Annual Statements Open main menu

COMERICA INC /NEW/ - Quarter Report: 2022 March (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 March 31, 2022
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 April 25, 2022: 130,760,307 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)March 31, 2022December 31, 2021
(unaudited)
ASSETS
Cash and due from banks$1,466 $1,236 
Interest-bearing deposits with banks12,084 21,443 
Other short-term investments181 197 
Investment securities available-for-sale18,810 16,986 
Commercial loans29,562 29,366 
Real estate construction loans2,301 2,948 
Commercial mortgage loans11,992 11,255 
Lease financing644 640 
International loans1,248 1,208 
Residential mortgage loans1,769 1,771 
Consumer loans2,047 2,097 
Total loans49,563 49,285 
Allowance for loan losses(554)(588)
Net loans49,009 48,697 
Premises and equipment444 454 
Accrued income and other assets7,171 5,603 
Total assets$89,165 $94,616 
LIABILITIES AND SHAREHOLDERS’ EQUITY
Noninterest-bearing deposits$42,677 $45,800 
Money market and interest-bearing checking deposits29,746 31,349 
Savings deposits3,300 3,167 
Customer certificates of deposit1,854 1,973 
Foreign office time deposits31 50 
Total interest-bearing deposits34,931 36,539 
Total deposits77,608 82,339 
Accrued expenses and other liabilities1,839 1,584 
Medium- and long-term debt2,682 2,796 
Total liabilities82,129 86,719 
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 surplus2,194 2,175 
Accumulated other comprehensive loss(1,173)(212)
Retained earnings10,585 10,494 
Less cost of common stock in treasury - 97,435,493 shares at 3/31/2022 and 97,476,872 shares at 12/31/2021
(6,105)(6,095)
Total shareholders’ equity7,036 7,897 
Total liabilities and shareholders’ equity$89,165 $94,616 
See notes to consolidated financial statements (unaudited).
1

Table of Contents
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (unaudited)
Comerica Incorporated and Subsidiaries 

Three Months Ended March 31,
(in millions, except per share data)20222021
INTEREST INCOME
Interest and fees on loans$383 $386 
Interest on investment securities77 69 
Interest on short-term investments
Total interest income469 459 
INTEREST EXPENSE
Interest on deposits
Interest on medium- and long-term debt
Total interest expense13 16 
Net interest income456 443 
Provision for credit losses(11)(182)
Net interest income after provision for credit losses467 625 
NONINTEREST INCOME
Card fees69 71 
Fiduciary income58 53 
Service charges on deposit accounts48 48 
Commercial lending fees22 18 
Derivative income22 30 
Bank-owned life insurance13 11 
Letter of credit fees10 
Brokerage fees
Other noninterest income(1)25 
Total noninterest income244 270 
NONINTEREST EXPENSES
Salaries and benefits expense289 282 
Outside processing fee expense62 64 
Software expense39 39 
Occupancy expense38 39 
Equipment expense11 12 
FDIC insurance expense
Advertising expense
Other noninterest expenses19 (1)
Total noninterest expenses473 447 
Income before income taxes238 448 
Provision for income taxes49 98 
NET INCOME189 350 
Less:
Income allocated to participating securities
Preferred stock dividends
Net income attributable to common shares$182 $343 
Earnings per common share:
Basic$1.39 $2.46 
Diluted1.37 2.43 
Comprehensive (loss) income(772)181 
Cash dividends declared on common stock89 95 
Cash dividends declared per common share0.68 0.68 
See notes to consolidated financial statements (unaudited).

