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COMERICA INC /NEW/ - Quarter Report: 2021 September (Form 10-Q)

Table of Contents

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
______________________________
FORM 10-Q
______________________________
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2021
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)
___________________________________________________________________________________
Delaware38-1998421
(State or other jurisdiction of incorporation or organization)(I.R.S. Employer Identification No.)
Comerica Bank Tower
1717 Main Street, MC 6404
Dallas, Texas 75201
(Address of principal executive offices)
(Zip Code)
(214) 462-6831
(Registrant’s telephone number, including area code) 
_________________________________________________________________________
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading symbolName of each exchange on which registered
Common Stock, $5 par valueCMANew York Stock Exchange
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 is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No 
Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date.
$5 par value common stock:
Outstanding as of October 27, 2021: 131,148,664 shares


Table of Contents
COMERICA INCORPORATED AND SUBSIDIARIES
TABLE OF CONTENTS


Table of Contents
Part I. FINANCIAL INFORMATION
Item 1. Financial Statements
CONSOLIDATED BALANCE SHEETS
Comerica Incorporated and Subsidiaries
(in millions, except share data)September 30, 2021December 31, 2020
(unaudited)(recast)
ASSETS
Cash and due from banks$1,050 $1,031 
Interest-bearing deposits with banks22,539 14,736 
Other short-term investments187 172 
Investment securities available-for-sale16,846 15,028 
Commercial loans28,355 32,753 
Real estate construction loans3,010 4,082 
Commercial mortgage loans11,215 9,912 
Lease financing569 594 
International loans1,131 926 
Residential mortgage loans1,813 1,830 
Consumer loans2,102 2,194 
Total loans48,195 52,291 
Allowance for loan losses(609)(948)
Net loans47,586 51,343 
Premises and equipment447 459 
Accrued income and other assets5,874 5,360 
Total assets$94,529 $88,129 
LIABILITIES AND SHAREHOLDERS’ EQUITY
Noninterest-bearing deposits$44,093 $39,420 
Money market and interest-bearing checking deposits32,932 28,540 
Savings deposits3,125 2,710 
Customer certificates of deposit2,091 2,133 
Foreign office time deposits43 66 
Total interest-bearing deposits38,191 33,449 
Total deposits82,284 72,869 
Accrued expenses and other liabilities1,605 1,482 
Medium- and long-term debt2,837 5,728 
Total liabilities86,726 80,079 
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 surplus2,170 2,185 
Accumulated other comprehensive (loss) income(207)64 
Retained earnings10,366 9,727 
Less cost of common stock in treasury - 97,158,441 shares at 9/30/2021 and 88,997,430 shares at 12/31/2020
(6,061)(5,461)
Total shareholders’ equity7,803 8,050 
Total liabilities and shareholders’ equity$94,529 $88,129 
See notes to consolidated financial statements (unaudited).
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CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (unaudited)
Comerica Incorporated and Subsidiaries 

Three Months Ended September 30,Nine Months Ended September 30,
(in millions, except per share data)2021202020212020
(recast)(recast)
INTEREST INCOME
Interest and fees on loans$411 $408 $1,201 $1,359 
Interest on investment securities70 72 209 220 
Interest on short-term investments17 25 
Total interest income489 484 1,427 1,604 
INTEREST EXPENSE
Interest on deposits15 17 91 
Interest on short-term borrowings— — — 
Interest on medium- and long-term debt11 27 70 
Total interest expense14 26 44 162 
Net interest income475 458 1,383 1,442 
Provision for credit losses(42)(359)554 
Net interest income after provision for credit losses517 453 1,742 888 
NONINTEREST INCOME
Card fees72 71 227 198 
Fiduciary income58 51 171 157 
Service charges on deposit accounts50 47 145 138 
Commercial lending fees31 19 76 53 
Derivative income20 72 48 
Bank-owned life insurance12 12 32 33 
Letter of credit fees10 30 27 
Brokerage fees11 17 
Other noninterest income24 29 70 65 
Total noninterest income280 252 834 736 
NONINTEREST EXPENSES
Salaries and benefits expense282 257 841 748 
Outside processing fee expense65 58 200 177 
Occupancy expense40 40 117 114 
Software expense40 39 117 115 
Equipment expense13 12 38 36 
Advertising expense10 25 24 
FDIC insurance expense17 24 
Other noninterest expenses11 15 20 51 
Total noninterest expenses465 438 1,375 1,289 
Income before income taxes332 267 1,201 335 
Provision for income taxes70 50 261 59 
NET INCOME262 217 940 276 
Less:
Income allocated to participating securities— 
Preferred stock dividends17 
Net income attributable to common shares$255 $209 $919 $267 
Earnings per common share:
Basic$1.92 $1.49 $6.75 $1.91 
Diluted1.90 1.48 6.67 1.90 
Comprehensive income175 169 669 610 
Cash dividends declared on common stock89 94 276 284 
Cash dividends declared per common share0.68 0.68 2.04 2.04 
See notes to consolidated financial statements (unaudited).

