COMERICA INC - Annual Report: 2023 (Form 10-K)

Average Loans By Loan Type:Commercial loans $30,009 $29,846 $163 1 %Real estate construction loans4,041 2,607 1,434 55 Commercial mortgage loans13,697 12,135 1,562 13 Lease financing776 680 96 14 International loans1,226 1,246 (20)(2)Residential mortgage loans1,877 1,776 101 6 Consumer loans:Home equity1,775 1,634 141 9 Other consumer502 536 (34)(6)Total consumer loans2,277 2,170 107 5 Total loans$53,903 $50,460 $3,443 7 %

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(in millions)							Percent Change
Years Ended December 31	2023		2022		Change
Average Loans By Business Line:
General Middle Market	$	12,568	$	12,686	$	(118)	(1)	%
National Dealer Services	5,775		4,633		1,142		25
Equity Fund Services	3,001		3,345		(344)		(10)
Environmental Services	2,366		2,119		247		12
Energy	1,480		1,387		93		7
Entertainment	1,153		1,141		12		1
Technology and Life Sciences	865		909		(44)		(5)
Total Middle Market	27,208		26,220		988		4
Commercial Real Estate	9,085		6,898		2,187		32
Corporate Banking	6,044		5,528		516		9
Business Banking	3,150		3,256		(106)		(3)
Mortgage Banker Finance	945		1,579		(634)		(40)
Total Commercial Bank	46,432		43,481		2,951		7
Total Retail Bank	2,237		2,063		174		8
Total Wealth Management	5,232		4,906		326		7
Total Finance and Other	2		10		(8)		(92)
Total loans	$	53,903	$	50,460	$	3,443	7	%

(a)Issued and/or guaranteed by U.S. government agencies or U.S. government-sponsored enterprises.

n/m - not meaningful

On a period-end basis, investment securities were $16.9 billion at December 31, 2023, a decrease of $2.1 billion from $19.0 billion at December 31, 2022, due to maturities of Treasury securities and paydowns of mortgage-backed securities, partially offset by an improvement in unrealized losses, from $3.0 billion at December 31, 2022 to $2.7 billion at December 31, 2023. At December 31, 2023, the effective duration of the Corporation's securities portfolio was approximately 5.5 years. On an average basis, investment securities decreased $1.6 billion to $17.4 billion in 2023, compared to $19.0 billion in 2022, primarily due to unrealized losses and maturities of Treasury securities.


(weighted average yield) (a)	U.S. Treasury securities		Residential mortgage-backed securities (b)		Commercial mortgage-backed securities (b)		Total investment securities
December 31, 2023
Maturity (c)
Within 1 year	0.23	%	3.76	%	—	%	0.25	%
1-5 Years	0.29		2.19		1.66		0.66
5-10 Years	—		1.93		2.97		2.93
After 10 Years	—		1.96		—		1.96
Total	0.26	%	1.96	%	2.96	%	2.08	%
Weighted Average Maturity (years)	1.1		26.2		8.1		19.1

(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.

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Interest-Bearing Deposits with Banks and Other Short-Term Investments

Interest-bearing deposits with banks, which are mostly used to manage liquidity requirements of the Corporation, primarily include deposits with the Federal Reserve Bank (FRB) and also include deposits with banks in developed countries or international banking facilities of foreign banks located in the United States. On a period-end basis, interest-bearing deposits with banks increased $3.5 billion to $8.1 billion at December 31, 2023. On an average basis, interest-bearing deposits with banks decreased $1.8 billion to $7.5 billion in 2023.

Other short-term investments include federal funds sold, trading securities, money market investments and loans held-for-sale. Substantially all trading securities are deferred compensation plan assets. Loans held-for-sale include variable-rate demand notes for which the Corporation has purchased the underlying bonds as well as residential mortgage loans originated with management's intention to sell and, from time to time, other loans that are transferred to held-for-sale. On a period-end basis, other short-term investments increased $242 million to $399 million at December 31, 2023, which was driven by the above-referenced variable-rate demand notes. On an average basis, other short-term investments increased $165 million to $339 million in 2023.