2

Table of Contents
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 DECEMBER 31, 2020$394 139.2 $1,141 $2,185 $64 $9,727 $(5,461)$8,050 
Net income— — — — — 350 — 350 
Other comprehensive loss, net of tax— — — — (169)— — (169)
Cash dividends declared on common stock ($0.68 per share)
— — — — — (95)— (95)
Cash dividends declared on preferred stock— — — — — (6)— (6)
Purchase of common stock— (0.1)— — — — (3)(3)
Net issuance of common stock under employee stock plans— 0.5 — (24)— (1)28 
Share-based compensation— — — 22 — — — 22 
BALANCE AT MARCH 31, 2021 $394 139.6 $1,141 $2,183 $(105)$9,975 $(5,436)$8,152 
BALANCE AT DECEMBER 31, 2021 $394 130.7 $1,141 $2,175 $(212)$10,494 $(6,095)$7,897 
Net income— — — — — 189 — 189 
Other comprehensive loss, net of tax— — — — (961)— — (961)
Cash dividends declared on common stock ($0.68 per share)
— — — — — (89)— (89)
Cash dividends declared on preferred stock— — — — — (6)— (6)
Purchase of common stock— (0.4)— — — — (36)(36)
Net issuance of common stock under employee stock plans— 0.4 — (9)— (3)26 14 
Share-based compensation— — — 28 — — — 28 
BALANCE AT MARCH 31, 2022$394 130.7 $1,141 $2,194 $(1,173)$10,585 $(6,105)$7,036 
See notes to consolidated financial statements (unaudited).


3

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

Three Months Ended March 31,
(in millions)20222021
OPERATING ACTIVITIES
Net income$189 $350 
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for credit losses(11)(182)
(Benefit) provision for deferred income taxes(2)39 
Depreciation and amortization23 25 
Net periodic defined benefit credit(22)(20)
Share-based compensation expense28 22 
Net amortization of securities10 
Net change in:
Accrued income receivable(1)(5)
Accrued expenses payable(93)26 
Other, net(831)(104)
Net cash (used in) provided by operating activities(710)159 
INVESTING ACTIVITIES
Investment securities available-for-sale:
Maturities and redemptions806 992 
Purchases(3,605)(1,750)
Net change in loans(391)1,685 
Net increase in premises and equipment(17)(18)
Federal Home Loan Bank stock:
Redemptions— 115 
Proceeds from bank-owned life insurance settlements
Other, net(21)
Net cash (used in) provided by investing activities(3,197)1,008 
FINANCING ACTIVITIES
Net change in:
Deposits(5,104)824 
Medium- and long-term debt:
Maturities and redemptions— (2,800)
Preferred stock:
Cash dividends paid(6)(6)
Common stock:
Repurchases(39)(8)
Cash dividends paid(89)(95)
Issuances under employee stock plans18 10 
Other, net(2)12 
Net cash used in financing activities(5,222)(2,063)
Net decrease in cash and cash equivalents(9,129)(896)
Cash and cash equivalents at beginning of period22,679 15,767 
Cash and cash equivalents at end of period$13,550 $14,871 
Interest paid$16 $20 
Income taxes paid
See notes to consolidated financial statements (unaudited).
4


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 three months ended March 31, 2022 are not necessarily indicative of the results that may be expected for the year ending December 31, 2022. 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, 2021.
Recently Issued Accounting Pronouncements
In March 2022, the FASB issued ASU No. 2022-02, “Financial Instruments - Credit Losses (Topic 326): Troubled Debt Restructuring and Vintage Disclosures” (ASU 2022-02), which eliminates the accounting for troubled debt restructuring (TDR) while expanding modification and vintage disclosure requirements. Under the previous guidance, a TDR occurs when a loan to a borrower experiencing financial difficulty is restructured with a concession provided that a creditor would not otherwise consider. ASU 2022-02 removes the TDR accounting model, instead requiring modifications to apply existing refinancing and restructuring guidance. The update also requires additional disclosures on the nature, magnitude and subsequent performance of certain types of modifications with borrowers experiencing financial difficulties. ASU 2022-02 further included a requirement to disclose gross charge-offs incurred by year of origination of the related loan or lease. ASU 2022-02 is effective for the Corporation on January 1, 2023, and must be applied prospectively, except that the recognition and measurement of TDRs may be applied using a modified retrospective approach. Early adoption is permitted. The Corporation is evaluating the impact of the new guidance to its disclosures but does not expect there to be a material impact on its financial condition or results of operation.
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, 2021 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.
5

