Comerica Incorporated
Annual Report
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2024 COMERICA INCORPORATED ANNUAL REPORT
Comerica Incorporated
Comerica Incorporated (NYSE: CMA) is a financial services company headquartered in Dallas, Texas, and strategically
aligned by three business segments: The Commercial Bank, The Retail Bank and Wealth Management. Comerica, one
of the 25 largest U.S. commercial financial holding companies, focuses on building relationships and helping people and
businesses be successful.
Comerica provides banking centers across the country with locations in Arizona, California, Florida, Michigan and Texas.
Founded 175 years ago in Detroit, Michigan, Comerica continues to expand into new regions, including its Southeast
Market, based in North Carolina, and Mountain West Market in Colorado. Comerica has offices in 17 states and services 14
of the 15 largest U.S. metropolitan areas, as well as Canada and Mexico. As of December 31, 2024, Comerica had:
$79.3 billion
in assets
$50.5 billion
in loans
$63.8 billion
in deposits
381
banking centers
7,766
employees (FTE)
Board of Directors
Senior Leadership Team
Curtis C. Farmer
Chairman, President and
Chief Executive Officer,
Comerica Incorporated
and Comerica Bank
Arthur G. Angulo(1) (4)
Consultant,
Ludwig Advisors LLC
Nancy Avila(4)
Chief Information Officer,
Analog Devices, Inc.
Roger A. Cregg(1) (3) (4)
Former President and Chief
Executive Officer,
AV Homes, Inc.
M. Alan Gardner(2)
Executive Vice President
and Chief People Officer,
Frontier Communications Parent, Inc.
Derek J. Kerr(1) (3)
Retired Vice Chair and Chief Financial
Officer, American Airlines Group
Inc. and Retired President,
American Eagle
Richard G. Lindner(1) (2) (3)
Retired Senior Executive Vice
President and Chief Financial Officer,
AT&T, Inc.
Jennifer H. Sampson(4)
McDermott-Templeton President and
Chief Executive Officer,
United Way of Metropolitan Dallas
Barbara R. Smith(2) (5)
Retired Executive Chairman
and Former President and
Chief Executive Officer,
Commercial Metals Company
Robert S. Taubman(4)
Chairman and Chief Executive Officer,
The Taubman Realty Group LLC; and
Chairman, President and
Chief Executive Officer,
The Taubman Company LLC
Nina G. Vaca (2)
Chairman and Chief Executive Officer,
Pinnacle Technical Resources, Inc.
and Vaca Industries Inc.
Michael G. Van de Ven(2)
Executive Advisor and Former
President and Chief Operating Officer,
Southwest Airlines Co.
Curtis C. Farmer
Chairman, President and
Chief Executive Officer
James J. Herzog
Senior Executive Vice President,
Chief Financial Officer
Corey R. Bailey
Executive Vice President,
Middle Market & Business Banking
Wendy W. Bridges
Executive Vice President,
Corporate Affairs
Megan D. Burkhart
Senior Executive Vice President,
Chief Administrative Officer
J. McGregor Carr
Executive Vice President,
Wealth Management
Melinda A. Chausse
Senior Executive Vice President,
Chief Credit Officer
Megan D. Crespi
Senior Executive Vice President,
Chief Operating Officer
Allysun C. Fleming
Executive Vice President,
Payments
Larry E. Franco
Executive Vice President,
Retail & Small Business Banking
Brian S. Goldman
Senior Executive Vice President,
Chief Risk Officer
Von E. Hays
Senior Executive Vice President,
Chief Legal Officer
Bruce Mitchell
Executive Vice President,
Chief Information Officer
Christine M. Moore
Executive Vice President,
Chief Audit Executive
Michael T. Ritchie
Executive Vice President,
National & Specialty Businesses
Peter L. Sefzik
Senior Executive Vice President,
Chief Banking Officer
James H. Weber
Executive Vice President,
Chief Experience Officer
(1) Audit Committee (2) Governance, Compensation and Nominating Committee (3) Qualified Legal Compliance Committee (4) Enterprise Risk Committee (5) Independent Facilitating Director
COMERICA INCORPORATED
1
2024 Company Highlights
$3.2 billion
in green loans and commitments as of
year end, an 11% increase over 2023
Received American Bankers Association (ABA) Foundation
Community Commitment Award for impact in supporting Southern
Dallas small businesses and nonprofits through
Comerica BusinessHQ™
Opened 340,000-square foot
Great Lakes Campus office
in Farmington Hills, Michigan
More than 84,000 hours of volunteer time equating to more than
$2.8 million donated to nonprofits by Comerica colleagues
Addition of more than
100
small business bankers to enhance
solutions for small businesses
Celebrated
175th anniversary
of our founding on Aug. 17, 1849
$1.6 billion
portfolio of public welfare
investments, including
approximately $121 million
in 2024 commitments
Named to Newsweek’s list of
America’s Most
Responsible
Companies
for sixth consecutive year
Ranked as one of the
top 100 American
companies
by JUST Capital in its rating of
performance regarding workers,
communities, customers,
environment, and shareholders
and governance
2024
Top Workplaces USA
award issued by Energage
and published by
USA Today
Resumed share repurchases
More than $9 million in financial
investments from Comerica Bank
and the Comerica Charitable
Foundation made to empower
nonprofits and other organizations
serving our communities
Comerica BusinessHQ™
expanded access to increase
small business participants
by 120%
Financials
COMPANY HIGHLIGHTS
2
0.15%
0.04%
0.10%
Past 10
years
2023
2024
Historically Low Net
Charge-Offs
(% of average total loans; YTD)
10.00% 11.09% 11.89%
2022
2023
2024
Common Equity Tier 1
Well Above Average
$45.58
$46.79
2023
2024
Grew Book Value
(per share; period-end)
Comerica’s Core Values
One Comerica
We believe that growth is achieved when
our colleagues act with common purpose in
support of shared goals.
The Customer Comes First
We put our customers at the center of every
conversation and make their satisfaction our
highest priority.
The Bigger Possible
We encourage a culture of bold and relentless
curiosity, where any idea has a chance to
be heard.
A Force for Good
We value empathy and integrity as we work
to support a more diverse, inclusive and
sustainable workplace, and world.
Trust. Act. Own.
Everyone is empowered to do what’s
right, speak up, and be heard, while
being accountable for their actions
and commitments.
Significant 2024
Corporate Achievements
• Invested in Talent: Hired sales
colleagues aligned with growth
strategies in Commercial Bank,
Small Business, Comerica Financial
Advisors, Payments & Capital Markets
• Enabled Customer Success:
Prioritized introduction of Comerica’s
Investment Banking team to provide
M&A advisory services to our
customer base
• Returned Capital: Resumed share
repurchases in 4Q24 and replenished
authorization for future repurchases
• Advanced Technology: Continued
progress in digital transformation with
goal of migrating almost all apps to
Cloud or SaaS platforms in 2025
• Modernized Real Estate: Continued
to transform real estate footprint with
new Great Lakes Campus, our largest
corporate office
• Supported Communities: Launched
a new program to assist nonprofit
organizations in scaling their
businesses to more broadly
support communities
Curtis C. Farmer
Chairman, President
and Chief Executive Officer
To Our Shareholders
To my fellow shareholders,
In 2024, Comerica Bank celebrated a remarkable milestone – 175 years
of excellence and dedication to our customers. For nearly two centuries,
we’ve strived to raise expectations of what a bank can be. While the banking
industry, business landscape, political climate and global environment
have become increasingly more complex since our humble beginnings, the
cornerstone of our success has proven tried and true: maintain a relationship-
based approach to banking to fulfill the needs of our customers, colleagues
and communities.
As always, the roadmap to our success is our corporate priorities across
four categories: colleagues, customers, community and performance.
By maintaining a clear focus on our priorities, we believe we have made a
lasting impact in each area to best benefit our shareholders.
Legacy begins within
Comerica’s resilience over 175 years is made possible because of our dynamic
team of colleagues. We value the strong work culture we have established, and
we continue to make the necessary investments to support this strength. In
addition to our dedicated, experienced colleagues being a source of pride, we
continue to establish ourselves as a desirable destination for new, high-impact
talent. For the second consecutive year, we set a record for the number of
employment applications we received in a single year. In addition, through
our competitive compensation, comprehensive benefits and work culture, we
achieved a 97 percent offer acceptance rate.
Investments made in elevating our facilities energized our colleagues. In late
2023, we introduced our new Business & Innovation Hub in Frisco, Texas.
With a legacy of helping our customers and communities rooted in Detroit,
it was only appropriate that we celebrate our 175th anniversary with the
introduction of a new facility in Southeast Michigan, where we plan to house
our employees for decades to come. The 340,000-square foot Great Lakes
Campus in Farmington Hills, Michigan – our largest corporate office – is the
new home to approximately 2,000 colleagues, providing vibrant, high-energy
and collaborative spaces with advanced technology and amenities.
We continually evaluate our facilities to ensure we are creating exceptional
experiences for colleagues and customers. By transitioning to newer, modern
facilities, we can strengthen efficiencies and prioritize investments that
provide innovative opportunities to better serve our customers, colleagues
and communities.
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COMERICA INCORPORATED
2024 COMERICA INCORPORATED ANNUAL REPORT
Enduring commitment to our customers
As an organization built on establishing meaningful, lasting relationships, we consistently leverage our expertise in banking
business while living our core value of “The Customer Comes First.” The relationships fostered with our customers span
generations and their support has played a key part in our 175-year legacy. In 2024, we continued our focus on enhancing
solutions for small businesses. Specifically, we added more than 100 small business bankers across all markets, increasing
our expertise and leading to significant improvement in overall customer satisfaction. We continued expanding our
signature offerings for this segment, such as doubling the number of members for Comerica BusinessHQ™ in Dallas, where
small business owners receive a no-cost office, business counsel, access to capital providers and more. In addition, we
proudly doubled the number of loans issued to small business customers with the launch of Comerica Convenient Capital,
a program designed to streamline the application process that provides quick loan decisions and funding.
Small business and business banking customers continue to benefit from Comerica Maximize®, which allows qualifying
customers to earn interest while growing and protecting their businesses with essential treasury services. We also
streamlined the commercial loan closing process to enhance efficiency and deliver an improved customer experience, and
our loan funding time is aligned with newly implemented industry standards.
Through Comerica Financial Advisors, powered by Ameriprise Financial, we continue to attract new clients and support
the range of customer needs with leading-class solutions. On our retail side, we released a digital CD product, allowing
customers to apply when and where it is convenient for them. We also advanced our cyber intelligence and cyber fraud
programs, while introducing a program designed to educate customers on the latest tactics and best practices to support
their overall financial health.
We prioritized introduction of Comerica’s Investment Banking team to provide mergers and acquisitions advisory services
to our customer base as we continued to build out the team. In addition, we enhanced payment product offerings,
established a commercial deposit desk to better assist customers and expanded distribution capabilities to bank-brokered
deposits, attracting more third-party payments providers.
In hand with product and service enhancements, we continually review our footprint to ensure we allocate the appropriate
resources to support our customers and strategic growth objectives. As our brand awareness and customer base in the
Southeast increased, we sought to expand resources and banker teams to meet the needs of this emerging market.
Unwavering focus on results
In many ways, the banking industry and the economic environment reached an inflection point in 2024, and we saw
positive trends in customer optimism, rate decreases and strong deposit trends. Comerica understands the importance
of strong capital, credit and liquidity to delivering long-term success, and we believe those foundational strengths
shined through in 2024. We prioritized further enhancing our foundation to better position ourselves for long-term success.
Part of the inflection in 2024 was the resumption of our share repurchase program, which we feel is a clear testament to
our financial strength. Credit has historically been and continues to be a competitive advantage for us as we outperformed
peers with low net charge-offs and appropriate reserves. Additionally, we have seen favorable trends from targeted
investments that have shown positive upside for revenue, including in areas like capital markets, treasury management
and wealth management. Along with added headcount in traditional markets and our continued expansion into the
Southeast and Mountain West regions, we believe the outlook for growth remains strong.
WORD FROM THE CEO
4
COMERICA INCORPORATED
As we move forward, we feel we have a compelling model. Our geographic
strategy is both diversified and growth oriented with a presence in 14 of the
15 largest metropolitan statistical areas in the country and nine of the 10
fastest-growing markets overall. We believe our differentiated commercial
model delivers expertise to our customers, and that coupled with strategic
investments supports our ability to win new business and expand existing
relationships. Our prudent, conservative approach has proven successful,
and we remain confident in its performance for many more years to come.
A legacy of service, a future of impact
Comerica is a proud supporter of the health and vibrancy of the
communities we serve. Through contributions and investments,
award-winning programs and colleague volunteerism, we continue to serve
as a “Force for Good” in our local communities.
In 2024, our colleagues collectively volunteered a record 84,000+
volunteer hours, equating to more than $2.8 million, according to the
Internal Revenue Service. Our commitment to volunteerism is reinforced
by our financial investments, totaling more than $9 million from Comerica
Bank and the Comerica Charitable Foundation to support nonprofits and
other organizations that strengthen our communities.
Brick by brick, we’re building a legacy of making a difference in our
communities and within our organization, and this effort has not gone
unnoticed. The American Bankers Association (ABA) Foundation awarded
Comerica the ABA Foundation Community Commitment Award in the
category of Community & Economic Development for our impact in
supporting Southern Dallas small businesses and nonprofits through
Comerica BusinessHQ™. Additionally, for the ninth consecutive year,
Points of Light named Comerica to its annual list of The Civic 50, a
recognition of the top community-minded companies from across the
country. We have a company culture that remains unmatched and is a key
reason why Comerica was named a recipient of the 2024 Top Workplaces
USA award issued by Energage.
5
• Education: Of the $9 million invested
by Comerica Bank and the Comerica
Charitable Foundation in nonprofits to
support our communities, $2.5 million
supported educational programs,
such as mentoring, leadership and
after school programming
• Low-Income Housing Tax Credits:
Invested $96 million to create
approximately 750 units of affordable
housing for underserved families
across our footprint
• New Market Tax Credits: Invested
$24 million to spur economic
development in distressed
areas, creating job opportunities
and providing services to help
transform communities
Major Community Investments
5
COMERICA INCORPORATED
2024 COMERICA INCORPORATED ANNUAL REPORT
WORD FROM THE CEO
6
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, 2024
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
38-1998421
(State or Other Jurisdiction of Incorporation)
(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
Trading symbol
Name of each exchange on which registered
Common Stock, $5 par value
CMA
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
☒
Accelerated filer
☐
Non-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 28, 2024 (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 $6.7 billion based on the closing price on the New
York Stock Exchange on that date of $51.04 per share. For purposes of this Form 10-K only, it has been assumed that all shares of common
stock the registrant's Trust Department holds for Comerica’s employee plans, and all shares of common stock the registrant’s directors and
executive officers hold, are shares held by affiliates.
At February 20, 2025, the registrant had outstanding 131,350,607 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 29, 2025.
TABLE OF CONTENTS
Forward-Looking Statements
1
PART I
3
Item 1. Business.
3
Item 1A. Risk Factors.
16
Item 1B. Unresolved Staff Comments.
28
Item 1C. Cybersecurity.
28
Item 2. Properties.
29
Item 3. Legal Proceedings.
29
Item 4. Mine Safety Disclosures.
29
PART II
30
Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity
Securities.
30
Item 6. Reserved.
31
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations.
31
Item 7A. Quantitative and Qualitative Disclosures About Market Risk.
31
Item 8. Financial Statements and Supplementary Data.
31
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.
31
Item 9A. Controls and Procedures.
31
Item 9B. Other Information.
32
Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections.
32
PART III
32
Item 10. Directors, Executive Officers and Corporate Governance.
32
Item 11. Executive Compensation.
32
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder
Matters.
32
Item 13. Certain Relationships and Related Transactions, and Director Independence.
32
Item 14. Principal Accountant Fees and Services.
32
PART IV
33
Item 15. Exhibits and Financial Statement Schedules.
33
Item 16. Form 10-K Summary.
37
FINANCIAL REVIEW AND REPORTS
F-1
SIGNATURES
S-1
FORWARD-LOOKING STATEMENTS
This report includes forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. In
addition, Comerica Incorporated ("Comerica" or 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. Words
such as “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, 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 impact the Corporation's net interest income and
balance sheet;
•
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, customers and partners, 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;
•
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;
1
•
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 has impacted, and could continue to negatively impact, the Corporation's business, profitability and stock price;
•
methods of reducing risk exposures might not be effective;
•
catastrophic events 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 Federal Deposit Insurance
Corporation.
2
PART I
Item 1. Business.
GENERAL
Comerica Incorporated 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), Comerica was among the 25 largest commercial United States (“U.S.”)
financial holding companies. As of December 31, 2024, Comerica owned directly or indirectly all the outstanding common
stock of two active banking subsidiaries (Comerica Bank, a Texas banking association, and Comerica Bank & Trust, National
Association) as well as non-banking subsidiaries. At December 31, 2024, Comerica had total assets of approximately $79.3
billion, total deposits of approximately $63.8 billion, total loans of approximately $50.5 billion and shareholders’ equity of
approximately $6.5 billion.
Comerica has strategically aligned its operations into three major business segments: the Commercial Bank, the Retail
Bank, and Wealth Management. 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 Financial Institutions Group ("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 name representing this strategic relationship is Comerica Financial
Advisors, powered by Ameriprise Financial.
Comerica provides information about the net interest income and noninterest income it received from its 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, 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, South Carolina and
Colorado, and has made other 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, hedge funds, private equity firms, 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
3
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.
Finally, the industry in which Comerica operates 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
in which it operates 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 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 Federal Reserve
Bank ("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 and the Securities and Exchange Commission (“SEC”) (in the
case of Comerica Securities, Inc.); and the Department of Insurance and Financial Services of the State of Michigan (in the case
of 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 (the "Exchange Act"), 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. Comerica expects that the Trump administration will seek to implement a regulatory reform agenda
that is significantly different from that of the Biden administration, impacting the rulemaking, supervision, examination and
enforcement priorities of the federal banking agencies. 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.
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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 (the “Tailoring Rules”). 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.
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 the 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 another bank holding company (including a
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."
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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. 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. Total capital is
the amount equal to Tier 1 capital plus Tier 2 capital. More information is set forth under the caption “Capital” in the Financial
Section of this report.
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, 6.0 percent and 8.0 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.
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At December 31, 2024, 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)
Comerica
Incorporated
(Consolidated)
Comerica
Bank
December 31, 2024
CET1 capital (minimum $3.3 billion (Consolidated))
$
8,667
$
8,547
Tier 1 capital (minimum $4.4 billion (Consolidated))
9,061
8,547
Total capital (minimum $5.8 billion (Consolidated))
10,363
9,799
Risk-weighted assets
72,903
72,833
Average assets (fourth quarter)
81,797
81,643
CET1 capital to risk-weighted assets (minimum-4.5%)
11.89 %
11.74 %
Tier 1 capital to risk-weighted assets (minimum-6.0%)
12.43
11.74
Total capital to risk-weighted assets (minimum-8.0%)
14.21
13.45
Tier 1 capital to average assets (minimum-4.0%)
11.08
10.47
Capital conservation buffer (minimum-2.5%)
6.21
5.45
December 31, 2023
CET1 capital (minimum $3.4 billion (Consolidated))
$
8,414
$
8,007
Tier 1 capital (minimum $4.6 billion (Consolidated))
8,808
8,007
Total capital (minimum $6.1 billion (Consolidated))
10,263
9,362
Risk-weighted assets
75,901
75,783
Average assets (fourth quarter)
87,538
87,423
CET1 capital to risk-weighted assets (minimum-4.5%)
11.09 %
10.57 %
Tier 1 capital to risk-weighted assets (minimum-6.0%)
11.60
10.57
Total capital to risk-weighted assets (minimum-8.0%)
13.52
12.35
Tier 1 capital to average assets (minimum-4.0%)
10.06
9.16
Capital conservation buffer (minimum-2.5%)
5.52
4.35
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
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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, 2025, Comerica's subsidiary banks could declare aggregate
dividends of approximately $782 million from retained net profits of the preceding two years. Comerica's subsidiary banks
declared dividends of $200 million in 2024, $675 million in 2023 and $1.0 billion in 2022.
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 individual "affiliate" (as defined by Section 23A of the Federal
Reserve Act, as implemented by Regulation W) to no more than 10% of the institution’s total capital and surplus, and limits the
aggregate outstanding amount of any insured depository institution’s covered transactions with all of its affiliates to no more
than 20% of its total capital and surplus. “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 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 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.
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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
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. On November 14, 2023, the FRB
issued a proposal to lower the maximum interchange fee a large debit card issuer can receive for a debit card transaction. The
FRB has not yet issued a final rule.
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 "computer-
security" incidents within thirty-six (36) hours after the bank determines that a computer-security incident has occurred. The
rule defines what constitutes a reportable computer-security incident and also requires bank service providers to provide notice
to their respective banking organization customers of certain computer-security incidents.
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 in 2023 (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. There have also been ongoing discussions and proposals in
the U.S. Congress with respect to new federal data privacy and security laws to which Comerica could become subject, if
enacted.
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. State laws similar to the FCRA 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
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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 2024, Comerica’s FDIC insurance expense totaled $76 million.
On October 18, 2022, the FDIC finalized a rule that would increase initial base deposit insurance assessment rates by
two 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 and an additional
$13 million during the year ended December 31, 2024.
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 Transaction Reporting Act of 1970, 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 National AML Priorities every four
years, 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.
Although the January 1, 2025, compliance date has passed, the beneficial ownership information reporting requirement under
the CTA is subject to ongoing litigation, and whether the requirement will be enforced going forward remains an open question.
Comerica will continue to monitor regulatory developments and ongoing litigation related to the CTA, including future FinCEN
rulemakings, and will continue to assess the ultimate impact of the CTA on Comerica, including on its Bank Secrecy Act and
AML policies and procedures.
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Office of Foreign Assets Control Sanctions Regulation
The U.S. Treasury Department's Office of Foreign Assets Control (“OFAC”) is responsible for administering
economic sanctions that affect transactions with designated foreign countries, nationals and others, as required 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 or with persons located in, resident of, or organized
under the laws of 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) blocking of assets in which the government
of a sanctioned country or sanctioned persons 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 a list of persons and organizations
subject to sanctions, including, among others, those suspected of aiding, harboring or engaging in terrorist acts, known as the
Specially Designated Nationals and Blocked Persons List. 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, financial 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 increased as a
result of the bank failures in the spring of 2023.
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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 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 June 20, 2024, the FDIC released a final rule that requires 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 preparing to
file the informational filing as required by the final rule.
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 2024, the FRB, OCC and several other federal financial regulators revised and re-proposed rules, previously
proposed in 2016, 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.
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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 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, and a lower threshold of $25 million in swap dealing activities with "special entities" as
such term is defined in 17 CFR 23.401(c). Comerica's swap dealing activities for purposes of the de minimis exception are
currently below these thresholds.
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, making proper loan underwriting 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.
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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).
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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-
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:
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The borrower's business model and industry characteristics.
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Periodic review of financial statements including financial statements audited by an independent certified
public accountant when appropriate.
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The proforma financial condition including financial projections.
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The borrower's sources and uses of funds.
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The borrower's debt service capacity.
•
The guarantor's financial strength.
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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 underwriting 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
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additional information specific to our CRE loan portfolio, please see the caption “Commercial Real Estate Lending” in the
Financial Section of this report.
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, 2024, Comerica and its subsidiaries had 7,565 full-time and 363 part-time employees,
mainly 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, colleague engagement, learning and
development, talent management, compensation and benefits.
The Governance, Compensation and Nominating Committee of the Board reviews Comerica’s human capital
management strategy which encompasses talent development programs, succession planning, recruitment evaluations and other
workforce updates. This Committee also reviews Comerica’s colleague engagement programs. 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. Comerica
managed an average of $15 million and $16 million of loans and deposits per employee as of December 31, 2024 and 2023,
respectively.
Comerica has 15 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. These ERGs help support and sustain Comerica's colleague engagement model.
Compensation and Benefits. Comerica strives to provide pay, benefits and programs that are competitive, cost
effective and help meet the varying needs of its employees. Compensation and benefits include market-competitive pay, broad-
based bonuses, retirement programs, 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 2024, Comerica kept its minimum
wage at $18 per hour. Periodically the main components of compensation, like salaries and bonuses, by grade level and position
are reviewed to ensure similar positions receive similar pay to the extent other factors can be equalized (e.g., time in position,
performance, education). 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 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 2024, over 23,000 skills-based titles were offered to Comerica colleagues and an average of around 22
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hours of training per employee were completed. Comerica also supports its employees’ involvement in external development
programs and volunteerism. Annually, full-time colleagues are granted up to eight hours of PTO, and part-time colleagues are
granted up to four hours of PTO annually to use for volunteer events whether related or unrelated to Comerica.
Comerica’s investment in its employees has resulted in a long-tenured workforce, with average tenure of around 11
years of service. Of the approximately 2,216 open employee positions filled in 2024, 65% were filled by external hires and 35%
of positions were filled by internal hires. Employee turnover for 2024 was approximately 17%. Comerica plans to launch its
fourth enterprise-wide engagement survey in 2025 as the last one was in 2023, with approximately 85% of colleagues
participating. Engagement surveys provide valuable feedback on employee sentiment and highlight opportunities to enhance
workforce culture and organizational performance.
AVAILABLE INFORMATION
Comerica maintains an Internet website at www.comerica.com where its Annual Report on Form 10-K, Quarterly
Reports on Form 10-Q, Current Reports on Form 8-K and all amendments to such reports are available without charge, as soon
as reasonably practicable after such reports are filed with or furnished to the SEC. Investors should regularly review Comerica's
website as Comerica regularly and routinely posts other important information there, particularly in the "Investor Relations"
portion of the website. The SEC maintains a public website, www.sec.gov, which includes reports, proxy and information
statements and other information regarding issuers that file electronically with the SEC.
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 Comerica's
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.
Web addresses included in this report, such as Comerica's web address and the web address of the SEC, have been
included in this report as inactive textual references only. Except as specifically incorporated by reference into this report,
information on such websites is not part of this report or incorporated by reference herein.
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.
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, the factors contained below, among others, could cause actual
results to differ materially from forward-looking statements.
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, Comerica'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.
