty and management expects repayment for the loan to be substantially through the operation or sale of the collateral. For
collateral-dependent loans, loss estimates are based on the fair value of collateral, less estimated cost to sell (if applicable).
Collateral values supporting individually evaluated loans are assessed quarterly and appraisals are typically obtained at least
annually.
The total allowance for loan losses is sufficient to absorb expected credit losses over the contractual life of the
portfolio. Unanticipated events impacting the economy, including political instability or global events affecting the U.S.
economy, could cause changes to expectations for current conditions and economic forecasts that result in an unanticipated
increase in the allowance. Significant increases in current portfolio exposures or changes in credit characteristics could also
increase the amount of the allowance. Such events, or others of similar nature, may result in the need for additional provision
for credit losses in order to maintain an allowance that complies with credit risk and accounting policies.
Loans deemed uncollectible are charged off and deducted from the allowance. Recoveries on loans previously charged
off are added to the allowance.
Credit losses are not estimated for accrued interest receivable as interest that is deemed uncollectible is written off
through interest income.
Allowance for Credit Losses on Lending-Related Commitments
The allowance for credit losses on lending-related commitments estimates current expected credit losses on collective
pools of letters of credit and unused commitments to extend credit based on reserve factors, determined in a manner similar to
business loans, multiplied by a probability of draw estimate, based on historical experience and credit risk, applied to
commitment amounts. The allowance for credit losses on lending-related commitments is included in accrued expenses and
other liabilities on the Consolidated Balance Sheets, with the corresponding charge included in the provision for credit losses on
the Consolidated Statements of Comprehensive Income.
Nonperforming Assets
Nonperforming assets consist of nonaccrual loans, reduced-rate loans and foreclosed property.
A loan is considered past due when the contractually required principal or interest payment is not received by the
specified due date or, for certain loans, when a scheduled monthly payment is past due and unpaid for 30 days or more.
Business loans are generally placed on nonaccrual status when management determines full collection of principal or interest is
unlikely or when principal or interest payments are 90 days past due, unless the loan is fully collateralized and in the process of
collection. The past-due status of a business loan is one of many indicative factors considered in determining the collectibility
F-52
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Comerica Incorporated and Subsidiaries
of the credit. The primary driver of when the principal amount of a business loan should be fully or partially charged-off is
based on a qualitative assessment of the recoverability of the principal amount from collateral and other cash flow sources.
Residential mortgage and home equity loans are generally placed on nonaccrual status once they become 90 days past due and
are charged off to current appraised values less costs to sell no later than 180 days past due. In addition, junior lien home equity
loans less than 90 days past due are placed on nonaccrual status if they have underlying risk characteristics that place full
collection of the loan in doubt, such as when the related senior lien position is identified as seriously delinquent. Residential
mortgage and consumer loans in bankruptcy for which the court has discharged the borrower's obligation and the borrower has
not reaffirmed the debt are placed on nonaccrual status and written down to estimated collateral value, without regard to the
actual payment status of the loan. All other consumer loans are generally placed on nonaccrual status at 90 days past due and
are charged off at no later than 120 days past due, or earlier if deemed uncollectible.
At the time a loan is placed on nonaccrual status, interest previously accrued but not collected is charged against
current income. Principal and interest payments received on such loans are generally first applied as a reduction of principal.
Income on nonaccrual loans is then recognized only to the extent that cash is received after principal has been fully repaid or
future collection of principal is probable. Generally, a loan may be returned to accrual status when all delinquent principal and
interest have been received and the Corporation expects repayment of the remaining contractual principal and interest, or when
the loan or debt security is both well secured and in the process of collection.
Foreclosed property (primarily real estate) is initially recorded at fair value, less costs to sell, at the date of legal title
transfer to the Corporation and subsequently carried at the lower of cost or fair value, less estimated costs to sell. Loans are
reclassified to foreclosed property upon obtaining legal title to the collateral. Independent appraisals are obtained to substantiate
the fair value of foreclosed property at the time of foreclosure and updated at least annually or upon evidence of deterioration in
the property’s value. At the time of foreclosure, the adjustment for the difference between the related loan balance and fair
value (less estimated costs to sell) of the property acquired is charged or credited to the allowance for loan losses. Subsequent
write-downs, operating expenses and losses upon sale, if any, are charged to noninterest expenses. Foreclosed property is
included in accrued income and other assets on the Consolidated Balance Sheets.
Premises and Equipment
Premises and equipment are stated at cost, less accumulated depreciation and amortization. Depreciation, computed
using the straight-line method, is charged to occupancy expenses in the Consolidated Statements of Income over the estimated
useful lives of the assets. Estimated useful lives are generally 3 years to 33 years for premises that the Corporation owns and 3
years to 8 years for furniture and equipment. Leasehold improvements are generally amortized over the terms of their respective
leases or 10 years, whichever is shorter.
Operating Leases
Operating leases with a term greater than one year are recognized as lease liabilities, measured as the present value of
unpaid lease payments for operating leases where the Corporation is the lessee, and corresponding right-of-use (ROU) assets for
the right to use the leased properties. Operating lease liabilities, recorded in accrued expenses and other liabilities, reflect the
Corporation’s obligation to make future lease payments, primarily for real estate locations. Lease terms typically comprise
contractual terms but may include extension options reasonably certain of being exercised at lease inception for certain strategic
locations such as regional headquarters. Payments are discounted using the Corporation's incremental borrowing rate, or the rate
it would pay to borrow amounts equal to the lease payments over the lease term. The Corporation does not separate lease and
non-lease components for contracts in which it is the lessee. ROU assets, recorded in accrued income and other assets, are
measured based on lease liabilities adjusted for incentives as well as accrued and prepaid rent. Operating lease expense is
recognized on a straight-line basis over the lease term, while variable lease payments are recognized as incurred. Common area
maintenance and other executory costs are the main components of variable lease payments. Operating and variable lease
expenses are recorded in net occupancy expense on the Consolidated Statements of Income.
Software
Capitalized software, stated at cost less accumulated amortization, includes purchased software, capitalizable
application development costs associated with internally developed software and cloud computing arrangements, including
capitalizable implementation costs associated with hosting arrangements that are service contracts. Cloud computing
arrangements include software as a service (SaaS), platform as a service (PaaS), infrastructure as a service (IaaS) and other
similar hosting arrangements. The Corporation primarily utilizes SaaS and IaaS arrangements. Capitalized implementation costs
of hosting arrangements that are service contracts were $61 million and $43 million, net of accumulated depreciation of
$14 million and $5 million at December 31, 2023 and December 31, 2022, respectively. Depreciation expense related to these
costs was $9 million and $4 million for the years ended December 31, 2023 and 2022, respectively.
F-53
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Comerica Incorporated and Subsidiaries
Capitalized software is included in accrued income and other assets on the Consolidated Balance Sheets. Amortization
expense, generally computed on the straight-line method, is charged to software expense in the Consolidated Statements of
Income over the estimated useful life of the software, generally five years, or the term of the hosting arrangement for
implementation costs related to service contracts.
Goodwill and Intangibles
Goodwill, included in accrued income and other assets on the Consolidated Balance Sheets, is initially recorded as the
excess of the purchase price over the fair value of net assets acquired in a business combination and is subsequently evaluated at
least annually for impairment. Goodwill impairment testing is performed at the reporting unit level, equivalent to a business
segment or one level below. The Corporation has three reporting units: the Commercial Bank, the Retail Bank and Wealth
Management.
The Corporation performs its annual evaluation of goodwill impairment in the third quarter of each year and may elect
to perform a quantitative impairment analysis or first conduct a qualitative analysis to determine if a quantitative analysis is
necessary. Additionally, the Corporation evaluates goodwill impairment on an interim basis if events or changes in
circumstances between annual tests indicate additional testing may be warranted to determine if goodwill might be impaired.
Factors considered in the assessment of the likelihood of impairment include macroeconomic conditions, industry and market
considerations, stock performance of the Corporation and its peers, financial performance of the reporting units, and previous
results of goodwill impairment tests, amongst other factors. Based on the results of the qualitative analysis, the Corporation
determines whether a quantitative test is necessary. The quantitative test compares the estimated fair value of identified
reporting units with their carrying amount, including goodwill. If the estimated fair value of the reporting unit is less than the
carrying value, an impairment charge would be recorded for the excess, not to exceed the amount of goodwill allocated to the
reporting unit.
Intangibles are amortized on an accelerated basis, based on the estimated period the economic benefits are expected to
be received. Intangibles are reviewed for impairment when events or changes in circumstances indicate that their carrying
amounts may not be recoverable. Impairment for a finite-lived intangible asset exists if the sum of the undiscounted cash flows
expected to result from the use of the asset exceeds its carrying value.
Additional information regarding goodwill and intangibles can be found in Note 7.
Nonmarketable Equity Securities
The Corporation has certain investments that are not readily marketable. These investments include a portfolio of
investments in indirect private equity and venture capital funds and restricted equity investments, which are securities the
Corporation is required to hold for various reasons, primarily Federal Home Loan Bank of Dallas (FHLB) and Federal Reserve
Bank (FRB) stock. These investments are accounted for on the cost or equity method and are included in accrued income and
other assets on the Consolidated Balance Sheets. The investments are individually reviewed for impairment on a quarterly basis.
Indirect private equity and venture capital funds are evaluated for impairment by comparing the carrying value to the estimated
fair value. Impairment is charged to current earnings and the carrying value of the investment is written down accordingly.
FHLB and FRB stock are recorded at cost (par value) and evaluated for impairment based on the ultimate recoverability of the
par value. If the Corporation does not expect to recover the full par value, the amount by which the par value exceeds the
ultimately recoverable value would be charged to current earnings and the carrying value of the investment would be written
down accordingly.
Derivative Instruments and Hedging Activities
Derivative instruments are carried at fair value in either accrued income and other assets or accrued expenses and other
liabilities on the Consolidated Balance Sheets. The accounting for changes in the fair value (i.e., gains or losses) of a derivative
instrument is determined by whether it has been designated and qualifies as part of a hedging relationship and, further, by the
type of hedging relationship. The Corporation presents derivative instruments at fair value on the Consolidated Balance Sheets
on a net basis when a right of offset exists, based on transactions with a single counterparty and any cash collateral paid to and/
or received from that counterparty for derivative contracts that are subject to legally enforceable master netting arrangements.
For derivative instruments designated and qualifying as fair value hedges (i.e., hedging the exposure to changes in the
fair value of an asset or a liability or an identified portion thereof that is attributable to a particular risk), the gain or loss on the
derivative instrument, as well as the offsetting loss or gain on the hedged item attributable to the hedged risk, are recognized in
the same consolidated statement of income line that is used to present the earnings effect of the hedged item during the period
of the change in fair values. For derivative instruments that are designated and qualify as cash flow hedges (i.e., hedging the
exposure to variability in expected future cash flows that is attributable to a particular risk), the gain or loss on the derivative
F-54
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Comerica Incorporated and Subsidiaries
instrument is reported as a component of other comprehensive income and reclassified into earnings in the same consolidated
statement of income line item as the earnings effect of the hedged item in the same period or periods during which the hedged
transaction affects earnings. For derivative instruments not designated as hedging instruments, the gain or loss is recognized in
risk management hedging (loss) income on the Consolidated Statements of Income during the period of change. The net change
in derivatives is included in "other, net" operating activity within the Consolidated Statements of Cash Flows.
To qualify for the use of hedge accounting, a derivative must be effective at inception and expected to be continuously
effective in offsetting the risk being hedged. For derivatives designated as hedging instruments at inception, the Corporation
uses either the short-cut method or applies statistical regression analysis to assess effectiveness. The short-cut method is used
for $1.7 billion of notional of fair value hedges of medium- and long-term debt. This method allows for the assumption of
perfect effectiveness and eliminates the requirement to further assess hedge effectiveness on these transactions. For hedge
relationships to which the Corporation does not apply the short-cut method, statistical regression analysis is used at inception to
assess whether the derivative used is expected to be highly effective in offsetting changes in the fair value or cash flows of the
hedged item. A statistical regression or qualitative analysis is performed at each reporting period thereafter to evaluate hedge
effectiveness. As part of the adoption of Topic 848, certain hedge accounting requirements for qualifying modifications to
derivative instruments due to LIBOR transition were suspended through the completion of LIBOR transition in third quarter
2023. For further information on Topic 848, refer to the "Loans" policy in this Note.
Further information on the Corporation’s derivative instruments and hedging activities is included in Note 8.
Financial Guarantees
Certain guarantee contracts or indemnification agreements that contingently require the Corporation, as guarantor, to
make payments to the guaranteed party are initially measured at fair value and included in accrued expenses and other liabilities
on the Consolidated Balance Sheets. The subsequent accounting for the liability depends on the nature of the underlying
guarantee. The release from risk is accounted for under a particular guarantee when the guarantee expires or is settled, or by a
systematic and rational amortization method.
Further information on the Corporation’s obligations under guarantees is included in Note 8.
Share-Based Compensation
The Corporation recognizes share-based compensation expense using the straight-line method over the requisite
service period, generally based on the instruments' grant-date fair value, for all stock awards, including those with graded
vesting. The requisite service period is the period an employee is required to provide service in order to vest in the award,
which cannot extend beyond the date at which the employee is no longer required to perform any service to receive the share-
based compensation (i.e., the retirement-eligible date). Forfeiture of stock awards and dividend equivalents are accounted for as
they occur.
Certain awards are contingent upon performance and/or market conditions, which affect the number of shares
ultimately issued. The Corporation periodically evaluates the probable outcome of the performance conditions and makes
cumulative adjustments to compensation expense as appropriate. Market conditions are included in the determination of the fair
value of the award on the date of grant. Subsequent to the grant date, market conditions have no impact on the amount of
compensation expense the Corporation will recognize over the life of the award.
Further information on the Corporation’s share-based compensation plans is included in Note 16.
Revenue Recognition
Revenue from contracts with customers comprises the noninterest income earned by the Corporation in exchange for
services provided to customers and is recognized when services are completed or as they are rendered, although contracts are
generally short-term by nature. Services provided over a period of time are typically transferred to customers evenly over the
term of the contracts and revenue is recognized accordingly over the period services are provided. Contract receivables are
included in accrued income and other assets on the Consolidated Balance Sheets. Payment terms vary by services offered, and
the time between completion of performance obligations and payment is typically not significant.
F-55
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Comerica Incorporated and Subsidiaries
Card Fees
Card fees comprise interchange and other fee income earned on government card, commercial card, debit/automated
teller machine card and merchant payment processing programs. Card fees are presented net of network costs, as performance
obligations for card services are limited to transaction processing and settlement with the card network on behalf of the
customers. Fees for these services are primarily based on interchange rates set by the network and transaction volume. The
Corporation also provides ongoing card program support services, for which fees are based on contractually agreed-upon prices
and customer demand for services.
Service Charges on Deposit Accounts
Service charges on deposit accounts comprise charges on retail and business accounts, including fees for treasury
management services. Treasury management services include transaction-based services related to payment processing,
overdrafts, non-sufficient funds and other deposit account activity, as well as account management services that are provided
over time. Business customers can earn credits depending on deposit balances maintained with the Corporation, which may be
used to offset fees. Fees and credits are based on predetermined, agreed-upon rates.
Fiduciary Income
Fiduciary income includes fees and commissions from asset management, custody, recordkeeping, investment
advisory and other services provided primarily to personal and institutional trust customers. Revenue is recognized as the
services are performed and is based either on the market value of the assets managed or the services provided, as well as
agreed-upon rates.
Commercial Lending Fees
Commercial lending fees include both revenue from contracts with customers (primarily loan servicing fees) and other
sources of revenue. Commercial loan servicing fees are based on contractually agreed-upon prices and timing of services
provided. Other sources of revenue in commercial lending fees primarily include fees assessed on the unused portion of
commercial lines of credit (unused commitment fees).
Brokerage Fees
Brokerage fees include commissions earned for facilitating securities transactions for customers, as well as other
brokerage services provided. Revenue is recognized when services are completed and is based on the type of services provided
and agreed-upon rates. The Corporation pays commissions based on brokerage fee revenue. These are typically recognized
when incurred because the amortization period is one year or less and are included in salaries and benefits expense on the
Consolidated Statements of Income As of November 2023, brokerage fees include income from sales of select investment
products of an independent financial services broker, net of commissions passed through to employees licensed by the
independent broker to sell their products.
Other Revenues
Other revenues, consisting primarily of other retail fees, investment banking fees and insurance commissions, are
typically recognized when services or transactions are completed and are based on the type of services provided and agreed-
upon rates.
Except as discussed above, commissions and other incentives paid to employees are generally based on several internal
and external metrics and, as a result, are not solely dependent on revenue generating activities.
F-56
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Comerica Incorporated and Subsidiaries
Defined Benefit Pension and Other Postretirement Costs
Defined benefit pension costs are funded consistent with the requirements of federal laws and regulations. Inherent in
the determination of defined benefit pension costs are assumptions concerning future events that will affect the amount and
timing of required benefit payments under the plans. These include demographic assumptions such as retirement age and
mortality, a compensation rate increase, a discount rate used to determine the current benefit obligation, form of payment
election and a long-term expected rate of return on plan assets. Net periodic defined benefit pension expense includes service
cost, interest cost based on the assumed discount rate, an expected return on plan assets based on an actuarially derived market-
related value of assets (MRVA), amortization of prior service cost or credit and amortization of net actuarial gains or losses.
The MRVA for fixed income securities and private placement assets is based on the fair value of plan assets, whereas the
MRVA for other plan assets is determined by amortizing the current year’s investment gains and losses (the actual investment
return net of the expected investment return) over 5 years. The amortization adjustment cannot exceed 10 percent of the fair
value of assets. Prior service costs or credits include the impact of plan amendments on the liabilities and are amortized over the
future service periods of active employees expected to receive benefits under the plan. Actuarial gains and losses result from
experience different from that assumed and from changes in assumptions (excluding asset gains and losses not yet reflected in
market-related value). Amortization of actuarial gains and losses is included as a component of net periodic defined benefit
pension cost for a year if the actuarial net gain or loss exceeds 10 percent of the greater of the projected benefit obligation or the
market-related value of plan assets. If amortization is required, the excess is amortized over the average remaining service
period of participating employees expected to receive benefits under the plan. Service costs are included in salaries and benefits
expense, while the other components of net periodic defined benefit pension expense are included in other noninterest expenses
on the Consolidated Statements of Income.
Postretirement benefit costs includes service cost, interest cost based on the assumed discount rate, an expected return
on plan assets based on an actuarially derived MRVA, amortization of prior service cost or credit and amortization of net
actuarial gains or losses. The components of postretirement benefit costs follow similar policies and methodologies as defined
benefit pensions costs. Postretirement benefits are recognized in other noninterest expenses on the Consolidated Statements of
Income.
See Note 17 for further information regarding the Corporation’s defined benefit pension and other postretirement
plans.
Income Taxes
The provision for income taxes is the sum of income taxes due for the current year and deferred taxes. The Corporation
classifies interest and penalties on income tax liabilities and excess tax benefits and deficiencies resulting from employee stock
awards in the provision for income taxes on the Consolidated Statements of Income.
Deferred taxes arise from temporary differences between the income tax basis and financial accounting basis of assets
and liabilities. Deferred tax assets are evaluated for realization based on available evidence of projected future reversals of
existing taxable temporary differences, foreign tax credit limitations, assumptions made regarding future events and, when
applicable, state loss carryback capacity. A valuation allowance is provided when it is more likely than not that some portion of
the deferred tax asset will not be realized.