Deposits and Borrowed Funds

Period-End Deposits and Borrowed Funds


(in millions)							Percent Change
Years Ended December 31	2023		2022		Change
Noninterest-bearing deposits	$	27,849	$	39,945	$	(12,096)	(30)	%
Money market and interest-bearing checking deposits	28,246		26,290		1,956		7
Savings deposits	2,381		3,225		(844)		(26)
Customer certificates of deposit	3,723		1,762		1,961		n/m
Other time deposits	4,550		124		4,426		n/m
Foreign office time deposits	13		51		(38)		(75)
Total deposits	$	66,762	$	71,397	$	(4,635)	(6)	%
Short-term borrowings	$	3,565	$	3,211	$	354	11	%
Medium- and long-term debt	6,206		3,024		3,182		n/m
Total borrowed funds	$	9,771	$	6,235	$	3,536	57	%

n/m - not meaningful

On a period-end basis, total deposits decreased $4.6 billion to $66.8 billion at December 31, 2023, compared to $71.4 billion at December 31, 2022, reflecting a decrease of $12.1 billion in noninterest-bearing deposits, partially offset by a $7.5 billion increase in interest-bearing deposits.

Uninsured deposits are defined as the portion of deposit accounts in U.S. offices that exceed the FDIC insurance limit and amounts in any other uninsured investment or deposit account that are classified as deposits and are not subject to any federal or state deposit insurance regimes. Total uninsured deposits were $31.5 billion and $45.5 billion at December 31, 2023 and 2022, respectively, as calculated per regulatory guidance. The portion of domestic time deposits in excess of insurance limits was $797 million and $370 million at December 31, 2023 and 2022, respectively. Time deposits otherwise uninsured, which consist of foreign office time deposits and all mature in three months or less, totaled $13 million at December 31, 2023, compared to $51 million at December 31, 2022.

On a period-end basis, short-term borrowings totaled $3.6 billion at December 31, 2023, compared to $3.2 billion at December 31, 2022, and included federal funds purchased and short-term Federal Home Loan Bank (FHLB) advances. On a period-end basis, total medium- and long-term debt totaled $6.2 billion at December 31, 2023, an increase of $3.2 billion from $3.0 billion at December 31, 2022. The Corporation uses medium- and long-term debt, which includes medium- and long-term senior notes, subordinated notes and FHLB advances, to provide funding for earning assets, liquidity and regulatory capital.

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Average Deposits and Borrowed Funds


(in millions)							Percent Change
Years Ended December 31	2023		2022		Change
Noninterest-bearing deposits	$	30,882	$	42,018	$	(11,136)	(27)	%
Money market and interest-bearing checking deposits	26,054		28,347		(2,293)		(8)
Savings deposits	2,774		3,304		(530)		(16)
Customer certificates of deposit	2,708		1,756		952		54
Other time deposits	3,577		16		3,561		n/m
Foreign office time deposits	23		40		(17)		(42)
Total deposits	$	66,018	$	75,481	$	(9,463)	(13)	%
Short-term borrowings	$	7,218	$	436	$	6,782	n/m
Medium- and long-term debt	5,847		2,818		3,029		n/m
Total borrowed funds	$	13,065	$	3,254	$	9,811	n/m

n/m - not meaningful


(in millions)							Percent Change
Years Ended December 31,	2023		2022		Change
Average Deposits By Business Line:
General Middle Market	$	16,962	$	20,409	$	(3,447)	(17)	%
Technology and Life Sciences	3,607		6,483		$	(2,876)	(44)
National Dealer Services	1,022		1,526		(504)		(33)
Equity Fund Services	976		1,175		(199)		(17)
Energy	574		1,000		(426)		(43)
Environmental Services	361		344		17		5
Entertainment	268		267		1		—
Total Middle Market	23,770		31,204		(7,434)		(24)
Corporate Banking	3,788		4,381		(593)		(14)
Business Banking	3,569		4,289		(720)		(17)
Commercial Real Estate	1,582		2,175		(593)		(27)
Mortgage Banker Finance	310		535		(225)		(42)
Total Commercial Bank	33,019		42,584		(9,565)		(22)
Total Retail Bank	24,363		26,672		(2,309)		(9)
Total Wealth Management	4,130		5,439		(1,309)		(24)
Total Finance and Other	4,506		786		3,720		n/m
Total deposits	$	66,018	$	75,481	$	(9,463)	(13)	%

Other comprehensive income, net of tax:Investment securities$276 Cash flow hedges337 Defined benefit and other postretirement plans81 Total other comprehensive income, net of tax694 Net issuance of common stock under employee stock plans(4)Share-based compensation52 Balance at December 31, 2023$6,406

The following table summarizes the Corporation’s repurchase activity for the year ended December 31, 2023.