Comerica also provides other products and services that meet the financial needs of customers that generate
noninterest income, Comerica's secondary source of revenue. Growth in loans, deposits and noninterest income is
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affected by many factors, including economic conditions in the markets Comerica 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, interest rate changes, military conflicts, labor shortages, supply chain constraints, bank failures,
fuel prices, energy costs, tariffs, trade wars, real estate values or other factors that affect customer income levels, have
altered and could in the future 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, such as due to 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 its portfolio, such as
technology and life sciences, commercial real estate, senior housing, 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 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 in recent years due to rapidly rising interest rates, shifts in
demand (i.e., office and 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's financial condition or results of operations. As a regional banking
organization, Comerica's credit risks (and many other of Comerica's risks) may be exacerbated by events or factors that
disproportionately affect the markets in which Comerica operates, accept deposits, makes loans or invests. For more
information regarding certain of Comerica's lines of business, please see "Concentrations of 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, both directly and indirectly. The FRB regulates the supply of money and credit in the
United States, 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 impact 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.
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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 their investment securities. After a period of
rising interest rates, the Federal Reserve lowered interest rates in September 2024, November 2024 and December
2024. If the Federal Reserve were to raise or lower interest rates in the future, there may be an impact on Comerica's
net interest income. 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 it did in 2023 and into 2024, 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.
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
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 reasons 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.
•
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, 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. In
January 2025, Moody’s downgraded the Corporation and Bank's credit ratings and changed the Corporation and
Bank's outlooks to Stable to align with median level peer banks. There can be no assurance that Comerica will
maintain its current ratings. 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
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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 Comerica or by
other institutions. For example, bank failures during the first half of 2023 led to increased scrutiny from regulators and
put further financial strain and uncertainty on other financial institutions. Similar bank failures, or the perception
thereof, could adversely affect Comerica’s operations. Many of the transactions in which Comerica engages 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. Any such losses could
adversely affect, possibly materially, Comerica.
TECHNOLOGY RISK
•
Comerica faces security risks, including denial of service attacks, hacking, social engineering attacks targeting
Comerica’s colleagues, customers and partners, malware intrusion or data corruption attempts, and identity
theft, that could result in the disclosure of confidential information, adversely affect Comerica's 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, social engineering attacks, malware intrusion, 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. Evolving technologies and the increased use of artificial intelligence and
automation by third parties further increase security risks for Comerica and third parties on which Comerica depends.
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 or it (or the third parties whose systems Comerica relies
upon) may not 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, physical security 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 or future threats of cyber attacks
could be materially 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
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cause serious reputational harm. A successful penetration or circumvention of system security could cause Comerica
material 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, and 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 attack losses (subject to policy terms and conditions), Comerica 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 continue to assess cybersecurity risks in their supervision and
examination of banks, including Comerica. In addition, several states have proposed or adopted cybersecurity
legislation and regulations, which require, among other things, 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 are 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.
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
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third-party systems is more limited than with respect to its own systems. Increasing usage of automation and a
measured approach to leveraging artificial intelligence by Comerica or third parties on which Comerica relies would
further increase the impact if Comerica's operational or security systems were to fail or be breached.
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.
•
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
suppliers for components of its delivery systems. Third-party suppliers 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 suppliers and performs ongoing monitoring of supplier controls, it does not control their operations. Further,
while Comerica's supplier management policies and practices are designed to comply with current regulations, these
policies and practices cannot eliminate this risk. In this context, any supplier 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 is, 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.
For further information on specific legal and regulatory proceedings, see Note 21 to the consolidated financial
statements.
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•
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. These data compromises
often are widely reported in the media or otherwise become public, which can damage a company's reputation and
results of operations. 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, some or all of which may ultimately be ineffective in preventing fraudulent activity.
•
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, the DOL and other regulatory
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 the “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, 2024, the Corporation had total assets of $79.3 billion. While the 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
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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, which could have a material adverse effect on
Comerica’s business, financial position and results of operations.
•
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, including the increased usage and introduction of artificial intelligence and automation
within the industry. 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. In addition, 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 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. 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
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cost of regulations. For more information regarding the regulations to which Comerica is subject, see the “Supervision
and Regulation” section of this report.
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 advances in technology 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 United States, and if Comerica's expansion is not successful, it could adversely impact Comerica's expenses.
•
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
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 may not be successful 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 2024, 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.
24
•
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 completed or 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 interest
rates that remain elevated despite recent decreases, persistent inflation, large fiscal deficits, subdued housing market
activity and a sluggish manufacturing sector. 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 public debt, 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 the possibility of a
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.
The Federal Reserve 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, before beginning to reduce
interest rates in 2024. However, the impacts interest rates have on the U.S. economy often are not immediate and take
time to materialize after such changes in interest rates occur, and their substantial increase relative to the pre-pandemic
period could still cause stress on capital-intensive sectors of the economy, including manufacturing, real estate, and
highly leveraged corporate balance sheets.
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, automotive manufacturing, information, 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 have affected, and could continue to affect, the economic health of downtowns in major cities and other
regions where economic activity has changed in recent years, and have impacted, and could continue to impact, real
estate prices, construction activity, and sales. In addition, the weakness of regional real estate markets could affect
municipal tax revenues and fiscal health, with knock-on effects to broader regional economies.
Adverse economic conditions related to 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, including tariffs and trade wars, immigration policies, state and local municipal finances, federal
government finances and the U.S. federal debt, are outside of Comerica's control and may affect the operating
environment affecting Comerica.
•
Inflation has impacted, and could continue to negatively impact, Comerica's business, profitability and stock
price.
Prolonged periods of inflation have impacted, and may continue to impact, Comerica's profitability by negatively
impacting its fixed costs and expenses, including increasing funding costs and expenses related to talent acquisition
25
and retention, and negatively impacting the demand for its products and services. Additionally, inflation has led, and
may continue to lead, to a decrease in consumer and client purchasing power and has negatively affected the need or
demand for Comerica's products and services. If significant inflation continues, Comerica's business could continue to
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.
Comerica 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. Comerica'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. Comerica 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 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 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 economies 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.
26
•
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 has
advanced 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. 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, Comerica's allowances for credit
losses, fair value measurement, 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 for additional information regarding critical
accounting estimates and policies.
•
Comerica's stock price can be volatile.
Stock price volatility may make it more difficult for stockholders 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 Comerica or competitors.
27
•
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 Comerica's 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, risk 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 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.” To date, there have been no risks from cybersecurity threats, including as a result of any previous
cybersecurity incidents, that have materially affected or are reasonably likely to materially affect Comerica's business strategy,
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.
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.
28
The Board’s Enterprise Risk Committee oversees 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, 2024,
Comerica, through its banking affiliates, operated at a total of 499 banking centers, trust services locations, and/or loan
production or other financial services offices, primarily in Texas, Michigan, California, Florida and Arizona. Of those, 199
were owned and 300 were leased. As of December 31, 2024, Comerica's banking 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 Note 21 to the Consolidated Financial Statements in the Financial Section of this report.
Item 4. Mine Safety Disclosures.
Not applicable.
29
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
Comerica's common stock is traded on the New York Stock Exchange (NYSE Trading Symbol: CMA). At
February 20, 2025, there were approximately 7,530 record holders of Comerica's common stock. This number is based on the
actual number of holders registered at such date and does not include holders whose shares are held in “street name” by brokers
and other nominees.
Subject to approval of the Board of Directors, applicable regulatory requirements and the Series A preferred stock
dividend preference, Comerica expects to continue its 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-79 and F-90, 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 its 2025 Annual
Meeting of Shareholders, which will be filed with the SEC pursuant to Regulation 14A of the Exchange Act not later than 120
days after the end of the fiscal year covered by this Annual Report on Form 10-K (the "Proxy Statement"). Such information is
hereby incorporated by reference herein.
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
Comerica's Board of Directors previously authorized a share repurchase program under which, as of December 31,
2023, an aggregate of 97.2 million shares of common stock could be repurchased since the program’s inception in 2010. On
November 5, 2024, the Board of Directors increased the number of authorized shares by 10 million, taking it to an aggregate of
107.2 million shares authorized since the program's inception. The timing and actual amount of share repurchases under
Comerica’s repurchase program are subject to various factors, including Comerica's earnings generation, capital needs to fund
future loan growth and market conditions. Shares under Comerica’s repurchase program may be repurchased through open
market repurchases, privately negotiated transactions, structured repurchase agreements with third parties and/or otherwise,
including utilizing Rule 10b5-1 plans. The repurchased shares may be held as treasury stock or retired. There is no expiration
date for Comerica's share repurchase program.
On October 18, 2024, Comerica announced that it intended to resume repurchases under the share repurchase program,
and on October 22, 2024, Comerica entered into an accelerated share repurchase agreement to repurchase $100 million of
common stock. A total of 1.499 million shares were repurchased under the ASR agreement during the fourth quarter of 2024.
On January 22, 2025, Comerica announced that it intended to repurchase $50 million of common stock during the first quarter
of 2025, and on February 3, 2025, Comerica entered into an ASR to repurchase $50 million of common stock. Under the terms
of the ASR agreement, Comerica received an initial delivery of common shares representing approximately 80% of the
expected total to be repurchased. Subject to certain adjustments pursuant to the ASR agreement, the final number of shares
repurchased and delivered under the ASR agreement will be based on the volume weighted average share price of Comerica’s
common stock during the term of the transaction, which is expected to be completed in the first quarter of 2025.
30
The following table summarizes Comerica's share repurchase activity for the year ended December 31, 2024.
(shares in thousands)
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
Total first quarter 2024
—
4,997
19 $
50.95
Total second quarter 2024
—
4,997
2
54.32
Total third quarter 2024
—
4,997
2
51.21
October 1 - 31, 2024
1,290
3,707
1,292
62.30
November 1 - 30, 2024
—
13,707
—
—
December 1 - 31, 2024
209
13,498
210
70.80
Total fourth quarter 2024
1,499
13,498
1,502
63.49
Total 2024
1,499
13,498
1,525 $
63.30
(a) Maximum number of shares that may yet be purchased under the publicly announced plans or programs.
(b)
Includes approximately 26,000 shares (including 3,000 shares in the quarter ended December 31, 2024) purchased related to deferred
compensation plans during the year ended December 31, 2024. 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 “2024 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-2 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-28 through F-35 of the Financial Section of this report.
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-40 through F-104 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
Our management is responsible for establishing and maintaining adequate internal control over financial reporting. Our
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-101 and F-102 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
31
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.
No director or officer (as defined in Rule 16a-1(f) of the Exchange Act) of the Corporation adopted, modified, or
terminated any Rule 10b5-1 trading arrangement or any non-Rule 10b5-1 trading arrangement (as such terms are defined in
Item 408 of Regulation S-K) during the quarter ended December 31, 2024.
On February 18, 2025, the Corporation filed a Certificate of Correction (the “Certificate of Correction”) to the
Certificate of Designations of 5.625% Fixed-Rate Non-Cumulative Perpetual Preferred Stock, Series A of the Corporation (the
“Certificate of Designations”). The Certificate of Correction was filed to correct a scrivener’s error included in the Certificate of
Designations by correcting the definition of “Reset Date” to reference October 1, 2025, as was correctly disclosed in the
Corporation’s prospectus supplement filed with the SEC on May 21, 2020. Pursuant to Section 103(f) of the General
Corporation Law of the State of Delaware, the correction was effective as of May 26, 2020.
On February 19, 2025, Nancy Avila notified the Board of Directors that she does not intend to stand for re-election at
the 2025 Annual Meeting of Shareholders. She plans to serve out her current term as a director until April 29, 2025. Ms. Avila’s
decision was not due to any disagreement with the Corporation on any matter. It is expected that the size of the Board will be
reduced to eleven directors, effective at the commencement of the 2025 Annual Meeting of Shareholders on April 29, 2025.
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, Comerica will disclose
the nature of such amendment or waiver on its website.
The remainder of the response to this item will be included in the Proxy Statement, and such information is hereby
incorporated by reference herein.
Item 11. Executive Compensation.
The response to this item will be included in the Proxy Statement, and such information is hereby incorporated by
reference herein.
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.
The response to this item will be included in the Proxy Statement, and such information (except for the information
required by Item 402(v) of Regulation S-K) is hereby incorporated by reference herein.
Item 13. Certain Relationships and Related Transactions, and Director Independence.
The response to this item will be included in the Proxy Statement, and such information is hereby incorporated by
reference herein.
Item 14. Principal Accountant Fees and Services.
The response to this item will be included in the Proxy Statement, and such information is hereby incorporated by
reference herein.
32
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.
Financial Statements: The financial statements that are filed as part of this report are included in the Financial
Section on pages F-40 through F-104.
2.
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.
3.
Exhibits:
2
(not applicable)
3.1
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).
3.2
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).
3.3
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).
3.4
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).
A
Certificate of Correction of Certificate of Designations of 5.625% Fixed-Rate Reset Non-Cumulative Perpetual
Preferred Stock, Series A, of Comerica Incorporated, filed on February 18, 2025.
4
[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.]
4.1
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).
4.2
Description of Registrant's Securities
9
(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).
33
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).
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) (filed as Exhibit 10.1N to
Registrant's Annual Report on Form 10-K for the year ended December 31, 2023, and incorporated herein by
reference).
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).
34
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).
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†
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).
10.4†
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).
10.5†
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).
10.6†
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).
10.7†
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).
10.8†
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).
10.9†
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).
35
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).
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†
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).
10.13†
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).
10.14†
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.)
10.15†
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).
10.16†
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†
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).
10.19†
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).
10.20†
Comerica Incorporated Amended and Restated 2018 Long-Term Incentive Plan, as Further Amended and
Restated (filed as Appendix A to the Corporation’s Definitive Proxy Statement on Schedule DEF14A, filed with
the Commission on March 11, 2024, and incorporated herein by reference).
A†
Form of Standard Comerica Incorporated Senior Executive Long-Term Performance Restricted Stock Unit Award
Agreement under the Comerica Incorporated Amended and Restated 2018 Long-Term Incentive Plan, as further
amended and restated (2025 version).
B†
Form of Standard Comerica Incorporated Restricted Stock Unit Award Agreement (cliff vesting) under the
Comerica Incorporated Amended and Restated 2018 Long-Term Incentive Plan, as further amended and restated
(2025 version).
C†
Form of Standard Comerica Incorporated Restricted Stock Unit Award Agreement (non-cliff vesting with
retirement provisions) under the Comerica Incorporated Amended and Restated 2018 Long-Term Incentive Plan,
as further amended and restated (2025 version).
36
D†
Form of Standard Comerica Incorporated Restricted Stock Unit Award Agreement (non-cliff vesting without
retirement provisions) under the Comerica Incorporated Amended and Restated 2018 Long-Term Incentive Plan,
as further amended and restated (2025 version).
13
(not applicable)
14
(not applicable)
16
(not applicable)
18
(not applicable)
19.1
Comerica Incorporated Amended and Restated Insider Trading Policy.
21
Subsidiaries of Registrant.
22
(not applicable)
23.1
Consent of Ernst & Young LLP.
24
(not applicable)
31.1
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).
31.2
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).
32
Section 1350 Certification of Periodic Report (pursuant to Section 906 of the Sarbanes-Oxley Act of 2002).
33
(not applicable)
34
(not applicable)
35
(not applicable)
95
(not applicable)
96
(not applicable)
97.1
Comerica Incorporated Compensation Recovery Policy, adopted on November 7, 2023.
99
(not applicable)
101.INS
XBRL Instance Document - The instance document does not appear in the Interactive Data File because its
XBRL tags are embedded within the Inline XBRL document.
101.SCH
Inline XBRL Taxonomy Extension Schema Document.
101.CAL
Inline XBRL Taxonomy Extension Calculation Linkbase Document.
101.DEF
Inline XBRL Taxonomy Extension Definition Linkbase Document.
101.LAB
Inline XBRL Taxonomy Extension Label Linkbase Document.
101.PRE
Inline XBRL Taxonomy Extension Presentation Linkbase Document.
104
The cover page from the Registrant's Annual Report on Form 10-K for the year ended December 31, 2024,
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.
37
FINANCIAL REVIEW AND REPORTS
Comerica Incorporated and Subsidiaries
2024 Overview
F-3
Results of Operations
F-4
Strategic Lines of Business
F-10
Balance Sheet and Capital Funds Analysis
F-13
Risk Management
F-19
Critical Accounting Estimates
F-36
Supplemental Financial Data
F-39
Consolidated Financial Statements:
Consolidated Balance Sheets
F-40
Consolidated Statements of Income
F-41
Consolidated Statements of Comprehensive Income
F-42
Consolidated Statements of Changes in Shareholders’ Equity
F-43
Consolidated Statements of Cash Flows
F-44
Notes to Consolidated Financial Statements
F-45
Report of Management
F-101
Reports of Independent Registered Public Accounting Firm
F-102
Performance Graph
F-2
F-1
PERFORMANCE GRAPH
The graph shown below compares the total shareholder return (assuming reinvestment of dividends) of Comerica's
common stock, the S&P 500 Index and the KBW Bank Index. The graph assumes $100 invested in Comerica's common stock
(returns based on stock prices per the NYSE) and each of the indices on December 31, 2019 and the reinvestment of all
dividends during the periods presented.
Comparison of Five Year Cumulative Total Return
Among Comerica Incorporated, KBW Bank and S&P 500 Indices
(Assumes $100 Invested on 12/31/19
and Reinvestment of Dividends)
Comerica Incorporated
KBW Bank Index
S&P 500 Index
2019
2020
2021
2022
2023
2024
$50
$75
$100
$125
$150
$175
$200
$225
2019
2020
2021
2022
2023
2024
Comerica Incorporated
100
83
134
107
95
111
KBW Bank Index
100
90
124
98
97
133
S&P 500 Index
100
118
152
125
157
197
The performance shown on the graph is not necessarily indicative of future performance.
F-2
2024 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 Corporation's 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 its 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 2024 compared to Full-Year 2023
•
Net income decreased $183 million, or 21 percent, to $698 million, reflecting decreases in net interest income and
noninterest income, partially offset by decreases in noninterest expenses and provision for credit losses. The decrease
in net interest income was driven by lower loan volume, the net impact of higher rates and a change in deposit mix
from noninterest-bearing to interest-bearing deposits, partially offset by a decline in short-term Federal Home Loan
Bank (FHLB) advances. Diluted net income per common share was $5.02 in 2024 compared to $6.44 in 2023.
•
Average loans decreased $2.9 billion, or 5 percent, to $51.0 billion, which included decreases in Equity Fund Services,
general Middle Market, Mortgage Banker Finance (reflecting a strategic exit from the business line) and Corporate
Banking, partially offset by an increase in Commercial Real Estate.
•
Average securities decreased $1.6 billion, or 9 percent, to $15.8 billion, reflecting paydowns and maturities, partially
offset by a decline in average unrealized losses. In the fourth quarter of 2024, $827 million in Treasury securities were
sold and replaced with higher-yielding Treasury securities to reposition a portion of the Corporation's securities
portfolio.
•
Average deposits decreased $2.1 billion, or 3 percent, to $63.9 billion, which included a $5.8 billion decrease in
noninterest-bearing deposits, partially offset by a $3.7 billion increase in interest-bearing deposits. Brokered time
deposits decreased $960 million, and decreases in Technology and Life Sciences, Mortgage Banker Finance (reflecting
strategic exit), Wealth Management, Energy and National Dealer Services were partially offset by increases in general
Middle Market and Corporate Banking.
•
Average short-term borrowings decreased $6.4 billion, or 88 percent, to $837 million, reflecting a reduction in short-
term FHLB advances, while average medium- and long-term debt increased $1.0 billion to $6.9 billion, mostly
reflecting an increase in longer-term FHLB advances.
•
Net interest income decreased $324 million, or 13 percent, to $2.2 billion, and the net interest margin decreased 18
basis points to 2.88 percent, driven by a decline in loan volume, the net impact of higher rates and a change in deposit
mix from noninterest-bearing to interest-bearing deposits, partially offset by a decline in short-term FHLB advances.
•
The provision for credit losses decreased $40 million, or 44 percent, to $49 million, reflecting changes in portfolio
composition, lower loan balances and an improved economic outlook.
•
Noninterest income decreased $24 million, or 2 percent, to $1.1 billion, which included a $19 million loss related to
securities repositioning. Decreases in card fees, FHLB stock dividends, capital markets income and commercial
lending fees were partially offset by an increase in risk management hedging income (mostly related to Bloomberg
Short-Term Bank Yield Index (BSBY) cessation losses in 2023), a $5 million negotiated vendor payment recorded in
the 2024 period and smaller increases in other categories. 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.
•
Noninterest expenses decreased $52 million, or 2 percent, to $2.3 billion, reflecting decreases in Federal Deposit
Insurance Corporation (FDIC) insurance expense (primarily special assessment), non-salary pension expense and
F-3
litigation-related expenses, partially offset by increases in salaries and benefits expense, occupancy expense and
software expense, as well as a decrease in gains on the sale of real estate.
•
The Corporation returned $476 million to common stock shareholders through dividends on its common stock of $2.84
per share and the repurchase of approximately 1.5 million shares of common stock. Additionally, the Corporation
declared $23 million in dividends on its preferred stock.
RESULTS OF OPERATIONS
The following provides a comparative discussion of the Corporation's consolidated results of operations for 2024
compared to 2023. A comparative discussion of results for 2023 compared to 2022 is provided in the "Results of Operations"
section beginning on page F-3 of the Corporation's 2023 Annual Report on Form 10-K for the year ended December 31, 2023
filed with the Securities and Exchange Commission on February 28, 2024.
F-4
Analysis of Net Interest Income
(dollar amounts in millions)
Years Ended December 31
2024
2023
2022
Average
Balance
Interest
Average
Rate
Average
Balance
Interest
Average
Rate
Average
Balance
Interest
Average
Rate
Commercial loans (a)
$ 26,278 $ 1,407
5.36 %
$ 30,009 $ 1,651
5.51 %
$ 29,846 $ 1,278
4.28 %
Real estate construction loans
4,422
367
8.30
4,041
330
8.16
2,607
132
5.07
Commercial mortgage loans
14,260
1,045
7.32
13,697
981
7.17
12,135
513
4.22
Lease financing (b)
791
48
6.08
776
37
4.72
680
21
3.12
International loans
1,069
82
7.71
1,226
98
7.96
1,246
56
4.46
Residential mortgage loans
1,902
72
3.78
1,877
66
3.54
1,776
56
3.16
Consumer loans
2,257
183
8.10
2,277
177
7.76
2,170
97
4.49
Total loans (c)
50,979
3,204
6.29
53,903
3,340
6.20
50,460
2,153
4.27
Mortgage-backed securities (d)
14,438
394
2.29
15,546
421
2.28
16,199
385
2.14
U.S. Treasury securities (e)
1,399
8
0.60
1,896
9
0.47
2,816
29
0.98
Total investment securities
15,837
402
2.16
17,442
430
2.10
19,015
414
1.97
Interest-bearing deposits with banks (f)
6,007
318
5.30
7,530
392
5.21
9,376
104
1.02
Other short-term investments
376
15
3.89
339
13
3.72
174
1
0.81
Total earning assets
73,199
3,939
5.18
79,214
4,175
5.08
79,025
2,672
3.27
Cash and due from banks
691
1,214
1,481
Allowance for loan losses
(688)
(658)
(569)
Accrued income and other assets
7,366
7,424
7,335
Total assets
$ 80,568
$ 87,194
$ 87,272
Money market and interest-bearing checking deposits (g) $ 30,203
962
3.18
$ 26,054
627
2.39
$ 28,347
94
0.33
Savings deposits
2,243
5
0.20
2,774
6
0.21
3,304
2
0.05
Customer certificates of deposit
3,733
131
3.51
2,708
75
2.77
1,756
5
0.30
Other time deposits
2,617
139
5.31
3,577
183
5.13
16
1
4.17
Foreign office time deposits
23
1
4.32
23
1
4.02
40
—
1.05
Total interest-bearing deposits
38,819
1,238
3.18
35,136
892
2.52
33,463
102
0.30
Federal funds purchased
8
—
5.28
29
1
4.77
82
3
3.28
Other short-term borrowings
829
48
5.73
7,189
390
5.41
354
14
4.08
Medium- and long-term debt
6,882
463
6.73
5,847
378
6.47
2,818
87
3.07
Total interest-bearing sources
46,538
1,749
3.75
48,201
1,661
3.43
36,717
206
0.56
Noninterest-bearing deposits
25,082
30,882
42,018
Accrued expenses and other liabilities
2,543
2,516
2,086
Shareholders’ equity
6,405
5,595
6,451
Total liabilities and shareholders’ equity
$ 80,568
$ 87,194
$ 87,272
Net interest income/rate spread
$ 2,190
1.43
$ 2,514
1.65
$ 2,466
2.71
Impact of net noninterest-bearing sources of funds
1.45
1.41
0.31
Net interest margin (as a percentage of average earning
assets)
2.88 %
3.06 %
3.02 %
(a)
Interest income on commercial loans included net expense from cash flow swaps of $637 million, $602 million and $25 million for the
years ended December 31, 2024, 2023 and 2022, respectively.
(b)
The years ended December 31, 2023 and 2022 included residual value adjustments totaling $6 million and $3 million, which impacted
the average lease financing yield by 81 basis points and 46 basis points, respectively, and impacted the average yield on loans by 1 basis
point in both periods.
(c)
Nonaccrual loans are included in average balances reported and in the calculation of average rates.
(d)
Average balances included $2.8 billion, $2.9 billion and $1.8 billion of unrealized losses for the years ended December 31, 2024, 2023
and 2022, respectively; yields calculated gross of these unrealized gains and losses.
(e)
Average balances included $47 million, $115 million and $117 million of unrealized losses for the years ended December 31, 2024,
2023 and 2022, respectively; yields calculated gross of these unrealized gains and losses.
(f)
Average balances excluded $1 million, included $5 million and excluded $769 million of collateral posted and netted against derivative
liability positions for the years ended December 31, 2024, 2023 and 2022, respectively; yields calculated gross of derivative netting
amounts.
(g)
Average balances excluded $100 million, $195 million and $128 million of collateral received and netted against derivative asset
positions for the years ended December 31, 2024, 2023 and 2022, respectively; rates calculated gross of derivative netting amounts.