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CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY (unaudited)
Comerica Incorporated and Subsidiaries

Accumulated
Nonredeemable Common StockOtherTotal
Preferred SharesCapitalComprehensiveRetainedTreasuryShareholders'
(in millions, except per share data)StockOutstandingAmountSurplusIncome (Loss)EarningsStockEquity
BALANCE AT JUNE 30, 2020 (recast)$395 139.0 $1,141 $2,173 $66 $9,496 $(5,469)$7,802 
Net income— — — — — 217 — 217 
Other comprehensive loss, net of tax— — — — (48)— — (48)
Cash dividends declared on common stock ($0.68 per share)
— — — — — (94)— (94)
Cash dividends on preferred stock— — — — — (8)— (8)
Issuance of preferred stock(1)— — — — — — (1)
Net issuance of common stock under employee stock plans— 0.1 — — — (2)— 
Share-based compensation— — — — — — 
BALANCE AT SEPTEMBER 30, 2020 (recast)$394 139.1 $1,141 $2,179 $18 $9,609 $(5,467)$7,874 
BALANCE AT JUNE 30, 2021$394 133.9 $1,141 $2,163 $(120)$10,202 $(5,849)$7,931 
Net income— — — — — 262 — 262 
Other comprehensive loss, net of tax— — — — (87)— — (87)
Cash dividends declared on common stock ($0.68 per share)
— — — — — (89)— (89)
Cash dividends declared on preferred stock— — — — — (6)— (6)
Purchase of common stock— (3.1)— — — — (220)(220)
Net issuance of common stock under employee stock plans— 0.2 — — — (3)
Share-based compensation— — — — — — 
BALANCE AT SEPTEMBER 30, 2021$394 131.0 $1,141 $2,170 $(207)$10,366 $(6,061)$7,803 
BALANCE AT DECEMBER 31, 2019 (recast)$— 142.1 $1,141 $2,174 $(316)$9,619 $(5,291)$7,327 
Cumulative effect of change in accounting principle— — — — — 13 — 13 
Net income— — — — — 276 — 276 
Other comprehensive income, net of tax— — — — 334 — — 334 
Cash dividends declared on common stock ($2.04 per share)
— — — — — (284)— (284)
Cash dividends declared on preferred stock— — — — — (8)— (8)
Purchase of common stock— (3.4)— — — — (194)(194)
Issuance of preferred stock394 — — — — — — 394 
Net issuance of common stock under employee stock plans— 0.4 — (13)— (7)18 (2)
Share-based compensation— — — 18 — — — 18 
BALANCE AT SEPTEMBER 30, 2020 (recast)$394 139.1 $1,141 $2,179 $18 $9,609 $(5,467)$7,874 
BALANCE AT DECEMBER 31, 2020 (recast)$394 139.2 $1,141 $2,185 $64 $9,727 $(5,461)$8,050 
Net income— — — — — 940 — 940 
Other comprehensive loss, net of tax— — — — (271)— — (271)
Cash dividends declared on common stock ($2.04 per share)
— — — — — (276)— (276)
Cash dividends declared on preferred stock— — — — — (17)— (17)
Purchase of common stock— (9.0)— (24)— — (649)(673)
Net issuance of common stock under employee stock plans— 0.8 — (27)— (8)49 14 
Share-based compensation— — — 36 — — — 36 
BALANCE AT SEPTEMBER 30, 2021$394 131.0 $1,141 $2,170 $(207)$10,366 $(6,061)$7,803 
See notes to consolidated financial statements (unaudited).