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 March 31, 2022 and December 31, 2021.
(in millions)TotalLevel 1Level 2Level 3
March 31, 2022
Deferred compensation plan assets$106 $106 $— $— 
Equity securities54 54 — — 
Investment securities available-for-sale:
U.S. Treasury securities2,832 2,832 — — 
Residential mortgage-backed securities (a)13,973 — 13,973 — 
Commercial mortgage-backed securities (a)2,005 — 2,005 — 
Total investment securities available-for-sale18,810 2,832 15,978 — 
Derivative assets:
Interest rate contracts131 — 119 12 
Energy contracts1,673 — 1,673 — 
Foreign exchange contracts32 — 32 — 
Total derivative assets1,836 — 1,824 12 
Total assets at fair value$20,806 $2,992 $17,802 $12 
Derivative liabilities:
Interest rate contracts$253 $— $253 $— 
Energy contracts1,669 — 1,669 — 
Foreign exchange contracts26 — 26 — 
Other financial derivative12 — — 12 
Total derivative liabilities1,960 — 1,948 12 
Deferred compensation plan liabilities106 106 — — 
Total liabilities at fair value$2,066 $106 $1,948 $12 
December 31, 2021
Deferred compensation plan assets$113 $113 $— $— 
Equity securities62 62 — — 
Investment securities available-for-sale:
U.S. Treasury securities2,993 2,993 — — 
Residential mortgage-backed securities (a)13,288 — 13,288 — 
Commercial mortgage-backed securities (a)705 — 705 — 
Total investment securities available-for-sale16,986 2,993 13,993 — 
Derivative assets:
Interest rate contracts239 — 213 26 
Energy contracts670 — 670 — 
Foreign exchange contracts19 — 19 — 
Total derivative assets928 — 902 26 
Total assets at fair value$18,089 $3,168 $14,895 $26 
Derivative liabilities:
Interest rate contracts$69 $— $69 $— 
Energy contracts662 — 662 — 
Foreign exchange contracts16 — 16 — 
Other financial derivative13 — — 13 
Total derivative liabilities760 — 747 13 
Deferred compensation plan liabilities113 113 — — 
Total liabilities at fair value$873 $113 $747 $13 
(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-month periods ended March 31, 2022 and 2021.
6

Table of Contents
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-month periods ended March 31, 2022 and 2021.
Net Realized/Unrealized Gains (Losses) (Pretax) Recorded in Earnings (a)
(in millions)Balance at Beginning of PeriodRealizedUnrealizedBalance at End of Period
Three Months Ended March 31, 2022
Derivative assets:
Interest rate contracts$26 $— $(14)$12 
Derivative liabilities:
Other financial derivative(13)— (12)
Three Months Ended March 31, 2021
Derivative assets:
Interest rate contracts$39 $— $(15)$24 
Derivative liabilities:
Other financial derivative(11)— — (11)
(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 March 31, 2022 and December 31, 2021. No liabilities were recorded at fair value on a nonrecurring basis at March 31, 2022 and December 31, 2021.
(in millions)Level 3
March 31, 2022
Loans:
Commercial$58 
Real estate construction
Commercial mortgage13 
Total assets at fair value$73 
December 31, 2021
Loans:
Commercial$125 
Real estate construction
Commercial mortgage17 
International
Total assets at fair value$150 
Level 3 assets recorded at fair value on a nonrecurring basis at March 31, 2022 and December 31, 2021 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.
7

Table of Contents
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
March 31, 2022
Assets
Cash and due from banks$1,466 $1,466 $1,466 $— $— 
Interest-bearing deposits with banks12,084 12,084 12,084 — — 
Other short-term investments16 16 16 — — 
Loans held-for-sale— — 
Total loans, net of allowance for loan losses (a)49,009 47,919 — — 47,919 
Customers’ liability on acceptances outstanding— — 
Restricted equity investments92 92 92 — — 
Nonmarketable equity securities (b)11 
Liabilities
Demand deposits (noninterest-bearing)42,677 42,677 — 42,677 — 
Interest-bearing deposits33,077 33,077 — 33,077 — 
Customer certificates of deposit1,854 1,838 — 1,838 — 
Total deposits77,608 77,592 — 77,592 — 
Acceptances outstanding— — 
Medium- and long-term debt2,682 2,709 — 2,709 — 
Credit-related financial instruments(74)(74)— — (74)
December 31, 2021
Assets
Cash and due from banks$1,236 $1,236 $1,236 $— $— 
Interest-bearing deposits with banks21,443 21,443 21,443 — — 
Other short-term investments 16 16 16 — — 
Loans held-for-sale — — 
Total loans, net of allowance for loan losses (a)48,697 49,127 — — 49,127 
Customers’ liability on acceptances outstanding— — 
Restricted equity investments92 92 92 — — 
Nonmarketable equity securities (b) 10 
Liabilities
Demand deposits (noninterest-bearing)45,800 45,800 — 45,800 — 
Interest-bearing deposits34,566 34,566 — 34,566 — 
Customer certificates of deposit1,973 1,968 — 1,968 — 
Total deposits82,339 82,334 — 82,334 — 
Acceptances outstanding— — 
Medium- and long-term debt2,796 2,854 — 2,854 — 
Credit-related financial instruments(59)(59)— — (59)
(a)Included $73 million and $150 million of loans recorded at fair value on a nonrecurring basis at March 31, 2022 and December 31, 2021, 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.
8