F-5
Rate/Volume Analysis
(in millions)
Years Ended December 31
2024/2023
2023/2022
Increase
(Decrease)
Due to Rate
(a)
(Decrease)
Increase
Due to
Volume (a)
Net
(Decrease)
Increase
Increase
(Decrease)
Due to Rate
(a)
Increase
(Decrease)
Due to
Volume (a)
Net
Increase
(Decrease)
Interest Income:
Commercial loans
$
40
$
(284)
$
(244)
$
362
$
11
$
373
Real estate construction loans
6
31
37
86
112
198
Commercial mortgage loans
22
42
64
357
111
468
Lease financing
10
1
11
11
5
16
International loans
(4)
(12)
(16)
43
(1)
42
Residential mortgage loans
5
1
6
7
3
10
Consumer loans
8
(2)
6
71
9
80
Total loans
87
(223)
(136)
937
250
1,187
Mortgage-backed securities
(2)
(25)
(27)
10
26
36
U.S. Treasury securities
3
(4)
(1)
(15)
(5)
(20)
Total investment securities
1
(29)
(28)
(5)
21
16
Interest-bearing deposits with banks
6
(80)
(74)
420
(132)
288
Other short-term investments
1
1
2
6
6
12
Total interest income
95
(331)
(236)
1,358
145
1,503
Interest Expense:
Money market and interest-bearing checking deposits
186
149
335
459
74
533
Savings deposits
—
(1)
(1)
5
(1)
4
Customer certificates of deposit
20
36
56
44
26
70
Other time deposits
7
(51)
(44)
—
182
182
Foreign office time deposits
—
—
—
1
—
1
Total interest-bearing deposits
213
133
346
509
281
790
Federal funds purchased
—
(1)
(1)
1
(3)
(2)
Other short term borrowings
23
(365)
(342)
5
371
376
Medium- and long-term debt
38
47
85
138
153
291
Total interest expense
274
(186)
88
653
802
1,455
Net interest income
$
(179)
$
(145)
$
(324)
$
705
$
(657)
$
48
(a)
Impact of additional days, 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. 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. Additionally, 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.
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, 2024, 2023 and 2022 and details regarding the components of the change in net
interest income for 2024 compared to 2023 as well as 2023 compared to 2022.
For the year ended December 31, 2024, net interest income decreased $324 million to $2.2 billion and net interest
margin decreased 18 basis points to 2.88 percent, reflecting a decline in loans, the net impact of higher rates, a change in
deposit mix from noninterest-bearing to interest-bearing deposits and lower deposits held with the Federal Reserve Bank
(FRB), partially offset by a decline in short-term FHLB advances.
Average earning assets decreased $6.0 billion to $73.2 billion compared to the prior year, driven by decreases of
$2.9 billion in loans, $1.6 billion in investment securities and $1.5 billion in interest-bearing deposits with banks. Average
interest-bearing funding sources decreased $1.7 billion to $46.5 billion, reflecting a $6.4 billion decline in short-term
borrowings, partially offset by increases of $3.7 billion in interest-bearing deposits and $1.0 billion in medium- and long-term
debt.
F-6
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 decreased $40 million to $49 million, reflecting changes in portfolio composition, lower
loan balances and an improved economic outlook. Net loan charge-offs increased $30 million to $52 million, or 0.10 percent of
average total loans for the year ended December 31, 2024, compared to $22 million, or 0.04 percent of average total loans for
the year ended December 31, 2023, primarily driven by general Middle Market, partially offset by Technology and Life
Sciences, Energy and Corporate Banking. The provision for credit losses on lending-related commitments was a benefit of $5
million for the year ended December 31, 2024, compared to a benefit of $11 million for the year ended December 31, 2023.
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
(in millions)
Years Ended December 31
2024
2023
2022
Card fees
$
256 $
280 $
273
Fiduciary income (a)
220
235
233
Service charges on deposit accounts
184
185
195
Capital markets income
142
147
154
Commercial lending fees
68
72
68
Brokerage fees (a)
51
30
21
Bank-owned life insurance
44
46
47
Letter of credit fees
40
42
38
Risk management hedging income (loss)
8
(42)
8
Net losses on debt securities
(19)
—
—
Other noninterest income (a), (b)
60
83
31
Total noninterest income
$
1,054 $
1,078 $
1,068
(a)
Results reflect changes in presentation consistent with contractual terms with an investment program partner beginning in November
2023. Comparative impacts attributable to prior year’s presentation included an increase of $22 million in brokerage fees, with
corresponding reductions of $24 million in other noninterest income, $21 million in salaries and benefits expense (commission
expenses), $20 million in fiduciary income and $1 million in outside processing expense.
(b)
The table below provides further details on certain categories included in other noninterest income.
Noninterest income decreased $24 million to $1.1 billion, which included a $19 million loss related to repositioning
$827 million of the Corporation's securities portfolio, as well as decreases in card fees, other noninterest income, capital
markets income and commercial lending fees, partially offset by an increase in risk management hedging income and smaller
increases in other categories.
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 decreased $24 million, or 9
percent, reflecting lower government card interchange income, a decline in commercial card sales volume and ATM network
bonuses received in the 2023 period.
Following the contract expiration on January 2, 2025, Comerica Bank (the Bank) was not selected to continue serving
as financial agent supporting the Direct Express Debit MasterCard Program (Direct Express) for the U.S. Department of the
Treasury, Bureau of the Fiscal Service (the Treasury); however, the Treasury elected to extend the contract term for up to three
years past January 2, 2025 to facilitate an orderly transition. While the length of the transition is currently unknown, the
Corporation believes it may take some time given the scale and complexity of the program, as well as its own transition
experience. Card fee income related to the Direct Express program was $121 million and $137 million for the years ended
December 31, 2024 and 2023, respectively. Noninterest expenses related to the Direct Express program were $119 million and
$138 million, respectively, for the same periods, consisting primarily of outside processing fee expense and other noninterest
expenses. Refer to the "Direct Express Debit MasterCard Program" subheading in the "Market and Liquidity Risk" section of
this financial review for further discussion of Direct Express.
F-7
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 $5 million, or 3 percent, reflecting lower derivative income, partially offset by an increase in
advisory and investment banking fees.
Commercial lending fees include fees assessed on the unused portion of lines of credit (unused commitment fees) and
loan servicing fees. These fees decreased $4 million, or 6 percent, driven by lower commitment fees due to a decline in loan
commitments.
Risk management hedging income increased $50 million, reflecting a decline in losses related to BSBY cessation,
partially offset by a decline 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.
Brokerage fees are commissions earned for facilitating securities transactions for customers as well as other brokerage
services provided. In November 2023, the Corporation transitioned the 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 (Ameriprise), 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 $21 million, or 69 percent, reflecting the full-year impact of the Corporation's new investment program partner,
including additional service fee revenue.
Net losses on debt securities totaled $19 million for the year ended December 31, 2024, with no corresponding amount
in the 2023 period, and was related to the sale of $827 million of Treasury securities that were replaced with higher-yielding
Treasury securities with a duration of 1.9 years.
Other noninterest income decreased $23 million, or 29 percent, as detailed below, driven by a decrease in FHLB stock
dividends reflecting redemptions of stock corresponding with the decline in advances, partially offset by a $5 million negotiated
vendor payment received during the 2024 period.
(in millions)
Years Ended December 31
2024
2023
2022
FHLB and FRB stock dividends
$
17 $
30 $
3
Deferred compensation asset returns (a)
11
13
(18)
Securities trading income (b)
—
13
13
Insurance commissions (b)
—
12
13
All other noninterest income
32
15
20
Other noninterest income
$
60 $
83 $
31
(a) Compensation deferred by the Corporation's officers and directors is invested based on investment selections of such 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.
(b) Results reflect changes in presentation consistent with contractual terms with an investment program partner beginning in November
2023. Comparative impacts attributable to prior year’s presentation included decreases in securities trading income and insurance
commissions, with a corresponding increase in brokerage fees.
Noninterest Expenses
(in millions)
Years Ended December 31
2024
2023
2022
Salaries and benefits expense (a)
$
1,352 $
1,306 $
1,208
Outside processing fee expense
273
277
251
Occupancy expense
181
171
175
Software expense
181
171
161
FDIC insurance expense
76
180
31
Equipment expense
52
50
50
Advertising expense
41
40
38
Other noninterest expenses (a)
151
164
84
Total noninterest expenses
$
2,307 $
2,359 $
1,998
(a)
Results reflect above-described changes in presentation consistent with contractual terms with Ameriprise beginning in November 2023.
Comparative impacts attributable to prior year’s presentation included decreases of $21 million in salaries and benefits expense
(commission expenses) and $1 million in outside processing expense, with a corresponding increase in brokerage fees.
Noninterest expenses decreased $52 million to $2.3 billion, due to decreases in FDIC insurance expense and other
noninterest expenses, partially offset by increases in salaries and benefits expense, software expense and occupancy expense.
F-8
FDIC insurance expense decreased $104 million, or 58 percent, reflecting a decline of $96 million in a special
assessment approved by the FDIC Board of Directors in November 2023 to recover the loss to the Deposit Insurance Fund
following the failures of Silicon Valley Bank and Signature Bank. Additionally, risk-based assessment fees declined $8 million,
reflecting changes in balance sheet composition.
Other noninterest expenses decreased $13 million, or 8 percent, including decreases in non-salary pension expense and
litigation-related expenses, partially offset by a decline in gains on the sale of real estate.
Salaries and benefits expense increased $46 million, or 4 percent, reflecting increases from annual merit increases and
staff additions, performance-based compensation and staff insurance, partially offset by a decline in severance costs.
Software expense increased $10 million, or 6 percent, driven by higher cloud computing costs, partially offset by a
decrease in rental and maintenance fees.
Occupancy expense increased $10 million, or 5 percent, reflecting higher depreciation on corporate offices and
accelerated lease amortization related to closures of bank branches.
Income Taxes and Related Items
The provision for income taxes was $190 million in 2024, compared to $263 million in 2023. Net deferred tax assets
were $1.0 billion at both December 31, 2024 and December 31, 2023. Refer to Note 18 to the consolidated financial statements
for information about the components of net deferred tax assets. The Corporation evaluated deferred tax assets of $1.3 billion
and determined that a valuation allowance of $11 million for federal foreign tax credits and certain state net operating loss
(NOL) carryforwards was needed at December 31, 2024, compared to $6 million 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-9
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 and Other categories include
items not directly associated with the business segments. 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, 2024, 2023 and 2022.
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 Corporation's 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.
Conversely, in periods of declining interest rates, FTP charge rates for funding loans and FTP crediting rates on deposits will
decrease, 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
2024
2023
2022
Commercial Bank
$
1,070
81 % $
1,116
81 % $
1,057
85 %
Retail Bank
168
13
176
13
79
6
Wealth Management
80
6
90
6
106
9
1,318
100 %
1,382
100 %
1,242
100 %
Finance
(614)
(504)
(98)
Other
(6)
3
7
Total
$
698
$
881
$
1,151
F-10
The following sections present a summary of the performance of each of the Corporation's business segments for 2024
compared to 2023.
Commercial Bank
Years Ended December 31,
Percent
Change
(dollar amounts in millions)
2024
2023
Change
Earnings summary:
Net interest income
$
1,869
$
2,051
$
(182)
(9) %
Provision for credit losses
47
90
(43)
(48)
Noninterest income
592
603
(11)
(2)
Noninterest expenses
1,049
1,106
(57)
(5)
Provision for income taxes
295
342
(47)
(14)
Net income
$
1,070
$
1,116
$
(46)
(4) %
Net charge-offs
$
47
$
20
$
27
n/m
Selected average balances:
Loans
$
43,584
$
46,432
$
(2,848)
(6) %
Deposits
32,264
33,019
(755)
(2)
n/m - not meaningful
Average loans decreased $2.8 billion, as decreases in Equity Fund Services, general Middle Market, Mortgage Banker
Finance (reflecting a strategic exit) and Corporate Banking were partially offset by an increase in Commercial Real Estate.
Average deposits decreased $755 million, which included decreases in Technology and Life Sciences, Mortgage Banker
Finance (reflecting a strategic exit), Energy and National Dealer Services, partially offset by increases in general Middle Market
and Corporate Banking.
The Commercial Bank's net income decreased $46 million to $1.1 billion. Net interest income decreased $182 million
due to higher interest expense on deposits and lower interest income on loans. The provision for credit losses decreased $43
million to $47 million, reflecting changes in portfolio composition, lower loan balances and an improved economic outlook.
Net charge-offs increased $27 million to $47 million, driven by general Middle Market, partially offset by Energy, Technology
and Life Sciences and Corporate Banking. Noninterest income decreased $11 million, primarily due to lower card and
commercial lending fees, partially offset by a $5 million negotiated vendor payment recorded in the first quarter of 2024.
Noninterest expenses decreased $57 million, primarily reflecting a decrease in FDIC insurance expense (related to special
assessment) and lower operational losses and litigation-related expenses.
Retail Bank
Years Ended December 31,
Percent
Change
(dollar amounts in millions)
2024
2023
Change
Earnings summary:
Net interest income
$
813
$
846
$
(33)
(4) %
Provision for credit losses
2
3
(1)
(48)
Noninterest income
112
119
(7)
(5)
Noninterest expenses
707
728
(21)
(3)
Provision for income taxes
48
58
(10)
(17)
Net income
$
168
$
176
$
(8)
(4) %
Net charge-offs
$
4
$
2
$
2
58 %
Selected average balances:
Loans
$
2,335
$
2,237
$
98
4%
Deposits
24,292
24,363
(71)
—
Average loans increased $98 million while average deposits decreased $71 million. The Retail Bank's net income
decreased $8 million to $168 million. Net interest income decreased $33 million to $813 million, primarily due to higher
interest expense on deposits, partially offset by higher FTP crediting rates on deposits. Noninterest income decreased $7 million
to $112 million, primarily due to lower card fees. Noninterest expenses decreased $21 million, primarily due to a decrease in
FDIC insurance expense (related to special assessment) and an increase in gains on the sale of real estate, offset by an increase
in occupancy expenses.
F-11
Wealth Management
Years Ended December 31,
Percent
Change
(dollar amounts in millions)
2024
2023
Change
Earnings summary:
Net interest income
$
187
$
208
$
(21)
(10) %
Provision for credit losses
(2)
(6)
4
(80)
Noninterest income
287
307
(20)
(6)
Noninterest expenses
373
402
(29)
(7)
Provision for income taxes
23
29
(6)
(21)
Net income
$
80
$
90
$
(10)
(11) %
Net charge-offs
$
1
$
—
$
1
(56) %
Selected average balances:
Loans
$
5,050
$
5,232
$
(182)
(3) %
Deposits
3,894
4,130
(236)
(6)
Average loans decreased $182 million while average deposits decreased $236 million, primarily reflecting a decrease
in noninterest-bearing deposits. Wealth Management's net income decreased $10 million to $80 million. Net interest income
decreased $21 million to $187 million, primarily due to higher interest expense on deposits, partially offset by a decrease in
allocated net FTP charges and lower interest income on loans. Noninterest income decreased $20 million to $287 million,
primarily driven by lower investment fees and insurance commissions, while noninterest expenses decreased $29 million,
reflecting lower salaries and benefits expense, which reflected the November 2023 change in presentation consistent with
contractual terms with a new investment program partner, resulting in a net decrease to commission costs, with the offset
recorded in noninterest income. Additionally, lower litigation-related expenses were partially offset by higher operational losses
and outside processing fee expense.
Finance & Other
Years Ended December 31,
Percent
Change
(dollar amounts in millions)
2024
2023
Change
Earnings summary:
Net interest expense
$
(679)
$
(591)
$
(88)
15 %
Provision for credit losses
2
2
—
42
Noninterest income
63
49
14
27
Noninterest expenses
178
123
55
44
Benefit for income taxes
(176)
(166)
(10)
6
Net loss
$
(620)
$
(501)
$
(119)
24 %
Selected average balances:
Loans
$
10
$
2
$
8
n/m
Deposits
3,451
4,506
(1,055)
(23)
n/m - not meaningful
Average deposits, which primarily consist of centrally-managed brokered time deposits fully insured by the FDIC,
decreased $1.1 billion. Net loss for the Finance and Other category increased $119 million to $620 million. Net interest expense
increased $88 million to $679 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 $14 million to $63 million, primarily due to
an increase in risk management hedging income (BSBY cessation), partially offset by a loss related to securities repositioning
and a decrease in FHLB stock dividends. Noninterest expenses increased $55 million, reflecting higher salaries and benefits
expense and a decrease in gains on the sale of real estate, partially offset by a decrease in non-salary pension expense.
F-12
The following table lists the Corporation's banking centers by geographic market.
December 31
2024
2023
2022
Michigan
159
176
177
Texas
114
116
115
California
88
92
92
Other Markets:
Arizona
12
16
17
Florida
7
7
8
Canada
1
1
1
Total Other Markets
20
24
26
Total
381
408
410
BALANCE SHEET AND CAPITAL FUNDS ANALYSIS
Earning Assets
Period-End Loans
(in millions)
Percent
Change
December 31
2024
2023
Change
Commercial loans
$
26,492 $
27,251
$
(759)
(3) %
Real estate construction loans
3,680
5,083
(1,403)
(28)
Commercial mortgage loans
14,493
13,686
807
6
Lease financing
722
807
(85)
(11)
International loans
952
1,102
(150)
(14)
Residential mortgage loans
1,929
1,889
40
2
Consumer loans:
Home equity
1,802
1,792
10
1
Other consumer
469
503
(34)
(7)
Total consumer loans
2,271
2,295
(24)
(1)
Total loans
$
50,539 $
52,113
$
(1,574)
(3) %
On a period-end basis, total loans decreased $1.6 billion to $50.5 billion at December 31, 2024, compared to
$52.1 billion at December 31, 2023. The $1.4 billion decrease in real estate construction loans was primarily in the Commercial
Real Estate line of business and reflected expected paydowns from a higher pace of refinancing or sale of projects.
Average Loans
(in millions)
Percent
Change
Years Ended December 31
2024
2023
Change
Average Loans By Loan Type:
Commercial loans
$
26,278 $
30,009 $
(3,731)
(12) %
Real estate construction loans
4,422
4,041
381
9
Commercial mortgage loans
14,260
13,697
563
4
Lease financing
791
776
15
2
International loans
1,069
1,226
(157)
(13)
Residential mortgage loans
1,902
1,877
25
1
Consumer loans:
Home equity
1,787
1,775
12
1
Other consumer
470
502
(32)
(6)
Total consumer loans
2,257
2,277
(20)
(1)
Total loans
$
50,979 $
53,903 $
(2,924)
(5) %
F-13
(in millions)
Percent
Change
Years Ended December 31
2024
2023
Change
Average Loans By Business Line:
General Middle Market
$
11,503 $
12,568 $
(1,065)
(8) %
National Dealer Services
5,623
5,775
(152)
(3)
Environmental Services
2,519
2,366
153
6
Equity Fund Services
1,753
3,001
(1,248)
(42)
Energy
1,402
1,480
(78)
(5)
Entertainment
1,144
1,153
(9)
(1)
Technology and Life Sciences
716
865
(149)
(17)
Total Middle Market
24,660
27,208
(2,548)
(9)
Commercial Real Estate
10,329
9,085
1,244
14
Corporate Banking
5,438
6,044
(606)
(10)
Business Banking
3,140
3,150
(10)
—
Mortgage Banker Finance
17
945
(928)
(98)
Total Commercial Bank
43,584
46,432
(2,848)
(6)
Total Retail Bank
2,335
2,237
98
4
Total Wealth Management
5,050
5,232
(182)
(3)
Total Finance and Other
10
2
8
n/m
Total loans
$
50,979 $
53,903 $
(2,924)
(5) %
n/m - not meaningful
Average total loans decreased $2.9 billion to $51.0 billion in 2024, compared to $53.9 billion in 2023. Middle Market
business lines, which generally serve customers with annual revenue between $30 million and $500 million, decreased by
$2.5 billion, including a $1.2 billion decrease in Equity Fund Services and a $1.1 billion decrease in general Middle Market.
Mortgage Banker Finance, which provided short-term, revolving lines of credit to mortgage banking companies, decreased by
$928 million, reflecting the Corporation's strategic exit from this line of business. Corporate Banking, which generally serves
customers with revenue over $500 million, declined $606 million. These decreases were partially offset by a $1.2 billion
increase in Commercial Real Estate, which generally serves real estate developers and investors.
Investment Securities
(in millions)
Percent
Change
December 31
2024
2023
Change
U.S. Treasury securities
$
1,277 $
1,605
$
(328)
(20) %
Residential mortgage-backed securities (a)
9,076
10,519
(1,443)
(14)
Commercial mortgage-backed securities (a)
4,692
4,745
(53)
(1)
Total investment securities
$
15,045 $
16,869
$
(1,824)
(11) %
(a)
Issued and/or guaranteed by U.S. government agencies or U.S. government-sponsored enterprises.
On a period-end basis, investment securities were $15.0 billion at December 31, 2024, a decrease of $1.8 billion from
$16.9 billion at December 31, 2023, due to paydowns of mortgage-backed securities, maturities of Treasury securities and an
increase in unrealized losses, from $2.7 billion at December 31, 2023 to $2.9 billion at December 31, 2024. At December 31,
2024, the effective duration of the Corporation's securities portfolio was approximately 5.8 years. On an average basis,
investment securities decreased $1.6 billion to $15.8 billion in 2024, compared to $17.4 billion in 2023, reflecting paydowns of
mortgage-backed securities and maturities of Treasury securities, partially offset by a decline in average unrealized losses.
F-14
(weighted average yield) (a)
U.S. Treasury
securities
Residential
mortgage-backed
securities (b)
Commercial
mortgage-backed
securities (b)
Total investment
securities
December 31, 2024
Maturity (c)
Within 1 year
3.87 %
2.60 %
— %
3.85 %
1-5 Years
4.28
2.10
2.66
3.83
5-10 Years
—
2.02
2.98
2.96
After 10 Years
—
1.95
—
1.95
Total
4.18 %
1.95 %
2.96 %
2.41 %
Weighted Average Maturity (years)
1.6
25.5
7.0
18.4
(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.
(b)
Issued and/or guaranteed by U.S. government agencies or U.S. government-sponsored enterprises.
(c)
Based on final contractual maturity.
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 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 decreased
$2.1 billion to $6.0 billion at December 31, 2024. On an average basis, interest-bearing deposits with banks decreased $1.5
billion to $6.0 billion in 2024.
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 decreased $24 million to $375 million at December 31, 2024, driven by declines in deferred
compensation plan assets and variable-rate demand notes. On an average basis, other short-term investments increased $37
million to $376 million in 2024.
Deposits and Borrowed Funds
Period-End Deposits and Borrowed Funds
(in millions)
Percent
Change
Years Ended December 31
2024
2023
Change
Noninterest-bearing deposits
$
24,425 $
27,849 $
(3,424)
(12) %
Money market and interest-bearing checking deposits
32,714
28,246
4,468
16
Savings deposits
2,138
2,381
(243)
(10)
Customer certificates of deposit
3,450
3,723
(273)
(7)
Other time deposits
1,052
4,550
(3,498)
(77)
Foreign office time deposits
32
13
19
n/m
Total deposits
$
63,811 $
66,762 $
(2,951)
(4) %
Short-term borrowings
$
— $
3,565 $
(3,565)
n/m
Medium- and long-term debt
6,673
6,206
467
8
Total borrowed funds
$
6,673 $
9,771 $
(3,098)
(32) %
n/m - not meaningful
On a period-end basis, total deposits decreased $3.0 billion to $63.8 billion at December 31, 2024, compared to $66.8
billion at December 31, 2023, reflecting a decrease of $3.4 billion in noninterest-bearing deposits, partially offset by a $473
million 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 $33.4 billion and $31.5 billion at December 31, 2024
and 2023, respectively, as calculated per regulatory guidance. The portion of domestic time deposits in excess of insurance
limits was $953 million and $797 million at December 31, 2024 and 2023, respectively. Time deposits otherwise uninsured,
which consist of foreign office time deposits that mature in three months or less, totaled $32 million at December 31, 2024,
compared to $13 million at December 31, 2023.
F-15
On a period-end basis, the Corporation had no short-term borrowings at December 31, 2024, compared to $3.6 billion
of short-term borrowings at December 31, 2023. On a period-end basis, total medium- and long-term debt totaled $6.7 billion at
December 31, 2024, an increase of $467 million from $6.2 billion at December 31, 2023. 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.
Average Deposits and Borrowed Funds
(in millions)
Percent
Change
Years Ended December 31
2024
2023
Change
Noninterest-bearing deposits
$
25,082 $
30,882 $
(5,800)
(19) %
Money market and interest-bearing checking deposits
30,203
26,054
4,149
16
Savings deposits
2,243
2,774
(531)
(19)
Customer certificates of deposit
3,733
2,708
1,025
38
Other time deposits
2,617
3,577
(960)
(27)
Foreign office time deposits
23
23
—
—
Total deposits
$
63,901 $
66,018 $
(2,117)
(3) %
Short-term borrowings
$
837 $
7,218 $
(6,381)
(88)
Medium- and long-term debt
6,882
5,847
1,035
18
Total borrowed funds
$
7,719 $
13,065 $
(5,346)
n/m
n/m - not meaningful
(in millions)
Percent
Change
Years Ended December 31,
2024
2023
Change
Average Deposits By Business Line:
General Middle Market
$
17,259 $
16,962 $
297
2 %
Technology and Life Sciences
3,001
3,607
(606)
(17)
Equity Fund Services
904
976
(72)
(7)
National Dealer Services
864
1,022
(158)
(15)
Environmental Services
381
361
20
5
Energy
364
574
(210)
(37)
Entertainment
345
268
77
29
Total Middle Market
23,118
23,770
(652)
(3)
Corporate Banking
4,067
3,788
279
7
Business Banking
3,511
3,569
(58)
(2)
Commercial Real Estate
1,550
1,582
(32)
(2)
Mortgage Banker Finance
18
310
(292)
(94)
Total Commercial Bank
32,264
33,019
(755)
(2)
Total Retail Bank
24,292
24,363
(71)
—
Total Wealth Management
3,894
4,130
(236)
(6)
Total Finance and Other
3,451
4,506
(1,055)
(23)
Total deposits
$
63,901 $
66,018 $
(2,117)
(3) %
Average deposits decreased $2.1 billion to $63.9 billion in 2024, compared to $66.0 billion in 2023, reflecting a $5.8
billion decrease in noninterest-bearing deposits, partially offset by a $3.7 billion increase in interest-bearing deposits. The
decline in noninterest-bearing deposits mostly reflected customer responsiveness to a higher rate environment, while the
increase in interest-bearing deposits was primarily due to increases in money market and interest-bearing checking deposits and
customer certificates of deposit, partially offset by a decline in brokered time deposits.
Average short-term borrowings decreased by $6.4 billion to $837 million in 2024, compared to $7.2 billion in 2023,
driven by a decline in short-term FHLB advances. Average medium- and long-term debt increased $1.0 billion to $6.9 billion in
2024, compared to $5.8 billion in 2023, driven by an increase in longer-term FHLB advances and the issuance of $1.0 billion in
senior notes in January 2024, partially offset by a $500 million senior note maturity in July 2024. Further information on
medium- and long-term debt is provided in Note 12 to the consolidated financial statements.