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CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)
Comerica Incorporated and Subsidiaries

Nine Months Ended September 30,
(in millions)20212020
(recast)
OPERATING ACTIVITIES
Net income$940 $276 
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for credit losses(359)554 
Provision (benefit) for deferred income taxes119 (99)
Depreciation and amortization76 82 
Net periodic defined benefit credit(61)(41)
Share-based compensation expense36 18 
Net amortization of securities26 
Net gains on sales of foreclosed property— (1)
Net change in:
Accrued income receivable17 32 
Accrued expenses payable84 (50)
Other, net(673)(58)
Net cash provided by operating activities205 720 
INVESTING ACTIVITIES
Investment securities available-for-sale:
Maturities and redemptions4,203 2,344 
Purchases(6,327)(4,796)
Net change in loans5,222 (2,185)
Proceeds from sales of foreclosed property
Net increase in premises and equipment(50)(51)
Federal Home Loan Bank stock:
Purchases— (51)
Redemptions115 92 
Proceeds from bank-owned life insurance settlements10 14 
Other, net(11)— 
Net cash provided by (used in) investing activities3,170 (4,630)
FINANCING ACTIVITIES
Net change in:
Deposits8,200 11,054 
Short-term borrowings— (61)
Medium- and long-term debt:
Maturities and redemptions(2,800)(1,675)
Preferred stock:
Issuance— 394 
Cash dividends paid(17)— 
Common stock:
Repurchases(679)(199)
Cash dividends paid(281)(282)
Issuances under employee stock plans22 
Other, net— 
Net cash provided by financing activities4,447 9,233 
Net increase in cash and cash equivalents7,822 5,323 
Cash and cash equivalents at beginning of period15,767 5,818 
Cash and cash equivalents at end of period$23,589 $11,141 
Interest paid$47 $186 
Income taxes paid115 133 
See notes to consolidated financial statements (unaudited).
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NOTE 1 - BASIS OF PRESENTATION AND ACCOUNTING POLICIES
Organization
The accompanying unaudited consolidated financial statements were prepared in accordance with United States (U.S.) generally accepted accounting principles (GAAP) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, the statements do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation were included. The results of operations for the nine months ended September 30, 2021 are not necessarily indicative of the results that may be expected for the year ending December 31, 2021. Certain items in prior periods were reclassified to conform to the current presentation. For further information, refer to the consolidated financial statements and footnotes thereto included in the Annual Report of Comerica Incorporated and Subsidiaries (the Corporation) on Form 10-K for the year ended December 31, 2020.
Defined Benefit Pension and Other Postretirement Costs
Effective January 1, 2021, the Corporation elected to change the accounting methodology for determining the market-related value of assets (MRVA) for certain asset classes in the qualified defined benefit pension plan. The MRVA is used to calculate the Corporation's expected return on plan assets, a component of defined pension benefit cost (credit). These classes are currently comprised of the fixed income securities and private placement assets held in the portfolio, utilized by the Corporation to mitigate the impacts to financial results from changes in fair value of the pension liability. Previously, MRVA was measured using a historical five-year average fair value. Under the new methodology, the Corporation calculates MRVA using fair value of plan assets. Although both methods are permitted under U.S. GAAP, the Corporation believes the new policy is preferable for these classes of assets as it results in more timely recognition of the performance of pension assets in the results from operations.
The change in accounting methodology is applied retrospectively to all prior periods presented in the consolidated financial statements. The impact of the change to the qualified defined benefit plan on the Corporation's consolidated financial statements is as follows:
Consolidated Balance Sheets
 September 30, 2021December 31, 2020
(in millions)Accounting Change ImpactPreviously ReportedAccounting Change ImpactRecast
Amounts
Accumulated other comprehensive (loss) income $(11)$168 $(104)$64 
Retained earnings11 9,623 104 9,727 
Consolidated Statements of Comprehensive Income
Three Months Ended September 30,
 20212020
(in millions)Accounting Change ImpactPreviously ReportedAccounting Change ImpactRecast Amounts
Other noninterest expenses$(5)$23 $(8)$15 
Provision for income taxes48 50 
Net income211 217 
Earnings per common share:
Basic$0.03 $1.45 $0.04 $1.49 
Diluted0.03 1.44 0.04 1.48 
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Table of Contents
Notes to Consolidated Financial Statements (unaudited)
Comerica Incorporated and Subsidiaries
Nine Months Ended September 30,
 20212020
(in millions)Accounting Change ImpactPreviously ReportedAccounting Change ImpactRecast Amounts
Other noninterest expenses$(14)$73 $(22)$51 
Provision for income taxes54 59 
Net income11 259 17 276 
Earnings per common share:
Basic$0.08 $1.79 $0.12 $1.91 
Diluted0.08 1.78 0.12 1.90 
Consolidated Statements of Cash Flows
Nine Months Ended September 30,
 20212020
(in millions)Accounting Change ImpactPreviously ReportedAccounting Change ImpactRecast Amounts
Net income$11 $259 $17 $276 
Provision (benefit) for deferred income taxes(104)(99)
Net periodic defined benefit credit(14)(19)(22)(41)