Earnings Per Share
Basic net income per common share is calculated using the two-class method. The two-class method is an earnings
allocation formula that determines earnings per share for each share of common stock and participating securities according to
dividends declared (distributed earnings) and participation rights in undistributed earnings. Distributed and undistributed
earnings are allocated between common and participating security shareholders based on their respective rights to receive
dividends. Nonvested share-based payment awards that contain nonforfeitable rights to dividends or dividend equivalents are
considered participating securities (e.g., certain service-based restricted stock units). Undistributed net losses are not allocated
to nonvested restricted shareholders, as these shareholders do not have a contractual obligation to fund the losses incurred by
the Corporation. Net income attributable to common shares is then divided by the weighted-average number of common shares
outstanding during the period.
Diluted net income per common share is calculated using the more dilutive of either the treasury method or the two-
class method. The dilutive calculation considers common stock issuable under the assumed exercise of stock options and
warrants, as well as service- and performance-based restricted stock units granted under the Corporation’s stock plans using the
treasury stock method, if dilutive. Net income attributable to common shares is then divided by the total of weighted-average
number of common shares and common stock equivalents outstanding during the period.
F-57
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Comerica Incorporated and Subsidiaries
Statements of Cash Flows
Cash and cash equivalents are defined as those amounts included in cash and due from banks and interest-bearing
deposits with banks on the Consolidated Balance Sheets.
Comprehensive Income (Loss)
The Corporation presents on an annual basis the components of net income and other comprehensive income in two
separate, but consecutive statements and presents on an interim basis the components of net income and a total for
comprehensive income in one continuous consolidated statement of comprehensive income.
Recently Issued Accounting Pronouncements
In March 2023, the FASB issued ASU No. 2023-02 "Investments-Equity Method and Joint Ventures (Topic 323):
Accounting for Investments in Tax Credit Structures Using the Proportional Amortization Method (a consensus of the
Emerging Issues Task Force)" (ASU 2023-02). ASU 2023-02 expands the permitted use of the proportional amortization
method, which is currently only available to low-income housing tax credit investments, to other tax equity investments if
certain conditions are met. Under the proportional amortization method, the initial cost of an investment is amortized in
proportion to the income tax benefits received and both the amortization of the investment and the income tax benefits received
are recognized as a component of income tax expense. The Corporation adopted this ASU on January 1, 2024 by applying the
modified retrospective basis of transition or, for certain changes, a prospective basis. The update did not have a material impact
on their financial statements.
In November 2023, the FASB issued ASU No. 2023-07 "Segment Reporting (Topic 280): Improvements to Reportable
Segment Disclosures" (ASU 2023-07). The update requires enhanced disclosures about significant segment expenses, enhanced
interim disclosure requirements, clarification for when multiple segment measures of profit or loss can be disclosed, and other
requirements intended to improve overall reportable segment disclosures in annual and interim periods. ASU 2023-07 is
effective for the Corporation in the annual period beginning on January 1, 2024 and interim periods beginning on January 1,
2025 with retrospective application to all prior periods presented. Early adoption is permitted. The Corporation is evaluating the
impact of ASU 2023-07 on its reportable segment disclosures.
In December 2023, the FASB issued ASU No. 2023-09 "Income Taxes (Topic 740): Improvements to Income Tax
Disclosures" (ASU 2023-09). ASU 2023-09 requires additional annual disclosures including further disaggregation of
information in the rate reconciliation, additional information for reconciling items meeting a quantitative threshold, further
disaggregation of income taxes paid, and other required disclosures. ASU 2023-09 is effective for the Corporation in the annual
period beginning on January 1, 2025 and applied on a prospective basis with both early adoption and retrospective application
permitted. The Corporation is evaluating the impact of ASU 2023-09 on its income tax disclosures.
NOTE 2 – FAIR VALUE MEASUREMENTS
Note 1 contains information about the fair value hierarchy, descriptions of the valuation methodologies and key inputs
used to measure financial assets and liabilities recorded at fair value, as well as a description of the methods and significant
assumptions used to estimate fair value disclosures for financial instruments not recorded at fair value in their entirety on a
recurring basis.
F-58
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Comerica Incorporated and Subsidiaries
Assets and Liabilities Recorded at Fair Value on a Recurring Basis
The following tables present the recorded amount of assets and liabilities measured at fair value on a recurring basis as of
December 31, 2023 and 2022.
(in millions)
December 31, 2023
Level 2
Level 1
Level 3
Total
Deferred compensation plan assets
Equity securities
Investment securities available-for-sale:
U.S. Treasury securities
Residential mortgage-backed securities (a)
Commercial mortgage-backed securities (a)
Total investment securities available-for-sale
Derivative assets:
Interest rate contracts
Energy contracts
Foreign exchange contracts
Total derivative assets
Total assets at fair value
Derivative liabilities:
Interest rate contracts
Energy contracts
Foreign exchange contracts
Other financial derivative liabilities
Total derivative liabilities
Deferred compensation plan liabilities
Total liabilities at fair value
December 31, 2022
Deferred compensation plan assets
Equity securities
Investment securities available-for-sale:
U.S. Treasury securities
Residential mortgage-backed securities (a)
Commercial mortgage-backed securities (a)
Total investment securities available-for-sale
Derivative assets:
Interest rate contracts
Energy contracts
Foreign exchange contracts
Total derivative assets
Total assets at fair value
Derivative liabilities:
Interest rate contracts
Energy contracts
Foreign exchange contracts
Other financial derivative liabilities
Total derivative liabilities
Deferred compensation plan liabilities
Total liabilities at fair value
$
104 $
39
1,605
10,519
4,745
16,869
104 $
39
— $
—
1,605
—
—
1,605
—
10,519
4,745
15,264
225
758
36
1,019
18,031 $
—
—
—
—
1,748 $
225
758
36
1,019
16,283 $
435 $
736
35
12
1,218
104
1,322 $
— $
—
—
—
—
104
104 $
435 $
736
35
—
1,206
—
1,206 $
92 $
44
92 $
44
— $
—
$
$
$
$
2,664
11,655
4,693
19,012
206
1,020
53
1,279
$
20,427 $
$
$
644 $
1,006
45
12
1,707
92
1,799 $
2,664
—
—
2,664
—
—
—
—
2,800 $
— $
—
—
—
—
92
92 $
—
11,655
4,693
16,348
206
1,020
53
1,279
17,627 $
644 $
1,006
45
—
1,695
—
1,695 $
—
—
—
—
—
—
—
—
—
—
—
—
—
—
12
12
—
12
—
—
—
—
—
—
—
—
—
—
—
—
—
—
12
12
—
12
(a)
Issued and/or guaranteed by U.S. government agencies or U.S. government-sponsored enterprises.
There were no transfers of assets or liabilities recorded at fair value on a recurring basis into or out of Level 3 fair
value measurements during the years ended December 31, 2023 and 2022.
F-59
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Comerica Incorporated and Subsidiaries
The following table summarizes the changes in Level 3 assets and liabilities measured at fair value on a recurring basis
for the years ended December 31, 2023 and 2022.
(in millions)
Year Ended December 31, 2023
Derivative liabilities:
Other financial derivative
Year Ended December 31, 2022
Derivative assets:
Interest rate contracts
Derivative liabilities:
Balance at
Beginning
of Period
Net Realized/Unrealized
Gains (Pretax) Recorded
in Earnings (a)
Realized
Unrealized
Settlements
Balance at
End of
Period
$
$
(12) $
— $
— $
— $
(12)
26 $
— $
—
(26) $
—
Other financial derivative
(12)
(a) Realized and unrealized gains and losses due to changes in fair value recorded in other noninterest income on the Consolidated
(13)
1
—
—
Statements of Income.
Assets and Liabilities Recorded at Fair Value on a Nonrecurring Basis
The Corporation may be required to record certain assets and liabilities at fair value on a nonrecurring basis. These
include assets that are recorded at the lower of cost or fair value, and were recognized at fair value since it was less than cost at
the end of the period.
The following table presents assets recorded at fair value on a nonrecurring basis at December 31, 2023 and 2022. No
liabilities were recorded at fair value on a nonrecurring basis at December 31, 2023 and 2022.
(in millions)
December 31, 2023
Loans:
Commercial
Commercial mortgage
International
Total loans
Loans held-for-sale
Other real estate
Total assets at fair value
December 31, 2022
Loans:
Commercial
Real estate construction
Commercial mortgage
Total loans
Other real estate
Total assets at fair value
Level 3
12
16
16
44
231
5
280
53
2
11
66
9
75
$
$
$
$
Level 3 assets recorded at fair value on a nonrecurring basis at December 31, 2023 and December 31, 2022 included
loans with a specific allowance and certain bank property held for sale, both measured based on the fair value of collateral. The
unobservable inputs were the additional adjustments applied by management to the appraised values to reflect such factors as
non-current appraisals and revisions to estimated time to sell. These adjustments are determined based on qualitative judgments
made by management on a case-by-case basis and are not observable inputs, although they are used in the determination of fair
value. At December 31, 2023, loans held-for-sale classified as Level 3 represented loans held-for-sale in less liquid markets
requiring significant management assumptions when determining fair value.
F-60
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Comerica Incorporated and Subsidiaries
Estimated Fair Values of Financial Instruments Not Recorded at Fair Value on a Recurring Basis
The Corporation typically holds the majority of its financial instruments until maturity and thus does not expect to
realize many of the estimated fair value amounts disclosed. The disclosures do not include estimated fair value amounts for
items that are not defined as financial instruments, but which have significant value. These include such items as core deposit
intangibles, the future earnings potential of significant customer relationships and the value of trust operations and other fee
generating businesses. The Corporation believes the imprecision of an estimate could be significant. The disclosures also do not
include a limited amount of nonmarketable equity securities (primarily indirect private equity and venture capital investments)
that do not have a readily determinable fair value and whose fair values are based on net asset value.
The carrying amount and estimated fair value of financial instruments not recorded at fair value in their entirety on a
recurring basis on the Corporation’s Consolidated Balance Sheets are as follows:
(in millions)
December 31, 2023
Assets
Carrying
Amount
Total
Estimated Fair Value
Level 2
Level 1
Level 3
Cash and due from banks
Interest-bearing deposits with banks
Other short-term investments
Total loans, net of allowance for loan losses (a)
$
1,443 $
8,059
24
51,425
1,443 $
8,059
24
50,633
1,443 $
8,059
24
—
— $
—
—
—
—
—
—
50,633
Liabilities
Demand deposits
Time deposits
Total deposits
Short-term borrowings
Medium- and long-term debt
Liabilities for credit-related financial instruments
December 31, 2022
Assets
Cash and due from banks
Interest-bearing deposits with banks
Other short-term investments
Total loans, net of allowance for loan losses (a)
Liabilities
Demand deposits
Time deposits
Total deposits
Short-term borrowings
Medium- and long-term debt
58,476
8,286
66,762
3,565
6,206
58,476
8,391
66,867
3,565
6,207
(72)
(72)
—
—
—
3,565
—
—
58,476
8,391
66,867
—
6,207
—
—
—
—
—
—
(72)
$
1,758 $
4,524
19
52,792
1,758 $
4,524
19
50,964
1,758 $
4,524
19
—
— $
—
—
—
—
—
—
50,964
69,460
1,937
71,397
3,211
3,024
69,460
1,894
71,354
3,211
3,071
—
—
—
3,211
—
—
69,460
1,894
71,354
—
3,071
—
—
—
—
—
—
(79)
Liabilities for credit-related financial instruments
(79)
(79)
(a)
Included $44 million and $66 million of loans recorded at fair value on a nonrecurring basis at December 31, 2023 and 2022,
respectively.
F-61
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Comerica Incorporated and Subsidiaries
NOTE 3 - INVESTMENT SECURITIES
A summary of the Corporation’s investment securities follows:
Issued and/or guaranteed by U.S. government agencies or U.S. government-sponsored enterprises.
A summary of the Corporation’s investment securities in an unrealized loss position as of December 31, 2023 and
2022 follows:
(in millions)
December 31, 2023
Investment securities available-for-sale:
U.S. Treasury securities
Residential mortgage-backed securities (a)
Commercial mortgage-backed securities (a)
Total investment securities available-for-sale
December 31, 2022
Investment securities available-for-sale:
U.S. Treasury securities
Residential mortgage-backed securities (a)
Commercial mortgage-backed securities (a)
Total investment securities available-for-sale
(a)
(in millions, except securities count)
December 31, 2023
U.S. Treasury securities
Residential mortgage-backed securities (a)
Commercial mortgage-backed securities (a)
Total temporarily impaired securities
December 31, 2022
U.S. Treasury securities
Residential mortgage-backed securities (a)
Commercial mortgage-backed securities (a)
Total temporarily impaired securities
(a)
Amortized
Cost
Gross
Unrealized
Gains
Gross
Unrealized
Losses
Fair Value
$
$
$
$
1,681 $
12,607
5,253
19,541 $
2,810 $
13,983
5,252
22,045 $
— $
—
—
— $
— $
—
—
— $
76 $
2,088
508
2,672 $
146 $
2,328
559
3,033 $
1,605
10,519
4,745
16,869
2,664
11,655
4,693
19,012
Less than 12 Months
12 Months or more
Total
Fair
Value
Unrealized
Losses
Fair
Value
Unrealized
Losses
Fair
Value
Unrealized
Losses
Count
$ — $
10
—
10 $
$
996 $
$
3,500
4,008
$ 8,504 $
— $ 1,605 $
10,507
—
—
4,745
— $ 16,857 $
76 $ 1,605 $
10,517
4,745
2,088
508
2,672 $ 16,867 $
76
2,088
508
19
978
253
2,672 1,250
5 $ 1,668 $
8,153
685
361
405
771 $ 10,506 $
141 $ 2,664 $
1,967
154
11,653
4,693
2,262 $ 19,010 $
146
27
2,328 1,008
254
3,033 1,289
559
Issued and/or guaranteed by U.S. government agencies or U.S. government-sponsored enterprises.
Unrealized losses on investment securities resulted from changes in market interest rates. The Corporation’s portfolio
is comprised of securities issued or guaranteed by the U.S. government agencies or government-sponsored enterprises. As such,
it is expected that the securities would not be settled at a price less than the amortized cost of the investments. Further, the
Corporation does not intend to sell the investments, and it is not more-likely-than-not that it will be required to sell the
investments before recovery of amortized costs. No allowance for credit losses was recorded on securities in an unrealized loss
position at December 31, 2023 or December 31, 2022.
Interest receivable on investment securities totaled $40 million and $49 million at December 31, 2023 and 2022,
respectively, and was included in accrued income and other assets on the Consolidated Balance Sheets.
Sales, calls and write-downs of investment securities available-for-sale, computed based on the adjusted cost of the
specific security, resulted in no gains or losses during the years ended December 31, 2023, 2022 and 2021.
F-62
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Comerica Incorporated and Subsidiaries
The following table summarizes the amortized cost and fair values of investment securities by contractual maturity.
Securities with multiple maturity dates are classified in the period of final maturity. The actual cash flows of mortgage-backed
securities may differ as borrowers of the underlying loans may exercise prepayment options. Expected maturities will differ
from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or
prepayment penalties.
(in millions)
December 31, 2023
Contractual maturity
Within one year
After one year through five years
After five years through ten years
After ten years
Total investment securities
Amortized Cost
Fair Value
$
$
813 $
1,098
5,380
12,250
19,541 $
790
1,034
4,869
10,176
16,869
At December 31, 2023, investment securities with a carrying value of $15.6 billion were pledged where permitted or
required by law. Pledges included $7.7 billion to the Federal Reserve Bank (FRB) for potential future borrowings, $6.6 billion
to the Federal Home Loan Bank (FHLB) as collateral for current advances and potential future borrowings as well as
$1.3 billion to secure $702 million of liabilities, consisting of trust deposits, deposits of public entities and state and local
government agencies as well as derivative instruments. For information on FHLB borrowings, refer to Notes 11 and 12.
F-63
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Comerica Incorporated and Subsidiaries
NOTE 4 – CREDIT QUALITY AND ALLOWANCE FOR CREDIT LOSSES
The following table presents an aging analysis of the amortized cost basis of loans.
(in millions)
December 31, 2023
Business loans:
Commercial
Real estate construction:
Loans Past Due and Still Accruing
30-59
Days
60-89
Days
90 Days
or More
Total
Nonaccrual
Loans
Current
Loans
Total
Loans
$
48 $
14 $
10 $
72 $
75 $
27,104 $ 27,251
Commercial Real Estate business line (a)
Other business lines (b)
Total real estate construction
—
3
3
—
—
—
—
—
—
—
3
3
—
2
2
18
23
41
—
20
138
4,570
508
5,078
4,704
8,866
13,570
803
1,081
47,636
4,570
513
5,083
4,727
8,959
13,686
807
1,102
47,929
19
1,854
1,889
21
—
21
40
178 $
1,792
1,755
503
472
2,295
2,227
4,081
4,184
51,717 $ 52,113
—
3
3
1
22
23
—
3
171
2,505
595
3,100
4,674
8,531
13,205
754
1,185
48,740
2,505
600
3,105
4,681
8,625
13,306
760
1,197
49,277
53
1,739
1,814
15
1
16
69
240 $
1,754
528
2,282
4,021
1,776
535
2,311
4,125
52,761 $ 53,402
Commercial mortgage:
Commercial Real Estate business line (a)
Other business lines (b)
Total commercial mortgage
Lease financing
International
Total business loans
Retail loans:
Residential mortgage
Consumer:
Home equity
Other consumer
Total consumer
Total retail loans
Total loans
December 31, 2022
Business loans:
Commercial
Real estate construction:
5
49
54
4
—
109
—
12
12
—
—
26
—
9
9
—
1
20
10
6
—
11
31
42
52
$ 161 $
5
—
5
11
37 $
—
—
—
—
20 $ 218 $
Commercial Real Estate business line (a)
Other business lines (b)
Total real estate construction
—
2
2
—
—
—
—
—
—
—
2
2
Commercial mortgage:
Commercial Real Estate business line (a)
Other business lines (b)
Total commercial mortgage
Lease financing
International
Total business loans
Retail loans:
Residential mortgage
Consumer:
Home equity
Other consumer
Total consumer
Total retail loans
—
64
64
6
—
310
6
5
11
—
9
33
—
3
3
—
—
23
22
—
—
4
5
9
31
$ 341 $
—
—
—
—
3
1
4
4
37 $
Total loans
(a) Primarily loans to real estate developers.
(b) Primarily loans secured by owner-occupied real estate.
23 $ 401 $
5
70
75
4
1
155
16
16
31
47
63
6
72
78
6
9
366
22
7
6
13
35
F-64
$ 238 $
13 $
20 $ 271 $
142 $
30,496 $ 30,909
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Comerica Incorporated and Subsidiaries
The following table presents loans by credit quality indicator and vintage year. Credit quality indicator is based on
internal risk ratings assigned to each business loan at the time of approval and subjected to subsequent reviews, generally at
least annually, and to pools of retail loans with similar risk characteristics. Vintage year is the year of origination or major
modification.