Capital
Total shareholders' equity increased $137 million to $6.5 billion at December 31, 2024, compared to $6.4 billion at
December 31, 2023. The following table presents a summary of changes in total shareholders' equity in 2024.
F-16
(in millions)
Balance at January 1, 2024
$
6,406
Cumulative effect of change in accounting principle (a)
(4)
Net income
698
Cash dividends declared on common stock
(376)
Cash dividends declared on preferred stock
(23)
Purchase of common stock
(100)
Other comprehensive (loss) income, net of tax:
Investment securities
$
(154)
Cash flow hedges
9
Defined benefit and other postretirement plans
32
Total other comprehensive loss, net of tax
(113)
Net issuance of common stock under employee stock plans
1
Share-based compensation
54
Balance at December 31, 2024
$
6,543
(a) Effective January 1, 2024, the Corporation adopted ASU 2023-02, which expanded the permitted use of the proportional amortization
method to certain tax credit investments.
The following table summarizes the Corporation’s repurchase activity for the year ended December 31, 2024.
(shares in thousands)
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
First Quarter 2024
—
4,997
19 $
50.95
Second Quarter 2024
—
4,997
2
54.32
Third Quarter 2024
—
4,997
2
51.21
Fourth Quarter 2024
1,499
13,498
1,502
63.49
Total 2024
1,499
13,498
1,525
63.30
(a) Maximum number of shares that may be repurchased under the publicly announced plans or programs.
(b) Consists of approximately 26,000 shares purchased related to deferred compensation plans during the year ended December 31, 2024 and
is not considered part of the Corporation's repurchase program.
In October 2024, the Corporation resumed repurchasing its common shares under its previously established share
repurchase plan by entering an accelerated share repurchase agreement to repurchase $100 million of its common stock, which
was completed in the fourth quarter of 2024. In January 2025, the Corporation announced that it intended to repurchase $50
million of common stock during the first quarter of 2025, and on February 3, 2025, the Corporation entered into an Accelerated
Share Repurchase transaction (ASR) to repurchase $50 million of common stock. Under the terms of the ASR agreement, the
Corporation received an initial delivery of common shares representing approximately 80% of the expected total to be
repurchased. Subject to certain adjustments pursuant to the ASR agreement, the final number of shares repurchased and
delivered under the ASR agreement will be based on the volume weighted average share price of Comerica’s common stock
during the term of the transaction, which is expected to be completed in the first quarter of 2025.
Since the inception of the share repurchase program in 2010, a total of 107.2 million shares have been authorized for
repurchase. There is no expiration date for the share repurchase program, which may be effectuated through open market
repurchases, privately negotiated transactions, structured repurchase agreements with third parties and/or otherwise, including
utilizing Rule 10b5-1 plans. The timing and actual amount of additional share repurchases are subject to various factors,
including the Corporation's earnings generation, capital needs to fund future loan growth and market conditions.
The Corporation has a long-term CET1 capital ratio target of approximately 10 percent with capital deployment. At
December 31, 2024, the Corporation's CET1 capital ratio was 11.89 percent, an increase of 80 basis points compared to
December 31, 2023.
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 requires compliance with set minimum capital ratios as well as compliance with 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
and cash flow hedges and defined benefit postretirement plans from CET1, an option available to standardized approach entities
F-17
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.
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. 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 under Basel III.
Common equity tier 1 capital to risk-weighted assets
4.5 %
Tier 1 capital to risk-weighted assets
6.0
Total capital to risk-weighted assets
8.0
Capital conservation buffer (a)
2.5
Tier 1 capital to adjusted average assets (leverage ratio)
4.0
(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 for the periods presented as follows:
December 31, 2024
December 31, 2023
(dollar amounts in millions)
Capital/Assets
Ratio
Capital/Assets
Ratio
Common shareholders' equity
$
6,149
7.75 % $
6,012
7.00 %
Tangible common equity (a)
5,508
7.00
5,369
6.30
Common equity tier 1 (a)
8,667
11.89
8,414
11.09
Tier 1 risk-based (a)
9,061
12.43
8,808
11.60
Total risk-based
10,363
14.21
10,263
13.52
Leverage
9,061
11.08
8,808
10.06
Risk-weighted assets
72,903
75,901
(a) See Supplemental Financial Data section for reconciliations of non-GAAP financial measures and regulatory ratios.
At December 31, 2024, 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.
Common shareholders' equity included $3.2 billion in accumulated other comprehensive losses, with approximately
$2.4 billion of such 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 365 basis points; the impact on the tangible common equity ratio using the same calculation method was 370 basis
points. Average common shareholders' equity and return on average common shareholders' equity for the year ended
December 31, 2024 was $6.0 billion and 11.23%, respectively, compared to $5.2 billion and 16.50%, respectively, for the year
ended December 31, 2023.
Total shareholders' equity included $394 million of fixed-rate reset non-cumulative perpetual preferred stock at both
December 31, 2024 and December 31, 2023, which was issued in May 2020. The dividend rate is scheduled to reset on any
outstanding shares of preferred stock in October 2025. See Note 13 to the consolidated financial statements for further
information about the terms of preferred stock.
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 was subject to a public comment period, which ended
on January 16, 2024. If adopted as proposed, the Capital Proposal would include a three-year transition period beginning July 1,
2025. As of December 31, 2024, the Corporation had total assets of $79.3 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
F-18
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 the Corporation 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 345 basis point decrease to common equity tier-1 capital as of December 31, 2024.
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 improve the Corporation's ability to control those such 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 risks that 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, was established by the Enterprise Risk
Committee of the Board and is responsible for overseeing the risk management framework, providing oversight of 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 risks facing the Corporation and the
financial services industry in general. 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.
A discussion and analysis of each of the main categories of risk the Corporation faces is set forth below.
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
F-19
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 Corporation's credit risk rating policy and
providing business segment reporting support as necessary. The Enterprise Risk Division provides a 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 following table presents metrics of the allowance for credit losses and nonperforming loans.
December 31,
2024
2023
Allowance for credit losses as a percentage of total loans
1.44 %
1.40 %
Allowance for credit losses as a multiple of total nonaccrual loans
2.4x
4.1x
Allowance for credit losses as a multiple of total nonperforming loans
2.4x
4.1x
Higher criticized and nonperforming loans, partially offset by improved economic forecasts and reduced levels of
uncertainty incorporated into the estimate, contributed to an overall higher allowance for credit losses to total loans ratio as of
December 31, 2024 compared to December 31, 2023. A decrease in loan balances in combination with the factors above
resulted in the allowance for credit losses remaining relatively stable at $725 million at December 31, 2024, compared to $728
million as of December 31, 2023.
Key credit metrics remained below historical levels at December 31, 2024, with some normalization in trends in 2024
leading to higher criticized loans and nonperforming assets than in 2023. Criticized loan balances increased 5% at
December 31, 2024 from December 31, 2023, while nonperforming assets increased to $308 million from $178 million over the
same period. Net charge-offs as a percentage of average loans remained low for 2024 at 10 basis points. These portfolio trends
were impacted by persistent inflation and elevated interest rates that continued to pressure customer profitability and debt
service ratios.
In isolation, slight improvements in economic forecasts contributed to a partial reduction to the allowance for credit
losses to total loans ratio as of December 31, 2024, compared to December 31, 2023. At December 31, 2024, forecasts reflected
a more stabilized economic outlook compared to the December 31, 2023 forecasts, with less volatility over the reasonable and
supportable period and a return to normalized levels for key economic variables. Specifically, the two-year forecast at
December 31, 2024 reflected improved Gross Domestic Product (GDP) growth, relatively flat unemployment trends, more
normalized oil prices and bond spreads indicative of lower credit risk in the market.
The allowance for credit losses incorporates risks not captured in the underlying model, primarily forecast risk. In
management’s view, forecast risk at December 31, 2024 was lower than at December 31, 2023 due to a tightening of the
economic scenarios, signaling an overall decrease in uncertainty. Uncertainties considered by management at December 31,
2024 focused on portfolios with incremental monitoring, such as leveraged, senior housing and automotive production loans.
The economic forecasts informing the current expected credit loss (CECL) model continue to reflect the cumulative
lagged effects of the FRB's tight monetary policy between 2022 and 2024 that are weighing on the real economy, as well as
several years of elevated inflation that largely depleted the excess savings that households accumulated during the pandemic.
Energy prices are projected to level off amid crosswinds from the Russia-Ukraine and Middle East conflicts, rising U.S. crude
production and weak demand from China and other major foreign economies. Residential real estate prices are generally
stronger than commercial real estate property prices, which face continued headwinds from the long and variable lags by which
the FRB's tighter monetary policy affect real asset prices and an overhang of office space supply.
A reversion to trend after the boost from expansionary fiscal policy fades is expected to contribute to a moderation of
economic growth in 2025 and 2026. Price pressures are forecasted to continue to revert toward to pre-pandemic norms as the
modest margin of slack which opened in the economy's productive capacity in 2024 cools pricing power. The FRB is expected
to gradually normalize its monetary stance but not return interest rates to their pre-crisis levels.
F-20
These factors shaped the two-year reasonable and supportable forecast used by the Corporation in its CECL estimate at
December 31, 2024. The U.S. economy is projected to grow at a below-trend rate through 2025 before gradually normalizing to
its trend growth rate. The unemployment rate is forecasted to move somewhat higher as private hiring remains subdued.
Forecasts for other key economic variables are generally consistent with those of GDP and unemployment rate, while interest
rate forecasts reflect market expectations and recent guidance from the FRB. The following table summarizes select economic
variables representative of the economic forecasts used to develop the allowance for credit losses estimate at December 31,
2024.
Economic Variable
Base Forecast
Real GDP growth
Growth slows to 1.6 percent in the first quarter of 2025 before
recovering to approximately 2.0 percent by the end of the forecast
period.
Unemployment rate
Remains between 4.2 and 4.4 percent over the forecast period.
Corporate BBB bond to 10-year Treasury bond spreads
Spread gradually widens to 2.2 percent by the end of the forecast
period.
Oil Prices
Prices generally remain close to $70 per barrel throughout the
forecast period.
Due to the high degree of uncertainty regarding recessionary risks, persistent inflation, continued elevated 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.
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 $2 million to $690 million at December 31, 2024, compared to
$688 million at December 31, 2023.
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 $35 million and $40 million at
December 31, 2024 and December 31, 2023, respectively.
F-21
Analysis of the Allowance for Credit Losses
The table below details net charge-offs (recoveries) as a percentage of average loans by loan category.
2024
2023
2022
(dollar amounts in millions)
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)
Commercial
$
40
0.15 % $
9
0.03 % $
18
0.06 %
Commercial mortgage
13
0.09
(1)
(0.01)
—
—
Lease financing
4
0.51
—
—
—
—
International
(5)
(0.47)
13
1.06
—
—
Residential mortgage
—
—
—
—
(1)
(0.03)
Consumer
—
—
1
0.04
—
—
Total loans
$
52
0.10 % $
22
0.04 % $
17
0.03 %
(a)
Net charge-offs (recoveries) as a percentage of related average loans outstanding.
Net loan charge-offs totaled $52 million for the year ended December 31, 2024, a $30 million increase from net loan
charge-offs of $22 million for the year ended December 31, 2023. 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
2024
2023
(dollar amounts in millions)
Allocated
Allowance
Allowance
Ratio (a)
% (b)
Allocated
Allowance
Allowance
Ratio (a)
% (b)
December 31,
Allowance for loan losses
Business loans
Commercial
$
315
1.19 %
52 % $
303
1.11 %
52 %
Real estate construction
35
0.95
7
71
1.39
10
Commercial mortgage
257
1.78
29
226
1.66
26
Lease financing
13
1.75
1
12
1.44
2
International
5
0.56
2
8
0.71
2
Total business loans
625
1.35
91
620
1.29
92
Retail loans
Residential mortgage
25
1.31
4
28
1.50
4
Consumer
40
1.76
5
40
1.74
4
Total retail loans
65
1.55
9
68
1.63
8
Total loans
690
1.37 %
100 % $
688
1.32 %
100 %
Allowance for credit losses on lending-related commitments
Business commitments
28
31
Retail commitments
7
9
Total commitments
35
40
Allowance for credit losses
$
725
1.44 %
$
728
1.40 %
(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.
F-22
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
2024
2023
Total nonperforming loans and nonperforming assets
$
308
$
178
Nonaccrual loans as a percentage of total loans
0.61 %
0.34 %
Nonperforming loans as a percentage of total loans
0.61
0.34
Nonperforming assets as a percentage of total loans and foreclosed property
0.61
0.34
Loans past due 90 days or more and still accruing
$
44
$
20
Nonperforming assets increased $130 million to $308 million at December 31, 2024, from $178 million at
December 31, 2023. The increase in nonperforming assets primarily reflected increases of $106 million in nonaccrual business
loans and $24 million in nonaccrual retail loans. Nonperforming loans were 0.61 percent of total loans at December 31, 2024,
compared to 0.34 percent at December 31, 2023. 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
2024
2023
Balance at beginning of period
$
178 $
240
Loans transferred to nonaccrual (a)
280
94
Nonaccrual loan gross charge-offs
(95)
(62)
Loans transferred to accrual status (a)
(7)
(14)
Nonaccrual loans sold
(29)
(5)
Payments/other (b)
(19)
(75)
Balance at end of period
$
308 $
178
(a)
Based on an analysis of nonaccrual loans with book balances greater than $2 million.
(b)
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 27 borrowers with a balance greater than $2 million, totaling $280 million, transferred to nonaccrual status
in 2024, an increase of 11 borrowers compared to 16 borrowers totaling $94 million in 2023. For further information about the
composition of loans transferred to nonaccrual status during 2024, 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, 2024 and 2023.
2024
2023
(dollar amounts in millions)
Number of
Borrowers
Balance
Number of
Borrowers
Balance
Under $2 million
490 $
68
457 $
50
$2 million - $5 million
18
64
11
35
$5 million - $10 million
5
33
5
35
$10 million - $25 million
6
112
4
58
Greater than $25 million
1
31
—
—
Total
520 $
308
477 $
178
F-23
The following table presents a summary of nonaccrual loans at December 31, 2024 and loans transferred to nonaccrual
and net loan charge-offs (recoveries) for the year ended December 31, 2024, based on North American Industry Classification
System categories.
December 31, 2024
Year Ended December 31, 2024
(dollar amounts in millions)
Nonaccrual Loans
Loans Transferred to
Nonaccrual (a)
Net Loan Charge-Offs
(Recoveries)
Industry Category
Real Estate & Home Builders
$
68
22 % $
43
15 % $
3
6 %
Health Care & Social Assistance
48
16
57
20
10
19
Residential Mortgage
37
12
11
4
—
—
Information & Communication
37
12
35
13
6
12
Manufacturing
26
9
32
11
7
13
Retail Trade
22
6
42
16
22
43
Utilities
16
5
17
6
—
—
Services
10
3
15
5
6
12
Wholesale Trade
7
2
11
4
8
15
Arts, Entertainment & Recreation
5
2
—
—
—
—
Management of Companies and Enterprises
3
1
—
—
—
—
Mining, Quarrying and Oil & Gas Extraction
—
—
—
—
(10)
(20)
Other (b)
29
10
17
6
—
—
Total
$
308
100 % $
280
100 % $
52
100 %
(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
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 increased $24 million to $44 million at December 31, 2024, compared
to $20 million at December 31, 2023. Loans past due 30-89 days increased $21 million to $219 million at December 31, 2024,
compared to $198 million at December 31, 2023. Loans past due 30 days or more and still accruing interest as a percentage of
total loans were 0.52 percent and 0.42 percent at December 31, 2024 and December 31, 2023, 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
2024
2023
Total criticized loans
$
2,530
$
2,405
As a percentage of total loans
5.0 %
4.6 %
The $125 million increase in criticized loans during the year ended December 31, 2024 was primarily driven by
Corporate Banking, partially offset by a decrease in 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, 2024.
F-24
Commercial Real Estate Lending
At December 31, 2024, 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, 2024
December 31, 2023
(in millions)
Commercial
Real Estate
business line (a)
Other (b)
Total
Commercial
Real Estate
business line (a)
Other (b)
Total
Real estate construction loans
$
3,358 $
322 $ 3,680 $
4,570 $
513 $ 5,083
Commercial mortgage loans
6,044
8,449 14,493
4,727
8,959 13,686
Total commercial real estate
$
9,402 $ 8,771 $ 18,173 $
9,297 $ 9,472 $ 18,769
(a)
Primarily loans to real estate developers.
(b)
Primarily loans secured by owner-occupied real estate.
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,
which are based on third-party appraisals that are performed at the time of origination in accordance with regulatory
requirements as well as generally at the time of renewal. Per Interagency guidelines, the Corporation may also require an
updated appraisal or valuation when economic, financial or market conditions may have resulted in deterioration of the prior
appraisal's property value conclusions. Commercial real estate loans, consisting of real estate construction and commercial
mortgage loans, totaled $18.2 billion at December 31, 2024. Commercial real estate loans made to borrowers in the Commercial
Real Estate business line, which includes loans to real estate developers, totaled $9.4 billion, or 52 percent of total commercial
real estate loans, an increase of $105 million compared to December 31, 2023.
The Commercial Real Estate business line at December 31, 2024 was predominantly secured by multi-family and
industrial properties, comprising 48 percent and 29 percent of the portfolio, respectively, with only 4 percent secured by office
properties. Commercial real estate loans in other business lines totaled $8.8 billion, or 48 percent of total commercial real estate
loans, at December 31, 2024, a decrease of $701 million compared to December 31, 2023. 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 $36 million
at December 31, 2024 compared to $86 million at December 31, 2023. In other business lines, criticized real estate construction
loans totaled $2 million at December 31, 2024, compared to $12 million at December 31, 2023. There were no real estate
construction loan net charge-offs in the years ended December 31, 2024 and 2023.
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 $379 million and $378 million at December 31, 2024 and 2023, respectively. In other business lines, $694 million and
$395 million of commercial mortgage loans were criticized at December 31, 2024 and 2023, respectively, with the increase
primarily in senior housing properties, largely maintained in the Corporate Banking line of business. Senior housing loans
totaled $658 million at December 31, 2024, of which 57% were criticized, compared to $796 million at December 31, 2023, of
which 11% were criticized. Commercial mortgage loan net charge-offs were $13 million in 2024, compared to net recoveries of
$1 million in 2023.
Automotive Lending - Dealer:
The following table presents a summary of dealer loans.
December 31, 2024
December 31, 2023
(in millions)
Loans
Outstanding
Percent of
Total Loans
Loans
Outstanding
Percent of
Total Loans
Dealer:
Floor plan
$
2,279
$
2,313
Other
3,234
3,878
Total dealer
$
5,513
10.9 % $
6,191
11.9 %
F-25
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, 2024, a decrease of $34 million compared to $2.3 billion at December 31,
2023. At December 31, 2024 and 2023, other loans in the National Dealer Services business line totaled $3.2 billion and $3.9
billion, respectively, including $1.8 billion and $2.2 billion of owner-occupied commercial real estate mortgage loans,
respectively.
There were no nonaccrual dealer loans at December 31, 2024, and 2023. Additionally, there were no net charge-offs of
dealer loans in either of the years ended December 31, 2024 and 2023.
Automotive Lending- Production:
The following table presents a summary of loans to borrowers involved with automotive production.
December 31, 2024
December 31, 2023
Loans
Outstanding
Percent of
Total Loans
Loans
Outstanding
Percent of
Total Loans
(in millions)
Production:
Domestic
$
499
$
591
Foreign
265
257
Total production
$
764
1.5 % $
848
1.6 %
Loans to borrowers involved with automotive production, primarily Tier 1 and Tier 2 suppliers, totaled $764 million at
December 31, 2024 and $848 million at December 31, 2023. 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.
There were no nonaccrual loans to borrowers involved with automotive production at December 31, 2024, compared
to $17 million at December 31, 2023. Automotive production loan net recoveries totaled $1 million for the year ended
December 31, 2024, compared to net charge-offs of $7 million for the year ended December 31, 2023.
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, 2024, 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.
December 31, 2024
December 31, 2023
(dollar amounts in millions)
Residential
Mortgage
Loans
Percent
of
Total
Home
Equity
Loans
Percent
of
Total
Residential
Mortgage
Loans
Percent
of
Total
Home
Equity
Loans
Percent
of
Total
Geographic market:
Michigan
$
576
30 % $
420
23 % $
548
29 % $
444
25 %
California
889
46
931
52
871
46
911
51
Texas
273
14
365
20
272
14
351
20
Other Markets
191
10
86
5
198
11
86
4
Total
$
1,929
100 % $
1,802
100 % $
1,889
100 % $
1,792
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, 2024. 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, 2024, 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, $37 million were on nonaccrual status at December 31, 2024, an increase of $18 million compared to
December 31, 2023. The home equity portfolio totaled $1.8 billion at December 31, 2024, of which 95 percent were
outstanding under primarily variable-rate, interest-only home equity lines of credit and 5 percent were in amortizing status. Of
the $1.8 billion of home equity loans outstanding, $27 million were on nonaccrual status at December 31, 2024, an increase of
F-26
$6 million compared to December 31, 2023. A majority of the home equity portfolio was secured by junior liens at
December 31, 2024.
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 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 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
industry. 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)
2024
2023
December 31
Outstandings
Nonaccrual Criticized (a)
Outstandings
Nonaccrual Criticized (a)
Exploration and production (E&P)
$ 1,188
80% $
—
$
—
$ 1,070
77% $
4
$
4
Midstream
298
20
—
—
312
23
—
—
Total Energy business line
$ 1,486 100% $
—
$
—
$ 1,382 100% $
4
$
4
(a)
Includes nonaccrual loans.
Loans in the Energy business line totaled $1.5 billion, or 3 percent of total loans, at December 31, 2024, an increase of
$104 million compared to December 31, 2023. Total exposure, including unused commitments to extend credit and letters of
credit, was $3.5 billion (a utilization rate of 41%) and $3.3 billion (a utilization of 42 percent) at December 31, 2024 and
December 31, 2023, respectively. There were no nonaccrual or criticized at Energy loans at December 31, 2024, compared to
$4 million at December 31, 2023. Energy net recoveries were $10 million for the year ended December 31, 2024, compared to
net recoveries of $1 million for the year ended December 31, 2023.
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 6 percent and 5 percent of total
loans at December 31, 2024 and December 31, 2023, respectively.
(in millions)
December 31
2024
2023
Outstandings
$
2,836 $
2,814
Criticized
300
332
Net loan charge-offs recorded during the years ended December 31,
23
5
F-27
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
helps mitigate 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. The Corporation's evaluation as of December 31, 2024 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 $1.3 billion on an unconsolidated basis at December 31,
2024.
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, 2024 was 56 percent fixed-rate, 34
percent overnight to 30-day rate, 7 percent 90-day and greater rates and 3 percent prime rate. The composition of the
Corporation's 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 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-28
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, 2024 included, for the rising interest rate
scenarios, a modest increase in loan balances and a moderate decrease in deposit balances, and for the declining interest 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 47%, 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 $15.8 billion for the year ended December
31, 2024 with an average yield of 2.16% and an effective duration of 5.8 years. During the year ended December 31, 2024, the
Corporation repositioned a portion of its securities portfolio by selling $827 million of Treasury securities, resulting in a
$19 million loss, and replacing them with higher-yielding Treasury securities with a duration of 1.9 years.
The table below details components of the variable-rate loan swap portfolio at December 31, 2024.
Variable-Rate Loan Swaps
(dollar amounts in millions)
Notional Amount
Weighted Average
Yield
Years to Maturity (b)
Swaps under contract at December 31, 2024 (a)
$
23,350
2.55 %
3.1
Weighted average notional active per period:
Full year 2024
23,575
2.50
2.4
Full year 2025
22,973
2.57
3.1
(a)
Years to maturity calculated from a starting date of December 31, 2024.
The analysis also includes interest rate swaps that convert $6.8 billion of fixed-rate medium- and long-term debt to
variable rates through fair value hedges. Additionally, included in this analysis are $15.1 billion of loans that were subject to an
average interest rate floor of 52 basis points at December 31, 2024. 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, 2024 and 2023, 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 interest rate scenarios described
above.
Estimated Annual Change
(dollar amounts in millions)
2024
2023
December 31
Amount
%
Amount
%
Change in Interest Rates:
Change in Interest Rates:
Rising 100 basis points
$
(26)
(1) %
Rising 100 basis points
$
(36)
(2) %
(50 basis points on average)
(50 basis points on average)
Declining 100 basis points
12
1
Declining 100 basis points
23
1
(50 basis points on average)
(50 basis points on average)
Rising 200 basis points
(67)
(3)
Rising 200 basis points
(87)
(4)
(100 basis points on average)
(100 basis points on average)
Declining 200 basis points
12
1
Declining 200 basis points
33
1
(100 basis points on average)
(100 basis points on average)
Sensitivity to both rising and declining interest rates decreased slightly from December 31, 2023 to December 31, 2024
due to changes in balance sheet mix dynamics.
At December 31, 2024, 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 $56 million and increased by
$35 million, respectively, due to a more rapid repricing pace compared to the standard model assumptions.
F-29
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, 2024 and December 31, 2023, displays the estimated impact on the economic
value of equity from the interest rate scenario described above.
(dollar amounts in millions)
2024
2023
December 31
Amount
%
Amount
%
Change in Interest Rates:
Change in Interest Rates:
Rising 100 basis points
$
(503)
(4) %
Rising 100 basis points
$
(567)
(4) %
Declining 100 basis points
598
5
Declining 100 basis points
794
6
Rising 200 basis points
(1,066)
(9)
Rising 200 basis points
(1,254)
(10)
Declining 200 basis points
1,097
9
Declining 200 basis points
1,363
11
The sensitivity of the economic value of equity to rising and declining rates decreased modestly from December 31,
2023 to December 31, 2024 due to a declining notional amount of cash flow swaps and a smaller securities portfolio, partially
offset by updated deposit modeling assumptions.
Loans by Maturity and Interest Rate Sensitivity
The contractual maturity distribution of the loan portfolio is presented below.
Loans Maturing
(in millions)
December 31, 2024
Within One
Year (a)
After One
But Within
Five Years
After Five But
Within Fifteen
Years
After Fifteen
Years
Total
Commercial loans
$
9,873 $
15,573
$894
$
152 $
26,492
Real estate construction loans
1,287
2,280
113
—
3,680
Commercial mortgage loans
4,213
7,629
2,635
16
14,493
Lease financing
137
266
319
—
722
International loans
463
458
31
—
952
Residential mortgage loans
20
6
186
1,717
1,929
Consumer loans
447
134
43
1,647
2,271
Total
$
16,440 $
26,346 $
4,221 $
3,532 $
50,539
(a)
Includes demand loans, loans having no stated repayment schedule or maturity and overdrafts.