NOTE 2 – 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.
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, 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.
Refer to Note 1 to the consolidated financial statements in the Corporation's Annual Report on Form 10-K for the year ended December 31, 2020 for further 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.
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Table of Contents
Notes to Consolidated Financial Statements (unaudited)
Comerica Incorporated and Subsidiaries
Assets and Liabilities Recorded at Fair Value on a Recurring Basis
The following tables present the recorded amount of assets and liabilities measured at fair value on a recurring basis as of September 30, 2021 and December 31, 2020.
(in millions)TotalLevel 1Level 2Level 3
September 30, 2021
Deferred compensation plan assets$108 $108 $— $— 
Equity securities71 71 — — 
Investment securities available-for-sale:
U.S. Treasury securities3,429 3,429 — — 
Residential mortgage-backed securities (a)13,163 — 13,163 — 
Commercial mortgage-backed securities (a)254 — 254 — 
Total investment securities available-for-sale16,846 3,429 13,417 — 
Derivative assets:
Interest rate contracts326 — 299 27 
Energy contracts769 — 769 — 
Foreign exchange contracts18 — 18 — 
Total derivative assets1,113 — 1,086 27 
Total assets at fair value$18,138 $3,608 $14,503 $27 
Derivative liabilities:
Interest rate contracts$62 $— $62 $— 
Energy contracts764 — 764 — 
Foreign exchange contracts12 — 12 — 
Total derivative liabilities838 — 838 — 
Deferred compensation plan liabilities108 108 — — 
Total liabilities at fair value$946 $108 $838 $— 
December 31, 2020
Deferred compensation plan assets$107 $107 $— $— 
Equity securities60 60 — — 
Investment securities available-for-sale:
U.S. Treasury securities4,658 4,658 — — 
Residential mortgage-backed securities (a)10,370 — 10,370 — 
Total investment securities available-for-sale15,028 4,658 10,370 — 
Derivative assets:
Interest rate contracts531 — 492 39 
Energy contracts151 — 151 — 
Foreign exchange contracts18 — 18 — 
Total derivative assets700 — 661 39 
Total assets at fair value$15,895 $4,825 $11,031 $39 
Derivative liabilities:
Interest rate contracts$61 $— $61 $— 
Energy contracts149 — 149 — 
Foreign exchange contracts19 — 19 — 
Total derivative liabilities229 — 229 — 
Deferred compensation plan liabilities107 107 — — 
Total liabilities at fair value$336 $107 $229 $— 
(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 each of the three- and nine-month periods ended September 30, 2021 and 2020.
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Notes to Consolidated Financial Statements (unaudited)
Comerica Incorporated and Subsidiaries
The following table summarizes the changes in Level 3 assets and liabilities measured at fair value on a recurring basis for the three- and nine-month periods ended September 30, 2021 and 2020.