December 31, 2023
Vintage Year
2023
2022
2021
2020
2019
Prior
Revolvers
Revolvers
Converted
to Term
Total
(in millions)
Business loans:
Commercial:
Pass (a)
Criticized (b)
Total commercial
Commercial gross charge-offs
Real estate construction
Pass (a)
Criticized (b)
Total real estate construction
Real estate construction gross charge-offs
Commercial mortgage
Pass (a)
Criticized (b)
Total commercial mortgage
Commercial mortgage gross charge-offs
Lease financing
Pass (a)
Criticized (b)
Total lease financing
Lease financing gross charge-offs
International
Pass (a)
Criticized (b)
Total international
International gross charge-offs
Total business loans
Retail loans:
Residential mortgage
Pass (a)
Criticized (b)
Total residential mortgage
Residential mortgage gross charge-offs
Consumer:
Home equity
Pass (a)
Criticized (b)
Total home equity
Home equity gross charge-offs
Other consumer
Pass (a)
Criticized (b)
Total other consumer
Other consumer gross charge-offs
Total consumer
Total retail loans
Total loans
$ 3,105
85
3,190
1
503
2
505
—
1,680
15
1,695
—
173
5
178
—
286
15
301
12
5,869
254
2
256
—
—
—
—
—
23
—
23
—
23
3,182
11
2,205
53
2,258
—
3,129
232
3,361
—
319
8
327
—
168
2
170
—
9,298
296
—
296
—
—
—
—
—
38
—
38
—
38
(
b
$ 3,013
)
169
(
b
$ 2,072
)
226
(
b
$
)
593 $
42
610 $ 1,033 $
59
75
15,394 $
760
2,298
2
1,581
34
1,615
—
635
1
329
2
331
—
669
11
1,108
12
16,154
3
43
7
50
—
36
—
36
—
2,173
99
2,272
—
1,786
34
1,820
—
981
248
1,229
3
2,271
141
2,412
1
110
3
113
—
47
3
50
—
34
7
41
—
94
4
98
—
89
7
96
—
6,394
35
—
35
—
2,871
76
—
76
—
2,065
2
6
8
1
3,662
415
1
416
—
17,755
373
1
374
—
—
—
—
—
22
—
22
—
22
450
—
450
—
—
—
—
—
8
—
8
—
8
131
—
131
—
—
—
—
—
4
—
4
1
4
360
22
382
—
8
—
8
—
46
—
46
—
54
288
—
288
—
893
4
897
—
—
—
—
—
—
—
—
—
1,695
28
1,723
2
362
—
362
—
2,085
2,085
13 $ 25,833
1,418
2
15
1
27,251
42
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
15
—
—
—
—
59
2
61
—
—
—
—
—
61
61
4,985
98
5,083
—
12,913
773
13,686
4
777
30
807
—
1,071
31
1,102
13
47,929
1,864
25
1,889
—
1,762
30
1,792
2
503
—
503
1
2,295
4,184
279
334
396
458
135
436
$ 6,148 $ 9,632 $ 6,790 $ 3,329 $ 2,200 $ 4,098 $
19,840 $
76 $ 52,113
Table continues on the following page.
F-65
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Comerica Incorporated and Subsidiaries
December 31, 2022
Vintage Year
2022
2021
2020
2019
2018
Prior
Revolvers
Revolvers
Converted
to Term
Total
$ 3,946
75
4,021
(
b
$
)
(
b
$ 3,509
)
274
3,783
917 $ 1,041 $
81
998
69
1,110
598 $ 1,030 $
45
643
78
1,108
18,604 $
632
19,236
9 $ 29,654
1,255
1
30,909
10
836
—
836
3,349
7
3,356
316
10
326
317
12
329
8,868
327
4
331
—
—
—
69
—
69
69
400
1,134
—
1,134
2,501
5
2,506
140
—
140
161
—
161
7,724
398
—
398
—
—
—
38
—
38
38
436
633
3
636
162
—
162
102
—
102
28
—
28
1,825
7
1,832
1,394
32
1,426
1,050
31
1,081
2,182
75
2,257
64
2
66
47
8
55
37
5
42
130
1
131
207
—
207
838
10
848
—
—
—
55
3
58
3,590
88
—
88
2,841
19
3
22
1,890
14
10
24
3,548
498
17
515
20,806
480
—
480
—
—
—
50
—
50
50
530
133
9
142
—
—
—
8
1
9
9
151
68
1
69
—
—
—
1
—
1
1
70
355
39
394
9
—
9
10
—
10
19
413
—
—
—
1,708
17
1,725
355
3
358
2,083
2,083
$ 9,268 $ 8,160 $ 4,120 $ 2,992 $ 1,960 $ 3,961 $
22,889 $
—
—
—
—
—
—
—
—
—
—
—
—
10
—
—
—
40
2
42
3,102
3
3,105
13,139
167
13,306
734
26
760
1,152
45
1,197
49,277
1,761
53
1,814
1,757
19
1,776
531
—
4
—
535
—
2,311
42
42
4,125
52 $ 53,402
Business loans:
Commercial:
Pass (a)
Criticized (b)
Total commercial
Real estate construction:
Pass (a)
Criticized (b)
Total real estate construction
Commercial mortgage:
Pass (a)
Criticized (b)
Total commercial mortgage
Lease financing
Pass (a)
Criticized (b)
Total lease financing
International
Pass (a)
Criticized (b)
Total international
Total business loans
Retail loans:
Residential mortgage
Pass (a)
Criticized (b)
Total residential mortgage
Consumer:
Home equity
Pass (a)
Criticized (b)
Total home equity
Other consumer
Pass (a)
Criticized (b)
Total other consumer
Total consumer
Total retail loans
Total loans
(a)
(b)
Includes all loans not included in the categories of special mention, substandard or nonaccrual.
Includes loans with an internal rating of special mention, substandard loans for which the accrual of interest has not been discontinued
and nonaccrual loans. Special mention loans have potential credit weaknesses that deserve management’s close attention, such as loans
to borrowers who may be experiencing financial difficulties that may result in deterioration of repayment prospects from the borrower at
some future date. Accruing substandard loans have a well-defined weakness, or weaknesses, such as loans to borrowers who may be
experiencing losses from operations or inadequate liquidity of a degree and duration that jeopardizes the orderly repayment of the loan.
Substandard loans are also distinguished by the distinct possibility of loss in the future if these weaknesses are not corrected.
Nonaccrual loans are loans for which the accrual of interest has been discontinued. For further information regarding nonaccrual
loans, refer to the Nonperforming Assets subheading in Note 1 - Basis of Presentation and Accounting Policies. These categories are
generally consistent with the "special mention" and "substandard" categories as defined by regulatory authorities. A minority of
nonaccrual loans are consistent with the "doubtful" category.
Loan interest receivable totaled $313 million and $261 million at December 31, 2023 and 2022, respectively, and was
included in accrued income and other assets on the Consolidated Balance Sheets.
F-66
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Comerica Incorporated and Subsidiaries
Allowance for Credit Losses
The following table details the changes in the allowance for credit losses.
Business
Loans
2023
Retail
Loans
Total
Business
Loans
2022
Retail
Loans
Total
Business
Loans
2021
Retail
Loans
Total
(in millions)
Years Ended December 31,
Balance at beginning of period:
Allowance for loan losses
$ 541
$ 69
$ 610
$ 531
$ 57
$ 588
$ 895
$ 53
$ 948
Allowance for credit losses on
lending-related commitments
Allowance for credit losses
Loan charge-offs
Recoveries on loans previously
charged-off
Net loan (charge-offs) recoveries
Provision for credit losses:
Provision for loan losses
Provision for credit losses on
lending-related commitments
Provision for credit losses
Balance at end of period:
40
581
(59)
38
(21)
11
80
(3)
2
(1)
51
661
(62)
24
555
(65)
40
(22)
47
(18)
100
—
100
(9)
91
(2)
(2)
(11)
89
28
16
44
6
63
(3)
4
1
11
5
16
30
618
(68)
35
930
(67)
51
(17)
76
9
9
62
(3)
4
1
44
992
(70)
80
10
39
(373)
3
(370)
21
60
(11)
(384)
(3)
—
(14)
(384)
Allowance for loan losses
620
68
688
541
69
610
531
57
588
Allowance for credit losses on
lending-related commitments
Allowance for credit losses
Allowance for loan losses as a
percentage of total loans
Allowance for credit losses as a
percentage of total loans
31
$ 651
9
$ 77
40
$ 728
40
$ 581
11
$ 80
51
$ 661
24
$ 555
6
$ 63
30
$ 618
1.29%
1.63%
1.32%
1.10%
1.67%
1.14%
1.17%
1.47%
1.19%
1.36
1.85
1.40
1.18
1.96
1.24
1.22
1.63
1.26
F-67
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Comerica Incorporated and Subsidiaries
Nonaccrual Loans
The following table presents additional information regarding nonaccrual loans. Interest income of $9 million,
$12 million and $11 million was recognized on nonaccrual loans for the years ended December 31, 2023, 2022 and 2021,
respectively.
(in millions)
December 31, 2023
Business loans:
Commercial
Real estate construction:
Other business lines (a)
Commercial mortgage:
Commercial Real Estate business line (b)
Other business lines (a)
Total commercial mortgage
International
Total business loans
Retail loans:
Residential mortgage
Consumer:
Home equity
Total consumer
Total retail loans
Total nonaccrual loans
December 31, 2022
Business loans:
Commercial
Real estate construction:
Other business lines (a)
Commercial mortgage:
Commercial Real Estate business line (b)
Other business lines (a)
Total commercial mortgage
International
Total business loans
Retail loans:
Residential mortgage
Consumer:
Home equity
Other consumer
Total consumer
Total retail loans
Total nonaccrual loans
(a) Primarily loans secured by owner-occupied real estate.
(b) Primarily loans to real estate developers.
Foreclosed Properties
Nonaccrual
Loans with
No Related
Allowance
Nonaccrual
Loans with
Related
Allowance
Total
Nonaccrual
Loans
$
47 $
28 $
2
—
17
17
3
69
19
—
18
6
24
17
69
—
21
21
40
109 $
—
—
—
69 $
75
2
18
23
41
20
138
19
21
21
40
178
$
$
64 $
78 $
142
—
—
4
4
3
71
53
15
1
16
69
$
140 $
3
1
18
19
—
100
—
—
—
—
—
100 $
3
1
22
23
3
171
53
15
1
16
69
240
Foreclosed properties were insignificant at December 31, 2023 and December 31, 2022. Retail loans secured by
residential real estate properties in process of foreclosure included in nonaccrual loans were insignificant at December 31, 2023
and December 31, 2022.
F-68
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Comerica Incorporated and Subsidiaries
Loan Modifications Made to Borrowers Experiencing Financial Difficulty
Effective January 1, 2023, the Corporation adopted the provisions of ASU 2022-02, which eliminated the accounting
for TDRs while expanding loan modification and vintage disclosure requirements. The update specifically required additional
disclosures on loan modifications to borrowers experiencing financial difficulties that involved an interest rate reduction, other-
than-insignificant payment delay, a term extension, principal forgiveness or a combination thereof.
The following table displays the amortized cost basis at December 31, 2023 of loan modifications made to borrowers
experiencing financial difficulty that were restructured during the year ended December 31, 2023 by type of modification.
(in millions)
Year Ended December 31, 2023
Business loans:
Commercial
Real estate construction:
Other business lines (c)
Total real estate construction
Commercial mortgage:
Other business lines (c)
Total commercial mortgage
Total business loans
Retail loans:
Consumer:
Home equity
Total consumer
Total retail loans
Total loans
Term
Extension (a)
Payment
Delay (a)
Interest Rate
Reduction
Combinations
(b)
Total
Percent of
Total Class
$
92 $
20 $
10 $
2 $
124
0.46 %
10
10
15
15
117
—
—
—
—
20
1
1
1
118 $
—
—
—
20 $
$
—
—
—
—
10
1
1
1
—
—
10
10
12
1
1
1
11 $
13 $
10
10
25
25
159
3
3
3
162
1.92
0.19
0.28
0.18
0.33
0.16
0.13
0.07
0.31 %
(a) Represents loan balances where terms were extended or payments were delayed by a more than an insignificant time period, typically more than 180
days, at or above contractual interest rates. See Note 1 to the consolidated financial statements for further information.
(b) Relates to FDMs where more than one type of modification was made. For the year ended December 31, 2023, this primarily related to modifications
where the interest rate was reduced and the term was extended.
(c) Primarily loans secured by owner-occupied real estate.
There were no commitments to lend additional funds to borrowers experiencing financial difficulty whose terms had
been restructured at December 31, 2023.
F-69
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Comerica Incorporated and Subsidiaries
The following table summarizes the financial impacts of loan modifications made to specific loans during the year
ended December 31, 2023.
Weighted-Average Term
Extension
(in months)
Weighted-Average Interest
Rate Reduction
Year Ended December 31, 2023
Business loans:
Commercial
Real estate construction:
Other business lines (a)
Total real estate construction
Commercial mortgage:
Other business lines (a)
Total commercial mortgage
Total business loans
Retail loans:
Consumer:
Home equity
Total consumer
Total retail loans
Total loans
10.4
9.3
9.3
17.6
17.6
11.7
145.4
145.4
145.4
13.1
(2.01) %
—
—
(0.68)
(0.68)
(1.35)
(3.01)
(3.01)
(3.01)
(1.49) %
(a) Primarily loans secured by owner-occupied real estate.
During the year ended December 31, 2023, modifications to borrowers experiencing financial difficulty included
restructurings with other-than-insignificant payment delays of $6 million in the Commercial loan category.
On an ongoing basis, the Corporation monitors the performance of modified loans related to their restructured terms.
Loans restructured during the year ended December 31, 2023 were current under modified terms at year ended December 31,
2023. Nonperforming restructured loans are classified as nonaccrual loans and are individually evaluated in the allowance for
loan losses.
For restructured loans, a subsequent payment default is defined in terms of delinquency, when a principal or interest
payment is 90 days past due or classified into nonaccrual status during the reporting period. Of the loans restructured during the
12 month period ended December 31, 2023, there were no subsequent defaults as of December 31, 2023.
F-70
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Comerica Incorporated and Subsidiaries
Troubled Debt Restructurings Prior to the Adoption of ASU 2022-02
The following table details the amortized cost basis at December 31, 2022 of loans considered to be TDRs that were
restructured during the year ended December 31, 2022 by type of modification. In cases of loans with more than one type of
modification, the loans were categorized based on the most significant modification.
(in millions)
Year Ended December 31, 2022
Business loans:
Commercial
Real estate construction:
Other business lines (b)
Commercial mortgage:
Other business lines (b)
Total business loans
Retail loans:
Residential mortgage
Consumer:
Home equity (c)
Other consumer
Total consumer
Total retail loans
Total loans
Type of Modification
Principal Deferrals (a)
Interest Rate Reductions
Total Modifications
$
26 $
— $
3
14
43
—
1
—
1
1
44 $
—
—
—
27
1
1
2
29
29 $
$
26
3
14
43
27
2
1
3
30
73
(a) Primarily represents loan balances where terms were extended by more than an insignificant time period, typically more than 180 days,
at or above contractual interest rates. Also includes commercial loans restructured in bankruptcy.
(b) Primarily loans secured by owner-occupied real estate.
(c)
Includes bankruptcy loans for which the court has discharged the borrower's obligation and the borrower has not reaffirmed the debt.
The Corporation charges interest on principal balances outstanding during deferral periods. Additionally, none of the
modifications involved forgiveness of principal. There were no significant commitments to lend additional funds to borrowers
whose terms have been modified in TDRs at December 31, 2022.
For principal deferrals, incremental deterioration in the credit quality of the loan, represented by a downgrade in the
risk rating of the loan, for example, due to missed interest payments or a reduction of collateral value, was considered a
subsequent default. For interest rate reductions, a subsequent payment default was defined in terms of delinquency, when a
principal or interest payment was 90 days past due. Of the TDRs modified during the year ended December 31, 2022, there
were $6 million of subsequent defaults of principal deferrals and no subsequent defaults of interest rate reductions.
NOTE 5 - SIGNIFICANT GROUP CONCENTRATIONS OF CREDIT RISK
Concentrations of credit risk may exist when a number of borrowers are engaged in similar activities, or activities in
the same geographic region, and have similar economic characteristics that would cause them to be similarly impacted by
changes in economic or other conditions. Concentrations of both on-balance sheet and off-balance sheet credit risk are
controlled and monitored as part of credit policies. The Corporation is a regional financial services holding company with a
geographic concentration of its on-balance-sheet and off-balance-sheet activities in Michigan, California and Texas.
F-71
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Comerica Incorporated and Subsidiaries
At December 31, 2023, the Corporation's concentration of credit risk with the commercial real estate industry, which
includes a portfolio of real estate construction and commercial mortgage loans, represented 36 percent of total loans. The
following table summarizes the Corporation's commercial real estate loan portfolio by loan category.
(in millions)
December 31
Real estate construction loans:
Commercial Real Estate business line (a)
Other business lines (b)
Total real estate construction loans
Commercial mortgage loans:
Commercial Real Estate business line (a)
Other business lines (b)
Total commercial mortgage loans
Total commercial real estate loans
Total unused commitments on commercial real estate loans
(a) Primarily loans to real estate developers.
(b) Primarily loans secured by owner-occupied real estate.
2023
2022
$
$
$
4,570 $
513
5,083
4,727
8,959
13,686
18,769 $
4,382 $
2,505
600
3,105
4,681
8,625
13,306
16,411
6,602
The Corporation also has a concentration of credit risk with the automotive industry, which represented 14 percent of
total loans at December 31, 2023. Outstanding loans, included in commercial loans on the Consolidated Balance Sheets, and
total exposure (outstanding loans, unused commitments and standby letters of credit) to companies related to the automotive
industry were as follows:
(in millions)
December 31
Automotive loans:
Production
Dealer
Total automotive loans
Total automotive exposure:
Production
Dealer
Total automotive exposure
NOTE 6 - PREMISES AND EQUIPMENT
A summary of premises and equipment by major category follows:
(in millions)
December 31
Land
Buildings and improvements
Furniture and equipment
Total cost
Less: Accumulated depreciation and amortization
Net book value
2023
2022
848 $
6,191
7,039 $
1,744 $
10,418
12,162 $
1,068
5,367
6,435
2,028
10,910
12,938
2023
2022
81 $
768
536
1,385
(940)
445 $
81
737
518
1,336
(936)
400
$
$
$
$
$
$
The Corporation conducts a portion of its business from leased facilities and leases certain equipment. Refer to Note
25 for more information on leased facilities and equipment.
Other assets included unamortized capitalized software costs of $106 million and $83 million at December 31, 2023
and 2022, respectively. Noninterest expenses included software amortization expense of $26 million, $25 million and $33
million for the years ending December 31, 2023, 2022 and 2021, respectively.
F-72
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Comerica Incorporated and Subsidiaries
NOTE 7 - GOODWILL AND INTANGIBLES
The following table summarizes the carrying value of goodwill by reporting unit for the years ended December 31,
2023 and 2022.
(in millions)
December 31
Commercial Bank
Retail Bank
Wealth Management
Total
2023
2022
$
$
473 $
101
61
635 $
473
101
61
635
The Corporation performs its annual evaluation of goodwill impairment in the third quarter of each year and may elect
to perform a quantitative impairment analysis or first conduct a qualitative analysis to determine if a quantitative analysis is
necessary. In addition, the Corporation evaluates goodwill impairment on an interim basis if events or changes in circumstances
between annual tests indicate additional testing may be warranted to determine if goodwill might be impaired.
In 2023 and 2022, the annual test of goodwill impairment was performed as of the beginning of the third quarter, and
in both periods, a qualitative assessment resulted in the Corporation determining goodwill was not impaired, as it was more
likely than not that the fair value of each reporting unit exceeded its carrying value.
NOTE 8 - DERIVATIVE AND CREDIT-RELATED FINANCIAL INSTRUMENTS
In the normal course of business, the Corporation enters into various transactions involving derivative and credit-
related financial instruments to manage exposure to fluctuations in interest rate, foreign currency and other market risks and to
meet the financing needs of customers (customer-initiated derivatives). These financial instruments involve, to varying degrees,
elements of market and credit risk. Market and credit risk are included in the determination of fair value.