(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 2023	—	4,997	31	$	72.78
Second Quarter 2023	—	4,997	3	42.36
Third Quarter 2023	—	4,997	3	43.37
Fourth Quarter 2023	—	4,997	3	40.60
Total 2023	—	4,997	40	65.89

(a) Maximum number of shares that may be repurchased under the publicly announced plans or programs.

(b) Includes approximately 40,000 shares purchased related to deferred compensation plans during the year ended December 31, 2023 and is not considered part of the Corporation's repurchase program.

Since the inception of the Corporation's share repurchase program in 2010, a total of 97.2 million shares have been authorized for repurchase. There is no expiration date for the share repurchase program. Management is not currently engaged in repurchasing shares and will continue to monitor various factors, including the Corporation's earnings generation, capital needs to fund future loan growth, regulatory changes and market conditions, before resuming the share repurchase program.

The Corporation continues to target a Common Equity Tier 1 (CET1) capital ratio of approximately 10 percent with active capital management. At December 31, 2023, the Corporation's CET1 capital ratio was 11.09 percent, a increase of 109 basis points compared to December 31, 2022.

The Corporation is subject to the capital adequacy standards under the Basel III regulatory framework (Basel III). This regulatory framework establishes comprehensive methodologies for calculating regulatory capital and risk-weighted assets (RWA). Basel III also set minimum capital ratios as well as overall capital adequacy standards.

Under Basel III, regulatory capital comprises CET1 capital, additional Tier 1 capital and Tier 2 capital. CET1 capital predominantly includes common shareholders' equity, less certain deductions for goodwill, intangible assets and deferred tax assets that arise from net operating losses and tax credit carry-forwards. Additionally, the Corporation has elected to permanently exclude capital in accumulated other comprehensive income (AOCI) related to debt classified as available-for-sale as well as for cash flow hedges and defined benefit postretirement plans from CET1, an option available to standardized approach entities under Basel III. Tier 1 capital incrementally includes noncumulative perpetual preferred stock. Tier 2 capital includes Tier 1 capital as well as subordinated debt qualifying as Tier 2 and qualifying allowance for credit losses.

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The Corporation computes RWA using the standardized approach. Under the standardized approach, RWA is generally based on supervisory risk-weightings which vary by counterparty type and asset class. Under the Basel III standardized approach, capital is required for credit risk RWA, to cover the risk of unexpected losses due to failure of a customer or counterparty to meet its financial obligations in accordance with contractual terms; and if trading assets and liabilities exceed certain thresholds, capital is also required for market risk RWA, to cover the risk of losses due to adverse market movements or from position-specific factors.

The following table presents the minimum ratios required.


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 as follows:


	December 31, 2023				December 31, 2022
(dollar amounts in millions)	Capital/Assets		Ratio		Capital/Assets		Ratio
Common equity tier 1 (a)	$	8,414	11.09	%	$	7,884	10.00	%
Tier 1 risk-based (a)	8,808		11.60		8,278		10.50
Total risk-based	10,263		13.52		9,817		12.45
Leverage	8,808		10.06		8,278		9.55
Common shareholders' equity	6,012		7.00		4,787		5.60
Tangible common equity (a)	5,369		6.30		4,143		4.89
Risk-weighted assets	75,901				78,871

(a) See Supplemental Financial Data section for reconciliations of non-GAAP financial measures and regulatory ratios.

At December 31, 2023, the Corporation and its U.S. banking subsidiaries exceeded the capital ratios required for an institution to be considered “well capitalized” by the standards developed under the Federal Deposit Insurance Corporation Improvement Act of 1991. Refer to Note 20 to the consolidated financial statements for further discussion of regulatory capital requirements, capital ratio calculations and restrictions on the ability of the Corporation's banking subsidiaries to transfer assets to the Corporation.

The common shareholders' equity ratio increased 140 basis points to 7.00 percent at December 31, 2023, primarily due to lower unrealized losses on investment securities available-for-sale and the Corporation's cash flow hedge portfolio. The unrealized losses in the Corporation's available-for-sale investment security portfolio, which are due to market valuations since the time of initial acquisition, are not expected to be realized. The tangible common equity ratio, which excludes goodwill and other intangible assets, increased 141 basis points to 6.30 percent for the same reasons discussed above. Common shareholders' equity included $3.0 billion in accumulated other comprehensive losses, with approximately $2.3 billion of those losses relating to balances recorded in total assets, comprised of valuation adjustments to available-for-sale securities and pension assets, as well as related deferred tax assets. These amounts impacted the common shareholders' equity ratio by 328 basis points; the impact on the tangible common equity ratio using the same calculation method was 332 basis points.