Table of Contents
Notes to Consolidated Financial Statements (unaudited)
Comerica Incorporated and Subsidiaries
NOTE 3 - INVESTMENT SECURITIES
A summary of the Corporation’s investment securities, which are defined by the Corporation as debt securities reported on the Consolidated Balance Sheet as investment securities available-for-sale, follows:
(in millions)Amortized
Cost
Gross
Unrealized
Gains
Gross
Unrealized
Losses
Fair Value
March 31, 2022
Investment securities available-for-sale:
U.S. Treasury securities$2,932 $$105 $2,832 
Residential mortgage-backed securities (a)14,868 901 13,973 
Commercial mortgage-backed securities (a)2,105 103 2,005 
Total investment securities available-for-sale$19,905 $14 $1,109 $18,810 
December 31, 2021
Investment securities available-for-sale:
U.S. Treasury securities$3,010 $22 $39 $2,993 
Residential mortgage-backed securities (a)13,397 67 176 13,288 
Commercial mortgage-backed securities (a)709 705 
Total investment securities available-for-sale$17,116 $91 $221 $16,986 
(a)Issued and/or guaranteed by U.S. government agencies or U.S. government-sponsored enterprises.
A summary of the Corporation’s investment securities in an unrealized loss position as of March 31, 2022 and December 31, 2021 follows:
 Less than 12 Months12 Months or moreTotal
(in millions)Fair
Value
Unrealized
Losses
Fair
Value
Unrealized
Losses
Fair
Value
Unrealized
Losses
March 31, 2022
U.S. Treasury securities (a)$$— $1,724 $105 $1,726 $105 
Residential mortgage-backed securities (b)10,849 612 2,373 289 13,222 901 
Commercial mortgage-backed securities (b)1,780 103 — — 1,780 103 
Total temporarily impaired securities$12,631 $715 $4,097 $394 $16,728 $1,109 
December 31, 2021
U.S. Treasury securities$465 $$1,334 $33 $1,799 $39 
Residential mortgage-backed securities (b)7,197 128 1,128 48 8,325 176 
Commercial mortgage-backed securities (b)346 — — 346 
Total temporarily impaired securities$8,008 $140 $2,462 $81 $10,470 $221 
(a)Unrealized losses totaled less than $0.5 million in Less than 12 Months category.
(b)Issued and/or guaranteed by U.S. government agencies or U.S. government-sponsored enterprises.
Unrealized losses resulted from changes in market interest rates. 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 March 31, 2022, the Corporation had 943 securities in an unrealized loss position with no allowance for credit losses, comprised of 20 U.S. Treasury securities, 790 residential mortgage-backed securities and 133 commercial mortgage-backed securities.
9

Table of Contents
Notes to Consolidated Financial Statements (unaudited)
Comerica Incorporated and Subsidiaries
Interest receivable on investment securities totaled $29 million at March 31, 2022 and $23 million at December 31, 2021 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 March 31, 2022 or March 31, 2021.
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. 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)
March 31, 2022Amortized CostFair Value
Contractual maturity
Within one year$800 $804 
After one year through five years2,414 2,311 
After five years through ten years2,377 2,276 
After ten years14,314 13,419 
Total investment securities$19,905 $18,810 
Included in the contractual maturity distribution in the table above were residential mortgage-backed securities with a total amortized cost of $14.9 billion and fair value of $14.0 billion and commercial mortgage-backed securities with a total amortized cost of $2.1 billion and a fair value of $2.0 billion. The actual cash flows of mortgage-backed securities may differ as borrowers of the underlying loans may exercise prepayment options.
At March 31, 2022, investment securities with a carrying value of $2.7 billion were pledged where permitted or required by law, including $1.4 billion pledged to the Federal Home Loan Bank (FHLB) as collateral for potential future borrowings and $1.3 billion to secure $983 million of liabilities, primarily deposits of state and local government agencies as well as derivative instruments. For information on FHLB borrowings, refer to Note 7.



