Market risk is the potential loss that may result from movements in interest rates, foreign currency exchange rates or
energy commodity prices that cause an unfavorable change in the value of a financial instrument. The Corporation manages this
risk by establishing monetary exposure limits and monitoring compliance with those limits. Market risk inherent in interest rate
and energy contracts entered into on behalf of customers is mitigated by taking offsetting positions, except in those
circumstances when the amount, tenor and/or contract rate level results in negligible economic risk, whereby the cost of
purchasing an offsetting contract is not economically justifiable. The Corporation mitigates most of the inherent market risk in
foreign exchange contracts entered into on behalf of customers by taking offsetting positions and manages the remainder
through individual foreign currency position limits and aggregate value-at-risk limits. These limits are established annually and
positions are monitored quarterly. Market risk inherent in derivative instruments held or issued for risk management purposes is
typically offset by changes in the fair value of the assets or liabilities being hedged.
Credit risk is the possible loss that may occur in the event of nonperformance by the counterparty to a financial
instrument. The Corporation attempts to minimize credit risk arising from customer-initiated derivatives by evaluating the
creditworthiness of each customer, adhering to the same credit approval process used for traditional lending activities and
obtaining collateral as deemed necessary. Derivatives with dealer counterparties are either cleared through a clearinghouse or
settled directly with a single counterparty. For derivatives settled directly with dealer counterparties, the Corporation utilizes
counterparty risk limits and monitoring procedures as well as master netting arrangements and bilateral collateral agreements to
facilitate the management of credit risk.
Included in the fair value of derivative instruments are credit valuation adjustments reflecting counterparty credit risk.
These adjustments are determined by applying a credit spread for the counterparty or the Corporation, as appropriate, to the
total expected exposure of the derivative. Master netting arrangements effectively reduce credit valuation adjustments by
permitting settlement of positive and negative positions and offset cash collateral held with the same counterparty on a net
basis. Bilateral collateral agreements require daily exchange of cash or highly rated securities issued by the U.S. Treasury or
other U.S. government entities to collateralize amounts due to either party. At December 31, 2023, counterparties with bilateral
collateral agreements deposited $143 million of cash with the Corporation to secure the fair value of contracts in an unrealized
gain position, and the Corporation had pledged $4 million of marketable investment securities and posted $14 million of cash as
collateral for contracts in an unrealized loss position. For those counterparties not covered under bilateral collateral agreements,
collateral is obtained, if deemed necessary, based on the results of management’s credit evaluation of the counterparty.
Collateral varies, but may include cash, investment securities, accounts receivable, equipment or real estate.
F-73
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Comerica Incorporated and Subsidiaries
Derivative Instruments
Derivative instruments utilized by the Corporation are negotiated over-the-counter and primarily include swaps, caps
and floors, forward contracts and options, each of which may relate to interest rates, energy commodity prices or foreign
currency exchange rates. Swaps are agreements in which two parties periodically exchange cash payments based on specified
indices applied to a specified notional amount until a stated maturity. Caps and floors are agreements which entitle the buyer to
receive cash payments based on the difference between a specified reference rate or price and an agreed strike rate or price,
applied to a specified notional amount until a stated maturity. Forward contracts are over-the-counter agreements to buy or sell
an asset at a specified future date and price. Options are similar to forward contracts except the purchaser has the right, but not
the obligation, to buy or sell the asset during a specified period or at a specified future date.
Over-the-counter contracts are tailored to meet the needs of the counterparties involved and, therefore, contain a
greater degree of credit risk and liquidity risk than exchange-traded contracts, which have standardized terms and readily
available price information. The Corporation reduces exposure to market and liquidity risks from over-the-counter derivative
instruments entered into for risk management purposes, and transactions entered into to mitigate the market risk associated with
customer-initiated transactions, by taking offsetting positions with investment grade domestic and foreign financial institutions
and subjecting counterparties to credit approvals, limits and collateral monitoring procedures similar to those used in making
other extensions of credit. In addition, certain derivative contracts executed bilaterally with a dealer counterparty in the over-
the-counter market are cleared through a clearinghouse, whereby the clearinghouse becomes the counterparty to the transaction.
F-74
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Comerica Incorporated and Subsidiaries
The following table presents the composition of the Corporation’s derivative instruments held or issued for risk
management purposes or in connection with customer-initiated and other activities at December 31, 2023 and 2022. The table
excludes a derivative related to the Corporation's 2008 sale of its remaining ownership of Visa shares and includes accrued
interest receivable and payable.
(in millions)
Risk management purposes
Derivatives designated as hedging instruments
Interest rate contracts:
Fair value swaps - receive fixed/
pay floating
Cash flow swaps - receive fixed/
pay floating (b)
Derivatives used as economic hedges
Foreign exchange contracts:
Spot, forwards and swaps
Total risk management purposes
Customer-initiated and other activities
Interest rate contracts:
Caps and floors written
Caps and floors purchased
Swaps
Total interest rate contracts
Energy contracts:
Caps and floors written
Caps and floors purchased
Swaps
Total energy contracts
Foreign exchange contracts:
Spot, forwards, options and swaps
Total customer-initiated and other activities
Total gross derivatives
$
Amounts offset in the Consolidated Balance
Sheets:
Netting adjustment - Offsetting
derivative assets/liabilities
Netting adjustment - Cash collateral
received/posted
Net derivatives included in the Consolidated
Balance Sheets (c)
Amounts not offset in the Consolidated
Balance Sheets:
Marketable securities pledged under
bilateral collateral agreements
Net derivatives after deducting amounts not
offset in the Consolidated Balance Sheets
December 31, 2023
December 31, 2022
Fair Value
Fair Value
Notional/
Contract
Amount (a)
Gross
Derivative
Assets
Gross
Derivative
Liabilities
Notional/
Contract
Amount (a)
Gross
Derivative
Assets
Gross
Derivative
Liabilities
$
6,300 $
— $
— $
3,150 $
— $
24,850
—
8
26,600
—
560
31,710
1,577
1,577
19,316
22,470
3,719
3,719
6,368
13,806
2,751
39,027
70,737
1
1
—
18
207
225
3
292
463
758
3
11
392
30,142
1
1
18
—
409
427
291
3
442
736
924
924
18,450
20,298
4,051
4,051
6,419
14,521
—
25
181
206
—
431
589
1,020
52
1,278
1,279
35
1,018
1,019
32
1,195
1,206 $
2,704
37,523
67,665
—
50
3
53
25
—
569
594
430
—
576
1,006
42
1,642
1,695
(311)
(311)
(644)
(644)
(143)
(13)
(180)
(4)
565
882
455
1,047
(501)
(4)
(70)
(202)
$
64 $
878
$
385 $
845
(a) Notional or contractual amounts, which represent the extent of involvement in the derivatives market, are used to determine the
contractual cash flows required in accordance with the terms of the agreement. These amounts are typically not exchanged, significantly
exceed amounts subject to credit or market risk and are not reflected on the Consolidated Balance Sheets.
(b) December 31, 2023 included $2.0 billion of forward starting swaps that will become effective on their contractual start dates in 2024.
(c) Net derivative assets are included in accrued income and other assets and net derivative liabilities are included in accrued expenses and
other liabilities on the Consolidated Balance Sheets. Included in the fair value of net derivative assets and net derivative liabilities are
credit valuation adjustments reflecting counterparty credit risk and credit risk of the Corporation. The fair value of net derivative assets
included credit valuation adjustments for counterparty credit risk of $3 million and $2 million at December 31, 2023 and 2022,
respectively.
F-75
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Comerica Incorporated and Subsidiaries
Risk Management
The Corporation's derivative instruments used for managing interest rate risk include cash flow hedging strategies that
convert variable-rate loans to fixed rates and fair value hedging strategies that convert fixed-rate medium-and long-term debt to
variable rates. Interest and fees on loans included (expense) income related to swaps settlements of $(602) million, $(25)
million and $95 million for the years ended December 31, 2023, 2022 and 2021, respectively.
The following table details the effects of fair value hedging on the Consolidated Statements of Comprehensive Income.
(in millions)
Years Ended December 31
Total interest on medium-and long-term debt (a)
Fair value hedging relationships:
Interest rate contracts:
Hedged items
Derivatives designated as hedging instruments
Includes the effects of hedging.
(a)
Interest on Medium- and Long-Term Debt
2022
2021
2023
$
378 $
87 $
35
265
113
112
(25)
102
(68)
The following tables summarize the expected weighted average remaining maturity of the notional amount of risk
management interest rate swaps, the weighted average interest rates associated with amounts expected to be received or paid on
interest rate swap agreements, and for fair value swaps, the carrying amount of the related hedged items, as of December 31,
2023 and 2022.
Cash flow swaps - receive fixed/pay floating rate on variable-rate loans (a)
(dollar amounts in millions)
Weighted average:
Time to maturity (in years)
Receive rate (b)
Pay rate (b), (c)
(a)
(b) Excludes forward starting swaps not effective as of the period shown. December 31, 2023 excluded $2.0 billion of forward starting
Includes $7.0 billion of de-designated interest rate swaps.
3.9
2.43%
5.38
4.6
2.35%
4.07
December 31, 2023
December 31, 2022
swaps. December 31, 2022 excluded $4.6 billion of forward starting swaps.
(c) Variable rates paid on receive fixed swaps designated as cash flow hedges were based on BSBY or SOFR rates in effect at December 31,
2023 and LIBOR, BSBY or SOFR rates in effect at December 31, 2022.
Fair value swaps - receive fixed/pay floating rate on medium- and long-term debt
(dollar amounts in millions)
Carrying value of hedged items (a)
Weighted average:
Time to maturity (in years)
Receive rate
Pay rate (b)
(a)
December 31, 2023
6,206
December 31, 2022
3,024
3.1
3.67%
5.74
3.9
3.52%
4.90
Included $(93) million and $(124) million of cumulative hedging adjustments at December 31, 2023 and 2022, respectively, which
included $3 million and $4 million, respectively, of hedging adjustment on a discontinued hedging relationship.
(b) Floating rates paid on receive fixed swaps designated as fair value hedges were based on SOFR rates in effect at December 31, 2023
and SOFR and LIBOR rates in effect at December 31, 2022.
De-designated Interest Rate Swaps and Price Alignment Income
On November 15, 2023, the Bloomberg Index Services Limited announced a permanent cessation of BSBY and all of
its tenors effective November 15, 2024. Accordingly, the Corporation de-designated $7.0 billion of interest rate swaps
accounted for as cash flow hedges of BSBY-indexed loans, as of November 15, 2023, because it was no longer probable that
the BSBY-based loan cash flows would occur through the duration of the hedging relationships.
As a result of the de-designation, a pre-tax loss of $195 million was reclassified out of AOCI and into earnings for
cash flows no longer probable of occurring. In addition, periodic settlement losses of $29 million and fair market value gains of
$133 million for de-designated positions were recognized as part of noninterest income from the de-designation date of
November 15, 2023 through December 31, 2023. This resulted in a net loss of $91 million recorded as a component of risk
management hedging (loss) income in the Consolidated Statement of Income.
F-76
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Comerica Incorporated and Subsidiaries
Amounts in AOCI related to cash flows that continue to be probable of occurring are amortized out of AOCI and into
earnings from the de-designation date through BSBY cessation, resulting in a pre-tax loss of $26 million recognized as part of
interest and fees on loans as of December 31, 2023. Along with settlements no longer recognized through margin, this resulted
in a net benefit of $3 million to interest and fees on loans for the year ended December 31, 2023.
For more information on accumulated net losses on cash flow hedges, refer to Note 14.
Risk management hedging (loss) income also includes price alignment income, which is income received on payments
made to a central clearing party for centrally cleared derivatives. Positions are settled daily based on derivative fair values and
the party receiving net settlement amounts pays price alignment, based on an earning rate, to the party making settlement
payments. Price alignment income totaled $51 million for the year ending December 31, 2023, $8 million for the year ending
December 31, 2022 and was insignificant for the year ending December 31, 2021.
Customer-Initiated and Other
The Corporation enters into derivative transactions at the request of customers and generally takes offsetting positions
with dealer counterparties to mitigate the inherent market risk. Income primarily results from the spread between the customer
derivative and the offsetting dealer position.
For customer-initiated foreign exchange contracts where offsetting positions have not been taken, the Corporation
manages the remaining inherent market risk through individual foreign currency position limits and aggregate value-at-risk
limits. These limits are established annually and reviewed quarterly.
Fair values of customer-initiated and other derivative instruments represent the net unrealized gains or losses on such
contracts and are recorded on the Consolidated Balance Sheets. Changes in fair value are recognized on the Consolidated
Statements of Income. The net gains recognized in income on customer-initiated derivative instruments, net of the impact of
offsetting positions included in derivative income, were as follows:
(in millions)
Interest rate contracts
Energy contracts
Foreign exchange contracts
Total
Credit-Related Financial Instruments
Years Ended December 31,
2022
2021
2023
$
$
22 $
25
51
98 $
34 $
28
47
109 $
36
18
45
99
The Corporation issues off-balance sheet financial instruments in connection with commercial and consumer lending
activities. The Corporation’s credit risk associated with these instruments is represented by the contractual amounts indicated in
the following table.
(in millions)
December 31
Unused commitments to extend credit:
Commercial and other
Bankcard, revolving credit and home equity loan commitments
Total unused commitments to extend credit
Standby letters of credit
Commercial letters of credit
2023
2022
$
$
$
27,303 $
4,082
31,385 $
3,586 $
48
30,800
4,017
34,817
3,712
39
The Corporation maintains an allowance to cover current expected credit losses inherent in lending-related
commitments, including unused commitments to extend credit, letters of credit and financial guarantees. The allowance for
credit losses on lending-related commitments, included in accrued expenses and other liabilities on the Consolidated Balance
Sheets, was $40 million and $51 million at December 31, 2023 and 2022, respectively.
Unused Commitments to Extend Credit
Commitments to extend credit are legally binding agreements to lend to a customer, provided there is no violation of
any condition established in the contract. These commitments generally have fixed expiration dates or other termination clauses
and may require payment of a fee. Since many commitments expire without being drawn upon, the total contractual amount of
commitments does not necessarily represent future cash requirements of the Corporation. Commercial and other unused
commitments are primarily variable rate commitments. The allowance for credit losses on lending-related commitments
F-77
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Comerica Incorporated and Subsidiaries
included $38 million and $44 million at December 31, 2023 and 2022, respectively, for expected credit losses inherent in the
Corporation’s unused commitments to extend credit.
Standby and Commercial Letters of Credit
Standby letters of credit represent conditional obligations of the Corporation which guarantee the performance of a
customer to a third party. Standby letters of credit are primarily issued to support public and private borrowing arrangements,
including commercial paper, bond financing and similar transactions. Commercial letters of credit are issued to finance foreign
or domestic trade transactions. These contracts expire in decreasing amounts through the year 2033. The Corporation may enter
into participation arrangements with third parties that effectively reduce the maximum amount of future payments which may
be required under standby and commercial letters of credit. These risk participations covered $85 million and $107 million at
December 31, 2023 and 2022, respectively, of the $3.6 billion and $3.8 billion of standby and commercial letters of credit
outstanding at December 31, 2023 and 2022, respectively.
The carrying value of the Corporation’s standby and commercial letters of credit, included in accrued expenses and
other liabilities on the Consolidated Balance Sheets, totaled $34 million at December 31, 2023, including $32 million in
deferred fees and $2 million in the allowance for credit losses on lending-related commitments. At December 31, 2022, the
comparable amounts were $35 million, $28 million and $7 million, respectively.
The following table presents a summary of criticized standby and commercial letters of credit at December 31, 2023
and 2022. The Corporation's criticized list is consistent with the Special Mention, Substandard and Doubtful categories defined
by regulatory authorities. The Corporation manages credit risk through underwriting, periodically reviewing and approving its
credit exposures using Board committee approved credit policies and guidelines.
(dollar amounts in millions)
Total criticized standby and commercial letters of credit
As a percentage of total outstanding standby and commercial letters of credit
December 31, 2022
37
$
1.0 %
December 31, 2023
$
50
1.4 %
Other Credit-Related Financial Instruments
The Corporation enters into credit risk participation agreements, under which the Corporation assumes credit exposure
associated with a borrower’s performance related to certain interest rate derivative contracts. The Corporation is not a party to
the interest rate derivative contracts and only enters into these credit risk participation agreements in instances in which the
Corporation is also a party to the related loan participation agreement for such borrowers. The Corporation manages its credit
risk on the credit risk participation agreements by monitoring the creditworthiness of the borrowers, which is based on the
normal credit review process as if the Corporation had entered into the derivative instruments directly with the borrower. The
notional amount of such credit risk participation agreements reflects the pro-rata share of the derivative instrument, consistent
with its share of the related participated loan. The total notional amount of the credit risk participation agreements was
approximately $1.0 billion and $951 million at December 31, 2023 and 2022, respectively, and the fair value was insignificant
at both December 31, 2023 and December 31, 2022. The maximum estimated exposure to these agreements, as measured by
projecting a maximum value of the guaranteed derivative instruments as of the balance sheet date, assuming 100 percent default
by all obligors on the maximum values, was $2 million at December 31, 2023 and insignificant at December 31, 2022. In the
event of default, the lead bank has the ability to liquidate the assets of the borrower, in which case the lead bank would be
required to return a percentage of the recouped assets to the participating banks. As of December 31, 2023, the weighted
average remaining maturity of outstanding credit risk participation agreements was 4.1 years.
In 2008, the Corporation sold its remaining ownership of Visa Class B shares and entered into a derivative contract.
Under the terms of the derivative contract, the Corporation will compensate the counterparty primarily for dilutive adjustments
made to the conversion factor of the Visa Class B shares to Class A shares based on the ultimate outcome of litigation involving
Visa. Conversely, the Corporation will be compensated by the counterparty for any increase in the conversion factor from anti-
dilutive adjustments. The notional amount of the derivative contract was equivalent to approximately 780,000 Visa Class B
Shares. The fair value of the derivative liability, included in accrued expenses and other liabilities on the Consolidated Balance
Sheets, was $12 million at both December 31, 2023 and 2022.
NOTE 9 - VARIABLE INTEREST ENTITIES (VIEs)
The Corporation evaluates its interest in certain entities to determine if these entities meet the definition of a VIE and
whether the Corporation is the primary beneficiary and should consolidate the entity based on the variable interests it held both
at inception and when there is a change in circumstances that requires a reconsideration.
The Corporation holds ownership interests in funds in the form of limited partnerships or limited liability companies
(LLCs) investing in affordable housing projects that qualify for the low-income housing tax credit (LIHTC). The Corporation
F-78
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Comerica Incorporated and Subsidiaries
also directly invests in limited partnerships and LLCs which invest in community development projects, which generate similar
tax credits to investors (other tax credit entities). As an investor, the Corporation obtains income tax credits and deductions
from the operating losses of these tax credit entities. These tax credit entities meet the definition of a VIE; however, the
Corporation is not the primary beneficiary of the entities, as the general partner or the managing member has both the power to
direct the activities that most significantly impact the economic performance of the entities and the obligation to absorb losses
or the right to receive benefits that could be significant to the entities.
The Corporation accounts for its interests in LIHTC entities using the proportional amortization method. Ownership
interests in other tax credit entities are accounted for under either the cost or equity method. Exposure to loss as a result of the
Corporation’s involvement in LIHTC entities and other tax credit entities at December 31, 2023 was limited to $500 million
and $29 million, respectively.
Investment balances, including all legally binding commitments to fund future investments, are included in accrued
income and other assets on the Consolidated Balance Sheets. A liability is recognized in accrued expenses and other liabilities
on the Consolidated Balance Sheets for all legally binding unfunded commitments to fund tax credit entities ($231 million at
December 31, 2023). Amortization and other write-downs of LIHTC investments are presented on a net basis as a component
of the provision for income taxes on the Consolidated Statements of Income, while amortization and write-downs of other tax
credit investments are recorded in other noninterest income. The income tax credits and deductions are recorded as a reduction
of income tax expense and a reduction of federal income taxes payable.