Net Realized/Unrealized Gains (Losses) (Pretax) Recorded in Earnings (a)
Balance at Beginning of PeriodBalance at End of Period
Sales
(in millions)RealizedUnrealized
Three Months Ended September 30, 2021
Derivative assets:
Interest rate contracts$29 $— $(2)$— $27 
Three Months Ended September 30, 2020
Derivative assets:
Interest rate contracts$44 $— $(2)$— $42 
Nine Months Ended September 30, 2021
Derivative assets:
Interest rate contracts$39 $— $(12)$— $27 
Nine Months Ended September 30, 2020
Derivative assets:
Interest rate contracts$22 $— $20 $— $42 
(a)Realized and unrealized gains and losses due to changes in fair value are recorded in other noninterest income on the Consolidated Statements of Comprehensive 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 September 30, 2021 and December 31, 2020. No liabilities were recorded at fair value on a nonrecurring basis at September 30, 2021 and December 31, 2020.
(in millions)Level 3
September 30, 2021
Loans:
Commercial$125 
Real estate construction
Commercial mortgage12 
International
Total assets at fair value$148 
December 31, 2020
Loans:
Commercial$134 
Commercial mortgage16 
Total assets at fair value$150 
Level 3 assets recorded at fair value on a nonrecurring basis at September 30, 2021 and December 31, 2020 included both nonaccrual loans and TDRs for which a specific allowance was established 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.
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Notes to Consolidated Financial Statements (unaudited)
Comerica Incorporated and Subsidiaries
Estimated Fair Values of Financial Instruments Not Recorded at Fair Value on a Recurring Basis
The Corporation typically holds the majority of its financial instruments until maturity and thus does not expect to realize many of the estimated fair value amounts disclosed. The disclosures also 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 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)TotalLevel 1Level 2Level 3
September 30, 2021
Assets
Cash and due from banks$1,050 $1,050 $1,050 $— $— 
Interest-bearing deposits with banks22,539 22,539 22,539 — — 
Loans held-for-sale— — 
Total loans, net of allowance for loan losses (a)47,586 48,146 — — 48,146 
Customers’ liability on acceptances outstanding— — 
Restricted equity investments92 92 92 — — 
Nonmarketable equity securities (b)10 
Liabilities
Demand deposits (noninterest-bearing)44,093 44,093 — 44,093 — 
Interest-bearing deposits36,100 36,100 — 36,100 — 
Customer certificates of deposit2,091 2,090 — 2,090 — 
Total deposits82,284 82,283 — 82,283 — 
Acceptances outstanding— — 
Medium- and long-term debt2,837 2,904 — 2,904 — 
Credit-related financial instruments(51)(51)— — (51)
December 31, 2020
Assets
Cash and due from banks$1,031 $1,031 $1,031 $— $— 
Interest-bearing deposits with banks14,736 14,736 14,736 — — 
Loans held-for-sale — — 
Total loans, net of allowance for loan losses (a)51,343 50,601 — — 50,601 
Customers’ liability on acceptances outstanding— — 
Restricted equity investments207 207 207 — — 
Nonmarketable equity securities (b)
Liabilities
Demand deposits (noninterest-bearing)39,420 39,420 — 39,420 — 
Interest-bearing deposits31,316 31,316 — 31,316 — 
Customer certificates of deposit2,133 2,133 — 2,133 — 
Total deposits72,869 72,869 — 72,869 — 
Acceptances outstanding— — 
Medium- and long-term debt5,728 5,790 — 5,790 — 
Credit-related financial instruments(68)(68)— — (68)
(a)Included $148 million and $150 million of loans recorded at fair value on a nonrecurring basis at September 30, 2021 and December 31, 2020, respectively.
(b)Certain investments that are measured at fair value using the net asset value have not been classified in the fair value hierarchy. The fair value amounts presented in the table are intended to permit reconciliation of the fair value hierarchy to the amounts presented in the Consolidated Balance Sheets.
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Notes to Consolidated Financial Statements (unaudited)
Comerica Incorporated and Subsidiaries
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
September 30, 2021
Investment securities available-for-sale:
U.S. Treasury securities$3,417 $34 $22 $3,429 
Residential mortgage-backed securities (a)13,175 114 126 13,163 
Commercial mortgage-backed securities (a)258 — 254 
Total investment securities available-for-sale$16,850 $148 $152 $16,846 
December 31, 2020
Investment securities available-for-sale:
U.S. Treasury securities$4,583 $76 $$4,658 
Residential mortgage-backed securities (a)10,169 203 10,370 
Total investment securities available-for-sale$14,752 $279 $$15,028 
(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 September 30, 2021 and December 31, 2020 follows:
 Temporarily Impaired
 Less than 12 Months12 Months or moreTotal
(in millions)Fair
Value
Unrealized
Losses
Fair
Value
Unrealized
Losses
Fair
Value
Unrealized
Losses
September 30, 2021
U.S. Treasury securities$992 $$832 $14 $1,824 $22 
Residential mortgage-backed securities (a)6,872 107 391 19 7,263 126 
Commercial mortgage-backed securities (a)254 — — 254 
Total temporarily impaired securities$8,118 $119 $1,223 $33 $9,341 $152 
December 31, 2020
U.S. Treasury securities$1,119 $$— $— $1,119 $
Residential mortgage-backed securities (a)952 — — 952 
Total temporarily impaired securities$2,071 $$— $— $2,071 $
(a)Issued and/or guaranteed by U.S. government agencies or U.S. government-sponsored enterprises.
Unrealized losses resulted from changes in market interest rates and liquidity. The Corporation’s portfolio is comprised of securities issued or guaranteed by the U.S. government 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. At September 30, 2021, the Corporation had 390 securities in an unrealized loss position with no allowance for credit losses, comprised of 20 U.S. Treasury securities, 345 residential mortgage-backed securities and 25 commercial mortgage-backed securities.
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Notes to Consolidated Financial Statements (unaudited)
Comerica Incorporated and Subsidiaries
Interest receivable on investment securities totaled $22 million at September 30, 2021 and $18 million at December 31, 2020 and was included in accrued income and other assets on the Consolidated Balance Sheets.
Sales, calls and write-downs of investment securities available-for-sale, computed based on the adjusted cost of the specific security, resulted in no gains or losses during the three months ended September 30, 2021 or September 30, 2020 or the nine months ended September 30, 2021. There were $1 million of gains and $1 million of losses for the nine months ended September 30, 2020.
The following table summarizes the amortized cost and fair values of debt securities by contractual maturity. Securities with multiple maturity dates are classified in the period of final maturity. 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)
September 30, 2021Amortized CostFair Value
Contractual maturity
Within one year$469 $472 
After one year through five years3,143 3,163 
After five years through ten years902 915 
After ten years12,336 12,296 
Total investment securities$16,850 $16,846 
Included in the contractual maturity distribution in the table above were residential mortgage-backed securities with a total amortized cost and fair value of $13.2 billion and commercial mortgage-backed securities with a total amortized cost of $258 million and a fair value of $254 million. The actual cash flows of mortgage-backed securities may differ as borrowers of the underlying loans may exercise prepayment options.
At September 30, 2021, investment securities with a carrying value of $3.9 billion were pledged where permitted or required by law, including $2.4 billion pledged to the Federal Home Loan Bank (FHLB) as collateral for potential future borrowings of approximately $2.3 billion and $1.4 billion to secure $926 million of liabilities, primarily public and other deposits of state and local government agencies as well as derivative instruments. For information on FHLB borrowings, refer to Note 7.

