The interest rate composition of loans with a maturity date over one year are presented below based on contractual
terms.
Loans Maturing After One Year
(in millions)
December 31, 2024
Predetermined
(Fixed) Interest
Rate
Floating
Interest Rate
Total
Commercial loans
$
307 $
16,312 $
16,619
Real estate construction loans
51
2,342
2,393
Commercial mortgage loans
1,591
8,689
10,280
Lease financing
241
344
585
International loans
1
488
489
Residential mortgage loans
576
1,333
1,909
Consumer loans
21
1,803
1,824
Total
$
2,788 $
31,311 $
34,099
F-30
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 variable rate loans to a fixed rate and fixed-rate medium- and long-term debt to a
floating 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 a similar manner, notional activity for 2024 included the impact of BSBY
cessation, where existing BSBY-based swaps were replaced with short-dated BSBY swaps that matured in 2024 and surviving
forward-starting SOFR swaps.
(in millions)
Risk Management Notional Activity
Interest
Rate
Contracts
Foreign
Exchange
Contracts
Totals
Balance at January 1, 2023
$
29,750 $
392 $
30,142
Additions
17,100
9,534
26,634
Maturities/amortizations
(9,150)
(9,366)
(18,516)
Terminations
(6,550)
—
(6,550)
Balance at December 31, 2023
$
31,150 $
560 $
31,710
Additions
12,200
9,305
21,505
Maturities/amortizations
(7,600)
(9,412)
(17,012)
Terminations
(5,600)
—
(5,600)
Balance at December 31, 2024
$
30,150 $
453 $
30,603
The notional amount of risk management interest rate swaps totaled $30.2 billion at December 31, 2024, which
included cash flow swaps that convert $23.4 billion of variable-rate loans to a fixed rate as well as fair value swaps that convert
$6.8 billion of fixed-rate medium- and long-term debt to a floating rate. Risk management interest rate swaps generated $765
million and $715 million of net interest expense for the years ended December 31, 2024 and December 31, 2023, respectively.
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.
Customer-Initiated and Other Derivative Instruments
(in millions)
Customer-Initiated and Other Notional Activity
Interest
Rate
Contracts
Energy
Derivative
Contracts
Foreign
Exchange
Contracts
Totals
Balance at January 1, 2023
$
20,298 $
14,521 $
2,704 $
37,523
Additions
16,207
11,510
44,060
71,777
Maturities/amortizations
(5,651)
(10,761)
(44,013)
(60,425)
Terminations
(8,384)
(1,464)
—
(9,848)
Balance at December 31, 2023
$
22,470 $
13,806 $
2,751 $
39,027
Additions
14,396
11,928
39,220
65,544
Maturities/amortizations
(9,004)
(10,205)
(38,854)
(58,063)
Terminations
(5,111)
(2,271)
—
(7,382)
Balance at December 31, 2024
$
22,751 $
13,258 $
3,117 $
39,126
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 56 percent and 55 percent of total interest
rate, energy and foreign exchange contracts at December 31, 2024 and 2023, respectively.
Further information regarding customer-initiated and other derivative instruments is provided in Note 8 to the
consolidated financial statements.
F-31
BSBY Cessation
The Bloomberg Index Services Limited (Bloomberg) discontinued publishing BSBY on November 15, 2024. As a
result, 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 were recorded as risk management hedging losses
within other noninterest income instead of net interest income until re-designation. All impacted swaps were re-designated as of
April 1, 2024.
BSBY cessation positively impacted interest income on commercial loans by $7 million for the year ended December
31, 2024, compared to $3 million for the year ended December 31, 2023. Additionally, the Corporation recognized net losses of
$39 million and $91 million in noninterest income for the year ended December 31, 2024 and 2023, respectively. Refer to Note
8 to the consolidated financial statements for further discussion of re-designated interest rate hedges.
The Corporation has substantially completed its BSBY transition efforts and effectively all BSBY-based contracts had
transitioned to other reference rates as of December 31, 2024. Any BSBY-based contracts that did not transition to SOFR or
other indices in 2024 are expected to either not reprice prior to maturing in 2025 or convert to SOFR or another index at their
next repricing date.
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 FRB borrowing through the discount window, as well as the market value of
unencumbered investment securities, which, if needed, could be utilized as collateral for FHLB advances and FRB borrowings.
The Corporation has pledged a portion of its investment securities portfolio to access wholesale funding as needed.
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, 2024, the Bank had pledged real estate-related loans totaling $22.5 billion and investment securities
totaling $6.0 billion to the FHLB, which provided for up to $17.0 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. At December 31, 2024, the Bank pledged $20.3 billion of loans to the FRB, which provided for up to
$16.8 billion of collateralized borrowing through the discount window.
The table below details the Corporation's sources of available liquidity at December 31, 2024.
(dollar amounts in millions)
Total Capacity
Borrowings
Outstanding
Available Liquidity
Cash on deposit with FRB (a)
$
5,811
Unencumbered investment securities (b)
8,018
Secured borrowing facilities:
FHLB
$
17,026
$
4,000
13,026
FRB
16,841
—
16,841
Total available liquidity
$
43,696
(a)
Included in interest-bearing deposits with banks on the Consolidated Balance Sheet.
(b)
Market value of available-for-sale investment securities that the Corporation can pledge or sell without third-party consent.
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, 2024,
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
F-32
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.
Debt Ratings
Deposit Ratings
Comerica Incorporated
Comerica Bank
Comerica Bank
December 31, 2024
Rating
Rating
Outlook
Rating
Moody’s Investors Service (a)
Baa1
Baa1
Negative
A1
Fitch Ratings
A-
A-
Negative
A
Standard and Poor’s
BBB
BBB+
Stable
not rated
(a)
In January 2025, Moody's Investors Service (Moody's) downgraded the Corporation and Bank's debt ratings by one notch to Baa2 from
Baa1, changed the Corporation and Bank's outlooks to Stable and downgraded the Bank's deposit rating to A2.
Deposit Concentrations and Uninsured Deposits
The Corporation's uninsured deposits are well-diversified between geographies, industries and customers. At
December 31, 2024, the Retail Bank and general Middle Market segments, both highly diversified and granular, accounted for
37% and 30% of the total deposit base, respectively. Corporate Banking and Technology and Life Sciences comprised 7% and
5% each of total deposits, respectively, which were the largest deposit concentrations of the more specialized business lines.
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.
December 31, 2024
December 31, 2023
(Dollar amount in millions)
Amount
Percentage of
total deposits
Amount
Percentage of
total deposits
Total uninsured deposits, as calculated per regulatory guidelines
$
33,387
52 % $
31,485
47 %
Less: affiliate deposits
(3,876)
(4,064)
Total uninsured deposits, excluding affiliate deposits
$
29,511
46 % $
27,421
41 %
The $1.9 billion increase in uninsured deposits (as calculated per regulatory guidelines) was primarily due to an
increase in uninsured commercial interest-bearing deposits, partially offset by a decline in uninsured noninterest-bearing
deposits. Time deposits otherwise uninsured, which consist of foreign office time deposits, totaled $32 million at December 31,
2024 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 $348 million at December 31, 2024, compared to $687 million at
December 31, 2023.
Direct Express Debit MasterCard Program
In July 2024, the Bank received preliminary notification that, following the contract expiration on January 2, 2025, it
was not selected to continue serving as financial agent supporting the Direct Express Program; however, the Treasury elected to
extend the contract term for up to three years past January 2, 2025 to facilitate an orderly transaction. While the length of the
transition is currently unknown, the Corporation believes it may take some time given the scale and complexity of the program
as well as its own transition experience.
For the years ended December 31, 2024 and 2023, average deposits related to the Direct Express program were $3.4
billion and $3.1 billion, respectively, all of which were noninterest-bearing. Card fee income related to the Direct Express
program was $121 million and $137 million for the years ended December 31, 2024 and 2023, respectively. Noninterest
expenses related to the Direct Express program were $119 million and $138 million, respectively, for the same periods,
consisting primarily of outside processing fee expense and other noninterest expenses. The Corporation cannot currently predict
the impact that the loss of this contract and the related deposits could have on its financial statements as it will be subject to
many factors, including, but not limited to, the timing, costs and extent of securing any necessary alternative sources of funding.
However, such impact could be material.
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. GAAP.
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.
F-33
Selected Contractual Obligations
Minimum Payments Due by Period
(in millions)
December 31, 2024
Total
Less than
1 Year
1-3
Years
4-5
Years
More than
5 Years
Deposits without a stated maturity (a)
$
59,277 $
59,277
Certificates of deposit and other deposits with a stated
maturity (a)
4,534
4,455 $
68 $
8 $
3
Medium- and long-term debt (a)
6,800
1,350
2,400
1,550
1,500
Operating leases
423
67
123
84
149
Total contractual obligations
$
71,034 $
65,149 $
2,591 $
1,642 $
1,652
Medium- and long-term debt (parent company only) (a) (b) $
1,800 $
— $
250 $
550 $
1,000
(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
Expected Expiration Dates by Period
(in millions)
December 31, 2024
Total
Less than
1 Year
1-3
Years
4-5
Years
More than
5 Years
Unused commitments to extend credit
$
28,398 $
6,416 $
12,362 $
6,002 $
3,618
Standby letters of credit and financial guarantees
4,138
3,690
340
105
3
Commercial letters of credit
12
12
—
—
—
Total commercial commitments
$
32,548 $
10,118 $
12,702 $
6,107 $
3,621
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.
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. This 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
F-34
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 failures 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-35
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, 2024,
the most critical of these estimates related to the allowance for credit losses, fair value measurement, 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 2024 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 and 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 five percent of the individual risk ratings were adjusted down by one rating across all pools, the allowance for loan losses as
of December 31, 2024 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
more severe economic forecast scenarios, with varying responses to current economic risks. The following table summarizes
select economic variables representative of the forecasts used in a more severe forecast scenario.
F-36
Economic Variable
More Severe Forecast
Real GDP
Contracts through third quarter 2025, followed by partial recovery,
resulting in a cumulative contraction of 0.7 percent over the forecast
period.
Unemployment rate
Increases to 8.3 percent by first quarter 2026, followed by a decline
to 7.5 percent by the end of the forecast period.
Corporate BBB bond to 10-year Treasury bond spreads
Spreads widen to a peak of 4.0 percent before gradually narrowing
to 2.3 percent by the end of the forecast period.
Oil Prices
Decline to $48 per barrel by first quarter 2026 before recovering to
$57 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, 2024 would increase by approximately $328 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, 2024 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, 2024, 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-37
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
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 2025 and 2024 defined benefit plan pension expense (benefit) were as follows:
2025
2024
Discount rate
5.72 %
5.33 %
Long-term rate of return on plan assets
6.75 %
6.75 %
Mortality table:
Base table (a)
Pri-2012
Pri-2012
Mortality improvement scale (a)
MP-2021
MP-2020
(a)
Issued by the Society of Actuaries
Defined benefit plan benefit is expected to decrease $8 million to approximately $38 million in 2025, compared to a
benefit of $46 million in 2024. This includes service cost expense of $38 million and a benefit from other components of $76
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 $5 million, while a decrease of 25 basis points would reduce pension
expense by $5 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.
F-38
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, and 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.
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.
(dollar amounts in millions)
December 31
2024
2023
Common Equity Tier 1 Capital:
Tier 1 capital
$ 9,061
$
8,808
Less:
Fixed-rate reset non-cumulative perpetual preferred stock
394
394
Common equity tier 1 capital
$
8,667
$
8,414
Risk-weighted assets
$ 72,903
$ 75,901
Tier 1 capital ratio
12.43 %
11.60 %
Common equity tier 1 capital ratio
11.89
11.09
Tangible Common Equity Ratio:
Total shareholders' equity
$
6,543
$
6,406
Less:
Fixed-rate reset non-cumulative perpetual preferred stock
394
394
Common shareholders' equity
$
6,149
$
6,012
Less:
Goodwill
635
635
Other intangible assets
6
8
Tangible common equity
$
5,508
$
5,369
Total assets
$ 79,297
$ 85,834
Less:
Goodwill
635
635
Other intangible assets
6
8
Tangible assets
$ 78,656
$ 85,191
Common equity ratio
7.75 %
7.00 %
Tangible common equity ratio
7.00
6.30
Tangible Common Equity per Share of Common Stock:
Common shareholders' equity
$
6,149
$
6,012
Tangible common equity
5,508
5,369
Shares of common stock outstanding (in millions)
131
132
Common shareholders' equity per share of common stock
$
46.79
$
45.58
Tangible common equity per share of common stock
41.91
40.70
F-39
(in millions, except share data)
December 31
2024
2023
ASSETS
Cash and due from banks
$
850
$
1,443
Interest-bearing deposits with banks
5,954
8,059
Other short-term investments
375
399
Investment securities available-for-sale
15,045
16,869
Commercial loans
26,492
27,251
Real estate construction loans
3,680
5,083
Commercial mortgage loans
14,493
13,686
Lease financing
722
807
International loans
952
1,102
Residential mortgage loans
1,929
1,889
Consumer loans
2,271
2,295
Total loans
50,539
52,113
Allowance for loan losses
(690)
(688)
Net loans
49,849
51,425
Premises and equipment
473
445
Accrued income and other assets
6,751
7,194
Total assets
$
79,297
$
85,834
LIABILITIES AND SHAREHOLDERS’ EQUITY
Noninterest-bearing deposits
$
24,425
$
27,849
Money market and interest-bearing checking deposits
32,714
28,246
Savings deposits
2,138
2,381
Customer certificates of deposit
3,450
3,723
Other time deposits
1,052
4,550
Foreign office time deposits
32
13
Total interest-bearing deposits
39,386
38,913
Total deposits
63,811
66,762
Short-term borrowings
—
3,565
Accrued expenses and other liabilities
2,270
2,895
Medium- and long-term debt
6,673
6,206
Total liabilities
72,754
79,428
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
394
394
Common stock - $5 par value:
Authorized - 325,000,000 shares
Issued - 228,164,824 shares
1,141
1,141
Capital surplus
2,218
2,224
Accumulated other comprehensive loss
(3,161)
(3,048)
Retained earnings
12,017
11,727
Less cost of common stock in treasury - 96,755,368 shares at 12/31/2024 and 96,266,568 shares
at 12/31/2023
(6,066)
(6,032)
Total shareholders’ equity
6,543
6,406
Total liabilities and shareholders’ equity
$
79,297
$
85,834
See notes to consolidated financial statements.
CONSOLIDATED BALANCE SHEETS
Comerica Incorporated and Subsidiaries
F-40
(in millions, except per share data)
Years Ended December 31
2024
2023
2022
INTEREST INCOME
Interest and fees on loans
$
3,204
$
3,340
$
2,153
Interest on investment securities
402
430
414
Interest on short-term investments
333
405
105
Total interest income
3,939
4,175
2,672
INTEREST EXPENSE
Interest on deposits
1,238
892
102
Interest on short-term borrowings
48
391
17
Interest on medium- and long-term debt
463
378
87
Total interest expense
1,749
1,661
206
Net interest income
2,190
2,514
2,466
Provision for credit losses
49
89
60
Net interest income after provision for credit losses
2,141
2,425
2,406
NONINTEREST INCOME
Card fees
256
280
273
Fiduciary income
220
235
233
Service charges on deposit accounts
184
185
195
Capital markets income
142
147
154
Commercial lending fees
68
72
68
Brokerage fees
51
30
21
Bank-owned life insurance
44
46
47
Letter of credit fees
40
42
38
Risk management hedging income (loss)
8
(42)
8
Net losses on debt securities
(19)
—
—
Other noninterest income
60
83
31
Total noninterest income
1,054
1,078
1,068
NONINTEREST EXPENSES
Salaries and benefits expense
1,352
1,306
1,208
Outside processing fee expense
273
277
251
Occupancy expense
181
171
175
Software expense
181
171
161
FDIC insurance expense
76
180
31
Equipment expense
52
50
50
Advertising expense
41
40
38
Other noninterest expenses
151
164
84
Total noninterest expenses
2,307
2,359
1,998
Income before income taxes
888
1,144
1,476
Provision for income taxes
190
263
325
NET INCOME
698
881
1,151
Less:
Income allocated to participating securities
4
4
6
Preferred stock dividends
23
23
23
Net income attributable to common shares
$
671
$
854
$
1,122
Earnings per common share:
Basic
$
5.06
$
6.47
$
8.56
Diluted
5.02
6.44
8.47
Cash dividends declared on common stock
376
375
356
Cash dividends declared per common share
2.84
2.84
2.72
See notes to consolidated financial statements.
CONSOLIDATED STATEMENTS OF INCOME
Comerica Incorporated and Subsidiaries
F-41
(in millions)
Years Ended December 31
2024
2023
2022
NET INCOME
$
698
$
881
$
1,151
OTHER COMPREHENSIVE (LOSS) INCOME
Unrealized (losses) gains on investment securities:
Net unrealized holding (losses) gains arising during the period
(182)
361
(2,903)
Less: Reclassification adjustment for net securities losses included in net income
19
—
—
Change in net unrealized (losses) gains before income taxes
(201)
361
(2,903)
Net gains (losses) on cash flow hedges:
Net cash flow hedge (losses) gains arising during the period before income taxes
(624)
34
(1,329)
Reclassification of loss related to de-designation of derivatives to other
noninterest income
—
(195)
—
Less:
Net cash flow hedge losses recognized in interest and fees on loans before taxes
(629)
(576)
(25)
Amortization of unrealized losses related to de-designated derivatives included
in interest and fees on loans
(8)
(26)
—
Change in net cash flow hedge gains (losses) before income taxes
13
441
(1,304)
Defined benefit pension and other postretirement plans adjustment:
Actuarial gain (loss) arising during the period
35
96
(415)
Adjustments for amounts recognized as components of net periodic benefit cost:
Amortization of actuarial net loss
27
36
28
Amortization of prior service credit
(22)
(23)
(23)
Change in defined benefit pension and other postretirement plans adjustment
before income taxes
40
109
(410)
Total other comprehensive (loss) income before income taxes
(148)
911
(4,617)
(Benefit) provision for income taxes
(35)
217
(1,087)
Total other comprehensive (loss) income, net of tax
(113)
694
(3,530)
COMPREHENSIVE INCOME (LOSS)
$
585
$
1,575
$
(2,379)
See notes to consolidated financial statements.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Comerica Incorporated and Subsidiaries
F-42
Accumulated
Other
Comprehensive
Loss
Nonredeemable
Preferred Stock
Common Stock
Total
Shareholders'
Equity
Shares
Outstanding
Amount
Capital
Surplus
Retained
Earnings
Treasury
Stock
(in millions, except per share data)
BALANCE AT DECEMBER 31, 2021
$
394
130.7 $ 1,141 $ 2,175 $
(212) $ 10,494 $ (6,095) $
7,897
Net income
—
—
—
—
—
1,151
—
1,151
Other comprehensive loss, net of tax
—
—
—
—
(3,530)
—
—
(3,530)
Cash dividends declared on common stock ($2.72 per
share)
—
—
—
—
—
(356)
—
(356)
Cash dividends declared on preferred stock
—
—
—
—
—
(23)
—
(23)
Purchase of common stock
—
(0.4)
—
—
—
—
(36)
(36)
Net issuance of common stock under employee stock
plans
—
0.7
—
(15)
—
(8)
41
18
Share-based compensation
—
—
—
60
—
—
—
60
BALANCE AT DECEMBER 31, 2022
$
394
131.0 $ 1,141 $ 2,220 $
(3,742) $ 11,258 $ (6,090) $
5,181
Net income
—
—
—
—
—
881
—
881
Other comprehensive income, net of tax
—
—
—
—
694
—
—
694
Cash dividends declared on common stock ($2.84 per
share)
—
—
—
—
—
(375)
—
(375)
Cash dividends declared on preferred stock
—
—
—
—
—
(23)
—
(23)
Net issuance of common stock under employee stock
plans
—
0.9
—
(48)
—
(14)
58
(4)
Share-based compensation
—
—
—
52
—
—
—
52
BALANCE AT DECEMBER 31, 2023
$
394
131.9 $ 1,141 $ 2,224 $
(3,048) $ 11,727 $ (6,032) $
6,406
Cumulative effect of change in accounting principle (a)
—
—
—
—
—
(4)
—
(4)
Net income
—
—
—
—
—
698
—
698
Other comprehensive loss, net of tax
—
—
—
—
(113)
—
—
(113)
Cash dividends declared on common stock ($2.84 per
share)
—
—
—
—
—
(376)
—
(376)
Cash dividends declared on preferred stock
—
—
—
—
—
(23)
—
(23)
Purchase of common stock
—
(1.5)
—
(4)
—
—
(96)
(100)
Net issuance of common stock under employee stock
plans
—
1.0
—
(56)
—
(5)
62
1
Share-based compensation
—
—
—
54
—
—
—
54
BALANCE AT DECEMBER 31, 2024
$
394
131.4 $ 1,141 $ 2,218 $
(3,161) $ 12,017 $ (6,066) $
6,543
See notes to consolidated financial statements.
(a)
Effective January 1, 2024, the Corporation adopted ASU 2023-02, which expanded the permitted use of the proportional amortization method to certain
tax credit investments.
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY
Comerica Incorporated and Subsidiaries
F-43
(in millions)
Years Ended December 31
2024
2023
2022
OPERATING ACTIVITIES
Net income
$
698
$
881
$
1,151
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for credit losses
49
89
60
Benefit for deferred income taxes
(1)
(92)
(27)
Depreciation and amortization
96
87
92
Net periodic defined benefit credit
(47)
(27)
(91)
Share-based compensation expense
54
52
60
Net amortization of securities
7
19
30
Net securities losses
19
—
—
Net gains on sales of foreclosed and other bank property
(17)
(36)
(2)
Net change in:
Accrued income receivable
83
(65)
(152)
Accrued expenses payable
(157)
348
131
Other, net
(183)
(5)
(614)
Net cash provided by operating activities
601
1,251
638
INVESTING ACTIVITIES
Investment securities available-for-sale:
Maturities and redemptions
2,213
2,485
2,511
Sales
816
—
—
Purchases
(1,332)
—
(7,470)
Net change in loans
1,514
1,265
(4,824)
Proceeds from sales of foreclosed and other bank property
22
44
3
Net increase in premises and equipment
(153)
(153)
(82)
Federal Home Loan Bank stock:
Purchases
(613)
(504)
(131)
Redemptions
759
325
—
Proceeds from bank-owned life insurance settlements
35
30
39
Other, net
—
2
2
Net cash provided by (used in) investing activities
3,261
3,494
(9,952)
FINANCING ACTIVITIES
Net change in:
Deposits
(3,003)
(4,634)
(10,401)
Short-term borrowings
(3,565)
354
3,211
Medium- and long-term debt:
Maturities and redemptions
(500)
(850)
—
Issuances and advances
1,000
4,000
500
Cash dividends paid on preferred stock
(23)
(23)
(23)
Common stock:
Repurchases
(100)
—
(36)
Stock tendered for payment of withholding taxes
(14)
(17)
(7)
Cash dividends paid
(377)
(371)
(353)
Issuances under employee stock plans
22
18
28
Other, net
—
(2)
(2)
Net cash used in financing activities
(6,560)
(1,525)
(7,083)
Net (decrease) increase in cash and cash equivalents
(2,698)
3,220
(16,397)
Cash and cash equivalents at beginning of period
9,502
6,282
22,679
Cash and cash equivalents at end of period
$
6,804
$
9,502
$
6,282
Interest paid
$
1,892
$
1,449
$
130
Income taxes paid
101
317
277
See notes to consolidated financial statements.
CONSOLIDATED STATEMENTS OF CASH FLOWS
Comerica Incorporated and Subsidiaries
F-44
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 generally 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 their proportionate share of losses or the right to receive their
proportionate share of 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 fair
value of the entity’s net assets. 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
of investments in certain tax equity structures 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 tax equity structures meeting certain criteria and that qualify for
tax credits such as qualified affordable housing projects and expansion into new markets. The equity method is used for other
investments where the Corporation has the ability to exercise significant influence over an entity’s or its underlying project'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 proportional
amortization method 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.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Comerica Incorporated and Subsidiaries
F-45
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
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.
Level 3
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,
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Comerica Incorporated and Subsidiaries
F-46
U.S. Treasury securities that are traded by dealers or brokers in active over-the-counter markets and other securities traded on
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
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Comerica Incorporated and Subsidiaries
F-47
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, 2024 and 2023.
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, 2024.
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.
The Corporation assesses all loan modifications to determine whether one is granted to a borrower experiencing
financial difficulty. 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).
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
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
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Comerica Incorporated and Subsidiaries
F-48
income and unamortized costs, fees, premiums and discounts, totaled $92 million and $94 million at December 31, 2024 and
2023, 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
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
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Comerica Incorporated and Subsidiaries
F-49
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 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 collectability
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
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Comerica Incorporated and Subsidiaries
F-50
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 $65 million and $61 million, net of accumulated depreciation of
$30 million and $14 million at December 31, 2024 and December 31, 2023, respectively. Depreciation expense related to these
costs was $15 million and $9 million for the years ended December 31, 2024 and 2023, respectively.
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.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Comerica Incorporated and Subsidiaries
F-51
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 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 securities 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
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 risk management derivative instruments that are economic hedges (e.g.: de-designated hedging
instruments), the gain or loss is recognized in risk management hedging (loss) income. Gains and losses for customer-related
derivatives are recognized in capital markets 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
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Comerica Incorporated and Subsidiaries
F-52
for $6.8 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 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.
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.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Comerica Incorporated and Subsidiaries
F-53
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 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. Prior to November
2023, brokerage fees included 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.
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.
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 values). 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.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Comerica Incorporated and Subsidiaries
F-54
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.
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.
Accounting Pronouncements Recently Adopted
Effective January 1, 2024, the Corporation adopted the provisions of Financial Accounting Standards Board (FASB)
Accounting Standards Update (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 expanded the permitted use of the proportional amortization method, which was
previously 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. ASU 2023-02 was adopted on a modified retrospective basis of transition or, for certain
changes, a prospective basis and resulted in a reduction to retained earnings as of January 1, 2024 of $4 million.
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. The Corporation
adopted ASU 2023-07 for the annual period beginning on January 1, 2024 and interim periods beginning on January 1, 2025
with retrospective application to all prior periods presented. See Note 22 for further information.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Comerica Incorporated and Subsidiaries
F-55
Recently Issued Accounting Pronouncements
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 to its disclosures.