The Corporation provided no financial or other support that was not contractually required to any of the above VIEs
during the years ended December 31, 2023, 2022 and 2021.
The following table summarizes the impact of these tax credit entities on the Corporation’s Consolidated Statements of
Income.
(in millions)
Years Ended December 31
Other noninterest income:
Amortization of other tax credit investments
Provision for income taxes:
Amortization of LIHTC Investments
Low income housing tax credits
Other tax benefits related to tax credit entities
Total provision for income taxes
2023
2022
2021
$
$
(4) $
— $
69 $
(65)
(21)
(17) $
72
(68)
(18)
(14) $
1
71
(68)
(17)
(14)
For further information on the Corporation’s consolidation policy, see Note 1.
NOTE 10 - DEPOSITS
At December 31, 2023, the scheduled maturities of certificates of deposit and other deposits with a stated maturity
were as follows:
(in millions)
Years Ending December 31
2024
2025
2026
2027
2028
Thereafter
Total
$
$
8,177
67
21
12
6
3
8,286
F-79
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Comerica Incorporated and Subsidiaries
A maturity distribution of domestic certificates of deposit of $100,000 and over follows:
(in millions)
December 31
Three months or less
Over three months to six months
Over six months to twelve months
Over twelve months
Total
2023
2022
$
$
1,083 $
1,052
359
32
2,526 $
220
136
590
49
995
The aggregate amount of domestic certificates of deposit that meet or exceed the current FDIC insurance limit of
$250,000 was $1.3 billion and $478 million at December 31, 2023 and 2022, respectively. All foreign office time deposits were
in denominations of $250,000 or more and totaled $13 million and $51 million at December 31, 2023 and 2022, respectively.
NOTE 11 - SHORT-TERM BORROWINGS
Federal funds purchased generally mature within one to four days from the transaction date. Other short-term
borrowings, which may consist of borrowed securities and short-term notes, generally mature within one to 120 days from the
transaction date. At December 31, 2023 and 2022, other short-term borrowings primarily consisted of advances from the FHLB
of Dallas, Texas, which provides short- and long-term funding to its members through advances collateralized by real estate-
related loans, certain government agency-backed securities and other eligible assets. Actual borrowing capacity is contingent on
the amount of collateral pledged to the FHLB. At December 31, 2023, the Bank had pledged real estate-related loans totaling
$21.9 billion and investment securities totaling $6.6 billion to the FHLB, which provided for up to $17.1 billion of
collateralized borrowing with the FHLB. Of the $17.1 billion total capacity at FHLB at December 31, 2023, $3.6 billion in
short-term advances and $4.0 billion in medium- and long-term advances were outstanding, leaving $9.5 billion available at the
FHLB at December 31, 2023.
At December 31, 2023, the Bank had pledged loans totaling $24.6 billion and investment securities totaling $7.7
billion to the FRB, which provided for up to $21.0 billion and $9.3 billion of collateralized borrowing through the discount
window and BTFP program, respectively. The Bank did not rely on the BTFP facility as a funding source, except to perform an
operational test at the onset, and does not plan to use the facility for the remainder of its existence. Total available collateralized
borrowings with the FRB was $30.3 billion at December 31, 2023.
The following table provides a summary of short-term borrowings.
(dollar amounts in millions)
December 31, 2023
Amount outstanding at year-end
Weighted average interest rate at year-end
Maximum month-end balance during the year
Average balance outstanding during the year
Weighted average interest rate during the year
December 31, 2022
Amount outstanding at year-end
Weighted average interest rate at year-end
Maximum month-end balance during the year
Average balance outstanding during the year
Weighted average interest rate during the year
December 31, 2021
Amount outstanding at year-end
Weighted average interest rate at year-end
Maximum month-end balance during the year
Average balance outstanding during the year
Weighted average interest rate during the year
Federal Funds Purchased
Other
Short-term
Borrowings
$
$
$
$
$
$
15
5.30 %
19
29
4.77 %
11
4.32 %
1,106
82
3.28 %
—
— %
2
2
0.06 %
3,550
5.74 %
11,000
7,189
5.41 %
3,200
4.54 %
3,200
354
4.08 %
—
— %
—
—
— %
$
$
$
$
$
$
F-80
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Comerica Incorporated and Subsidiaries
NOTE 12 - MEDIUM- AND LONG-TERM DEBT
Medium- and long-term debt is summarized as follows:
(in millions)
December 31
Parent company
Subordinated notes:
3.80% subordinated notes due 2026 (a)
Medium- and long-term notes:
3.70% notes due July 2023
4.00% notes due 2029 (a)
Total medium- and long-term notes
Total parent company
Subsidiaries
Subordinated notes:
4.00% subordinated notes due 2025 (a)
7.875% subordinated notes due 2026 (a)
5.332% subordinated notes due 2033 (a)
Total subordinated notes
Medium- and long-term notes:
2.50% notes due 2024 (a)
Total medium- and long-term notes
Federal Home Loan Bank (FHLB) advances:
5.07% advance due 2025 (a)
4.79% advance due 2026 (a)
4.49% advance due 2027 (a)
4.49% advance due 2028 (a)
Total FHLB advances
Total subsidiaries
Total medium- and long-term debt
2023
2022
$
241 $
—
523
523
764
337
162
466
965
489
489
995
997
999
997
3,988
5,442
6,206 $
$
237
841
515
1,356
1,593
331
165
459
955
476
476
—
—
—
—
—
1,431
3,024
(a) The fixed interest rates on these notes have been swapped to a variable rate and designated in a hedging relationship. Accordingly,
carrying value has been adjusted to reflect the change in the fair value of the debt as a result of changes in the benchmark rate.
Subordinated notes with remaining maturities greater than one year qualify as Tier 2 capital.
In first quarter 2023, the Bank borrowed $4.0 billion of fixed-rate FHLB advances due between 2025 and 2028.
Interest is due monthly, with principal due at maturity. Additionally, the Bank entered into fair value fixed-to-floating rate
swaps in which the Bank received a weighted-average fixed rate of 3.79% and pays a floating rate based on SOFR. See Note 11
- Short-Term Borrowings for additional information about FHLB advances.
In January 2024, the Corporation issued $1.0 billion of fixed-to-floating rate senior notes due in 2030, with a rate of
5.982% for the first five years. The rate on the senior notes will reset on January 30, 2029 to SOFR plus 215.5 basis points until
called or matured. Additionally, the Corporation entered into two fair value fixed-to-floating rate swaps in which the
Corporation received a weighted average fixed rate of 3.77% and will pay a floating rate based on SOFR for the first five years.
Unamortized debt issuance costs deducted from the carrying amount of medium- and long-term debt totaled $6 million
and $9 million at December 31, 2023 and 2022, respectively.
F-81
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Comerica Incorporated and Subsidiaries
At December 31, 2023, the principal maturities of medium- and long-term debt were as follows:
(in millions)
Years Ending December 31
2024
2025
2026
2027
2028
Thereafter
Total
$
$
500
1,350
1,400
1,000
1,000
1,050
6,300
NOTE 13 - SHAREHOLDERS’ EQUITY
In 2022 and 2021, repurchases of common stock under the share repurchase program initially authorized in 2010 by
the Board of Directors of the Corporation totaled 377 thousand shares at an average price paid of $92.61 per share and
9.5 million shares at an average price paid of $75.82 per share, respectively. There were no repurchases of common stock under
the share repurchase program in 2023. There is no expiration date for the share repurchase program.
At December 31, 2023, the Corporation had 4.3 million shares of common stock reserved for stock option exercises
and restricted stock unit vesting.
In May 2020, the Corporation issued and sold 400,000 depositary shares, each representing a 1/100th ownership
interest in a share of 5.625% Fixed-Rate Reset Non-Cumulative Perpetual Preferred Stock, Series A, without par value, with a
liquidation preference of $100,000 per share (equivalent of 1,000 per depositary share). Holders of the depositary shares will be
entitled to all proportional rights and preferences of the Series A preferred stock (including dividend, voting, redemption and
liquidation rights). The $400 million issuance yielded $394 million in proceeds net of underwriting discounts and offering
expenses. Dividends on the Series A preferred stock accrue on a non-cumulative basis and are payable in arrears when, as and if
authorized by the Corporation’s Board of Directors or a duly authorized committee of the Board and declared by the
Corporation, on the first day of January, April, July and October of each year, and commenced on October 1, 2020. Under the
terms of the Series A preferred stock, the ability of the Corporation to pay dividends on, make distributions with respect to, or
to repurchase, redeem or acquire its common stock or any other stock ranking on parity with or junior to the Series A preferred
stock, is subject to restrictions in the event that the Corporation does not declare and either pay or set aside a sum sufficient for
payment of dividends on the Series A preferred stock for the immediately preceding dividend period. The Series A preferred
stock is perpetual and has no maturity date, but is redeemable by the Corporation at specified times subject to regulatory
considerations.
F-82
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Comerica Incorporated and Subsidiaries
NOTE 14 - ACCUMULATED OTHER COMPREHENSIVE LOSS
The following table presents a reconciliation of the changes in the components of accumulated other comprehensive
loss and details the components of other comprehensive income (loss) for the years ended December 31, 2023, 2022 and 2021,
including the amount of income tax expense (benefit) allocated to each component of other comprehensive income (loss).
(in millions)
Years Ended December 31
Accumulated net unrealized gains (losses) on investment securities:
Balance at beginning of period, net of tax
Net unrealized gains (losses) arising during the period
Less: Provision (benefit) for income taxes
Change in net unrealized gains (losses) on investment securities, net of tax
Balance at end of period, net of tax
Accumulated net (losses) gains on cash flow hedges:
Balance at beginning of period, net of tax
Net cash flow hedge gains (losses) arising during the period
Reclassification of loss related to de-designation of derivatives to other
noninterest income
Less: Benefit for income taxes
Change in net cash flow hedge losses arising during the period, net of tax
Less:
Net cash flow (losses) gains included in interest and fees on loans
Amortization of unrealized losses related to de-designated derivatives included
in interest and fees on loans
Less: (Benefit) provision for income taxes
Reclassification adjustment for net cash flow hedge (losses) gains included in
net income, net of tax
Change in net cash flow hedge gains (losses), net of tax
Balance at end of period, net of tax (a)
Accumulated defined benefit pension and other postretirement plans
adjustment:
Balance at beginning of period, net of tax
Actuarial gain (loss) arising during the period
Prior service credit arising during the period
Net defined benefit pension and other postretirement plans adjustment arising
during the period
Less: Provision (benefit) for income taxes
Net defined benefit pension and other postretirement plans adjustment arising
during the period, net of tax
Amounts recognized in other noninterest expenses:
Amortization of actuarial net loss
Amortization of prior service credit
Total amounts recognized in other noninterest expenses
Less: Provision for income taxes
Adjustment for amounts recognized as components of net periodic benefit
credit during the period, net of tax
Change in defined benefit pension and other postretirement plans adjustment, net
of tax
Balance at end of period, net of tax
Total accumulated other comprehensive loss at end of period, net of tax
2023
2022
2021
$
$
$
$
$
(2,319) $
361
85
276
(2,043) $
(99) $
(2,903)
(683)
(2,220)
(2,319) $
(942) $
34
55 $
(1,329)
(195)
(38)
(123)
(576)
(26)
(142)
—
(313)
(1,016)
(25)
—
(6)
(460)
337
(605) $
(19)
(997)
(942) $
(481) $
96
—
96
25
71
36
(23)
13
3
10
(168) $
(415)
—
(415)
(98)
(317)
28
(23)
5
1
4
81
(400) $
(3,048) $
(313)
(481) $
(3,742) $
$
$
211
(406)
(96)
(310)
(99)
155
(35)
—
(8)
(27)
95
—
22
73
(100)
55
(302)
159
1
160
38
122
40
(25)
15
3
12
134
(168)
(212)
(a) The Corporation expects to reclassify $383 million of losses, net of tax, from accumulated other comprehensive loss to earnings over the
next twelve months if interest yield curves and notional amounts remain at December 31, 2023 levels.
F-83
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Comerica Incorporated and Subsidiaries
NOTE 15 - NET INCOME PER COMMON SHARE
Basic and diluted net income per common share are presented in the following table.
(in millions, except per share data)
Years Ended December 31
Basic and diluted
Net income
Less:
Income allocated to participating securities
Preferred stock dividends
Net income attributable to common shares
Basic average common shares
Basic net income per common share
Basic average common shares
Dilutive common stock equivalents:
Net effect of the assumed exercise of stock awards
Diluted average common shares
Diluted net income per common share
2023
2022
2021
881 $
1,151 $
4
23
854 $
132
6.47 $
132
1
133
6.44 $
6
23
1,122 $
131
8.56 $
131
2
133
8.47 $
1,168
5
23
1,140
135
8.45
135
2
137
8.35
$
$
$
$
Declared dividends on preferred stock are excluded from net income attributable to common shares. Refer to Note 13
for further information on preferred stock.
The following average shares related to outstanding options to purchase shares of common stock were not included in
the computation of diluted net income per common share because the options were anti-dilutive for the period.
(average outstanding options in thousands)
Years Ended December 31
Average outstanding options
Range of exercise prices
NOTE 16 - SHARE-BASED COMPENSATION
2023
1,631
2022
543
2021
438
$49.20 - $95.25
$70.18 - $95.25
$79.01 - $95.25
Share-based compensation expense is charged to salaries and benefits expense on the Consolidated Statements of
Income. The total share-based compensation expense for all share-based compensation plans and related tax benefits are as
follows:
(in millions)
Years Ended December 31
Total share-based compensation expense
Related tax benefits recognized in net income
2023
2022
2021
$
$
52 $
12 $
60 $
14 $
41
10
The following table summarizes unrecognized compensation expense information for all share-based plans.
(dollar amounts in millions)
Total unrecognized share-based compensation expense
Weighted-average expected recognition period (in years)
December 31, 2023
$
43
2.1
The Corporation has share-based compensation plans under which it awards shares of restricted stock units to
executive officers, directors and key personnel and stock options to executive officers and key personnel of the Corporation and
its subsidiaries. Restricted stock units fully vest after a period ranging from three years to five years, and stock options fully
vest after four years. A majority of share-based compensation awards include a retirement eligibility clause where qualified
employees are exempt from the service requirements of the award. This generally results in the recognition of compensation
expense at the grant date for retirement eligible employees. The maturity of each option is determined at the date of grant;
however, no options may be exercised later than ten years from the date of grant. The options may have restrictions regarding
exercisability. The plans provide for a grant of up to 7.7 million common shares, plus shares under certain plans that are
F-84
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Comerica Incorporated and Subsidiaries
forfeited, expire or are canceled, which become available for re-grant. At December 31, 2023, over 3.7 million shares were
available for grant.
The Corporation used a binomial model to value stock options granted in the periods presented. Option valuation
models require several inputs, including the expected stock price volatility, and changes in input assumptions can materially
affect the fair value estimates. The model used may not necessarily provide a reliable single measure of the fair value of stock
options. The risk-free interest rate assumption used in the binomial option-pricing model as outlined in the table below was
based on the federal ten-year treasury interest rate. The expected dividend yield was based on the historical and projected long-
term dividend yield patterns of the Corporation’s common shares. Expected volatility assumptions considered both the
historical volatility of the Corporation’s common stock over a ten-year period and implied volatility based on actively traded
options on the Corporation’s common stock with pricing terms and trade dates similar to the stock options granted. Expected
option life was based on historical exercise activity over the contractual term of the option grant (ten years), excluding certain
forced transactions.
The estimated weighted-average grant-date fair value per option and the underlying binomial option-pricing model
assumptions are summarized in the following table:
Years Ended December 31
Weighted-average grant-date fair value per option
Weighted-average assumptions:
Risk-free interest rates
Expected dividend yield
Volatility
Expected option life (in years)
2023
2022
2021
$
20.21
$
25.31
$
18.36
3.46%
4.00
32
7.8
1.78%
4.00
34
8.0
1.05%
4.00
39
7.8
A summary of the Corporation’s stock option activity and related information for the year ended December 31, 2023
follows:
Weighted-Average
Number of
Options
(in thousands)
Exercise Price
per Share
Remaining
Contractual
Term (in years)
Aggregate
Intrinsic Value
(in millions)
Outstanding-January 1, 2023
Granted
Forfeited or expired
Exercised
Outstanding-December 31, 2023
Exercisable-December 31, 2023
2,008 $
250
(27)
(148)
2,083
1,489 $
61.71
71.16
71.37
43.32
64.03
60.86
5.0 $
3.8 $
10
10
The aggregate intrinsic value of outstanding options shown in the table above represents the total pretax intrinsic value
at December 31, 2023, based on the Corporation’s closing stock price of $55.81 at December 31, 2023.
The total intrinsic value of stock options exercised was $4 million, $17 million and $29 million for the years ended
December 31, 2023, 2022 and 2021, respectively.
There was no restricted stock award activity in 2023. The plan was fully vested as of December 31, 2022. The total fair
value of restricted stock awards that fully vested in 2022 and 2021 was $4 million and $8 million, respectively.
F-85
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Comerica Incorporated and Subsidiaries
A summary of the Corporation's restricted stock unit activity and related information for the year ended December 31,
2023 follows:
Outstanding-January 1, 2023
Granted
Forfeited
Vested
Outstanding-December 31, 2023
Service-Based Units
Performance-Based Units
Number of
Units
(in thousands)
Weighted-Average
Grant-Date Fair
Value per Share
Number of
Units
(in thousands)
Weighted-Average
Grant-Date Fair
Value per Share
1,405 $
629
(34)
(482)
1,518
64.27
57.33
67.09
60.77
62.42
744 $
294
(8)
(303)
727
64.01
62.39
73.30
53.35
67.70
The total fair value of restricted stock units that fully vested was $52 million, $19 million and $21 million for the years
ended December 31, 2023, 2022 and 2021, respectively.
The Corporation expects to satisfy the exercise of stock options and the vesting of restricted stock units by issuing
shares of common stock out of treasury. At December 31, 2023, the Corporation held 96 million shares in treasury.
For further information on the Corporation’s share-based compensation plans, refer to Note 1.
NOTE 17 - EMPLOYEE BENEFIT PLANS
Defined Benefit Pension and Postretirement Benefit Plans
The Corporation has a qualified and non-qualified defined benefit pension plan. In October 2016, the Corporation
modified its defined benefit pension plans to freeze final average pay benefits as of December 31, 2016, other than for
participants who were age 60 or older as of December 31, 2016, and added a cash balance plan provision effective January 1,
2017. Active pension plan participants 60 years or older as of December 31, 2016 receive the greater of the final average pay
formula or the frozen final average pay benefit as of December 31, 2016 plus the cash balance benefit earned after January 1,
2017. Employees participating in the retirement account plan as of December 31, 2016 were eligible to participate in the cash
balance pension plan effective January 1, 2017. Benefits earned under the cash balance pension formula, in the form of an
account balance, include contribution credits based on eligible pay earned each month, age and years of service and monthly
interest credits based on the 30-year Treasury rate.
The Corporation’s postretirement benefit plan provides postretirement health care and life insurance benefits for
retirees as of December 31, 1992. The plan also provides certain postretirement health care and life insurance benefits for a
limited number of retirees who retired prior to January 1, 2000. For all other employees hired prior to January 1, 2000, a
nominal benefit is provided. Employees hired on or after January 1, 2000 and prior to January 1, 2007 are eligible to participate
in the plan on a full contributory basis until Medicare-eligible based on age and service. Employees hired on or after January 1,
2007 are not eligible to participate in the plan. The Corporation funds the pre-1992 retiree plan benefits with bank-owned life
insurance. Effective January 1, 2022, the plan moved from a self-insured plan to the Medicare and pre-65 individual
marketplace with a funded Health Reimbursement Arrangement account for those with subsidized coverage. This change did
not have a material impact on the Corporation's consolidated financial condition, results of operations or cash flow.