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Notes to Consolidated Financial Statements (unaudited)
Comerica Incorporated and Subsidiaries
NOTE 4 – CREDIT QUALITY AND ALLOWANCE FOR CREDIT LOSSES
The following table presents an aging analysis of the amortized cost basis of loans.
Loans Past Due and Still Accruing   
(in millions)30-59
Days
60-89 
Days
90 Days
or More
TotalNonaccrual
Loans
Current
Loans (a)
Total 
Loans
September 30, 2021
Business loans:
Commercial$51 $$$60 $200 $28,095 $28,355 
Real estate construction:
Commercial Real Estate business line (b)
17 — — 17 — 2,471 2,488 
Other business lines (c)— 507 522 
Total real estate construction17 26 2,978 3,010 
Commercial mortgage:
Commercial Real Estate business line (b)
— — 3,404 3,413 
Other business lines (c)34 11 46 28 7,728 7,802 
Total commercial mortgage41 11 53 30 11,132 11,215 
Lease financing— — — 563 569 
International11 1,112 1,131 
Total business loans124 24 156 244 43,880 44,280 
Retail loans:
Residential mortgage12 — 13 35 1,765 1,813 
Consumer:
Home equity— 12 1,537 1,557 
Other consumer— — — 541 545 
Total consumer12 12 2,078 2,102 
Total retail loans19 25 47 3,843 3,915 
Total loans$143 $26 $12 $181 $291 $47,723 $48,195 
December 31, 2020
Business loans:
Commercial$62 $115 $33 $210 $252 $32,291 $32,753 
Real estate construction:
Commercial Real Estate business line (b)
31 — — 31 — 3,626 3,657 
Other business lines (c)— — 415 425 
Total real estate construction40 — — 40 4,041 4,082 
Commercial mortgage:
Commercial Real Estate business line (b)
51 — 52 2,218 2,273 
Other business lines (c)48 40 93 26 7,520 7,639 
Total commercial mortgage99 41 145 29 9,738 9,912 
Lease financing14 — 15 578 594 
International— — — — — 926 926 
Total business loans215 156 39 410 283 47,574 48,267 
Retail loans:
Residential mortgage11 — 15 47 1,768 1,830 
Consumer:
Home equity— 17 1,563 1,588 
Other consumer10 — 16 — 590 606 
Total consumer17 24 17 2,153 2,194 
Total retail loans28 39 64 3,921 4,024 
Total loans$243 $161 $45 $449 $347 $51,495 $52,291 
(a)Includes $35 million and $141 million of loans with deferred payments not considered past due in accordance with the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) at September 30, 2021 and December 31, 2020, respectively.
(b)Primarily loans to real estate developers.
(c)Primarily loans secured by owner-occupied real estate.