In November 2024, the FASB issued ASU No. 2024-03 "Income Statement - Reporting Comprehensive Income -
Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses" (ASU 2024-03). ASU
2024-03 requires additional interim and annual disclosures that further disaggregate certain expense captions into specified
categories in a separate note to the financial statements, as well as certain qualitative information describing amounts not
separately disaggregated. ASU 2024-03 is effective for the Corporation in the annual period beginning on January 1, 2027 and
interim periods beginning on January 1, 2028 and can be applied on either a prospective or retrospective basis. The Corporation
is evaluating the impact of ASU 2024-03 to its 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.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Comerica Incorporated and Subsidiaries
F-56
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, 2024 and 2023.
(in millions)
Total
Level 1
Level 2
Level 3
December 31, 2024
Deferred compensation plan assets
$
89 $
89 $
— $
—
Equity securities
46
46
—
—
Investment securities available-for-sale:
U.S. Treasury securities
1,277
1,277
—
—
Residential mortgage-backed securities (a)
9,076
—
9,076
—
Commercial mortgage-backed securities (a)
4,692
—
4,692
—
Total investment securities available-for-sale
15,045
1,277
13,768
—
Derivative assets:
Interest rate contracts
177
—
177
—
Energy contracts
416
—
416
—
Foreign exchange contracts
73
—
73
—
Total derivative assets
666
—
666
—
Total assets at fair value
$
15,846 $
1,412 $
14,434 $
—
Derivative liabilities:
Interest rate contracts
$
335 $
— $
335 $
—
Energy contracts
400
—
400
—
Foreign exchange contracts
59
—
59
—
Other financial derivative liabilities
6
—
—
6
Total derivative liabilities
800
—
794
6
Deferred compensation plan liabilities
91
91
—
—
Total liabilities at fair value
$
891 $
91 $
794 $
6
December 31, 2023
Deferred compensation plan assets
$
104 $
104 $
— $
—
Equity securities
39
39
—
—
Investment securities available-for-sale:
U.S. Treasury securities
1,605
1,605
—
—
Residential mortgage-backed securities (a)
10,519
—
10,519
—
Commercial mortgage-backed securities (a)
4,745
—
4,745
—
Total investment securities available-for-sale
16,869
1,605
15,264
—
Derivative assets:
Interest rate contracts
225
—
225
—
Energy contracts
758
—
758
—
Foreign exchange contracts
36
—
36
—
Total derivative assets
1,019
—
1,019
—
Total assets at fair value
$
18,031 $
1,748 $
16,283 $
—
Derivative liabilities:
Interest rate contracts
$
435 $
— $
435 $
—
Energy contracts
736
—
736
—
Foreign exchange contracts
35
—
35
—
Other financial derivative liabilities
12
—
—
12
Total derivative liabilities
1,218
—
1,206
12
Deferred compensation plan liabilities
104
104
—
—
Total liabilities at fair value
$
1,322 $
104 $
1,206 $
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, 2024 and 2023.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Comerica Incorporated and Subsidiaries
F-57
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, 2024 and 2023.
Net Realized/Unrealized
Gains (Pretax) Recorded in
Earnings (a)
Balance at
Beginning of
Period
Balance at
End of Period
(in millions)
Realized
Unrealized
Year Ended December 31, 2024
Derivative liabilities:
Other financial derivative liabilities
$
(12) $
6 $
— $
(6)
Year Ended December 31, 2023
Derivative liabilities:
Other financial derivative liabilities
$
(12) $
— $
— $
(12)
(a)
Realized and unrealized gains and losses due to changes in fair value recorded in other noninterest income on the Consolidated
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, 2024 and 2023. No
liabilities were recorded at fair value on a nonrecurring basis at December 31, 2024 and 2023.
(in millions)
Level 3
December 31, 2024
Loans:
Commercial
$
69
Commercial mortgage
86
Residential mortgage
3
Total loans
158
Loans held-for-sale
216
Other real estate
3
Total assets at fair value
$
377
December 31, 2023
Loans:
Commercial
$
12
Commercial mortgage
16
International
16
Total loans
44
Loans held-for-sale
231
Other real estate
5
Total assets at fair value
$
280
Level 3 assets recorded at fair value on a nonrecurring basis at December 31, 2024 and December 31, 2023 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, 2024 and 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.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Comerica Incorporated and Subsidiaries
F-58
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:
Carrying
Amount
Estimated Fair Value
(in millions)
Total
Level 1
Level 2
Level 3
December 31, 2024
Assets
Cash and due from banks
$
850 $
850 $
850 $
— $
—
Interest-bearing deposits with banks
5,954
5,954
5,954
—
—
Other short-term investments
21
21
21
—
—
Total loans, net of allowance for loan losses (a)
49,849
49,436
—
—
49,436
Liabilities
Demand deposits
59,277
59,277
—
59,277
—
Time deposits
4,534
4,555
—
4,555
—
Total deposits
63,811
63,832
—
63,832
—
Medium- and long-term debt
6,673
6,780
—
6,780
—
Credit-related financial instruments
(64)
(64)
—
—
(64)
December 31, 2023
Assets
Cash and due from banks
$
1,443 $
1,443 $
1,443 $
— $
—
Interest-bearing deposits with banks
8,059
8,059
8,059
—
—
Other short-term investments
24
24
24
—
—
Total loans, net of allowance for loan losses (a)
51,425
50,633
—
—
50,633
Liabilities
Demand deposits
58,476
58,476
—
58,476
—
Time deposits
8,286
8,391
—
8,391
—
Total deposits
66,762
66,867
—
66,867
—
Short-term borrowings
3,565
3,565
3,565
—
—
Medium- and long-term debt
6,206
6,207
—
6,207
—
Credit-related financial instruments
(72)
(72)
—
—
(72)
(a)
Included $158 million and $44 million of loans recorded at fair value on a nonrecurring basis at December 31, 2024 and 2023,
respectively.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Comerica Incorporated and Subsidiaries
F-59
NOTE 3 - INVESTMENT SECURITIES
A summary of the Corporation’s investment securities follows:
(in millions)
Amortized
Cost
Gross
Unrealized
Gains
Gross
Unrealized
Losses
Fair Value
December 31, 2024
Investment securities available-for-sale:
U.S. Treasury securities
$
1,277 $
1 $
1 $
1,277
Residential mortgage-backed securities (a)
11,380
—
2,304
9,076
Commercial mortgage-backed securities (a)
5,261
—
569
4,692
Total investment securities available-for-sale
$
17,918 $
1 $
2,874 $
15,045
December 31, 2023
Investment securities available-for-sale:
U.S. Treasury securities
$
1,681 $
— $
76 $
1,605
Residential mortgage-backed securities (a)
12,607
—
2,088
10,519
Commercial mortgage-backed securities (a)
5,253
—
508
4,745
Total investment securities available-for-sale
$
19,541 $
— $
2,672 $
16,869
(a)
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, 2024 and
2023 follows:
Less than 12 Months
12 Months or more
Total
(in millions, except securities count)
Fair
Value
Unrealized
Losses
Fair
Value
Unrealized
Losses
Fair
Value
Unrealized
Losses
Count
December 31, 2024
U.S. Treasury securities
$
438 $
— $
25 $
1 $
463 $
1
7
Residential mortgage-backed securities (a)
—
—
9,074
2,304
9,074
2,304
913
Commercial mortgage-backed securities (a)
14
—
4,678
569
4,692
569
252
Total temporarily impaired securities
$
452 $
— $ 13,777 $
2,874 $ 14,229 $
2,874
1,172
December 31, 2023
U.S. Treasury securities
$
— $
— $ 1,605 $
76 $ 1,605 $
76
19
Residential mortgage-backed securities (a)
10
— 10,507
2,088 10,517
2,088
978
Commercial mortgage-backed securities (a)
—
—
4,745
508
4,745
508
253
Total temporarily impaired securities
$
10 $
— $ 16,857 $
2,672 $ 16,867 $
2,672
1,250
(a)
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, 2024 or December 31, 2023.
Interest receivable on investment securities totaled $38 million and $40 million at December 31, 2024 and 2023,
respectively, and was included in accrued income and other assets on the Consolidated Balance Sheets. The investment
securities portfolio included floating-rate securities with a fair value of $3 million and $4 million at December 31, 2024 and
2023, respectively.
During the year ended December 31, 2024, the Corporation repositioned a portion of its securities portfolio by selling
$827 million of U.S. Treasury securities, resulting in a $19 million loss (reported as "net losses on debt securities" on the
Consolidated Statements of Income), replacing them with higher-yielding U.S. Treasury securities. There were no sales, calls or
write-downs of investment securities available-for-sale for the years ended December 31, 2023 or 2022.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Comerica Incorporated and Subsidiaries
F-60
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, 2024
Amortized Cost
Fair Value
Contractual maturity
Within one year
$
306 $
306
After one year through five years
1,312
1,292
After five years through ten years
5,119
4,564
After ten years
11,181
8,883
Total investment securities
$
17,918 $
15,045
At December 31, 2024, investment securities with a carrying value of $7.0 billion were pledged where permitted or
required by law. Pledges included $6.0 billion to the Federal Home Loan Bank (FHLB) as collateral for current advances and
potential future borrowings as well as $1.0 billion to secure $357 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 Note 12.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Comerica Incorporated and Subsidiaries
F-61
NOTE 4 – CREDIT QUALITY AND ALLOWANCE FOR CREDIT LOSSES
The following table presents an aging analysis of the amortized cost basis of loans.
Loans Past Due and Still Accruing
(in millions)
30-59
Days
60-89
Days
90 Days
or More
Total
Nonaccrual
Loans
Current
Loans
Total
Loans
December 31, 2024
Business loans:
Commercial
$
50 $
16 $
13 $
79 $
125 $
26,288 $ 26,492
Real estate construction:
Commercial Real Estate business line (a)
—
—
—
—
—
3,358
3,358
Other business lines (b)
—
—
—
—
—
322
322
Total real estate construction
—
—
—
—
—
3,680
3,680
Commercial mortgage:
Commercial Real Estate business line (a)
75
8
—
83
49
5,912
6,044
Other business lines (b)
11
7
31
49
69
8,331
8,449
Total commercial mortgage
86
15
31
132
118
14,243
14,493
Lease financing
12
—
—
12
1
709
722
International
—
—
—
—
—
952
952
Total business loans
148
31
44
223
244
45,872
46,339
Retail loans:
Residential mortgage
5
5
—
10
37
1,882
1,929
Consumer:
Home equity
11
3
—
14
27
1,761
1,802
Other consumer
16
—
—
16
—
453
469
Total consumer
27
3
—
30
27
2,214
2,271
Total retail loans
32
8
—
40
64
4,096
4,200
Total loans
$ 180 $
39 $
44 $ 263 $
308 $
49,968 $ 50,539
December 31, 2023
Business loans:
Commercial
$
48 $
14 $
10 $
72 $
75 $
27,104 $ 27,251
Real estate construction:
Commercial Real Estate business line (a)
—
—
—
—
—
4,570
4,570
Other business lines (b)
3
—
—
3
2
508
513
Total real estate construction
3
—
—
3
2
5,078
5,083
Commercial mortgage:
Commercial Real Estate business line (a)
5
—
—
5
18
4,704
4,727
Other business lines (b)
49
12
9
70
23
8,866
8,959
Total commercial mortgage
54
12
9
75
41
13,570
13,686
Lease financing
4
—
—
4
—
803
807
International
—
—
1
1
20
1,081
1,102
Total business loans
109
26
20
155
138
47,636
47,929
Retail loans:
Residential mortgage
10
6
—
16
19
1,854
1,889
Consumer:
Home equity
11
5
—
16
21
1,755
1,792
Other consumer
31
—
—
31
—
472
503
Total consumer
42
5
—
47
21
2,227
2,295
Total retail loans
52
11
—
63
40
4,081
4,184
Total loans
$ 161 $
37 $
20 $ 218 $
178 $
51,717 $ 52,113
(a)
Primarily loans to real estate developers.
(b)
Primarily loans secured by owner-occupied real estate.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Comerica Incorporated and Subsidiaries
F-62
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, 2024
Vintage Year
(in millions)
2024
2023
2022
2021
2020
Prior
Revolvers
Revolvers
Converted to
Term
Total
Business loans:
Commercial:
Pass (a)
$ 3,313
(
b
)
$ 2,129
(
b
)
$ 1,856
(
b
)
$ 1,127
$ 358
$ 1,192
$
15,173
$
15
$ 25,163
Criticized (b)
90
160
179
185
33
59
621
2
1,329
Total commercial
3,403
2,289
2,035
1,312
391
1,251
15,794
17
26,492
Commercial gross charge-offs
1
1
9
29
9
12
10
1
72
Real estate construction
Pass (a)
137
703
1,987
550
19
23
223
—
3,642
Criticized (b)
—
—
36
—
—
2
—
—
38
Total real estate construction
137
703
2,023
550
19
25
223
—
3,680
Commercial mortgage
Pass (a)
1,423
1,574
3,339
2,576
1,301
2,414
793
—
13,420
Criticized (b)
105
187
350
102
111
208
10
—
1,073
Total commercial mortgage
1,528
1,761
3,689
2,678
1,412
2,622
803
—
14,493
Commercial mortgage gross charge-offs
—
—
11
—
—
5
—
—
16
Lease financing
Pass (a)
262
226
38
80
30
80
—
—
716
Criticized (b)
3
1
1
—
—
1
—
—
6
Total lease financing
265
227
39
80
30
81
—
—
722
Lease financing gross charge-offs
1
—
3
—
—
—
—
—
4
International
Pass (a)
237
112
142
60
19
27
347
—
944
Criticized (b)
7
—
—
—
—
—
1
—
8
Total international
244
112
142
60
19
27
348
—
952
International gross charge-offs
1
—
—
—
—
—
—
—
1
Total business loans
5,577
5,092
7,928
4,680
1,871
4,006
17,168
17
46,339
Retail loans:
Residential mortgage
Pass (a)
181
236
274
349
415
434
—
—
1,889
Criticized (b)
5
1
4
2
4
24
—
—
40
Total residential mortgage
186
237
278
351
419
458
—
—
1,929
Consumer:
Home equity
Pass (a)
—
—
—
—
—
5
1,681
82
1,768
Criticized (b)
—
—
—
—
—
—
28
6
34
Total home equity
—
—
—
—
—
5
1,709
88
1,802
Other consumer
Pass (a)
30
10
28
7
6
41
345
—
467
Criticized (b)
—
—
2
—
—
—
—
—
2
Total other consumer
30
10
30
7
6
41
345
—
469
Other consumer gross charge-offs
1
—
—
—
—
1
—
—
2
Total consumer
30
10
30
7
6
46
2,054
88
2,271
Total retail loans
216
247
308
358
425
504
2,054
88
4,200
Total loans
$ 5,793
$ 5,339
$ 8,236
$ 5,038
$ 2,296
$ 4,510
$
19,222
$
105
$ 50,539
Table continues on the following page.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Comerica Incorporated and Subsidiaries
F-63
December 31, 2023
Vintage Year
2023
2022
2021
2020
2019
Prior
Revolvers
Revolvers
Converted to
Term
Total
Business loans:
Commercial:
Pass (a)
$ 3,105
(
b
)
$ 3,013
(
b
)
$ 2,072
$ 593
$ 610
$ 1,033
$
15,394
$
13
$ 25,833
Criticized (b)
85
169
226
42
59
75
760
2
1,418
Total commercial
3,190
3,182
2,298
635
669
1,108
16,154
15
27,251
Commercial gross charge-offs
1
11
2
1
11
12
3
1
42
Real estate construction:
Pass (a)
503
2,205
1,581
329
43
36
288
—
4,985
Criticized (b)
2
53
34
2
7
—
—
—
98
Total real estate construction
505
2,258
1,615
331
50
36
288
—
5,083
Commercial mortgage:
Pass (a)
1,680
3,129
2,173
1,786
981
2,271
893
—
12,913
Criticized (b)
15
232
99
34
248
141
4
—
773
Total commercial mortgage
1,695
3,361
2,272
1,820
1,229
2,412
897
—
13,686
Commercial mortgage gross charge-offs
—
—
—
—
3
1
—
—
4
Lease financing
Pass (a)
173
319
110
47
34
94
—
—
777
Criticized (b)
5
8
3
3
7
4
—
—
30
Total lease financing
178
327
113
50
41
98
—
—
807
International
Pass (a)
286
168
89
35
76
2
415
—
1,071
Criticized (b)
15
2
7
—
—
6
1
—
31
Total international
301
170
96
35
76
8
416
—
1,102
International gross charge-offs
12
—
—
—
—
1
—
—
13
Total business loans
5,869
9,298
6,394
2,871
2,065
3,662
17,755
15
47,929
Retail loans:
Residential mortgage
Pass (a)
254
296
373
450
131
360
—
—
1,864
Criticized (b)
2
—
1
—
—
22
—
—
25
Total residential mortgage
256
296
374
450
131
382
—
—
1,889
Consumer:
Home equity
Pass (a)
—
—
—
—
—
8
1,695
59
1,762
Criticized (b)
—
—
—
—
—
—
28
2
30
Total home equity
—
—
—
—
—
8
1,723
61
1,792
Home equity gross charge-offs
—
—
—
—
—
—
2
—
2
Other consumer
Pass (a)
23
38
22
8
4
46
362
—
503
Total other consumer
23
38
22
8
4
46
362
—
503
Other consumer gross charge-offs
—
—
—
—
1
—
—
—
1
Total consumer
23
38
22
8
4
54
2,085
61
2,295
Total retail loans
279
334
396
458
135
436
2,085
61
4,184
Total loans
$ 6,148
$ 9,632
$ 6,790
$ 3,329
$ 2,200
$ 4,098
$
19,840
$
76
$ 52,113
(a)
Includes all loans not included in the categories of special mention, substandard or nonaccrual.
(b)
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.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Comerica Incorporated and Subsidiaries
F-64
Loan interest receivable totaled $266 million and $313 million at December 31, 2024 and 2023, respectively, and was
included in accrued income and other assets on the Consolidated Balance Sheets.
Allowance for Credit Losses
The following table details the changes in the allowance for credit losses.
2024
2023
2022
(in millions)
Business
Loans
Retail
Loans
Total
Business
Loans
Retail
Loans
Total
Business
Loans
Retail
Loans
Total
Years Ended December 31,
Balance at beginning of period:
Allowance for loan losses
$ 620
$ 68
$ 688
$ 541
$
69
$ 610
$ 531
$
57
$ 588
Allowance for credit losses on
lending-related commitments
31
9
40
40
11
51
24
6
30
Allowance for credit losses
651
77
728
581
80
661
555
63
618
Loan charge-offs
(93)
(2)
(95)
(59)
(3)
(62)
(65)
(3)
(68)
Recoveries on loans previously
charged-off
41
2
43
38
2
40
47
4
51
Net loan (charge-offs) recoveries
(52)
—
(52)
(21)
(1)
(22)
(18)
1
(17)
Provision for credit losses:
Provision for loan losses
57
(3)
54
100
—
100
28
11
39
Provision for credit losses on
lending-related commitments
(3)
(2)
(5)
(9)
(2)
(11)
16
5
21
Provision for credit losses
54
(5)
49
91
(2)
89
44
16
60
Balance at end of period:
Allowance for loan losses
625
65
690
620
68
688
541
69
610
Allowance for credit losses on
lending-related commitments
28
7
35
31
9
40
40
11
51
Allowance for credit losses
$ 653
$ 72
$ 725
$ 651
$
77
$ 728
$ 581
$
80
$ 661
Allowance for loan losses as a
percentage of total loans
1.35 %
1.55 %
1.37 %
1.29 %
1.63 %
1.32 %
1.10 %
1.67 %
1.14 %
Allowance for credit losses as a
percentage of total loans
1.41
1.73
1.44
1.36
1.85
1.40
1.18
1.96
1.24
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Comerica Incorporated and Subsidiaries
F-65
Nonaccrual Loans
The following table presents additional information regarding nonaccrual loans. Interest income of $16 million, $9
million and $12 million was recognized on nonaccrual loans for the years ended December 31, 2024, 2023 and 2022,
respectively.
(in millions)
Nonaccrual
Loans with
No Related
Allowance
Nonaccrual
Loans with
Related
Allowance
Total
Nonaccrual
Loans
December 31, 2024
Business loans:
Commercial
$
9 $
116 $
125
Commercial mortgage:
Commercial Real Estate business line (b)
—
49
49
Other business lines (a)
7
62
69
Total commercial mortgage
7
111
118
Lease financing
—
1
1
Total business loans
16
228
244
Retail loans:
Residential mortgage
37
—
37
Consumer:
Home equity
27
—
27
Total consumer
27
—
27
Total retail loans
64
—
64
Total nonaccrual loans
$
80 $
228 $
308
December 31, 2023
Business loans:
Commercial
$
47 $
28 $
75
Real estate construction:
Other business lines (a)
2
—
2
Commercial mortgage:
Commercial Real Estate business line (b)
—
18
18
Other business lines (a)
17
6
23
Total commercial mortgage
17
24
41
International
3
17
20
Total business loans
69
69
138
Retail loans:
Residential mortgage
19
—
19
Consumer:
Home equity
21
—
21
Total consumer
21
—
21
Total retail loans
40
—
40
Total nonaccrual loans
$
109 $
69 $
178
(a)
Primarily loans secured by owner-occupied real estate.
(b)
Primarily loans to real estate developers.
Foreclosed Properties
Foreclosed properties were insignificant at December 31, 2024 and December 31, 2023. Retail loans secured by
residential real estate properties in process of foreclosure included in nonaccrual loans were $4 million at December 31, 2024
and insignificant at December 31, 2023.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Comerica Incorporated and Subsidiaries
F-66
Loan Modifications Made to Borrowers Experiencing Financial Difficulty
The following table displays the amortized cost basis of loan modifications made to borrowers experiencing financial
difficulty that were restructured, by type of modification.
(in millions)
Term
Extension (a)
Payment
Delay (a)
Interest Rate
Reduction
Combinations
(b)
Total
Percent of
Total Class
Year Ended December 31, 2024
Business loans:
Commercial
$
199
$
— $
—
$
28
$
227
0.86 %
Commercial mortgage:
Other business lines (c)
40
—
—
—
40
0.47
Total commercial mortgage
40
—
—
—
40
0.27
International
1
—
—
4
5
0.54
Total business loans
240
—
—
32
272
0.59
Retail loans:
Residential mortgage
5
—
—
—
5
0.26
Consumer:
Home equity
—
3
5
2
10
0.58
Total consumer
—
3
5
2
10
0.46
Total retail loans
5
3
5
2
15
0.37
Total loans
$
245
$
3 $
5
$
34
$
287
0.57 %
Year Ended December 31, 2023
Business loans:
Commercial
$
92
$
20 $
10
$
2
$
124
0.46 %
Real estate construction:
Other business lines (c)
10
—
—
—
10
1.92
Total real estate construction
10
—
—
—
10
0.19
Commercial mortgage:
Other business lines (c)
15
—
—
10
25
0.28
Total commercial mortgage
15
—
—
10
25
0.18
Total business loans
117
20
10
12
159
0.33
Retail loans:
Consumer:
Home equity
1
—
1
1
3
0.16
Total consumer
1
—
1
1
3
0.13
Total retail loans
1
—
1
1
3
0.07
Total loans
$
118
$
20 $
11
$
13
$
162
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, 2024, this primarily related to modifications
where the payment was delayed and the term was extended. For the year ended December 31, 2023, this primarily related to modifications where the
interest was reduced and the term was extended.
(c)
Primarily loans secured by owner-occupied real estate.
There was no commitment to lend additional funds to borrowers experiencing financial difficulty whose terms had
been restructured at December 31, 2024 and December 31, 2023.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Comerica Incorporated and Subsidiaries
F-67
The following table summarizes the financial impacts of loan modifications made to specific loans.
Weighted-Average Term
Extension
(in months)
Weighted-Average Interest
Rate Reduction
Year Ended December 31, 2024
Business loans:
Commercial
12.7
(1.21) %
Commercial mortgage:
Other business lines (a)
14.1
—
Total commercial mortgage
14.1
—
International
46.1
—
Total business loans
13.6
(1.21)
Retail loans:
Residential mortgage
95.1
—
Consumer:
Home equity
117.0
(3.97)
Total consumer
117.0
(3.97)
Total retail loans
102.2
(3.97)
Total loans
15.9
(2.20)
Year Ended December 31, 2023
Business loans:
Commercial
10.4
(2.01) %
Real estate construction:
Other business lines (a)
9.3
—
Total real estate construction
9.3
—
Commercial mortgage:
Other business lines (a)
17.6
(0.68)
Total commercial mortgage
17.6
(0.68)
Total business loans
11.7
(1.35)
Retail loans:
Consumer:
Home equity
145.4
(3.01)
Total consumer
145.4
(3.01)
Total retail loans
145.4
(3.01)
Total loans
13.1
(1.49) %
(a)
Primarily loans secured by owner-occupied real estate.
During the year ended December 31, 2024, modifications to borrowers experiencing financial difficulty included
restructurings with other-than-insignificant payment delays of $4 million in the Commercial category, $2 million in the
International category and $3 million in the Home Equity category, compared to $6 million in the Commercial category at
December 31, 2023.
On an ongoing basis, the Corporation monitors the performance of modified loans related to their restructured terms.
Of the loans restructured during the year, $10 million were past due at December 31, 2024 compared to all being current at
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, 2024, there were $13 million of Commercial loans that subsequently defaulted. There
were no subsequent defaults as of December 31, 2023 of loans restructured during that 12 month period.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Comerica Incorporated and Subsidiaries
F-68
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 five primary geographic markets - Texas,
California, Michigan, Arizona and Florida - and secondarily in several mountain, southeastern and other states, and in Canada
and Mexico.
At December 31, 2024, 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
2024
2023
Real estate construction loans:
Commercial Real Estate business line (a)
$
3,358 $
4,570
Other business lines (b)
322
513
Total real estate construction loans
3,680
5,083
Commercial mortgage loans:
Commercial Real Estate business line (a)
6,044
4,727
Other business lines (b)
8,449
8,959
Total commercial mortgage loans
14,493
13,686
Total commercial real estate loans
$
18,173 $
18,769
Total unused commitments on commercial real estate loans
$
3,130 $
4,382
(a)
Primarily loans to real estate developers.
(b)
Primarily loans secured by owner-occupied real estate.