10

Table of Contents
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
March 31, 2022
Business loans:
Commercial$101 $$$115 $163 $29,284 $29,562 
Real estate construction:
Commercial Real Estate business line (b)
— — — 1,770 1,775 
Other business lines (c)— 515 526 
Total real estate construction10 — 12 2,285 2,301 
Commercial mortgage:
Commercial Real Estate business line (b)
15 — — 15 3,763 3,779 
Other business lines (c)24 14 40 26 8,147 8,213 
Total commercial mortgage39 14 55 27 11,910 11,992 
Lease financing— 11 — 633 644 
International— 1,239 1,248 
Total business loans162 10 25 197 199 45,351 45,747 
Retail loans:
Residential mortgage26 — 27 53 1,689 1,769 
Consumer:
Home equity14 1,524 1,543 
Other consumer— — 500 504 
Total consumer17 2,024 2,047 
Total retail loans29 33 70 3,713 3,816 
Total loans$191 $13 $26 $230 $269 $49,064 $49,563 
December 31, 2021
Business loans:
Commercial$35 $18 $$59 $173 $29,134 $29,366 
Real estate construction:
Commercial Real Estate business line (b)
— — — — — 2,391 2,391 
Other business lines (c)15 — 16 535 557 
Total real estate construction15 — 16 2,926 2,948 
Commercial mortgage:
Commercial Real Estate business line (b)
— — — — 3,337 3,338 
Other business lines (c)18 16 38 31 7,848 7,917 
Total commercial mortgage18 16 38 32 11,185 11,255 
Lease financing— — — 635 640 
International14 1,189 1,208 
Total business loans78 31 23 132 216 45,069 45,417 
Retail loans:
Residential mortgage— — 36 1,731 1,771 
Consumer:
Home equity— 12 1,514 1,533 
Other consumer32 37 — 527 564 
Total consumer36 44 12 2,041 2,097 
Total retail loans40 48 48 3,772 3,868 
Total loans$118 $35 $27 $180 $264 $48,841 $49,285 
(a)Includes $22 million of loans with deferred payments not considered past due in accordance with the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) at December 31, 2021.
(b)Primarily loans to real estate developers.
(c)Primarily loans secured by owner-occupied real estate.

11

Table of Contents
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.
March 31, 2022
Vintage Year
(in millions)20222021202020192018PriorRevolversRevolvers Converted to TermTotal
Business loans:
Commercial:
Pass (a)$1,210 (b)$4,411 (b)$1,512 (b)$1,318 $814 $1,328 $17,736 $$28,337 
Criticized (c)12 172 120 110 64 136 609 1,225 
Total commercial1,222 4,583 1,632 1,428 878 1,464 18,345 10 29,562 
Real estate construction
Pass (a)80 552 762 499 162 126 107 — 2,288 
Criticized (c)— — — — — 13 
Total real estate construction80 552 765 499 163 135 107 — 2,301 
Commercial mortgage
Pass (a)642 2,640 1,910 1,574 1,382 3,147 446 — 11,741 
Criticized (c)27 42 44 29 104 — 251 
Total commercial mortgage644 2,667 1,952 1,618 1,411 3,251 449 — 11,992 
Lease financing
Pass (a)54 156 84 93 47 183 — — 617 
Criticized (c)— — — — 27 
Total lease financing54 156 86 102 55 191 — — 644 
International
Pass (a)190 279 110 73 42 16 481 — 1,191 
Criticized (c)— 20 11 10 — 57 
Total international190 299 118 76 47 27 491 — 1,248 
Total business loans2,190 8,257 4,553 3,723 2,554 5,068 19,392 10 45,747 
Retail loans:
Residential mortgage
Pass (a)105 426 501 148 76 460 — — 1,716 
Criticized (c)37 — — 53 
Total residential mortgage107 430 502 156 77 497 — — 1,769 
Consumer:
Home equity
Pass (a)— — — — — 10 1,474 42 1,526 
Criticized (c)— — — — — 13 17 
Total home equity— — — — — 11 1,487 45 1,543 
Other consumer
Pass (a)15 64 63 11 11 335 — 500 
Criticized (c)— — — — — — — 
Total other consumer15 64 63 11 11 339 — 504 
Total consumer15 64 63 11 22 1,826 45 2,047 
Total retail loans122 494 565 167 78 519 1,826 45 3,816 
Total loans$2,312 $8,751 $5,118 $3,890 $2,632 $5,587 $21,218 $55 $49,563 
Table continues on the following page.