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Notes to Consolidated Financial Statements (unaudited)
Comerica Incorporated and Subsidiaries
The following table presents loans by credit quality indicator (CQI) and vintage year. CQI 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.
September 30, 2021
Vintage Year
(in millions)20212020201920182017PriorRevolversRevolvers Converted to TermTotal
Business loans:
Commercial:
Pass (a)$3,891 (b)$2,149 (b)$1,670 $1,122 $779 $863 $16,606 $12 $27,092 
Criticized (c)67 102 138 93 33 143 685 1,263 
Total commercial3,958 2,251 1,808 1,215 812 1,006 17,291 14 28,355 
Real estate construction
Pass (a)262 899 977 425 189 35 157 — 2,944 
Criticized (c)— 30 14 — 66 
Total real estate construction262 902 1,007 439 197 43 160 — 3,010 
Commercial mortgage
Pass (a)1,655 2,003 1,504 1,547 1,135 2,588 445 — 10,877 
Criticized (c)11 44 66 30 27 151 — 338 
Total commercial mortgage1,666 2,047 1,570 1,577 1,162 2,739 454 — 11,215 
Lease financing
Pass (a)62 93 103 54 40 183 — — 535 
Criticized (c)— 21 — — 34 
Total lease financing62 95 124 63 41 184 — — 569 
International
Pass (a)281 135 154 31 16 448 — 1,069 
Criticized (c)20 13 — 62 
Total international301 148 157 39 24 454 — 1,131 
Total business loans6,249 5,443 4,666 3,333 2,220 3,996 18,359 14 44,280 
Retail loans:
Residential mortgage
Pass (a)363 577 187 85 122 443 — — 1,777 
Criticized (c)— 25 — — 36 
Total residential mortgage364 577 188 87 129 468 — — 1,813 
Consumer:
Home equity
Pass (a)— — — — — 13 1,477 52 1,542 
Criticized (c)— — — — — — 10 15 
Total home equity— — — — — 13 1,487 57 1,557 
Other consumer
Pass (a)68 72 17 33 341 — 541 
Criticized (c)— — — — — — — 
Total other consumer68 72 17 33 345 — 545 
Total consumer68 72 17 46 1,832 57 2,102 
Total retail loans432 649 205 96 130 514 1,832 57 3,915 
Total loans$6,681 $6,092 $4,871 $3,429 $2,350 $4,510 $20,191 $71 $48,195 
Table continues on the following page.