The Corporation also has a concentration of credit risk with the automotive industry, which represented 12 percent of
total loans at December 31, 2024. 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
2024
2023
Automotive loans:
Production
$
764 $
848
Dealer
5,513
6,191
Total automotive loans
$
6,277 $
7,039
Total automotive exposure:
Production
$
1,661 $
1,744
Dealer
8,675
10,418
Total automotive exposure
$
10,336 $
12,162
NOTE 6 - PREMISES AND EQUIPMENT
A summary of premises and equipment by major category follows:
(in millions)
December 31
2024
2023
Land
$
78 $
81
Buildings and improvements
804
768
Furniture and equipment
476
536
Total cost
1,358
1,385
Less: Accumulated depreciation and amortization
(885)
(940)
Net book value
$
473 $
445
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.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Comerica Incorporated and Subsidiaries
F-69
Other assets included unamortized capitalized software costs of $137 million and $106 million at December 31, 2024
and 2023, respectively. Noninterest expenses included software amortization expense of $28 million, $26 million and $25
million for the years ending December 31, 2024, 2023 and 2022, respectively.
NOTE 7 - GOODWILL AND INTANGIBLES
The following table summarizes the carrying value of goodwill by reporting unit for the years ended December 31,
2024 and 2023.
(in millions)
December 31
2024
2023
Commercial Bank
$
473 $
473
Retail Bank
101
101
Wealth Management
61
61
Total
$
635 $
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 2024 and 2023, the annual test of goodwill impairment was performed as of the beginning of the third quarter. In
the 2024 period, 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. In the 2023 period, a quantitative
assessment resulted in the Corporation determining that goodwill was not impaired, as the estimated fair value of the reporting
units were each greater than their respective carrying values.
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. Position and value-at-risk limits are
established annually and monitored daily. 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, 2024, counterparties with bilateral
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Comerica Incorporated and Subsidiaries
F-70
collateral agreements deposited $85 million of cash with the Corporation to secure the fair value of contracts in an unrealized
gain position, and the Corporation had pledged $2 million of marketable investment securities and posted an insignificant
amount 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.
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.
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, 2024 and 2023. 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.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Comerica Incorporated and Subsidiaries
F-71
December 31, 2024
December 31, 2023
Fair Value
Fair Value
(in millions)
Notional/
Contract
Amount (a)
Gross
Derivative
Assets
Gross
Derivative
Liabilities
Notional/
Contract
Amount (a)
Gross
Derivative
Assets
Gross
Derivative
Liabilities
Risk management purposes
Derivatives designated as hedging instruments
Interest rate contracts:
Fair value swaps - receive fixed/
pay floating
$
6,800 $
— $
— $
6,300 $
— $
—
Cash flow swaps - receive fixed/
pay floating (b)
23,350
—
3
24,850
—
8
Derivatives used as economic hedges
Foreign exchange contracts:
Spot, forwards and swaps
453
3
—
560
1
3
Total risk management purposes
30,603
3
3
31,710
1
11
Customer-initiated and other activities
Interest rate contracts:
Caps and floors written
1,781
—
12
1,577
—
18
Caps and floors purchased
1,781
12
—
1,577
18
—
Swaps
19,189
165
320
19,316
207
409
Total interest rate contracts
22,751
177
332
22,470
225
427
Energy contracts:
Caps and floors written
3,460
—
201
3,719
3
291
Caps and floors purchased
3,460
202
—
3,719
292
3
Swaps
6,338
214
199
6,368
463
442
Total energy contracts
13,258
416
400
13,806
758
736
Foreign exchange contracts:
Spot, forwards, options and swaps
3,117
70
59
2,751
35
32
Total customer-initiated and other activities
39,126
663
791
39,027
1,018
1,195
Total gross derivatives
$
69,729
666
794 $
70,737
1,019
1,206
Amounts offset in the Consolidated Balance
Sheets:
Netting adjustment - Offsetting
derivative assets/liabilities
(330)
(330)
(311)
(311)
Netting adjustment - Cash collateral
received/posted
(80)
—
(143)
(13)
Net derivatives included in the Consolidated
Balance Sheets (c)
256
464
565
882
Amounts not offset in the Consolidated
Balance Sheets:
Marketable securities pledged under
bilateral collateral agreements
(143)
(2)
(501)
(4)
Net derivatives after deducting amounts not
offset in the Consolidated Balance Sheets
$
113 $
462
$
64 $
878
(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 billion of forward starting swaps that became effective on their contractual start dates in 2024. There
were no forward starting swaps at December 31, 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 $1 million and $3 million at December 31, 2024 and 2023,
respectively.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Comerica Incorporated and Subsidiaries
F-72
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 net expense from cash flow swaps of $637 million, $602 million and $25
million for the years ended December 31, 2024, 2023 and 2022, respectively.
The following table details the effects of fair value hedging on the Consolidated Statements of Comprehensive Income.
(in millions)
Interest on Medium- and Long-Term Debt
Years Ended December 31
2024
2023
2022
Total interest on medium-and long-term debt (a)
$
463 $
378 $
87
Fair value hedging relationships:
Interest rate contracts:
Hedged items
335
265
112
Derivatives designated as hedging instruments
128
113
(25)
(a)
Includes the effects of hedging.
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,
2024 and 2023.
Cash flow swaps - receive fixed/pay floating rate on variable-rate loans (a)
(dollar amounts in millions)
December 31, 2024
December 31, 2023
Weighted average:
Time to maturity (in years)
3.1
3.9
Receive rate (b)
2.55%
2.43%
Pay rate (b), (c)
4.55
5.38
(a)
December 31, 2023 included $7.0 billion of de-designated interest rate swaps.
(b)
Excludes 2.0 billion of forward starting swaps not effective as of December 31, 2023. There were no forward starting swaps at
December 31, 2024.
(c)
Variable rates paid on receive fixed swaps designated as cash flow hedges were based on SOFR rates in effect at December 31, 2024
and BSBY or SOFR rates in effect at December 31, 2023.
Fair value swaps - receive fixed/pay floating rate on medium- and long-term debt
(dollar amounts in millions)
December 31, 2024
December 31, 2023
Carrying value of hedged items (a)
$
6,673
$
6,206
Weighted average:
Time to maturity (in years)
2.6
3.1
Receive rate
3.77%
3.67%
Pay rate (b)
4.80
5.74
(a)
Included $(122) million and $(93) million of cumulative hedging adjustments at December 31, 2024 and 2023, respectively, which
included $2 million and $3 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, 2024
and December 31, 2023.
Re-designated Interest Rate Swaps and Price Alignment Income
On November 15, 2023, the Bloomberg Index Services Limited (Bloomberg) announced that it would discontinue
publishing the Bloomberg Short-Term Bank Yield Index (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. A total of $130 million in net losses
were included in noninterest income as a result of the de-designations, consisting of $39 million during the first quarter 2024
and $91 million during the fourth quarter 2023. For each de-designated swap, settlement of interest payments and changes in
fair value were recorded as risk management hedging losses within noninterest income instead of net interest income until re-
designation. All impacted swaps were re-designated as of April 1, 2024.
Amounts in accumulated other comprehensive income related to cash flows that continued to be probable of occurring
were amortized out of accumulated other comprehensive income and into earnings, which resulted in pre-tax losses of $177
million recorded in interest and fees on loans during the year ended December 31, 2024. Additionally, the fair value of swaps at
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Comerica Incorporated and Subsidiaries
F-73
re-designation date were accreted back into accumulated other comprehensive income, resulting in a benefit of $170 million for
the year ended December 31, 2024. The amortization of probable cash flows and fair value accretion, as well as settlements no
longer recognized through margin before re-designation, resulted in an overall $7 million increase to net interest income for the
year ended December 31, 2024.
BSBY cessation and the related de-designation and re-designation of interest rate swaps led to a net increase in
accumulated other comprehensive income of $24 million for the year ended December 31, 2024, compared to $68 million for
the year ended December 31, 2023.
For more information on accumulated net losses on cash flow hedges, refer to Note 14.
Price Alignment Income
Risk management hedging income (loss) 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 $46 million for the year ended December 31, 2024, $51 million for the year ended
December 31, 2023 and $8 million for the year ended December 31, 2022.
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:
Years Ended December 31,
(in millions)
2024
2023
2022
Interest rate contracts
$
21 $
22 $
34
Energy contracts
19
25
28
Foreign exchange contracts
47
51
47
Total
$
87 $
98 $
109
Credit-Related Financial Instruments
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
2024
2023
Unused commitments to extend credit:
Commercial and other
$
24,342 $
27,303
Bankcard, revolving credit and home equity loan commitments
4,055
4,082
Total unused commitments to extend credit
$
28,397 $
31,385
Standby letters of credit
$
4,138 $
3,586
Commercial letters of credit
12
48
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 $35 million and $40 million at December 31, 2024 and 2023, respectively.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Comerica Incorporated and Subsidiaries
F-74
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
included $30 million and $38 million at December 31, 2024 and 2023, 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 2035. 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 $223 million and $85 million at
December 31, 2024 and 2023, respectively, of the $4.2 billion and $3.6 billion of standby and commercial letters of credit
outstanding at December 31, 2024 and 2023, 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, 2024, including $29 million in
deferred fees and $5 million in the allowance for credit losses on lending-related commitments. At December 31, 2023, the
comparable amounts were $34 million, $32 million and $2 million, respectively.
The following table presents a summary of criticized standby and commercial letters of credit at December 31, 2024
and 2023. 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)
December 31, 2024
December 31, 2023
Total criticized standby and commercial letters of credit
$
37
$
50
As a percentage of total outstanding standby and commercial letters of credit
0.9 %
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 $1.1 billion and $1.0 billion at December 31, 2024 and 2023, respectively, and the fair value was insignificant at
December 31, 2024 and December 31, 2023. 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 $1 million and $2 million at December 31, 2024 and December 31, 2023, respectively. 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, 2024, the weighted
average remaining maturity of outstanding credit risk participation agreements was 4.6 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 fair value of the derivative liability, included in accrued expenses and other liabilities on the
Consolidated Balance Sheets, was $6 million and $12 million at December 31, 2024 and December 31, 2023, respectively.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Comerica Incorporated and Subsidiaries
F-75
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
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 and, upon adoption of ASU 2023-02 as discussed in Note
1, other tax credit entities that meet certain criteria using the proportional amortization method. Ownership interests in tax credit
entities that do not qualify for the proportional amortization method are accounted for under either the cost or equity method.
Exposure to loss as a result of the Corporation’s involvement in entities using the proportional amortization method was limited
to $566 million and none for other tax credit entities at December 31, 2024.
Investment balances, including all legally binding commitments to fund future investments that are accounted for
using the proportional amortization method, 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 that are accounted for using the proportional amortization method
($238 million at December 31, 2024). Amortization and other write-downs of tax credit investments for which the proportional
amortization method is applied 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 cash flows related to the total income tax benefits are presented in the "net income," "benefit
for deferred income taxes" and "other, net" line items within the operating activities section of the Consolidated Statements of
Cash Flows.
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, 2024, 2023 and 2022.
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
2024
Provision for income taxes:
Amortization of investments
$
76
Tax credits
(75)
Other income tax benefits related to tax credit entities
(16)
Total provision for income taxes
$
(15)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Comerica Incorporated and Subsidiaries
F-76
Prior to the adoption of ASU 2023-02, only LIHTC investments qualified for the proportional amortization method of
accounting. The following table summarizes the impact of these LIHTC entities on the Corporation’s Consolidated Statements
of Comprehensive Income.
(in millions)
Years Ended December 31
2023
2022
Other noninterest income:
Amortization of other tax credit investments
$
(4) $
—
Provision for income taxes:
Amortization of LIHTC investments
69
72
Low income housing tax credits
(65)
(68)
Other tax benefits related to tax credit entities
(21)
(18)
Total provision for income taxes
$
(17) $
(14)
For further information on the Corporation’s consolidation policy, see Note 1.
NOTE 10 - DEPOSITS
At December 31, 2024, the scheduled maturities of certificates of deposit and other deposits with a stated maturity
were as follows:
(in millions)
Years Ending December 31
2025
$
4,455
2026
54
2027
14
2028
6
2029
2
Thereafter
3
Total
$
4,534
A maturity distribution of domestic certificates of deposit of $100,000 and over follows:
(in millions)
December 31
2024
2023
Three months or less
$
1,135 $
1,083
Over three months to six months
1,040
1,052
Over six months to twelve months
263
359
Over twelve months
24
32
Total
$
2,462 $
2,526
The aggregate amount of domestic certificates of deposit that meet or exceed the current FDIC insurance limit of
$250,000 was $1.4 billion and $1.3 billion at December 31, 2024 and 2023, respectively. All foreign office time deposits were
in denominations of $250,000 or more and totaled $32 million and $13 million at December 31, 2024 and 2023, 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, 2024, there were no short-term borrowings outstanding. At December 31, 2023, other short-
term borrowings totaled $3.6 billion and primarily consisted of advances from the FHLB of Dallas, Texas. At December 31,
2024, the Bank had pledged loans totaling $20.3 billion to the FRB, which provided for up to $16.8 billion of collateralized
borrowing through the discount window.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Comerica Incorporated and Subsidiaries
F-77
The following table provides a summary of short-term borrowings.
(dollar amounts in millions)
Federal Funds Purchased
Other
Short-term
Borrowings
December 31, 2024
Amount outstanding at year-end
$
—
$
—
Weighted average interest rate at year-end
— %
— %
Maximum month-end balance during the year
$
37
$
3,550
Average balance outstanding during the year
8
829
Weighted average interest rate during the year
5.28 %
5.74 %
December 31, 2023
Amount outstanding at year-end
$
15
$
3,550
Weighted average interest rate at year-end
5.30 %
5.74 %
Maximum month-end balance during the year
$
19
$
11,000
Average balance outstanding during the year
29
7,189
Weighted average interest rate during the year
4.77 %
5.41 %
December 31, 2022
Amount outstanding at year-end
$
11
$
3,200
Weighted average interest rate at year-end
4.32 %
4.54 %
Maximum month-end balance during the year
$
1,106
$
3,200
Average balance outstanding during the year
82
354
Weighted average interest rate during the year
3.28 %
4.08 %
NOTE 12 - MEDIUM- AND LONG-TERM DEBT
Medium- and long-term debt is summarized as follows:
(in millions)
December 31
2024
2023
Parent company
Subordinated notes:
3.80% subordinated notes due 2026
$
243 $
241
Medium- and long-term notes:
4.00% notes due 2029
519
523
5.982% notes due 2030
984
—
Total medium- and long-term notes
1,503
523
Total parent company
1,746
764
Subsidiaries
Subordinated notes:
4.00% subordinated notes due 2025
345
337
7.875% subordinated notes due 2026
157
162
5.332% subordinated notes due 2033
451
466
Total subordinated notes
953
965
Medium- and long-term notes:
2.50% notes due July 2024
—
489
Total medium- and long-term notes
—
489
Federal Home Loan Bank (FHLB) advances:
5.07% advance due 2025
1,000
995
4.79% advance due 2026
997
997
4.49% advance due 2027
992
999
4.49% advance due 2028
985
997
Total FHLB advances
3,974
3,988
Total subsidiaries
4,927
5,442
Total medium- and long-term debt
$
6,673 $
6,206
Fixed interest rates have been swapped to a variable rate and designated in a hedging relationship for all notes
outstanding at both December 31, 2024 and 2023. Accordingly, carrying value has been adjusted to reflect the change in fair
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Comerica Incorporated and Subsidiaries
F-78
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.
Comerica Bank (the Bank), a wholly-owned subsidiary of Comerica, Incorporated, is a member of the FHLB, which
provides short- and long-term funding to its members through advances collateralized by real estate-related assets. Borrowing
capacity is contingent on the amount of collateral available to be pledged to the FHLB. At December 31, 2024, FHLB
borrowings were $4.0 billion, with remaining capacity for future borrowing of $13.0 billion, secured by real estate-related loans
totaling $22.5 billion and investment securities totaling $6.0 billion.
Unamortized debt issuance costs deducted from the carrying amount of medium- and long-term debt totaled $10
million and $6 million at December 31, 2024 and 2023, respectively.
At December 31, 2024, the principal maturities of medium- and long-term debt were as follows:
(in millions)
Years Ending December 31
2025
$
1,350
2026
1,400
2027
1,000
2028
1,000
2029
550
Thereafter
1,500
Total
$
6,800
NOTE 13 - SHAREHOLDERS’ EQUITY
During the year ended December 31, 2024, the Corporation repurchased 1.5 million shares at an average price paid of
$63.50 per share under the share repurchase program initially authorized in 2010 by the Board of Directors of the Corporation.
There is no expiration date for the share repurchase program. There were no repurchases of common stock under the share
repurchase program in 2023.
At December 31, 2024, the Corporation had 4.7 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 at an initial fixed rate per annum of
5.625% 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. Beginning on October 1, 2025 and every five years thereafter, the per annum dividend rate on
outstanding shares of Series A preferred stock will reset and equal the then-current five-year Treasury rate plus 5.291%. 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.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Comerica Incorporated and Subsidiaries
F-79
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 (loss) income for the years ended December 31, 2024, 2023 and 2022,
including the amount of income tax (benefit) expense allocated to each component of other comprehensive (loss) income.
(in millions)
Years Ended December 31
2024
2023
2022
Accumulated net unrealized losses on investment securities:
Balance at beginning of period, net of tax
$
(2,043) $
(2,319) $
(99)
Net unrealized holding (losses) gains arising during the period
(182)
361
(2,903)
Less: (Benefit) provision for income taxes
(43)
85
(683)
Net unrealized holding (losses) gains arising during the period, net of tax
(139)
276
(2,220)
Less:
Net realized losses included in net securities losses
19
—
—
Less: Benefit for income taxes
4
—
—
Reclassification adjustment for net securities losses included in net income,
net of tax
15
—
—
Change in net unrealized losses on investment securities, net of tax
(154)
276
(2,220)
Balance at end of period, net of tax
$
(2,197) $
(2,043) $
(2,319)
Accumulated net losses on cash flow hedges:
Balance at beginning of period, net of tax
$
(605) $
(942) $
55
Net cash flow hedge (losses) gains arising during the period
(624)
34
(1,329)
Reclassification of loss related to de-designation of derivatives to other
noninterest income
—
(195)
—
Less: Benefit for income taxes
(181)
(38)
(313)
Change in net cash flow hedge losses arising during the period, net of tax
(443)
(123)
(1,016)
Less:
Net cash flow losses included in interest and fees on loans
(629)
(576)
(25)
Net amortization of unrealized losses related to de-designated derivatives
included in interest and fees on loans
(8)
(26)
—
Less: Benefit for income taxes
(185)
(142)
(6)
Reclassification adjustment for net cash flow hedge losses included in net
income, net of tax
(452)
(460)
(19)
Change in net cash flow hedge losses, net of tax
9
337
(997)
Balance at end of period, net of tax (a)
$
(596) $
(605) $
(942)
Accumulated defined benefit pension and other postretirement plans
adjustment:
Balance at beginning of period, net of tax
$
(400) $
(481) $
(168)
Actuarial gain (loss) arising during the period
35
96
(415)
Less: Provision (benefit) for income taxes
8
25
(98)
Net defined benefit pension and other postretirement plans adjustment arising
during the period, net of tax
27
71
(317)
Amounts recognized in other noninterest expenses:
Amortization of actuarial net loss
27
36
28
Amortization of prior service credit
(22)
(23)
(23)
Total amounts recognized in other noninterest expenses
5
13
5
Less: Provision for income taxes
—
3
1
Adjustment for amounts recognized as components of net periodic benefit
credit during the period, net of tax
5
10
4
Change in defined benefit pension and other postretirement plans adjustment,
net of tax
32
81
(313)
Balance at end of period, net of tax
$
(368) $
(400) $
(481)
Total accumulated other comprehensive loss at end of period, net of tax
$
(3,161) $
(3,048) $
(3,742)
(a)
The Corporation expects to reclassify $198 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, 2024 levels.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Comerica Incorporated and Subsidiaries
F-80
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
2024
2023
2022
Basic and diluted
Net income
$
698 $
881 $
1,151
Less:
Income allocated to participating securities
4
4
6
Preferred stock dividends
23
23
23
Net income attributable to common shares
$
671 $
854 $
1,122
Basic average common shares
133
132
131
Basic net income per common share
$
5.06 $
6.47 $
8.56
Basic average common shares
133
132
131
Dilutive common stock equivalents:
Net effect of the assumed exercise of stock awards
1
1
2
Diluted average common shares
134
133
133
Diluted net income per common share
$
5.02 $
6.44 $
8.47
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
2024
2023
2022
Average outstanding options
1,792
1,631
543
Range of exercise prices
$53.96 - $95.25
$49.20 - $95.25
$70.18 - $95.25
NOTE 16 - SHARE-BASED COMPENSATION
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
2024
2023
2022
Total share-based compensation expense
$
54 $
52 $
60
Related tax benefits recognized in net income
12
12
14
The following table summarizes unrecognized compensation expense for all share-based plans.
(dollar amounts in millions)
December 31, 2024
Total unrecognized share-based compensation expense
$
47
Weighted-average expected recognition period (in years)
2.2
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 9.8 million common shares, plus shares under certain plans that are
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Comerica Incorporated and Subsidiaries
F-81
forfeited, expire or are canceled, which become available for re-grant. At December 31, 2024, over 4.6 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
2024
2023
2022
Weighted-average grant-date fair value per option
$
17.64
$
20.21
$
25.31
Weighted-average assumptions:
Risk-free interest rates
4.13 %
3.46 %
1.78 %
Expected dividend yield
4.00
4.00
4.00
Volatility
37
32
34
Expected option life (in years)
7.5
7.8
8.0
A summary of the Corporation’s stock option activity and related information for the year ended December 31, 2024
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, 2024
2,083 $
64.03
Granted
322
53.96
Forfeited or expired
(60)
67.87
Exercised
(279)
46.19
Outstanding-December 31, 2024
2,066
64.76
5.1 $
12
Exercisable-December 31, 2024
1,456 $
64.87
3.7 $
9
The aggregate intrinsic value of outstanding options shown in the table above represents the total pretax intrinsic value
at December 31, 2024, based on the Corporation’s closing stock price of $61.85 at December 31, 2024.
The total intrinsic value of stock options exercised was $4 million, $4 million and $17 million for the years ended
December 31, 2024, 2023 and 2022, respectively.
There was no restricted stock award activity in 2024 or 2023. The plan was fully vested as of December 31, 2022. The
total fair value of restricted stock awards that fully vested in 2022 was $4 million.
A summary of the Corporation's restricted stock unit activity and related information for the year ended December 31,
2024 follows:
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Comerica Incorporated and Subsidiaries
F-82
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
Outstanding-January 1, 2024
1,518 $
62.42
727 $
67.70
Granted
774
51.31
542
52.62
Forfeited
(103)
62.29
(32)
67.71
Vested
(365)
76.76
(437)
56.14
Outstanding-December 31, 2024
1,824
54.85
800
63.81
The total fair value of restricted stock units that fully vested was $42 million, $52 million and $19 million for the years
ended December 31, 2024, 2023 and 2022, 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, 2024, the Corporation held 97 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. All employees aged 21 years or older who attain one year of service are 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.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Comerica Incorporated and Subsidiaries
F-83
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, 2024 and 2023. The
Corporation used a measurement date of December 31, 2024 for these plans.
Defined Benefit Pension Plans
Qualified
Non-Qualified
Postretirement
Benefit Plan
(dollar amounts in millions)
2024
2023
2024
2023
2024
2023
Change in fair value of plan assets:
Fair value of plan assets at January 1
$ 2,681
$ 2,508
$
—
$
—
$
45
$
46
Actual return on plan assets
164
338
—
—
—
1
Benefits paid
(114)
(165)
—
—
(2)
(2)
Fair value of plan assets at December 31
$ 2,731
$ 2,681
$
—
$
—
$
43
$
45
Change in projected benefit obligation:
Projected benefit obligation at January 1
$ 1,629
$ 1,611
$
169
$
163
$
17
$
21
Service cost
35
31
2
2
—
—
Interest cost
82
85
9
9
1
1
Actuarial (loss) gain
(51)
67
—
10
(1)
(3)
Benefits paid
(114)
(165)
(15)
(15)
(2)
(2)
Projected benefit obligation at December 31
$ 1,581
$ 1,629
$
165
$
169
$
15
$
17
Accumulated benefit obligation
$ 1,563
$ 1,611
$
162
$
166
$
15
$
17
Funded status at December 31 (a) (b)
$ 1,150
$ 1,052
$ (165)
$ (169)
$
28
$
28
Weighted-average assumptions used:
Discount rate
5.72 %
5.33 %
5.72 %
5.33 %
5.72 %
5.43 %
Rate of compensation increase
4.50
4.50
4.50
4.50
n/a
n/a
Interest crediting rate
4.54 - 5.25
4.66 - 5.25
4.54 - 5.25
4.66 - 5.25
n/a
n/a
Amounts recognized in accumulated other
comprehensive loss before income taxes:
Net actuarial loss
$ (443)
$ (501)
$
(49)
$
(52)
$ (10)
$
(9)
Prior service credit
5
19
23
29
2
2
Balance at December 31
$ (438)
$ (482)
$
(26)
$
(23)
$
(8)
$
(7)
(a)
Based on projected benefit obligation for defined benefit pension plans and accumulated benefit obligation for postretirement benefit
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, 2024 and December 31, 2023.
The following table details the changes in plan assets and benefit obligations recognized in other comprehensive (loss)
income for the year ended December 31, 2024.
Defined Benefit Pension Plans
(in millions)
Qualified
Non-Qualified
Postretirement
Benefit Plan
Total
Actuarial gain (loss) arising during the period
$
36 $
— $
(1) $
35
Amortization of net actuarial loss
23
4
—
27
Amortization of prior service credit
(15)
(7)
—
(22)
Total recognized in other comprehensive (loss) income
$
44 $
(3) $
(1) $
40
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Comerica Incorporated and Subsidiaries
F-84
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:
Defined Benefit Pension Plans
(dollar amounts in millions)
Qualified
Non-Qualified
Years Ended December 31
2024
2023
2022
2024
2023
2022
Service cost (a)
$
35
$
31
$
37
$
2
$
2
$
2
Other components of net benefit (credit) cost:
Interest cost
82
85
62
9
9
6
Expected return on plan assets
(179)
(166)
(201)
—
—
—
Amortization of prior service credit
(15)
(14)
(14)
(7)
(9)
(9)
Amortization of actuarial net loss
23
32
19
4
4
9
Total other components of net benefit (credit) cost (b)
(89)
(63)
(134)
6
4
6
Net periodic defined benefit (credit) cost
$ (54)
$ (32)
$ (97)
$
8
$
6
$
8
Actual return on plan assets
$ 164
$ 338
$ (777)
n/a
n/a
n/a
Actual rate of return on plan assets
6.26 %
13.91 %
(23.02) %
n/a
n/a
n/a
Weighted-average assumptions used:
Discount rate
5.33 %
5.60 %
2.96 %
5.33 %
5.60 %
2.96 %
Expected long-term return on plan assets
6.75
6.50
6.50
n/a
n/a
n/a
Rate of compensation increase
4.50
4.25
4.00
4.50
4.25
4.00
(a)
Included in salaries and benefits expense on the Consolidated Statements of Income.