12

Table of Contents
Notes to Consolidated Financial Statements (unaudited)
Comerica Incorporated and Subsidiaries
December 31, 2021
Vintage Year
20212020201920182017PriorRevolversRevolvers Converted to TermTotal
Business loans:
Commercial:
Pass (a)$5,270 (b)$1,740 (b)$1,528 $947 $713 $763 $17,241 $10 $28,212 
Criticized (c)101 120 105 86 26 94 620 1,154 
Total commercial5,371 1,860 1,633 1,033 739 857 17,861 12 29,366 
Real estate construction:
Pass (a)458 858 849 424 158 34 132 — 2,913 
Criticized (c)— — 13 — 35 
Total real estate construction458 861 849 437 166 42 135 — 2,948 
Commercial mortgage:
Pass (a)2,491 1,932 1,444 1,343 1,018 2,298 481 — 11,007 
Criticized (c)17 44 50 22 23 87 — 248 
Total commercial mortgage2,508 1,976 1,494 1,365 1,041 2,385 486 — 11,255 
Lease financing
Pass (a)166 88 97 50 38 179 — — 618 
Criticized (c)— 10 — — 22 
Total lease financing166 90 107 58 39 180 — — 640 
International
Pass (a)381 141 103 29 16 480 — 1,151 
Criticized (c)20 10 — 57 
Total international 401 151 106 34 24 487 — 1,208 
Total business loans8,904 4,938 4,189 2,927 1,990 3,488 18,969 12 45,417 
Retail loans:
Residential mortgage
Pass (a)443 527 164 83 111 407 — — 1,735 
Criticized (c)— 21 — — 36 
Total residential mortgage448 527 165 85 118 428 — — 1,771 
Consumer:
Home equity
Pass (a)— — — — — 11 1,460 45 1,516 
Criticized (c)— — — — — 12 17 
Total home equity— — — — — 12 1,472 49 1,533 
Other consumer
Pass (a)101 68 13 31 337 — 560 
Criticized (c)— — — — — — — 
Total other consumer101 68 13 31 341 — 564 
Total consumer101 68 13 43 1,813 49 2,097 
Total retail loans549 595 178 94 119 471 1,813 49 3,868 
Total loans$9,453 $5,533 $4,367 $3,021 $2,109 $3,959 $20,782 $61 $49,285 
(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 $233 million and $458 million at March 31, 2022 and December 31, 2021, respectively.
(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-52 in the Corporation's 2021 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 $120 million at both March 31, 2022 and December 31, 2021, and was included in accrued income and other assets on the Consolidated Balance Sheets.

13

Table of Contents
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.
 20222021
(in millions)Business LoansRetail LoansTotalBusiness LoansRetail LoansTotal
Three Months Ended March 31
Balance at beginning of period:
Allowance for loan losses$531 $57 $588 $895 $53 $948 
Allowance for credit losses on lending-related commitments24 30 35 44 
Allowance for credit losses555 63 618 930 62 992 
Loan charge-offs(17)(1)(18)(15)(1)(16)
Recoveries on loans previously charged-off10 12 13 
Net loan charge-offs(8)— (8)(3)— (3)
Provision for credit losses:
Provision for loan losses(30)(26)(183)15 (168)
Provision for credit losses on lending-related commitments15 (13)(1)(14)
Provision for credit losses(21)10 (11)(196)14 (182)
Balance at end of period:
Allowance for loan losses493 61 554 709 68 777 
Allowance for credit losses on lending-related commitments33 12 45 22 30 
Allowance for credit losses$526 $73 $599 $731 $76 $807 
Allowance for loan losses as a percentage of total loans1.08 %1.61 %1.12 %1.52 %1.74 %1.54 %
Allowance for credit losses as a percentage of total loans1.15 1.92 1.21 1.57 1.94 1.59 





