F-86
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Comerica Incorporated and Subsidiaries
The following table sets forth reconciliations of plan assets and the projected benefit obligation, the weighted-average
assumptions used to determine year-end benefit obligations, and the amounts recognized in accumulated other comprehensive
loss for the Corporation’s defined benefit pension plans and postretirement benefit plan at December 31, 2023 and 2022. The
Corporation used a measurement date of December 31, 2023 for these plans.
(dollar amounts in millions)
Change in fair value of plan assets:
Fair value of plan assets at January 1
Actual return on plan assets
Benefits paid
Fair value of plan assets at December 31
Change in projected benefit obligation:
Projected benefit obligation at January 1
Service cost
Interest cost
Actuarial gain (loss)
Benefits paid
Projected benefit obligation at December 31
Accumulated benefit obligation
Funded status at December 31 (a) (b)
Weighted-average assumptions used:
Discount rate
Rate of compensation increase
Interest crediting rate
Amounts recognized in accumulated other
comprehensive loss before income taxes:
Defined Benefit Pension Plans
Qualified
Non-Qualified
2023
2022
2023
2022
Postretirement
Benefit Plan
2023
2022
$ 2,508
338
(165)
$ 2,681
$ 1,611
31
85
67
(165)
$ 1,629
$ 1,611
$ 1,052
$ 3,462
(777)
(177)
$ 2,508
$ 2,214
37
62
(525)
(177)
$ 1,611
$ 1,598
897
$
$ —
—
—
$ —
$ 163
2
9
10
(15)
$ 169
$ 166
$ (169)
$ —
—
—
$ —
$
$
$
$
207
2
6
(37)
(15)
163
161
(163)
$ 46
1
(2)
$ 45
$ 21
—
1
(3)
(2)
$ 17
$ 17
$ 28
$
$
53
(4)
(3)
46
$
31
—
1
(8)
(3)
21
21
25
$
$
$
5.33%
4.50
5.60%
4.25
5.33%
4.50
5.60%
4.25
4.66 - 5.25 3.99 - 5.25 4.66 - 5.25 3.99 - 5.25
5.43%
n/a
n/a
5.71%
n/a
n/a
Net actuarial loss
Prior service credit
Balance at December 31
(a) Based on projected benefit obligation for defined benefit pension plans and accumulated benefit obligation for postretirement benefit
$ (501)
19
$ (482)
(638)
33
(605)
(10)
2
(8)
(46)
38
(8)
(52)
29
(23)
(9)
2
(7)
$
$
$
$
$
$
$
$
$
$
plan.
(b) The Corporation recognizes the overfunded and underfunded status of the plans in accrued income and other assets and accrued
expenses and other liabilities, respectively, on the Consolidated Balance Sheets.
n/a - not applicable
Because the non-qualified defined benefit pension plan has no assets, the accumulated benefit obligation exceeded the
fair value of plan assets at December 31, 2023 and December 31, 2022.
The following table details the changes in plan assets and benefit obligations recognized in other comprehensive
income (loss) for the year ended December 31, 2023.
Defined Benefit Pension Plans
(in millions)
Actuarial gain (loss) arising during the period
Amortization of net actuarial loss
Amortization of prior service credit
Total recognized in other comprehensive income (loss)
$
$
Qualified
Non-Qualified
Postretirement
Benefit Plan
Total
105 $
32
(14)
123 $
(10) $
4
(9)
(15) $
1 $
—
—
1 $
96
36
(23)
109
F-87
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Comerica Incorporated and Subsidiaries
Components of net periodic defined benefit (credit) cost and postretirement benefit credit, the actual return on plan
assets and the weighted-average assumptions used were as follows:
(dollar amounts in millions)
Years Ended December 31
Service cost (a)
Other components of net benefit (credit) cost:
Interest cost
Expected return on plan assets
Amortization of prior service credit
Amortization of actuarial net loss
Total other components of net benefit (credit) cost (b)
Net periodic defined benefit (credit) cost
Actual return on plan assets
Actual rate of return on plan assets
Weighted-average assumptions used:
Discount rate
Expected long-term return on plan assets
Rate of compensation increase
(a)
(b)
n/a - not applicable
Defined Benefit Pension Plans
2023
$ 31
Qualified
2022
37
$
2021
38
$
2023
2
$
Non-Qualified
2022
2
$
2021
2
$
85
(166)
(14)
32
(63)
$ (32)
$ 338
13.91%
62
(201)
(14)
19
(134)
$
(97)
$ (777)
(23.02) %
5.60%
6.50
4.25
2.96%
6.50
4.00
61
(202)
(19)
29
(131)
$
(93)
$ 291
8.92%
2.71%
6.50
4.00
9
—
(9)
4
4
6
n/a
n/a
$
6
—
(9)
9
6
8
n/a
n/a
$
7
—
(6)
11
12
14
n/a
n/a
$
5.60%
n/a
4.25
2.96%
n/a
4.00
2.71%
n/a
4.00
Included in salaries and benefits expense on the Consolidated Statements of Income.
Included in other noninterest expenses on the Consolidated Statements of Income.
(dollar amounts in millions)
Years Ended December 31
Other components of net benefit credit:
Interest cost
Expected return on plan assets
Net periodic postretirement benefit credit
Actual return on plan assets
Actual rate of return on plan assets
Weighted-average assumptions used:
Discount rate
Expected long-term return on plan assets
Healthcare cost trend rate (a):
Cost trend rate assumed
Rate to which the cost trend rate is assumed to decline (the ultimate trend rate)
Year that the rate reaches the ultimate trend rate
Postretirement Benefit Plan
2022
2021
2023
$
$
$
1
(2)
(1)
1
2.61 %
5.71 %
5.00
n/a
n/a
n/a
$
$
$
$
$
$
1
(3)
(2)
(4)
(8.24) %
2.79 %
5.00
n/a
n/a
n/a
1
(3)
(2)
(1)
(2.25) %
2.43 %
5.00
6.00
4.50
2027
(a) Beginning January 1, 2022, the healthcare cost trend assumption is no longer a relevant assumption due to the change from a self-
insured plan to the Medicare and pre-65 individual marketplace with a funded Health Reimbursement Arrangement account.
n/a - not applicable
The expected long-term rate of return of plan assets is the average rate of return expected to be realized on funds
invested or expected to be invested over the life of the plan, which has an estimated duration of approximately 9 years as of
December 31, 2023. The expected long-term rate of return on plan assets is set after considering both long-term returns in the
general market and long-term returns experienced by the assets in the plan. The returns on the various asset categories are
blended to derive an equity and a fixed income long-term rate of return. The Corporation reviews its pension plan assumptions
on an annual basis with its actuarial consultants to determine if assumptions are reasonable and adjusts the assumptions to
reflect changes in future expectations.
F-88
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Comerica Incorporated and Subsidiaries
Plan Assets
The Corporation’s overall investment goals for the qualified defined benefit pension plan are to maintain a portfolio of
assets of appropriate liquidity and diversification; to generate investment returns (net of all operating costs) that are reasonably
anticipated to maintain the plan’s fully funded status or to reduce a funding deficit, after taking into account various factors,
including reasonably anticipated future contributions, expense and the interest rate sensitivity of the plan’s assets relative to that
of the plan’s liabilities; and to generate investment returns (net of all operating costs) that meet or exceed a customized
benchmark as defined in the plan's investment policy. Derivative instruments are permissible for hedging and transactional
efficiency, but only to the extent that the derivative use enhances the efficient execution of the plan’s investment policy. The
plan does not directly invest in securities issued by the Corporation and its subsidiaries. The Corporation’s target allocations for
plan investments are 35 percent to 45 percent for equity securities and 55 percent to 65 percent for fixed income, including
cash. Equity securities include collective investment and mutual funds and common stock. Fixed income securities include U.S.
Treasury and other U.S. government agency securities, mortgage-backed securities, corporate bonds and notes, municipal
bonds, collateralized mortgage obligations and money market funds.
Fair Value Measurements
The Corporation’s qualified defined benefit pension plan utilizes fair value measurements to record fair value
adjustments and to determine fair value disclosures. The Corporation’s qualified benefit pension plan categorizes investments
recorded at fair value into a three-level hierarchy, based on the markets in which the investment are traded and the reliability of
the assumptions used to determine fair value. Refer to Note 1 for a description of the three-level hierarchy.
Following is a description of the valuation methodologies and key inputs used to measure the fair value of the
Corporation’s qualified defined benefit pension plan investments, including an indication of the level of the fair value hierarchy
in which the investments are classified.
Mutual funds
Fair value measurement is based upon the net asset value (NAV) provided by the administrator of the fund. Mutual
fund NAVs are quoted in an active market exchange, such as the New York Stock Exchange, and are included in Level 1 of the
fair value hierarchy.
Common stock
Fair value measurement is based upon the closing price quoted in an active market exchange, such as the New York
Stock Exchange. Level 1 common stock includes domestic and foreign stock and real estate investment trusts.
U.S. Treasury and other U.S. government agency securities
Level 1 securities include U.S. Treasury securities that are traded by dealers or brokers in active over-the-counter
markets. Fair value measurement is based upon quoted prices in an active market exchange, such as the New York Stock
Exchange. Level 2 securities include debt securities issued by U.S. government agencies and U.S. government-sponsored
entities. The fair value of Level 2 securities is determined using quoted prices of securities with similar characteristics, or
pricing models based on observable market data inputs, primarily interest rates and spreads.
Corporate and municipal bonds and notes
Fair value measurement is based upon quoted prices of securities with similar characteristics or pricing models based
on observable market data inputs, primarily interest rates, spreads and prepayment information. Level 2 securities include
corporate bonds, municipal bonds, foreign bonds and foreign notes.
Mortgage-backed securities
Fair value measurement is based upon independent pricing models or other model-based valuation techniques such as
the present value of future cash flows, adjusted for the security's credit rating, prepayment assumptions and other factors, such
as credit loss and liquidity assumptions, and are included in Level 2 of the fair value hierarchy.
Private placements
Fair value is measured using the NAV provided by fund management as quoted prices in active markets are not
available. Management considers additional discounts to the provided NAV for market and credit risk. Private placements are
included in Level 3 of the fair value hierarchy.
F-89
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Comerica Incorporated and Subsidiaries
Collective investment funds
Fair value measurement is based upon the NAV provided by the administrator of the fund as a practical expedient to
estimate fair value. There are no unfunded commitments or redemption restrictions on the collective investment funds. The
investments are redeemable daily.
Fair Values
The fair values of the Corporation’s qualified defined benefit pension plan investments measured at fair value on a
recurring basis at December 31, 2023 and 2022, by asset category and level within the fair value hierarchy, are detailed in the
table below.
(in millions)
December 31, 2023
Fixed income securities:
U.S. Treasury and other U.S. government agency securities
Corporate and municipal bonds and notes
Private placements
Total investments in the fair value hierarchy
Investments measured at net asset value:
Collective investment funds
Total investments at fair value
December 31, 2022
Fixed income securities:
U.S. Treasury and other U.S. government agency securities
Corporate and municipal bonds and notes
Mortgage-backed securities
Private placements
Total investments in the fair value hierarchy
Investments measured at net asset value:
Collective investment funds
Total investments at fair value
Total
Level 1
Level 2
Level 3
564 $
—
—
564 $
3 $
786
—
789 $
531 $
—
—
—
531 $
3 $
676
20
—
699 $
—
—
44
44
—
—
—
39
39
$
$
$
$
$
$
567 $
786
44
1,397 $
1,268
2,665
534 $
676
20
39
1,269 $
1,230
2,499
The table below provides a summary of changes in the Corporation’s qualified defined benefit pension plan’s Level 3
investments measured at fair value on a recurring basis for the years ended December 31, 2023 and 2022.
(in millions)
Year Ended December 31, 2023
Private placements
Year Ended December 31, 2022
Private placements
Balance at
Beginning
of Period
Net Gains (Losses)
Realized
Unrealized
Purchases
Sales
Balance at
End of Period
$
$
39 $
(3) $
8 $
46 $
(46) $
50 $
(3) $
(12) $
38 $
(34) $
44
39
There were no assets in the non-qualified defined benefit pension plan at December 31, 2023 and 2022. The
postretirement benefit plan is fully invested in bank-owned life insurance policies. The fair value of bank-owned life insurance
policies is based on the cash surrender values of the policies as reported by the insurance companies and is classified in Level 2
of the fair value hierarchy.
F-90
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Comerica Incorporated and Subsidiaries
Cash Flows
The Corporation currently expects to make no employer contributions to the qualified and non-qualified defined
benefit pension plans and postretirement benefit plan for the year ended December 31, 2024.
(in millions)
Years Ended December 31
2024
2025
2026
2027
2028
2029 - 2033
Estimated Future Benefit Payments
Qualified
Defined Benefit
Pension Plan
Non-Qualified
Defined Benefit
Pension Plan
Postretirement
Benefit Plan (a)
$
162 $
140
144
142
143
668
15 $
15
15
15
15
73
3
2
2
2
2
6
(a) Estimated benefit payments in the postretirement benefit plan are net of estimated Medicare subsidies.
Defined Contribution Plans
Substantially all of the Corporation’s employees are eligible to participate in the Corporation’s principal defined
contribution plan (a 401(k) plan). Under this plan, the Corporation makes core matching cash contributions of 100 percent of
the first 4 percent of qualified earnings contributed by employees (up to the current IRS compensation limit), invested based on
employee investment elections. Employee benefits expense included expense for the plan of $27 million for the year ended
December 31, 2023 and $24 million for both years ended December 31, 2022 and 2021.
Deferred Compensation Plans
The Corporation offers optional deferred compensation plans under which certain employees and non-employee
directors (participants) may make an irrevocable election to defer incentive compensation and/or a portion of base salary until
retirement or separation from the Corporation. The participant may direct deferred compensation into one or more deemed
investment options. Although not required to do so, the Corporation invests actual funds into the deemed investments as
directed by participants, resulting in a deferred compensation asset, recorded in other short-term investments on the
Consolidated Balance Sheets that offsets the liability to participants under the plan, recorded in accrued expenses and other
liabilities. The earnings from the deferred compensation asset are recorded in interest on short-term investments and other
noninterest income and the related change in the liability to participants under the plan is recorded in salaries and benefits
expense on the Consolidated Statements of Income.
NOTE 18 - INCOME TAXES AND TAX-RELATED ITEMS
The provision for income taxes is calculated as the sum of income taxes due for the current year and deferred taxes.
Income taxes due for the current year are computed by applying federal and state tax statutes to current year taxable income.
Deferred taxes arise from temporary differences between the income tax basis and financial accounting basis of assets and
liabilities. Tax-related interest and penalties and foreign taxes are then added to the tax provision.
The current and deferred components of the provision for income taxes were as follows:
(in millions)
December 31
Current:
Federal
Foreign
State and local
Total current
Deferred:
Federal
State and local
Total deferred
Total
2023
2022
2021
$
$
297 $
9
49
355
(83)
(9)
(92)
263 $
296 $
6
50
352
(24)
(3)
(27)
325 $
212
5
26
243
62
17
79
322
F-91
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Comerica Incorporated and Subsidiaries
Income before income taxes of $1.1 billion for the year ended December 31, 2023 included $87 million of foreign
taxable income.
The provision for income taxes does not reflect the tax effects of unrealized gains and losses on investment securities
available-for-sale, hedging transactions or the change in defined benefit pension and other postretirement plans adjustment
included in accumulated other comprehensive (loss) income. Refer to Note 14 for additional information on accumulated other
comprehensive (loss) income.
A reconciliation of expected income tax expense at the federal statutory rate to the Corporation’s provision for income
taxes and effective tax rate follows:
(dollar amounts in millions)
Years Ended December 31
Tax based on federal statutory rate
State income taxes
Affordable housing and historic credits
Bank-owned life insurance
FDIC insurance expense
Employee stock transactions
Tax-related interest and penalties
Other
Provision for income taxes
2023
Amount
$
$
240
35
(16)
(10)
15
(1)
(4)
4
263
2022
2021
Amount
Rate
21.0% $
Amount
Rate
21.0% $
3.1
(1.4)
(0.9)
1.3
(0.1)
(0.4)
0.4
23.0% $
310
36
(13)
(10)
6
(3)
—
(1)
325
313
35
(13)
(10)
5
(3)
—
(5)
322
Rate
21.0%
2.4
(0.9)
(0.6)
0.3
(0.2)
—
(0.4)
21.6%
2.5
(0.9)
(0.7)
0.4
(0.2)
—
(0.1)
22.0% $
The liability for tax-related interest and penalties, included in accrued expenses and other liabilities on the
Consolidated Balance Sheets, was less than $1 million and $5 million at December 31, 2023 and 2022, respectively. The
decrease in tax-related interest and penalties was primarily due to a state settlement received in 2023.
In the ordinary course of business, the Corporation enters into certain transactions that have tax consequences. From
time to time, the Internal Revenue Service (IRS) may review and/or challenge specific interpretive tax positions taken by the
Corporation with respect to those transactions. The Corporation believes that its tax returns were filed based upon applicable
statutes, regulations and case law in effect at the time of the transactions. The IRS or other tax jurisdictions, an administrative
authority or a court, if presented with the transactions, could disagree with the Corporation’s interpretation of the tax law.
A reconciliation of the beginning and ending amount of net unrecognized tax benefits follows:
(in millions)
Balance at January 1
(Decrease) increase as a result of tax positions taken during a prior
period
Increase as a result of tax positions taken during the current period
Decreases related to settlements with tax authorities
Reduction as a result of expiration of statute of limitations
Balance at December 31
2023
2022
2021
$
$
16 $
—
1
(10)
—
7 $
18 $
(2)
3
(3)
—
16 $
19
1
3
(3)
(2)
18
After consideration of the effect of the federal tax benefit available on unrecognized state tax benefits, the total amount
of unrecognized tax benefits which, if recognized, would affect the Corporation’s effective tax rate was approximately $5
million and $13 million at December 31, 2023 and 2022, respectively.
The following tax years for significant jurisdictions remain subject to examination as of December 31, 2023:
Jurisdiction
Federal
New York
California
Tax Years
2020-2022
2018-2022
2020-2022
Based on current knowledge and probability assessment of various potential outcomes, the Corporation believes
current tax reserves are adequate, and the amount of any potential incremental liability arising is not expected to have a material
adverse effect on the Corporation’s consolidated financial condition or results of operations. Probabilities and outcomes are
reviewed as events unfold, and adjustments to the reserves are made when necessary.
F-92
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Comerica Incorporated and Subsidiaries
The principal components of deferred tax assets and liabilities were as follows:
(in millions)
December 31
Deferred tax assets:
Allowance for loan losses
Deferred compensation
Deferred loan origination fees and costs
Net hedging losses
Net unrealized losses on investment securities available-for-sale
Operating lease liabilities
Other temporary differences, net
Total deferred tax assets before valuation allowance
Valuation allowance
Total deferred tax assets
Deferred tax liabilities:
Lease financing transactions
Defined benefit plans
Allowance for depreciation
Leasing right of use assets
Total deferred tax liabilities
Net deferred tax assets
2023
2022
$
$
145 $
77
11
186
628
81
124
1,252
(6)
1,246
(20)
(159)
(5)
(67)
(251)
995 $
128
84
12
290
713
85
42
1,354
(5)
1,349
(31)
(123)
(4)
(71)
(229)
1,120
Deferred tax assets included $5 million and $4 million of federal foreign tax credit carryforwards at December 31,
2023 and 2022, respectively, expiring between 2028 and 2032. In addition, there were $2 million of state net operating loss
(NOL) carryforwards at both December 31, 2023 and 2022, expiring between 2024 and 2042. The Corporation believes it is
more likely than not that the benefit from federal foreign tax credits and certain state NOL carryforwards will not be realized
and, accordingly, maintains a federal valuation allowance of $5 million and a state valuation allowance of $1 million at
December 31, 2023, compared to a federal valuation of $4 million and a state valuation allowance of $1 million in the
comparable period in 2022. For further information on the Corporation’s valuation policy for deferred tax assets, refer to Note
1.