(b)
Included in other noninterest expenses on the Consolidated Statements of Income.
n/a - not applicable
(dollar amounts in millions)
Postretirement Benefit Plan
Years Ended December 31
2024
2023
2022
Other components of net benefit credit:
Interest cost
$
1
$
1
$
1
Expected return on plan assets
(2)
(2)
(3)
Net periodic postretirement benefit credit
$
(1)
$
(1)
$
(2)
Actual return on plan assets
$
—
$
1
$
(4)
Actual rate of return on plan assets
0.28 %
2.61 %
(8.24) %
Weighted-average assumptions used:
Discount rate
5.43 %
5.71 %
2.79 %
Expected long-term return on plan assets
5.00
5.00
5.00
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, 2024. 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.
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 funds. Fixed income securities include U.S. Treasury and other U.S.
government agency securities, corporate bonds and notes, municipal bonds, collateralized mortgage obligations and money
market funds.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Comerica Incorporated and Subsidiaries
F-85
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.
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.
Private placements
Fair value is measured using the net asset value (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.
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, 2024 and 2023, by asset category and level within the fair value hierarchy, are detailed in the
table below.
(in millions)
Total
Level 1
Level 2
Level 3
December 31, 2024
Fixed income securities:
U.S. Treasury and other U.S. government agency securities
$
676 $
670 $
6 $
—
Corporate and municipal bonds and notes
809
—
809
—
Private placements
37
—
—
37
Total investments in the fair value hierarchy
$
1,522 $
670 $
815 $
37
Investments measured at net asset value:
Collective investment funds
1,192
Total investments at fair value
$
2,714
December 31, 2023
Fixed income securities:
U.S. Treasury and other U.S. government agency securities
$
567 $
564 $
3 $
—
Corporate and municipal bonds and notes
786
—
786
—
Private placements
44
—
—
44
Total investments in the fair value hierarchy
$
1,397 $
564 $
789 $
44
Investments measured at net asset value:
Collective investment funds
1,268
Total investments at fair value
$
2,665
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Comerica Incorporated and Subsidiaries
F-86
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, 2024 and 2023.
Balance at
Beginning
of Period
Balance at
End of Period
Net Gains (Losses)
(in millions)
Realized
Unrealized
Purchases
Sales
Year Ended December 31, 2024
Private placements
$
44 $
— $
(2) $
47 $
(52) $
37
Year Ended December 31, 2023
Private placements
$
39 $
(3) $
8 $
46 $
(46) $
44
There were no assets in the non-qualified defined benefit pension plan at December 31, 2024 and 2023. 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.
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, 2025.
Estimated Future Benefit Payments
(in millions)
Years Ended December 31
Qualified
Defined Benefit
Pension Plan
Non-Qualified
Defined Benefit
Pension Plan
Postretirement
Benefit Plan (a)
2025
$
166 $
15 $
2
2026
146
15
2
2027
146
15
2
2028
144
15
2
2029
145
15
2
2030 - 2034
670
75
5
(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 $29 million for the year ended
December 31, 2024, $27 million for the year ended December 31, 2023 and $24 million for the year ended December 31, 2022.
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.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Comerica Incorporated and Subsidiaries
F-87
The current and deferred components of the provision for income taxes were as follows:
(in millions)
December 31
2024
2023
2022
Current:
Federal
$
143 $
297 $
296
Foreign
11
9
6
State and local
37
49
50
Total current
191
355
352
Deferred:
Federal
23
(83)
(24)
State and local
(24)
(9)
(3)
Total deferred
(1)
(92)
(27)
Total
$
190 $
263 $
325
Income before income taxes of $888 million for the year ended December 31, 2024 included $57 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 income (loss). Refer to Note 14 for additional information on accumulated other
comprehensive income (loss).
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)
2024
2023
2022
Years Ended December 31
Amount
Rate
Amount
Rate
Amount
Rate
Tax based on federal statutory rate
$
186
21.0 % $
240
21.0 % $
310
21.0 %
State income taxes
10
1.1
35
3.1
36
2.5
Affordable housing and historic credits
(15)
(1.7)
(16)
(1.4)
(13)
(0.9)
Bank-owned life insurance
(8)
(0.9)
(10)
(0.9)
(10)
(0.7)
FDIC insurance expense
13
1.5
15
1.3
6
0.4
Employee stock transactions
1
0.2
(1)
(0.1)
(3)
(0.2)
Tax-related interest and penalties
—
—
(4)
(0.4)
—
—
Other
3
0.4
4
0.4
(1)
(0.1)
Provision for income taxes
$
190
21.6 % $
263
23.0 % $
325
22.0 %
The liability for tax-related interest and penalties, included in accrued expenses and other liabilities on the
Consolidated Balance Sheets, was $1 million and less than $1 million at December 31, 2024 and 2023, respectively.
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)
2024
2023
2022
Balance at January 1
$
7 $
16 $
18
Increase as a result of tax positions taken during a prior period
—
—
(2)
Increase as a result of tax positions taken during the current period
1
1
3
Decreases related to settlements with tax authorities
—
(10)
(3)
Reduction as a result of expiration of statute of limitations
—
—
—
Balance at December 31
$
8 $
7 $
16
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Comerica Incorporated and Subsidiaries
F-88
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 $6
million and $5 million at December 31, 2024 and 2023, respectively.
The following tax years for significant jurisdictions remain subject to examination as of December 31, 2024:
Jurisdiction
Tax Years
Federal
2021-2023
New York
2018-2023
California
2020-2023
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.
The principal components of deferred tax assets and liabilities were as follows:
(in millions)
December 31
2024
2023
Deferred tax assets:
Allowance for loan losses
$
145 $
145
Deferred compensation
72
77
Deferred loan origination fees and costs
10
11
Net hedging losses
187
186
Net unrealized losses on investment securities available-for-sale
690
628
Operating lease liabilities
75
81
Other temporary differences, net
131
124
Total deferred tax assets before valuation allowance
1,310
1,252
Valuation allowance
(11)
(6)
Total deferred tax assets
1,299
1,246
Deferred tax liabilities:
Lease financing transactions
(18)
(20)
Defined benefit plans
(177)
(159)
Allowance for depreciation
(9)
(5)
Leasing Right of Use assets
(61)
(67)
Total deferred tax liabilities
(265)
(251)
Net deferred tax assets
$
1,034 $
995
Included in deferred tax assets at December 31, 2024 was approximately $9 million of federal foreign tax credit
carryforwards expiring between 2029 and 2035, compared to $5 million at December 31, 2023. In addition, there were $2
million of state net operating loss (NOL) carryforwards at both December 31, 2024 and 2023, the majority of which expires
between 2024 and 2028. 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 $9 million
and a state valuation allowance of $2 million at December 31, 2024, compared to a federal valuation of $5 million and a state
valuation allowance of $1 million in the comparable period in 2023. The determination regarding valuation allowances was
based on available evidence of NOL carryback capacity, projected future reversals of existing taxable temporary differences,
foreign tax rates, taxable income limitations per Internal Revenue Code Section 904, and assumptions made regarding future
events. For further information on the Corporation’s valuation policy for deferred tax assets, refer to Note 1.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Comerica Incorporated and Subsidiaries
F-89
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, 2024 totaled $81 million at the beginning of 2024 and $66 million at the
end of 2024. During 2024, new loans to related parties aggregated $612 million and repayments totaled $627 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 $782 million at January 1, 2025, plus
2025 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 $200 million, $675 million and $1.0 billion in 2024, 2023
and 2022, 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.
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,
2024 and 2023, 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, 2024 and 2023. 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, 2024 and 2023.
There have been no conditions or events since December 31, 2024 that management believes have changed the capital adequacy
classification of the Corporation or its U.S. banking subsidiaries.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Comerica Incorporated and Subsidiaries
F-90
The following is a summary of the capital position of the Corporation and Comerica Bank, its principal banking subsidiary.
(dollar amounts in millions)
Comerica
Incorporated
(Consolidated)
Comerica
Bank
December 31, 2024
CET1 capital (minimum $3.3 billion (Consolidated))
$
8,667
$
8,547
Tier 1 capital (minimum $4.4 billion (Consolidated))
9,061
8,547
Total capital (minimum $5.8 billion (Consolidated))
10,363
9,799
Risk-weighted assets
72,903
72,833
Average assets (fourth quarter)
81,797
81,643
CET1 capital to risk-weighted assets (minimum-4.5%)
11.89 %
11.74 %
Tier 1 capital to risk-weighted assets (minimum-6.0%)
12.43
11.74
Total capital to risk-weighted assets (minimum-8.0%)
14.21
13.45
Tier 1 capital to average assets (minimum-4.0%)
11.08
10.47
Capital conservation buffer (minimum-2.5%)
6.21
5.45
December 31, 2023
CET1 capital (minimum $3.4 billion (Consolidated))
$
8,414
$
8,007
Tier 1 capital (minimum $4.6 billion (Consolidated))
8,808
8,007
Total capital (minimum $6.1 billion (Consolidated))
10,263
9,362
Risk-weighted assets
75,901
75,783
Average assets (fourth quarter)
87,538
87,423
CET1 capital to risk-weighted assets (minimum-4.5%)
11.09 %
10.57 %
Tier 1 capital to risk-weighted assets (minimum-6.0%)
11.60
10.57
Total capital to risk-weighted assets (minimum-8.0%)
13.52
12.35
Tier 1 capital to average assets (minimum-4.0%)
10.06
9.16
Capital conservation buffer (minimum-2.5%)
5.52
4.35
NOTE 21 - CONTINGENT LIABILITIES
Legal Proceedings and Regulatory Matters
The Corporation is subject to various pending or threatened legal proceedings arising out of the normal course of
business or operations. Use of the term "Corporation" in this note should not be read to infer that Comerica Incorporated or any
of its subsidiaries that is not named in any legal or regulatory proceeding undertakes any responsibility or liability for any other
affiliate that is actually named in any legal or regulatory proceeding. The Corporation believes it has meritorious defenses to the
claims asserted against it in its 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. Remedies in resulting 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. For example, the Consumer Financial Protection Bureau (CFPB) launched an investigation into Comerica
Bank as Financial Agent under the Bureau of Fiscal Service's Direct Express® program. In response to the CFPB's
interpretation of certain statutes in connection with its investigation, Comerica Bank filed litigation against the CFPB in
November 2024. The CFPB filed a separate suit against Comerica Bank in December 2024 premised upon its interpretation of
certain statutes in connection with its investigation. The Corporation is unable to predict the outcome of this litigation at this
time.
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, the
Corporation's 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
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Comerica Incorporated and Subsidiaries
F-91
operations or cash flows. Legal fees of $21 million, $26 million and $17 million for the years ended December 31, 2024, 2023
and 2022, 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 $161 million at December 31, 2024. 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 proceedings and regulatory matters for which such estimate can be made. For certain legal proceedings 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 that
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 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 the ultimate resolution of these matters, if unfavorable,
could have a material adverse effect on 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 and Other categories include
items not directly associated with the business segments. 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 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, 2024.
For the Commercial Bank, Retail Bank and Wealth Management segments, the Corporation's chief operating decision
maker, the Chief Executive Officer, uses both segment net interest income and segment net income (loss) to allocate resources
predominantly in the annual budget and forecasting process, which includes allocations of employees, property, financial and/or
capital resources. The chief operating decision maker considers budget-to-actual variances on a monthly basis for both profit
measures when making decisions about allocating capital and personnel to each segment. Additionally, segment net interest
income is used to evaluate product pricing and lending terms for customer loans, while segment net income (loss) helps
evaluate the performance for each segment and compensation of certain employees.
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,
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Comerica Incorporated and Subsidiaries
F-92
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. Conversely, in periods
of declining interest rates, FTP charge rates for funding loans and FTP crediting rates on deposits will decrease, 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
category, 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 2024 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 category includes the Corporation’s securities portfolio and asset and liability management activities.
Finance 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.
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.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Comerica Incorporated and Subsidiaries
F-93
Business segment financial results are as follows:
(dollar amounts in millions)
Commercial
Bank
Retail
Bank
Wealth
Management
Finance
Other
Total
Year Ended December 31, 2024
Earnings summary:
Net interest income (expense)
$
1,869
$
813
$
187
$
(838) $
159 $ 2,190
Provision for credit losses
47
2
(2)
—
2
49
Noninterest income
592
112
287
50
13 1,054
Salaries and benefits expense
299
224
136
56
637 1,352
Outside processing fee expense
195
19
41
5
13
273
Occupancy expense
23
103
12
3
40
181
Allocated corporate expense
415
272
128
(70)
(745)
—
All other noninterest expenses (a)
117
89
56
11
228
501
Total noninterest expenses
1,049
707
373
5
173 2,307
Provision (benefit) for income taxes
295
48
23
(179)
3
190
Net income (loss)
$
1,070
$
168
$
80
$
(614) $
(6) $
698
Net charge-offs
$
47
$
4
$
1
$
— $
— $
52
Selected average balances:
Assets
$ 45,859
$ 3,038
$
5,310
$ 18,400 $
7,961 $ 80,568
Loans
43,584
2,335
5,050
—
10 50,979
Deposits
32,264
24,292
3,894
3,179
272 63,901
Year Ended December 31, 2023
Earnings summary:
Net interest income (expense)
$
2,051
$
846
$
208
$
(693) $
102 $ 2,514
Provision for credit losses
90
3
(6)
—
2
89
Noninterest income
603
119
307
37
12 1,078
Salaries and benefits expense
295
222
171
45
573 1,306
Outside processing fee expense
201
20
35
7
14
277
Occupancy expense
23
98
12
2
36
171
Allocated corporate expense
377
263
120
(59)
(701)
—
All other noninterest expenses (a)
210
125
64
18
188
605
Total noninterest expenses
1,106
728
402
13
110 2,359
Provision (benefit) for income taxes
342
58
29
(164)
(2)
263
Net income (loss)
$
1,116
$
176
$
90
$
(505) $
4 $
881
Net charge-offs
$
20
$
2
$
—
$
— $
— $
22
Selected average balances:
Assets
$ 49,458
$ 2,960
$
5,500
$ 20,139 $
9,137 $ 87,194
Loans
46,432
2,237
5,232
—
2 53,903
Deposits
33,019
24,363
4,130
4,169
337 66,018
Table continues on the following page.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Comerica Incorporated and Subsidiaries
F-94
(dollar amounts in millions)
Commercial
Bank
Retail
Bank
Wealth
Management
Finance
Other
Total
Year Ended December 31, 2022
Earnings summary:
Net interest income (expense)
$
1,761
$
680
$
199
$
(195) $
21 $ 2,466
Provision for credit losses
32
11
9
—
8
60
Noninterest income
607
122
298
59
(18) 1,068
Salaries and benefits expense
275
226
154
44
509 1,208
Outside processing fee expense
185
22
27
4
13
251
Occupancy expense
21
107
12
2
33
175
Allocated corporate expense
394
241
120
(55)
(700)
—
All other noninterest expenses (a)
89
94
35
6
140
364
Total noninterest expenses
964
690
348
1
(5) 1,998
Provision (benefit) for income taxes
315
22
34
(39)
(7)
325
Net income (loss)
$
1,057
$
79
$
106
$
(98) $
7 $ 1,151
Net charge-offs (recoveries)
$
21
$
(1)
$
(3)
$
— $
— $
17
Selected average balances:
Assets
$ 47,437
$ 2,814
$
5,037
$ 20,912 $ 11,072 $ 87,272
Loans
43,481
2,063
4,906
—
10 50,460
Deposits
42,584
26,672
5,439
360
426 75,481
(a)
All other noninterest expenses for each reportable business segment includes:
i.
Commercial Bank and Retail Bank - Primarily FDIC insurance expense, software expense and other noninterest expenses.
ii.
Wealth Management - Primarily software expense and other noninterest expenses.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Comerica Incorporated and Subsidiaries
F-95
NOTE 23 - PARENT COMPANY FINANCIAL STATEMENTS
BALANCE SHEETS - COMERICA INCORPORATED
(in millions, except share data)
December 31
2024
2023
Assets
Cash and due from subsidiary banks
$
1,218 $
1,415
Investment securities
35
—
Other short-term investments
89
104
Receivable due from subsidiary bank
850
—
Investment in subsidiaries, principally banks
6,212
5,777
Accrued income and other assets
220
180
Total assets
$
8,624 $
7,476
Liabilities and Shareholders’ Equity
Medium- and long-term debt
$
1,746 $
764
Accrued expenses and other liabilities
335
306
Total liabilities
2,081
1,070
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
394
394
Common stock - $5 par value:
Authorized - 325,000,000 shares
Issued - 228,164,824 shares
1,141
1,141
Capital surplus
2,218
2,224
Accumulated other comprehensive loss
(3,161)
(3,048)
Retained earnings
12,017
11,727
Less cost of common stock in treasury - 96,755,368 shares at 12/31/2024 and 96,266,568
shares at 12/31/2023
(6,066)
(6,032)
Total shareholders’ equity
6,543
6,406
Total liabilities and shareholders’ equity
$
8,624 $
7,476
STATEMENTS OF INCOME - COMERICA INCORPORATED
(in millions)
Years Ended December 31
2024
2023
2022
Income
Income from subsidiaries:
Dividends from subsidiaries
$
200 $
677 $
1,067
Other interest income
58
53
13
Intercompany management fees
85
75
109
Total income
343
805
1,189
Expenses
Interest on medium- and long-term debt
124
79
47
Salaries and benefits expense
71
62
53
Other noninterest expenses
15
13
46
Total expenses
210
154
146
Income before benefit for income taxes and equity in undistributed earnings
of subsidiaries
133
651
1,043
Benefit for income taxes
(11)
(2)
(3)
Income before equity in undistributed earnings of subsidiaries
144
653
1,046
Equity in undistributed earnings of subsidiaries, principally banks
554
228
105
Net income
698
881
1,151
Less income allocated to participating securities
4
4
6
Preferred stock dividends
23
23
23
Net income attributable to common shares
$
671 $
854 $
1,122
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Comerica Incorporated and Subsidiaries
F-96
STATEMENTS OF CASH FLOWS - COMERICA INCORPORATED
(in millions)
Years Ended December 31
2024
2023
2022
Operating Activities
Net income
$
698 $
881 $
1,151
Adjustments to reconcile net income to net cash provided by operating
activities:
Undistributed earnings of subsidiaries, principally banks
(554)
(228)
(105)
Net periodic defined benefit cost
1
1
2
Share-based compensation expense
20
18
22
Benefit for deferred income taxes
(8)
(2)
—
Other, net
21
28
24
Net cash provided by operating activities
178
698
1,094
Investing Activities
Investment securities available-for-sale:
Maturities and redemptions
70
—
—
Purchases
(103)
—
—
Advance to subsidiary bank
(850)
—
—
Repayment of subsidiary advance
—
150
—
Other, net
—
—
2
Net cash (used in) provided by investing activities
(883)
150
2
Financing Activities
Medium- and long-term debt:
Maturities
—
(850)
—
Issuances
1,000
—
—
Cash dividends paid on preferred stock
(23)
(23)
(23)
Common Stock:
Repurchases
(100)
—
(36)
Stock tendered for payment of withholding taxes
(14)
(17)
(7)
Cash dividends paid
(377)
(371)
(353)
Issuances under employee stock plans
22
18
28
Net cash provided by (used in) financing activities
508
(1,243)
(391)
Net (decrease) increase in cash and cash equivalents
(197)
(395)
705
Cash and cash equivalents at beginning of period
1,415
1,810
1,105
Cash and cash equivalents at end of period
$
1,218 $
1,415 $
1,810
Interest paid
$
115 $
76 $
41
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Comerica Incorporated and Subsidiaries
F-97
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.
Commercial
Bank
Retail
Bank
Wealth
Management
Finance &
Other
Total
(in millions)
Year Ended December 31, 2024
Revenue from contracts with customers:
Card fees
$
212 $
40 $
4 $
— $
256
Fiduciary income
1
—
219
—
220
Service charges on deposit accounts
124
54
6
—
184
Commercial loan servicing fees (a)
12
—
—
—
12
Capital markets income (b)
22
—
—
—
22
Brokerage fees
—
1
50
—
51
Other noninterest income (b)
7
14
5
1
27
Total revenue from contracts with customers
378
109
284
1
772
Other sources of noninterest income
214
3
3
62
282
Total noninterest income
$
592 $
112 $
287 $
63 $
1,054
Year Ended December 31, 2023
Revenue from contracts with customers:
Card fees
$
231 $
45 $
4 $
— $
280
Fiduciary income
1
—
234
—
235
Service charges on deposit accounts
125
55
5
—
185
Commercial loan servicing fees (a)
11
—
—
—
11
Capital markets income (b)
17
—
—
—
17
Brokerage fees
—
—
30
—
30
Other noninterest income (b)
2
14
23
1
40
Total revenue from contracts with customers
387
114
296
1
798
Other sources of noninterest income
216
5
11
48
280
Total noninterest income
$
603 $
119 $
307 $
49 $
1,078
Year Ended December 31, 2022
Revenue from contracts with customers:
Card fees
$
227 $
42 $
4 $
— $
273
Fiduciary income
—
—
233
—
233
Service charges on deposit accounts
132
57
6
—
195
Commercial loan servicing fees (a)
11
—
—
—
11
Capital markets income (b)
11
—
—
—
11
Brokerage fees
—
—
21
—
21
Other noninterest income (b)
3
16
24
1
44
Total revenue from contracts with customers
384
115
288
1
788
Other sources of noninterest income
223
7
10
40
280
Total noninterest income
$
607 $
122 $
298 $
41 $
1,068
(a)
Included in commercial lending fees on the Consolidated Statements of Income.
(b)
Excludes derivative, warrant and other miscellaneous income.
Revenue from contracts with customers did not generate significant contract assets and liabilities.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Comerica Incorporated and Subsidiaries
F-98
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, 2024, 2023 and 2022 were as follows:
(in millions)
Years Ended December 31
2024
2023
2022
Operating lease expense
$
69 $
67 $
68
Variable lease expense
19
18
17
Less: sublease income
(1)
(1)
(1)
Total lease expense
$
87 $
84 $
84
Supplemental balance sheet information related to leases is summarized as follows:
(dollar amounts in millions)
Years Ended December 31
2024
2023
2022
Included in accrued income and other assets
Right-of-use (ROU) assets
$
292
$
317
$
338
Included in accrued expenses and other liabilities
Operating lease liabilities
357
388
406
Weighted average discount rate
3.92 %
3.72 %
3.53 %
Weighted average remaining lease term in years
8
9
9
Supplemental cash flow information related to leases is summarized as follows:
(in millions)
Years Ended December 31
2024
2023
2022
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from operating leases
$
80 $
69 $
66
ROU assets obtained in exchange for new liabilities
27
28
80
As of December 31, 2024, the contractual maturities of operating lease liabilities were as follows:
(in millions)
Years Ended December 31
2025
$
67
2026
67
2027
56
2028
48
2029
36
Thereafter
149
Total contractual maturities
423
Less imputed interest
(66)
Total operating lease liabilities
$
357
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 $47 million, $40 million and $21 million for the years ended December 31, 2024,
2023 and 2022, respectively. The Corporation's net investment in sales-type and direct financing leases was $675 million and
$761 million at December 31, 2024 and 2023, respectively.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Comerica Incorporated and Subsidiaries
F-99
As of December 31, 2024, the contractual maturities of sales-type and direct financing lease receivables were as
follows:
(in millions)
Years Ended December 31
2025
$
136
2026
96
2027
68
2028
55
2029
49
Thereafter
245
Total lease payments receivable
649
Unguaranteed residual values
51
Less deferred interest income
(25)
Total lease receivables (a)
$
675
(a)
Excludes net investment in leveraged leases of $47 million.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Comerica Incorporated and Subsidiaries
F-100
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, 2024. 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, 2024.
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, 2024 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
James J. Herzog
Mauricio A. Ortiz
Chairman, President and
Senior Executive Vice President and
Executive Vice President,
Chief Executive Officer
Chief Financial Officer
Chief Accounting Officer and
Controller
F-101
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, 2024,
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,
2024, 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, 2024 and 2023, 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, 2024, and the related notes of the Corporation and our report dated February 24, 2025 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 the board of 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 24, 2025
F-102
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, 2024 and 2023, 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, 2024, 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, 2024 and 2023, and the results of its
operations and its cash flows for each of the three years in the period ended December 31, 2024 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, 2024, 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 24, 2025 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.
Allowance for credit losses
Description of
the Matter
The Corporation’s loan portfolio and the associated allowance for credit losses (ACL) were $50.5 billion and $725
million as of December 31, 2024, 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 in developing assumptions used to determine the allowance estimate and
the inputs used in those models as well as in applying qualitative adjustments and model overlays. These
determinations could have a significant effect on the ACL.
F-103
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 and
model overlays, 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 and model overlays, 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 24, 2025
F-104
SIGNATURES
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 24, 2025.
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 24, 2025.
/s/ Curtis C. Farmer
Chairman, President, Chief Executive Officer and
Curtis C. Farmer
Director (Principal Executive Officer)
/s/ James J. Herzog
Senior Executive Vice President and Chief Financial Officer
James J. Herzog
(Principal Financial Officer)
/s/ Mauricio A. Ortiz
Executive Vice President, Chief Accounting Officer
Mauricio A. Ortiz
and Controller (Principal Accounting Officer)
/s/ Arthur G. Angulo
Director
Arthur G. Angulo
/s/ Nancy Avila
Director
Nancy Avila
/s/ Roger A. Cregg
Director
Roger A. Cregg
/s/ M. Alan Gardner
Director
M. Alan Gardner
/s/ Derek J. Kerr
Director
Derek J. Kerr
/s/ Richard G. Lindner
Director
Richard G. Lindner
/s/ Jennifer H. Sampson
Director
Jennifer H. Sampson
/s/ Barbara R. Smith
Director
Barbara R. Smith
/s/ Robert S. Taubman
Director
Robert S. Taubman
/s/ Nina G. Vaca
Director
Nina G. Vaca
/s/ Michael G. Van de Ven
Director
Michael G. Van de Ven
S-1
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: 800.521.1190
Product Information: 800.292.1300
COMERICA CORPORATE HEADQUARTERS
Comerica Bank Tower
1717 Main Street
Dallas, Texas 75201
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