14

Table of Contents
Notes to Consolidated Financial Statements (unaudited)
Comerica Incorporated and Subsidiaries
Nonaccrual Loans
The following table presents additional information regarding nonaccrual loans. No interest income was recognized on nonaccrual loans for the three-month periods ended March 31, 2022 and 2021.
(in millions)Nonaccrual
Loans with
No Related
Allowance
Nonaccrual
Loans with
Related
Allowance
Total
Nonaccrual
Loans
March 31, 2022
Business loans:
Commercial$70 $93 $163 
Real estate construction:
Other business lines (a)— 
Commercial mortgage:
Commercial Real Estate business line (b)— 
Other business lines (a)20 26 
Total commercial mortgage21 27 
International— 
Total business loans81 118 199 
Retail loans:
Residential mortgage53 — 53 
Consumer:
Home equity14 — 14 
Other consumer— 
Total consumer17 — 17 
Total retail loans70 — 70 
Total nonaccrual loans$151 $118 $269 
December 31, 2021
Business loans:
Commercial$$165 $173 
Real estate construction:
Other business lines (a)— 
Commercial mortgage:
Commercial Real Estate business line (b)— 
Other business lines (a)27 31 
Total commercial mortgage28 32 
International— 
Total business loans12 204 216 
Retail loans:
Residential mortgage36 — 36 
Consumer:
Home equity12 — 12 
Total retail loans48 — 48 
Total nonaccrual loans$60 $204 $264 
(a)Primarily loans secured by owner-occupied real estate.
(b)Primarily loans to real estate developers.

Foreclosed Properties
Foreclosed properties totaled $1 million at both March 31, 2022 and December 31, 2021. Retail loans secured by residential real estate properties in process of foreclosure included in nonaccrual loans totaled $1 million at March 31, 2022, compared to none at December 31, 2021.

15

Table of Contents
Notes to Consolidated Financial Statements (unaudited)
Comerica Incorporated and Subsidiaries
Troubled Debt Restructurings
The following table details the amortized cost basis at March 31, 2022 and 2021 of loans considered to be TDRs that were restructured during the three-month periods ended March 31, 2022 and 2021, by type of modification. In cases of loans with more than one type of modification, the loans were categorized based on the most significant modification.
Principal Deferrals (a)
(in millions)20222021 (b)
Three Months Ended March 31,
Commercial$21 $— 
Consumer:
Home equity (c)— 
Total loans$23 $— 
(a)Primarily represents loan balances where terms were extended by more than an insignificant time period, typically more than 180 days, at or above contractual interest rates. Also includes commercial loans restructured in bankruptcy.
(b)Under the provisions of the CARES Act, qualifying COVID-19-related modifications, primarily principal deferrals, were not considered TDRs during the three months ended March 31, 2021.
(c)Includes bankruptcy loans for which the court has discharged the borrower's obligation and the borrower has not reaffirmed the debt.
The Corporation charges interest on principal balances outstanding during deferral periods. Additionally, none of the modifications involved forgiveness of principal. Commitments to lend additional funds to borrowers whose terms have been modified in TDRs were $1 million at March 31, 2022 compared to none at December 31, 2021, respectively. On an ongoing basis, the Corporation monitors the performance of modified loans to their restructured terms. The allowance for loan losses continues to be reassessed on the basis of an individual evaluation of the loan.
For principal deferrals, incremental deterioration in the credit quality of the loan, represented by a downgrade in the risk rating of the loan, for example, due to missed interest payments or a reduction of collateral value, is considered a subsequent default. For interest rate reductions, a subsequent payment default is defined in terms of delinquency, when a principal or interest payment is 90 days past due. Of the TDRs modified during the twelve-month periods ended March 31, 2022 and 2021, there were no subsequent defaults of principal deferrals or interest rate reductions for the three-month period ended March 31, 2022 and 2021.