NOTE 19 - TRANSACTIONS WITH RELATED PARTIES
The Corporation’s banking subsidiaries had, and expect to have in the future, transactions with the Corporation’s
directors and executive officers, companies with which these individuals are associated and certain related individuals. Such
transactions were made in the ordinary course of business and included extensions of credit, leases and professional services.
With respect to extensions of credit, all were made on substantially the same terms, including interest rates and collateral, as
those prevailing at the same time for comparable transactions with other customers and did not, in management’s opinion,
involve more than normal risk of collectibility or present other unfavorable features. The aggregate amount of loans attributable
to persons who were related parties at December 31, 2023 totaled $57 million at the beginning of 2023 and $81 million at the
end of 2023. During 2023, new loans to related parties aggregated $277 million and repayments totaled $253 million.
NOTE 20 - REGULATORY CAPITAL
Banking regulations limit the transfer of assets in the form of dividends, loans or advances from the bank subsidiaries
to the parent company. Under the most restrictive of these regulations, the aggregate amount of dividends which can be paid to
the parent company, without prior approval from bank regulatory agencies, approximated $400 million at January 1, 2024, plus
2024 net profits. Substantially all the assets of the Corporation’s banking subsidiaries are restricted from transfer to the parent
company of the Corporation in the form of loans or advances.
The Corporation’s subsidiary banks declared dividends of $675 million, $1.0 billion and $852 million in 2023, 2022
and 2021, respectively.
The Corporation and its U.S. banking subsidiaries are subject to various regulatory capital requirements administered
by federal and state banking agencies under the Basel III regulatory framework (Basel III). This regulatory framework
establishes comprehensive methodologies for calculating regulatory capital and risk-weighted assets (RWA). Basel III also set
minimum capital ratios as well as overall capital adequacy standards.
F-93
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Comerica Incorporated and Subsidiaries
Under Basel III, regulatory capital comprises Common Equity Tier 1 (CET1) capital, additional Tier 1 capital and Tier
2 capital. CET1 capital predominantly includes common shareholders' equity, less certain deductions for goodwill, intangible
assets and deferred tax assets that arise from net operating losses and tax credit carry-forwards. Additionally, the Corporation
has elected to permanently exclude capital in accumulated other comprehensive income (AOCI) related to debt securities
classified as available-for-sale as well as for cash flow hedges and defined benefit postretirement plans from CET1, an option
available to standardized approach entities under Basel III. Tier 1 capital incrementally includes noncumulative perpetual
preferred stock. Tier 2 capital includes Tier 1 capital as well as subordinated debt qualifying as Tier 2 and qualifying allowance
for credit losses. In addition to the minimum risk-based capital requirements, the Corporation and its Bank subsidiaries are
required to maintain a minimum capital conservation buffer, in the form of common equity, of 2.5 percent in order to avoid
restrictions on capital distributions and discretionary bonuses.
The Corporation computes RWA using the standardized approach. Under the standardized approach, RWA is
generally based on supervisory risk-weightings which vary by counterparty type and asset class. Under the Basel III
standardized approach, capital is required for credit risk RWA, to cover the risk of unexpected losses due to failure of a
customer or counterparty to meet its financial obligations in accordance with contractual terms; and if trading assets and
liabilities exceed certain thresholds, capital is also required for market risk RWA, to cover the risk of losses due to adverse
market movements or from position-specific factors.
Quantitative measures established by regulation to ensure capital adequacy require the maintenance of minimum
amounts and ratios of CET1, Tier 1 and total capital (as defined in the regulations) to average and/or risk-weighted assets.
Failure to meet minimum capital requirements can initiate certain mandatory and possibly additional discretionary actions by
regulators that, if undertaken, could have a direct material effect on the Corporation’s financial statements. At December 31,
2023 and 2022, the Corporation and its U.S. banking subsidiaries exceeded the ratios required for an institution to be considered
“well capitalized”. For U.S. banking subsidiaries, those requirements were total risk-based capital, Tier 1 risk-based capital,
CET1 risk-based capital and leverage ratios greater than 10 percent, 8 percent, 6.5 percent and 5 percent, respectively, at
December 31, 2023 and 2022. For the Corporation, requirements to be considered "well capitalized" were total risk-based
capital and Tier 1 risk-based capital ratios greater than 10 percent and 6 percent, respectively, at December 31, 2023 and 2022.
There have been no conditions or events since December 31, 2023 that management believes have changed the capital adequacy
classification of the Corporation or its U.S. banking subsidiaries.
The following is a summary of the capital position of the Corporation and Comerica Bank, its principal banking subsidiary.
(dollar amounts in millions)
December 31, 2023
CET1 capital (minimum $3.4 billion (Consolidated))
Tier 1 capital (minimum $4.6 billion (Consolidated))
Total capital (minimum $6.1 billion (Consolidated))
Risk-weighted assets
Average assets (fourth quarter)
CET1 capital to risk-weighted assets (minimum-4.5%)
Tier 1 capital to risk-weighted assets (minimum-6.0%)
Total capital to risk-weighted assets (minimum-8.0%)
Tier 1 capital to average assets (minimum-4.0%)
Capital conservation buffer (minimum-2.5%)
December 31, 2022
CET1 capital (minimum $3.5 billion (Consolidated))
Tier 1 capital (minimum $4.7 billion (Consolidated))
Total capital (minimum $6.3 billion (Consolidated))
Risk-weighted assets
Average assets (fourth quarter)
CET1 capital to risk-weighted assets (minimum-4.5%)
Tier 1 capital to risk-weighted assets (minimum-6.0%)
Total capital to risk-weighted assets (minimum-8.0%)
Tier 1 capital to average assets (minimum-4.0%)
Capital conservation buffer (minimum-2.5%)
F-94
Comerica
Incorporated
(Consolidated)
Comerica
Bank
$
$
$
$
8,414
8,808
10,263
75,901
87,538
11.09 %
11.60
13.52
10.06
5.52
7,884
8,278
9,817
78,871
86,726
10.00 %
10.50
12.45
9.55
4.45
8,007
8,007
9,362
75,783
87,423
10.57 %
10.57
12.35
9.16
4.35
7,801
7,801
9,190
78,781
86,608
9.90 %
9.90
11.67
9.01
3.67
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Comerica Incorporated and Subsidiaries
NOTE 21 - CONTINGENT LIABILITIES
Legal Proceedings and Regulatory Matters
The Corporation and certain of its subsidiaries are subject to various other pending or threatened legal proceedings
arising out of the normal course of business or operations. The Corporation believes it has substantial defenses to the claims
asserted against it in its other currently outstanding legal proceedings and, with respect to such legal proceedings, intends to
continue to defend itself vigorously, litigating or settling cases according to management’s judgment as to what is in the best
interests of the Corporation and its shareholders. Settlement may result from the Corporation's determination that it may be
more prudent financially to settle, rather than litigate, and should not be regarded as an admission of liability.
Further, from time to time, the Corporation is also subject to examinations, inquiries and investigations by regulatory
authorities in areas including, but not limited to, compliance, risk management and consumer protection, which could lead to
administrative or legal proceedings or settlements. For example, the Consumer Financial Protection Bureau (CFPB) is
investigating certain of the Corporation's practices, and the Corporation has responded and continues to respond to the CFPB.
We are unable to predict the outcome of these discussions at this time. Remedies in these proceedings or settlements may
include fines, penalties, restitution or alterations in the Corporation's business practices and may result in increased operating
expenses or decreased revenues.
On at least a quarterly basis, the Corporation assesses its potential liabilities and contingencies in connection with
outstanding legal proceedings and regulatory matters utilizing the latest information available. On a case-by-case basis, accruals
are established for those legal claims and regulatory matters for which it is probable that a loss will be incurred and the amount
of such loss can be reasonably estimated. The actual costs of resolving these claims and regulatory matters may be substantially
higher or lower than the amounts accrued. Based on current knowledge, and after consultation with legal counsel, management
believes current accruals are adequate, and the amount of any incremental liability arising from these matters is not expected to
have a material adverse effect on the Corporation’s consolidated financial condition, results of operations or cash flows. Legal
fees of $26 million, $17 million and $14 million for the years ended December 31, 2023, 2022 and 2021, respectively, were
included in other noninterest expenses on the Consolidated Statements of Income.
For matters where a loss is not probable, the Corporation has not established an accrual. The Corporation believes the
estimate of the aggregate range of reasonably possible losses, in excess of established accruals, for all legal proceedings and
regulatory matters in which it is involved is from zero to approximately $202 million at December 31, 2023. This estimated
aggregate range of reasonably possible losses is based upon currently available information for those legal proceedings and
regulatory matters in which the Corporation is involved, taking into account the Corporation’s best estimate of such losses for
those legal cases and regulatory matters for which such estimate can be made. For certain legal cases and regulatory matters, the
Corporation does not believe that an estimate can currently be made. The Corporation’s estimate involves significant judgment,
given the varying stages of the legal proceedings and regulatory matters (including the fact many are currently in preliminary
stages), the existence in certain legal proceedings of multiple defendants (including the Corporation) whose share of liability
has yet to be determined, the numerous yet-unresolved issues in many of the legal proceedings and regulatory matters
(including issues regarding class certification and the scope of many of the claims) and the attendant uncertainty of the various
potential outcomes of such legal proceedings and regulatory matters. Accordingly, the Corporation’s estimate will change from
time to time, and actual losses may be more or less than the current estimate.
In the event of unexpected future developments, it is possible that the ultimate resolution of these matters, if
unfavorable, may be material to the Corporation's consolidated financial condition, results of operations or cash flows.
For information regarding income tax contingencies, refer to Note 18.
NOTE 22 - STRATEGIC LINES OF BUSINESS
The Corporation has strategically aligned its operations into three major business segments: the Commercial Bank, the
Retail Bank and Wealth Management. These business segments are differentiated based on the type of customer and the related
products and services provided. In addition to the three major business segments, the Finance Division is also reported as a
segment. Business segment results are produced by the Corporation’s internal management accounting system. This system
measures financial results based on the internal business unit structure of the Corporation. The performance of the business
segments is not comparable with the Corporation's consolidated results and is not necessarily comparable with similar
information for any other financial institution. Additionally, because of the interrelationships of the various segments, the
information presented is not indicative of how the segments would perform if they operated as independent entities. The
management accounting system assigns balance sheet and income statement items to each business segment using certain
methodologies, which are regularly reviewed and refined. From time to time, the Corporation may make reclassifications
among the segments to more appropriately reflect management's current view of the segments, and methodologies may be
F-95
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Comerica Incorporated and Subsidiaries
modified as the management accounting system is enhanced and changes occur in the organizational structure and/or product
lines. For comparability purposes, amounts in all periods are based on business unit structure and methodologies in effect at
December 31, 2023.
Net interest income for each segment reflects the interest income generated by earning assets less interest expense on
interest-bearing liabilities plus the net impact from associated internal funds transfer pricing (FTP) funding credits and
charges. The FTP methodology allocates credits to each business segment for deposits and other funds provided as well as
charges for loans and other assets being funded. This credit or charge is based on matching stated or implied maturities for these
assets and liabilities. The FTP crediting rates on deposits and other funds provided reflect the long-term value of deposits and
other funding sources based on their implied maturity. Due to the longer-term nature of implied maturities, FTP crediting rates
are generally less volatile than changes in interest rates observed in the market. FTP charge rates for funding loans and other
assets reflect a matched cost of funds based on the pricing and duration characteristics of the assets. As a result of applying
matched funding, interest revenue for each segment resulting from loans and other assets is generally not impacted by changes
in interest rates. Therefore, net interest income for each segment primarily reflects the volume of loans and other earning assets
at the spread over the matched cost of funds, as well as the volume of deposits at the associated FTP crediting rates. Generally,
in periods of rising interest rates, FTP charge rates for funding loans and FTP crediting rates on deposits will increase, with FTP
crediting rates for deposits typically repricing at a slower pace than FTP charge rates for funding loans.
For acquired loans and deposits, matched maturity funding is determined based on origination date. Accordingly, the
FTP process reflects the transfer of interest rate risk exposures to the Corporate Treasury department within the Finance
segment, where such exposures are centrally managed. The allowance for credit losses is allocated to the business segments
based on the methodology used to estimate the consolidated allowance for credit losses described in Note 1. The related
provision for credit losses is assigned based on the amount necessary to maintain an allowance for credit losses appropriate for
each business segment. Noninterest income and expenses directly attributable to a line of business are assigned to that business
segment. Direct expenses incurred by areas whose services support the overall Corporation are allocated to the business
segments as follows: product processing expenditures are allocated based on standard unit costs applied to actual volume
measurements; administrative expenses are allocated based on estimated time expended; and corporate overhead is assigned 50
percent based on the ratio of the business segment’s noninterest expenses to total noninterest expenses incurred by all business
segments and 50 percent based on the ratio of the business segment’s attributed equity to total attributed equity of all business
segments. Equity is attributed based on credit, operational and interest rate risks. Most of the equity attributed relates to credit
risk, which is determined based on the credit score and expected remaining life of each loan, letter of credit and unused
commitment recorded in the business segments. Operational risk is allocated based on loans and letters of credit, deposit
balances, non-earning assets, trust assets under management, certain noninterest income items, and the nature and extent of
expenses incurred by business units. Virtually all interest rate risk is assigned to Finance, as are the Corporation’s hedging
activities.
The following discussion provides information about the activities of each business segment. A discussion of the
financial results and the factors impacting 2023 performance can be found in "Strategic Lines of Business" section of the
financial review.
The Commercial Bank meets the needs of small and middle market businesses, multinational corporations and
governmental entities by offering various products and services including commercial loans and lines of credit, deposits, cash
management, payment solutions, card services, capital market products, international trade finance and letters of credit.
The Retail Bank includes a full range of personal financial services, consisting of consumer lending, consumer deposit
gathering and mortgage loan origination. This business segment offers a variety of consumer products, including deposit
accounts, installment loans, credit cards, home equity lines of credit and residential mortgage loans. In addition, this business
segment offers products and services to small businesses who are serviced through a team of dedicated small business bankers
and our branch network.
Wealth Management provides products and services to affluent, high-net worth and ultra-high-net-worth individuals
and families, business owners and executives, and institutional clients, including comprehensive financial planning, trust and
fiduciary services, investment management and advisory, brokerage, private banking, and business transition planning services.
The Finance segment includes the Corporation’s securities portfolio and asset and liability management activities. This
segment is responsible for managing the Corporation’s funding, liquidity and capital needs, performing interest sensitivity
analysis and executing various strategies to manage the Corporation’s exposure to liquidity, interest rate risk and foreign
exchange risk.
F-96
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Comerica Incorporated and Subsidiaries
The Other category includes tax benefits not assigned to specific business segments, charges of an unusual or
infrequent nature that are not reflective of the normal operations of the business segments and miscellaneous other expenses of
a corporate nature.
Business segment financial results are as follows:
(dollar amounts in millions)
Year Ended December 31, 2023
Earnings summary:
Net interest income (expense)
Provision for credit losses
Noninterest income
Noninterest expenses
Provision (benefit) for income taxes
Net income (loss)
Net charge-offs
Selected average balances:
Assets
Loans
Deposits
Statistical data:
Return on average assets (a)
Efficiency ratio (b)
Year Ended December 31, 2022
Earnings summary:
Net interest income
Provision for credit losses
Noninterest income
Noninterest expenses
Provision (benefit) for income taxes
Net income (loss)
Net charge-offs (recoveries)
Selected average balances:
Assets
Loans
Deposits
Statistical data:
Return on average assets (a)
Efficiency ratio (b)
Commercial
Bank
Retail
Bank
Wealth
Management
Finance
Other
Total
$
$
$
2,051
90
603
1,106
342
1,116
20
$ 846
3
119
728
58
$ 176
1
$
$ 49,458
46,435
33,019
$ 2,960
2,236
24,363
$
$
$
$
208
(6)
307
402
29
90
1
$
$
$
(693) $
—
37
12
(164)
(504) $
— $
2
12
111
102 $ 2,514
89
1,078
2,359
263
(2)
3 $ 881
22
— $
5,500
5,232
4,130
$ 20,139 $
—
4,169
n/m
n/m
9,137 $ 87,194
53,903
66,018
—
337
n/m
n/m
1.01 %
65.56
2.26 %
41.68
0.71 %
74.90
1.61 %
78.16
$
$
$
1,761
32
607
964
315
1,057
21
$ 680
11
122
690
22
79
(1)
$
$
$ 47,437
43,481
42,584
$ 2,814
2,063
26,672
$
$
$
$
199
9
298
348
34
106
(3)
$
$
$
(195) $
—
59
1
(39)
(98) $
— $
21 $ 2,466
60
8
(18) 1,068
(5) 1,998
325
(7)
7 $ 1,151
17
— $
5,037
4,906
5,439
$ 20,912 $ 11,072 $ 87,272
50,460
75,481
10
426
—
360
2.23 %
40.57
0.29 %
85.51
1.84 %
69.92
n/m
n/m
n/m
n/m
1.32 %
56.32
Table continues on the following page.
F-97
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Comerica Incorporated and Subsidiaries
(dollar amounts in millions)
Year Ended December 31, 2021
Earnings summary:
Net interest income (expense)
Provision for credit losses
Noninterest income
Noninterest expenses
Provision (benefit) for income taxes
Net income (loss)
Net credit-related (recoveries) charge-offs
Commercial
Bank
Retail
Bank
Wealth
Management
Finance
Other
Total
$
$
$
1,574
(346)
663
871
384
1,328
(12)
$ 565
(5)
123
648
5
40
2
$
$
$
$
$
166
(32)
279
316
36
125
—
$
$
$
(471) $
—
41
1
(100)
(331) $
— $
10 $ 1,844
(384)
(1)
1,123
17
1,861
25
322
(3)
6 $ 1,168
(10)
— $
$ 44,007
41,799
45,602
Selected average balances:
Assets
Loans
Deposits
Statistical data:
2.71 %
Return on average assets (a)
38.78
Efficiency ratio (b)
(a) Return on average assets is calculated based on the greater of average assets or average liabilities and attributed equity.
(b) Noninterest expenses as a percentage of the sum of net interest income and noninterest income excluding net gains (losses) from
securities, a derivative contract tied to the conversion rate of Visa Class B shares and changes in the value of shares obtained through
monetization of warrants.