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Notes to Consolidated Financial Statements (unaudited)
Comerica Incorporated and Subsidiaries
December 31, 2020
Vintage Year
20202019201820172016PriorRevolversRevolvers Converted to TermTotal
Business loans:
Commercial:
Pass (a)$5,991 (b)$2,316 $1,563 $1,051 $429 $755 $18,416 $17 $30,538 
Criticized (c)30 281 191 116 64 166 1,365 2,215 
Total commercial6,021 2,597 1,754 1,167 493 921 19,781 19 32,753 
Real estate construction:
Pass (a)433 1,080 1,244 631 335 141 171 — 4,035 
Criticized (c)28 — — 47 
Total real estate construction436 1,108 1,249 639 335 142 173 — 4,082 
Commercial mortgage:
Pass (a)2,053 1,559 1,146 1,120 818 2,272 431 — 9,399 
Criticized (c)47 130 42 45 41 193 15 — 513 
Total commercial mortgage2,100 1,689 1,188 1,165 859 2,465 446 — 9,912 
Lease financing
Pass (a)109 122 71 50 14 201 — — 567 
Criticized (c)17 — — — 27 
Total lease financing111 139 76 52 15 201 — — 594 
International
Pass (a)274 161 103 11 64 245 — 861 
Criticized (c)13 18 13 — 65 
Total international 287 169 121 15 10 66 258 — 926 
Total business loans8,955 5,702 4,388 3,038 1,712 3,795 20,658 19 48,267 
Retail loans:
Residential mortgage
Pass (a)639 230 119 197 196 398 — — 1,779 
Criticized (c)32 — — 51 
Total residential mortgage646 232 121 203 198 430 — — 1,830 
Consumer:
Home equity
Pass (a)— — — — — 15 1,489 63 1,567 
Criticized (c)— — — — — 13 21 
Total home equity— — — — — 16 1,502 70 1,588 
Other consumer
Pass (a)113 23 12 41 404 — 598 
Criticized (c)— — — — — — 
Total other consumer113 23 14 41 410 — 606 
Total consumer113 23 14 57 1,912 70 2,194 
Total retail loans759 255 135 205 201 487 1,912 70 4,024 
Total loans$9,714 $5,957 $4,523 $3,243 $1,913 $4,282 $22,570 $89 $52,291 
(a)Includes all loans not included in the categories of special mention, substandard or nonaccrual.
(b)Includes Small Business Administration Paycheck Protection Program (PPP) loans of $627 million and $393 million in 2021 and 2020, respectively, at September 30, 2021, and PPP loans of $3.5 billion in 2020 at December 31, 2020.
(c)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 on page F-59 in the Corporation's 2020 Annual Report. These categories are generally consistent with the "special mention" and "substandard" categories as defined by regulatory authorities. A minority of nonaccrual loans are consistent with the "doubtful" category.

Loan interest receivable totaled $118 million and $141 million at September 30, 2021 and December 31, 2020, respectively, and was included in accrued income and other assets on the Consolidated Balance Sheets.

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Notes to Consolidated Financial Statements (unaudited)
Comerica Incorporated and Subsidiaries
Allowance for Credit Losses
The following table details the changes in the allowance for credit losses.
 20212020
(in millions)Business LoansRetail LoansTotalBusiness LoansRetail LoansTotal
Three Months Ended September 30
Balance at beginning of period:
Allowance for loan losses$589 $63 $652 $943 $64 $1,007 
Allowance for credit losses on lending-related commitments24 31 50 59 
Allowance for credit losses613 70 683 993 73 1,066 
Loan charge-offs(26)— (26)(53)— (53)
Recoveries on loans previously charged-off22 24 18 20 
Net loan (charge-offs) recoveries(4)(2)(35)(33)
Provision for credit losses:
Provision for loan losses(31)(10)(41)15 (11)
Provision for credit losses on lending-related commitments— (1)(1)— 
Provision for credit losses(31)(11)(42)16 (11)
Balance at end of period:
Allowance for loan losses554 55 609 923 55 978 
Allowance for credit losses on lending-related commitments24 30 51 60 
Allowance for credit losses$578 $61 $639 $974 $64 $1,038 
Nine Months Ended September 30
Balance at beginning of period
Allowance for loan losses$895 $53 $948 $601 $36 $637 
Allowance for credit losses on lending-related commitments35 44 28 31 
Allowance for credit losses930 62 992 629 39 668 
Cumulative effect of change in accounting principle— — — (42)25 (17)
Loan charge-offs(48)(2)(50)(196)(3)(199)
Recoveries on loans previously charged-off53 56 29 32 
Net loan recoveries (charge-offs)(167)— (167)
Provision for credit losses:
Provision for loan losses(346)(345)531 (6)525 
Provision for credit losses on lending-related commitments(11)(3)(14)23 29 
Provision for credit losses(357)(2)(359)554 — 554 
Balance at end of period:
Allowance for loan losses554 55 609 923 55 978 
Allowance for credit losses on lending-related commitments24 30 51 60 
Allowance for credit losses$578 $61 $639 $974 $64 $1,038 
Allowance for loan losses as a percentage of total loans1.25 %1.42 %1.26 %1.91 %1.35 %1.87 %
Allowance for loan losses as a