NOTE 5 - DERIVATIVE AND CREDIT-RELATED FINANCIAL INSTRUMENTS
In the normal course of business, the Corporation enters into various transactions involving derivative and credit-related financial instruments to manage exposure to fluctuations in interest rate, foreign currency and other market risks and to meet the financing needs of customers (customer-initiated derivatives). These financial instruments involve, to varying degrees, elements of market and credit risk. Market and credit risk are included in the determination of fair value.
Market risk is the potential loss that may result from movements in interest rates, foreign currency exchange rates or energy commodity prices that cause an unfavorable change in the value of a financial instrument. The Corporation manages this risk by establishing monetary exposure limits and monitoring compliance with those limits. Market risk inherent in interest rate and energy contracts entered into on behalf of customers is mitigated by taking offsetting positions, except in those circumstances when the amount, tenor and/or contract rate level results in negligible economic risk, whereby the cost of purchasing an offsetting contract is not economically justifiable. The Corporation mitigates most of the inherent market risk in foreign exchange contracts entered into on behalf of customers by taking offsetting positions and manages the remainder through individual foreign currency position limits and aggregate value-at-risk limits. These limits are established annually and positions are monitored quarterly. Market risk inherent in derivative instruments held or issued for risk management purposes is typically offset by changes in the fair value of the assets or liabilities being hedged.
Credit risk is the possible loss that may occur in the event of nonperformance by the counterparty to a financial instrument. The Corporation attempts to minimize credit risk arising from customer-initiated derivatives by evaluating the creditworthiness of each customer, adhering to the same credit approval process used for traditional lending activities and obtaining collateral as deemed necessary. Derivatives with dealer counterparties are either cleared through a clearinghouse or settled directly with a single counterparty. For derivatives settled directly with dealer counterparties, the Corporation utilizes counterparty risk limits and monitoring procedures as well as master netting arrangements and bilateral collateral agreements to facilitate the management of credit risk.
Included in the fair value of derivative instruments are credit valuation adjustments reflecting counterparty credit risk. These adjustments are determined by applying a credit spread for the counterparty or the Corporation, as appropriate, to the total expected exposure of the derivative. Master netting arrangements effectively reduce credit valuation adjustments by

16

Table of Contents
Notes to Consolidated Financial Statements (unaudited)
Comerica Incorporated and Subsidiaries
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 March 31, 2022, counterparties with bilateral collateral agreements deposited $99 million of cash with the Corporation to secure the fair value of contracts in an unrealized gain position, and the Corporation had pledged $161 million of marketable investment securities and posted $1.4 billion 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 March 31, 2022 and December 31, 2021. The table excludes a derivative related to the Corporation's 2008 sale of its remaining ownership of Visa shares.

17

Table of Contents
Notes to Consolidated Financial Statements (unaudited)
Comerica Incorporated and Subsidiaries
 March 31, 2022December 31, 2021
  Fair Value Fair Value
(in millions)Notional/
Contract
Amount (a)
Gross Derivative AssetsGross Derivative LiabilitiesNotional/
Contract
Amount (a)
Gross Derivative AssetsGross Derivative Liabilities
Risk management purposes
Derivatives designated as hedging instruments
Interest rate contracts:
Fair value swaps - receive fixed/pay floating $2,650 $— $— $2,650 $— $— 
Cash flow swaps - receive fixed/pay floating (b)11,150 — — 8,050 — — 
Derivatives used as economic hedges
Foreign exchange contracts:
Spot, forwards and swaps379 452 — 
Total risk management purposes14,179 11,152 — 
Customer-initiated and other activities
Interest rate contracts:
Caps and floors written848 — 809 — 
Caps and floors purchased848 — 809 — 
Swaps 19,044 122 244 19,382 236 66 
Total interest rate contracts20,740 131 253 21,000 239 69 
Energy contracts:
Caps and floors written2,935 — 477 1,779 — 203 
Caps and floors purchased2,935 478 — 1,779 204 — 
Swaps5,748 1,195 1,192 4,212 466 459 
Total energy contracts11,618 1,673 1,669 7,770 670 662 
Foreign exchange contracts:
Spot, forwards, options and swaps2,149 31 25 1,716 19 14 
Total customer-initiated and other activities34,507 1,835 1,947 30,486 928 745 
Total gross derivatives$48,686 1,836 1,948 $41,638 928 747