$ 17,713 $ 20,194 $ 90,152
49,083
77,681
2.24 % n/m
n/m
70.93
$ 3,213
2,382
25,682
5,025
4,902
5,218
0.15 %
93.34
1.30 %
62.42
—
787
—
392
n/m
n/m
$
n/m – not meaningful
F-98
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Comerica Incorporated and Subsidiaries
NOTE 23 - PARENT COMPANY FINANCIAL STATEMENTS
BALANCE SHEETS - COMERICA INCORPORATED
(in millions, except share data)
December 31
Assets
Cash and due from subsidiary banks
Other short-term investments
Receivable due from subsidiary bank
Investment in subsidiaries, principally banks
Accrued income and other assets
Total assets
Liabilities and Shareholders’ Equity
Medium- and long-term debt
Accrued expenses and other liabilities
Total liabilities
Fixed-rate reset non-cumulative perpetual preferred stock, series A, no par value, $100,000
liquidation preference per share:
Authorized - 4,000 shares
Issued - 4,000 shares
Common stock - $5 par value:
Authorized - 325,000,000 shares
Issued - 228,164,824 shares
Capital surplus
Accumulated other comprehensive loss
Retained earnings
Less cost of common stock in treasury - 96,266,568 shares at 12/31/2023 and 97,197,962
shares at 12/31/2022
Total shareholders’ equity
Total liabilities and shareholders’ equity
2023
2022
1,415 $
104
—
5,777
180
7,476 $
764 $
306
1,070
1,810
92
150
4,853
191
7,096
1,593
322
1,915
394
394
1,141
2,224
(3,048)
11,727
(6,032)
6,406
7,476 $
1,141
2,220
(3,742)
11,258
(6,090)
5,181
7,096
$
$
$
$
STATEMENTS OF INCOME - COMERICA INCORPORATED
(in millions)
Years Ended December 31
Income
Income from subsidiaries:
Dividends from subsidiaries
Other interest income
Intercompany management fees
Total income
Expenses
Interest on medium- and long-term debt
Salaries and benefits expense
Other noninterest expenses
Total expenses
Income before benefit for income taxes and equity in undistributed earnings
of subsidiaries
Benefit for income taxes
Income before equity in undistributed earnings of subsidiaries
Equity in undistributed earnings of subsidiaries, principally banks
Net income
Less income allocated to participating securities
Preferred stock dividends
Net income attributable to common shares
2023
2022
2021
$
$
677 $
53
75
805
79
62
13
154
651
(2)
653
228
881
4
23
854 $
1,067 $
13
109
1,189
47
53
46
146
1,043
(3)
1,046
105
1,151
6
23
1,122 $
849
1
235
1,085
20
170
72
262
823
(6)
829
339
1,168
5
23
1,140
F-99
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Comerica Incorporated and Subsidiaries
STATEMENTS OF CASH FLOWS - COMERICA INCORPORATED
(in millions)
Years Ended December 31
Operating Activities
Net income
Adjustments to reconcile net income to net cash provided by operating
activities:
Undistributed losses of subsidiaries, principally banks
Net periodic defined benefit cost
Share-based compensation expense
(Benefit) provision for deferred income taxes
Other, net
Net cash provided by operating activities
Investing Activities
Advance to subsidiary bank
Repayment of subsidiary advance
Other, net
Net cash provided by (used in) investing activities
Financing Activities
Maturities of medium- and long-term debt
Cash dividends paid on preferred stock
Common Stock:
Repurchases
Cash dividends paid
Issuances under employee stock plans
Net cash used in financing activities
Net (decrease) increase in cash and cash equivalents
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period
Interest paid
2023
2022
2021
$
881 $
1,151 $
1,168
(228)
1
18
(2)
28
698
—
150
—
150
(105)
2
22
—
24
1,094
—
—
2
2
(850)
(23)
—
(23)
(17)
(371)
18
(1,243)
(395)
1,810
1,415 $
76 $
(43)
(353)
28
(391)
705
1,105
1,810 $
41 $
$
$
(339)
5
19
(2)
3
854
(150)
—
(1)
(151)
—
(23)
(729)
(369)
34
(1,087)
(384)
1,489
1,105
21
F-100
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Comerica Incorporated and Subsidiaries
NOTE 24 - REVENUE FROM CONTRACTS WITH CUSTOMERS
Revenue from contracts with customers comprises the noninterest income earned by the Corporation in exchange for
services provided to customers. The following table presents the composition of revenue from contracts with customers,
segregated from other sources of noninterest income, by business segment.
(in millions)
Year Ended December 31, 2023
Revenue from contracts with customers:
Card fees
Fiduciary income
Service charges on deposit accounts
Commercial loan servicing fees (a)
Capital markets income (b)
Brokerage fees
Other noninterest income (b)
Total revenue from contracts with customers
Other sources of noninterest income
Total noninterest income
Year Ended December 31, 2022
Revenue from contracts with customers:
Card fees
Fiduciary income
Service charges on deposit accounts
Commercial loan servicing fees (a)
Capital markets income (b)
Brokerage fees
Other noninterest income (b)
Total revenue from contracts with customers
Other sources of noninterest income
Total noninterest income
Year Ended December 31, 2021
Revenue from contracts with customers:
Card fees
Fiduciary income
Service charges on deposit accounts
Commercial loan servicing fees (a)
Capital markets income (b)
Brokerage fees
Other noninterest income (b)
Total revenue from contracts with customers
Other sources of noninterest income
Total noninterest income
Commercial
Bank
Retail
Bank
Wealth
Management
Finance &
Other
Total
$
$
$
$
$
$
231 $
1
125
11
17
—
2
387
216
603 $
227 $
—
132
11
11
—
3
384
223
607 $
250 $
—
136
13
17
—
(6)
410
253
663 $
45 $
—
55
—
—
—
14
114
5
119 $
42 $
—
57
—
—
—
16
115
7
122 $
44 $
—
54
—
—
—
17
115
8
123 $
4 $
234
5
—
—
30
23
296
11
307 $
4 $
233
6
—
—
21
24
288
10
298 $
4 $
231
5
—
—
14
17
271
8
279 $
— $
—
—
—
—
—
1
1
48
49 $
— $
—
—
—
—
—
1
1
40
41 $
— $
—
—
—
—
—
—
—
58
58 $
280
235
185
11
17
30
40
798
280
1,078
273
233
195
11
11
21
44
788
280
1,068
298
231
195
13
17
14
28
796
327
1,123
Included in commercial lending fees on the Consolidated Statements of Income.
(a)
(b) Excludes derivative, warrant and other miscellaneous income.
(c) Effective January 1, 2023, the Corporation reported derivative income, syndication agent fees (previously a component of commercial
lending fees) and investment banking fees (previously a component of other noninterest income) as a combined item captioned by capital
markets income on the Consolidated Statements of Comprehensive Income. Prior periods have been adjusted to conform to this
presentation, and the changes in presentation do not impact total noninterest income
Revenue from contracts with customers did not generate significant contract assets and liabilities.
F-101
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Comerica Incorporated and Subsidiaries
NOTE 25 - LEASES
As a lessee, the Corporation has entered into operating leases for the majority of its real estate locations, primarily
retail and office space. Total lease expense for the years ended December 31, 2023, 2022 and 2021 were as follows:
(in millions)
Years Ended December 31
Operating lease expense
Variable lease expense
Less sublease income
Total lease expense
2023
2022
2021
$
$
67 $
18
(1)
84 $
68 $
17
(1)
84 $
65
15
(1)
79
Supplemental balance sheet information related to leases is summarized as follows:
(dollar amounts in millions)
Years Ended December 31
Included in accrued income and other assets
Right-of-use (ROU) assets
Included in accrued expenses and other liabilities
Operating lease liabilities
Weighted average discount rate
Weighted average remaining lease term in years
2023
2022
2021
$
317
$
338
$
317
388
3.72%
9
406
3.53%
9
356
3.33%
8
Supplemental cash flow information related to leases is summarized as follows:
(in millions)
Years Ended December 31
Cash paid for amounts included in the measurement of lease liabilities
2023
2022
2021
Operating cash flows from operating leases
ROU assets obtained in exchange for new liabilities
$
69 $
28
66 $
80
66
64
As of December 31, 2023, the contractual maturities of operating lease liabilities were as follows:
(in millions)
Years Ended December 31
2024
2025
2026
2027
2028
Thereafter
Total contractual maturities
Less imputed interest
Total operating lease liabilities
$
$
70
68
61
50
42
169
460
(72)
388
As a lessor, the Corporation leases certain types of manufacturing and warehouse equipment as well as public and
private transportation vehicles to its customers. The Corporation recognized lease-related revenue, primarily interest income
from sales-type and direct financing leases of $40 million, $21 million and $12 million for the years ended December 31, 2023,
2022 and 2021, respectively. The Corporation's net investment in sales-type and direct financing leases was $761 million and
$659 million at December 31, 2023 and 2022, respectively.
F-102
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Comerica Incorporated and Subsidiaries
As of December 31, 2023, the contractual maturities of sales-type and direct financing lease receivables were as
follows:
(in millions)
Years Ended December 31
2024
2025
2026
2027
2028
Thereafter
Total lease payments receivable
Unguaranteed residual values
Less deferred interest income
Total lease receivables (a)
(a) Excludes net investment in leveraged leases of $46 million.
$
$
118
154
90
49
39
268
718
61
(18)
761
F-103
REPORT OF MANAGEMENT
The management of Comerica Incorporated (the Corporation) is responsible for the accompanying consolidated
financial statements and all other financial information in this Annual Report. The consolidated financial statements have been
prepared in conformity with U.S. generally accepted accounting principles and include amounts which of necessity are based on
management’s best estimates and judgments and give due consideration to materiality. The other financial information herein is
consistent with that in the consolidated financial statements.
In meeting its responsibility for the reliability of the consolidated financial statements, management develops and
maintains effective internal controls, including those over financial reporting, as defined in the Securities and Exchange Act of
1934, as amended. The Corporation’s internal control over financial reporting includes policies and procedures that (1) pertain
to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the
assets of the Corporation; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of
the consolidated financial statements in conformity with U.S. generally accepted accounting principles, and that receipts and
expenditures of the Corporation are made only in accordance with authorizations of management and directors of the
Corporation; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or
disposition of the Corporation’s assets that could have a material effect on the consolidated financial statements.
Management assessed, with participation of the Corporation’s Chief Executive Officer and Chief Financial Officer,
internal control over financial reporting as it relates to the Corporation’s consolidated financial statements presented in
conformity with U.S. generally accepted accounting principles as of December 31, 2023. The assessment was based on criteria
for effective internal control over financial reporting described in Internal Control—Integrated Framework issued by the
Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria). Based on this
assessment, management determined that internal control over financial reporting is effective as it relates to the Corporation’s
consolidated financial statements presented in conformity with U.S. generally accepted accounting principles as of
December 31, 2023.
Because of inherent limitations, internal control over financial reporting may not prevent or detect misstatements.
Also, projections of any evaluation of effectiveness to future periods are subject to risk that controls may become inadequate
because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
The Corporation's internal control over financial reporting as of December 31, 2023 has been audited by Ernst &
Young LLP, an independent registered public accounting firm, as stated in their accompanying report.
The Corporation’s Board of Directors oversees management’s internal control over financial reporting and financial
reporting responsibilities through its Audit Committee as well as various other committees. The Audit Committee, which
consists of directors who are not officers or employees of the Corporation, meets regularly with management, internal audit and
the independent public accountants to assure that the Audit Committee, management, internal auditors and the independent
public accountants are carrying out their responsibilities, and to review auditing, internal control and financial reporting matters.
Curtis C. Farmer
Chairman, President and
Chief Executive Officer
James J. Herzog
Senior Executive Vice President and
Chief Financial Officer
Mauricio A. Ortiz
Executive Vice President,
Chief Accounting Officer and
Controller
F-104
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Shareholders and the Board of Directors of Comerica Incorporated
Opinion on Internal Control over Financial Reporting
We have audited Comerica Incorporated and subsidiaries’ internal control over financial reporting as of December 31, 2023,
based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of
the Treadway Commission (2013 framework) (the COSO criteria). In our opinion, Comerica Incorporated and subsidiaries (the
Corporation) maintained, in all material respects, effective internal control over financial reporting as of December 31, 2023,
based on the COSO criteria.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States)
(PCAOB), the consolidated balance sheets of the Corporation as of December 31, 2023 and 2022, and the related consolidated
statements of income, comprehensive income, changes in shareholders' equity and cash flows for each of the three years in the
period ended December 31, 2023, and the related notes of the Corporation and our report dated February 28, 2024 expressed an
unqualified opinion thereon.
Basis for Opinion
The Corporation’s management is responsible for maintaining effective internal control over financial reporting and for its
assessment of the effectiveness of internal control over financial reporting included in the accompanying Report of
Management. Our responsibility is to express an opinion on the Corporation’s internal control over financial reporting based on
our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the
Corporation in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and
Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all
material respects.
Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material
weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and
performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a
reasonable basis for our opinion.
Definition and Limitations of Internal Control over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally
accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures
that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and
dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit
preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and
expenditures of the company are being made only in accordance with authorizations of management and directors of the
company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or
disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also,
projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate
because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
/s/ Ernst & Young LLP
Dallas, TX
February 28, 2024
F-105
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Shareholders and the Board of Directors of Comerica Incorporated
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of Comerica Incorporated and subsidiaries (the Corporation) as
of December 31, 2023 and 2022, and the related consolidated statements of income, comprehensive income, changes in
shareholders' equity and cash flows for each of the three years in the period ended December 31, 2023, and the related notes
(collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present
fairly, in all material respects, the financial position of the Corporation at December 31, 2023 and 2022, and the consolidated
results of its operations and its cash flows for each of the three years in the period ended December 31, 2023, in conformity
with U.S. generally accepted accounting principles.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States)
(PCAOB), the Corporation’s internal control over financial reporting as of December 31, 2023, based on criteria established in
Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission
(2013 framework) and our report dated February 28, 2024, expressed an unqualified opinion thereon.
Basis for Opinion
These financial statements are the responsibility of the Corporation’s management. Our responsibility is to express an opinion
on the Corporation’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and
are required to be independent with respect to the Corporation in accordance with the U.S. federal securities laws and the
applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to
error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial
statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included
examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included
evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall
presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matter
The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that
was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that
are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. The
communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken
as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit
matter or on the accounts or disclosures to which it relates.
Description of
the Matter
Allowance for credit losses
The Corporation’s loan portfolio and the associated allowance for credit losses (ACL) were $52.1 billion
and $728 million as of December 31, 2023, respectively. The allowance for credit losses represents
management’s estimate of expected credit losses over the contractual life of the loan portfolio at the
balance sheet date. The allowance for credit losses includes credit loss estimates for loans evaluated on an
individual basis, such as for certain nonaccrual loans and collective loss estimates for pools of loans with
similar risk characteristics. The Corporation determines the allowance for pools of loans with similar risk
characteristics by applying loss factors to amortized cost balances over the remaining contractual life.
Loss factors are based on estimated probability of default, set to a default horizon based on contractual
life, and loss given default. Through the use of various models, historical estimates are calibrated to
economic forecasts over the reasonable and supportable forecast period based on economic variables that
statistically correlate with each of the probability of default and loss given default pools. Qualitative
adjustments are then made to bring the allowance to the level management believes is appropriate based
on factors that have not otherwise been fully accounted for in the quantitative analysis. Examples of these
adjustments include 1) foresight risk, 2) input imprecision, and 3) model imprecision.
Auditing management’s estimate of the allowance for credit losses involved a high degree of subjectivity
due to the highly judgmental nature of the expected loss models and the qualitative adjustments included
in the ACL. Management applies significant judgment when selecting the expected loss models to be used
to determine the allowance and the inputs used in those models as well as in applying qualitative
adjustments. These determinations could have a significant effect on the ACL.
F-106
How We
Addressed the
Matter in Our
Audit
We obtained an understanding of the Corporation’s process for establishing the ACL, including selection
of the models, inputs used in the models, monitoring of the models, and the qualitative adjustments made
to the ACL. We evaluated the design and tested the operating effectiveness of the controls over 1)
determining the appropriateness of the models used to estimate quantitative components of the ACL, 2)
validating the models used to estimate quantitative components of the ACL, 3) selecting the appropriate
inputs and assumptions within the models, 4) monitoring of the models including the assessment of the
output, 5) determining the appropriateness of the qualitative reserve methodology, including the
identification and the assessment for the need for qualitative adjustments, 6) validating the relevance and
reliability of data used to estimate the various components of the qualitative reserves, and 7)
management’s review and approval of qualitative adjustments and model output.
To test the appropriateness of the models used by management to estimate quantitative components of the
ACL, with the support of specialists, we evaluated the model methodology and model performance, and
tested key modeling assumptions used within the models. To test the qualitative adjustments, we
evaluated the identification and measurement of the qualitative adjustments, including the basis for
concluding an adjustment was warranted when considering the potential impact of foresight risk, input
imprecision and model imprecision, evaluated the appropriateness of the data used by the Corporation to
estimate the qualitative adjustments, recalculated the analyses used by management to determine the
qualitative adjustments, and analyzed the changes in assumptions and components of the qualitative
reserves relative to changes in the Corporation’s loan portfolio. For example, we evaluated the data and
information utilized by management to estimate the qualitative adjustments by independently obtaining
and comparing to historical loan data, third-party macroeconomic data, and peer bank data to assess the
appropriateness of the information and to consider whether new or contradictory information existed. We
also evaluated if qualitative adjustments were based on a comprehensive framework, well-documented,
and consistently applied.
/s/ Ernst & Young LLP
We have served as the Corporation’s auditor since 1992.
Dallas, TX
February 28, 2024
F-107
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly
caused this report to be signed on its behalf by the undersigned, thereunto duly authorized as of February 28, 2024.
SIGNATURES
COMERICA INCORPORATED
By:
/s/ Curtis C. Farmer
Curtis C. Farmer
Chairman, President and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed by the following
persons on behalf of the registrant in the capacities indicated as of February 28, 2024.
/s/ Curtis C. Farmer
Curtis C. Farmer
/s/ James J. Herzog
James J. Herzog
/s/ Mauricio A. Ortiz
Mauricio A. Ortiz
/s/ Arthur G. Angulo
Arthur G. Angulo
/s/ Nancy Avila
Nancy Avila
/s/ Michael E. Collins
Michael E. Collins
/s/ Roger A. Cregg
Roger A. Cregg
/s/ M. Alan Gardner
M. Alan Gardner
/s Jacqueline P. Kane
Jacqueline P. Kane
/s/ Derek J. Kerr
Derek J. Kerr
/s/ Richard G. Lindner
Richard G. Lindner
/s/ Jennifer H. Sampson
Jennifer H. Sampson
/s/ Barbara R. Smith
Barbara R. Smith
/s/ Robert S. Taubman
Robert S. Taubman
/s/ Robert S. Taubman
Reginald M. Turner, Jr.
/s/ Nina G. Vaca
Nina G. Vaca
/s/ Michael G. Van de Ven
Michael G. Van de Ven
Chairman, President, Chief Executive Officer and
Director (Principal Executive Officer)
Senior Executive Vice President and Chief Financial Officer
(Principal Financial Officer)
Executive Vice President, Chief Accounting Officer
and Controller (Principal Accounting Officer)
Director
Director
Director
Director
Director
Director
Director
Director
Director
Director
Director
Director
Director
Director
S-1
[This page intentionally left blank]
SHAREHOLDER INFORMATION
COMMON STOCK:
Comerica’s common stock trades under the symbol CMA on the New York Stock Exchange (NYSE). Subject to approval of the board
of directors and applicable regulatory requirements, dividends customarily are paid on a quarterly basis.
TRANSFER AGENT / REGISTRATION AND SHAREHOLDER ASSISTANCE:
Inquiries related to shareholder name change, address or ownership of stock, and lost or stolen stock certificates
•
• Eliminate duplicate mailings received at one address
• Reinvest dividends and invest up to $10,000 each month for the purchase of additional shares
• Direct deposit of dividends
CONTACT INFORMATION:
Website: computershare.com/investor
Email: web.queries@computershare.com
Phone: 877.536.3551 or 781.575.3100
WRITTEN REQUESTS:
Computershare
P.O. Box 43006
Providence, RI 02940-3078
CERTIFIED/OVERNIGHT MAIL:
Computershare
150 Royall St., Suite 101
Canton, MA 02021
INVESTOR RELATIONS INFORMATION:
investor.comerica.com
InvestorRelations@comerica.com
833.571.0486
GENERAL INFORMATION:
Directory Services
Product Information
800.521.1190
800.292.1300
®
COMERICA CORPORATE HEADQUARTERS
Comerica Bank Tower
1717 Main Street
Dallas, Texas 75201
Follow Us