Basel III Endgame Framework

On July 27, 2023, the federal banking agencies issued a notice of proposed rulemaking, commonly referred to as Basel III Endgame (the Capital Proposal) that would significantly increase the capital requirements applicable to large banking organizations with total assets of $100 billion or more. The Capital Proposal would align the regulatory capital calculation and the calculation of risk-weighted assets across large banking organizations subject to the Capital Proposal and require Category III and IV banking organizations to include most components of AOCI, including net unrealized gains and losses on available-for-sale securities, in their regulatory capital ratios. The Capital Proposal is subject to a public comment period, which ended on January 16, 2024, and, if adopted, would include a three-year transition period beginning July 1, 2025. As of December 31, 2023, the Corporation had total assets of $85.8 billion. While the Capital Proposal would not apply to the Corporation as it is currently proposed, if the Corporation becomes subject to the requirements of the Capital Proposal in the future or becomes subject to any other new laws or regulations related to capital and liquidity, such requirements could limit the Corporation’s ability to pay dividends or make share repurchases or require Comerica to reduce business levels or to raise capital, which would have a material adverse effect on the Corporation’s financial condition and results of operations. If subject to the Capital Proposal, the estimated impact related to proposed inclusion of most components of AOCI would be an approximate 300 basis point decrease to common equity tier-1 capital based on December 31, 2023 financials.

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RISK MANAGEMENT

The Corporation assumes various types of risk as a result of conducting business in the normal course. The Corporation's enterprise risk management framework provides a process for identifying, measuring, controlling and managing these risks. This framework incorporates a risk assessment process, a collection of risk committees that manage the Corporation's major risk elements and a risk appetite statement that outlines the levels and types of risks the Corporation accepts. The Corporation continuously enhances its enterprise risk framework with additional processes, tools and systems designed to not only provide management with deeper insight into the various existing and emerging risks in accordance with its appetite for risk, but also to improve the Corporation's ability to control those risks and ensure that appropriate consideration is received for the risks taken.

The Corporation’s front line employees, the first line of defense, are responsible for the day-to-day management and ownership of risks, including the identification, assessment, measurement and control of risks encountered as a part of the normal course of business. Each of the major risk categories are further monitored and measured by specialized risk managers in the second line of defense within the Enterprise Risk Division, who provide oversight as well as independent and effective challenge and guidance for the risk management activities of the organization. The Enterprise Risk Division, led by the Chief Risk Officer, is responsible for designing and managing the Corporation’s enterprise risk management framework and ensures effective risk management oversight. Risk management committees serve as a point of review and escalation for those risks which may have risk interdependencies or where risk levels may be nearing the limits outlined in the Corporation’s risk appetite statement. These committees comprise senior and executive management that represent views from both the lines of business and risk management. Internal Audit, the third line of defense, monitors and assesses the overall effectiveness of the risk management framework on an ongoing basis and provides an independent, objective assessment of the Corporation’s ability to manage and control risk to management and the Audit Committee of the Board.

The Enterprise Risk and Return Committee, chaired by the Chief Risk Officer, is established by the Enterprise Risk Committee of the Board and responsible for governance over the risk management framework, providing oversight in managing the Corporation's aggregate risk position and reporting on the comprehensive portfolio of risks as well as the potential impact these risks can have on the Corporation's risk profile and resulting capital level. Capital provides the primary buffer for risk and also serves as a measuring tool when evaluating risk. The Enterprise Risk and Return Committee is principally composed of senior officers and executives representing the different risk areas and business units who are appointed by the Chairman and Chief Executive Officer of the Corporation.

The Board's Enterprise Risk Committee meets quarterly and is chartered to assist the Board in promoting the best interests of the Corporation by overseeing policies and risk practices relating to enterprise-wide risk and ensuring compliance with bank regulatory obligations. Members of the Enterprise Risk Committee are selected such that the committee comprises individuals whose experiences and qualifications can lead to broad and informed views on risk matters facing the Corporation and the financial services industry. These include, but are not limited to, existing and emerging risk matters related to credit, market, liquidity, operational, technology, compliance and strategic conditions. A comprehensive risk report is submitted to the Enterprise Risk Committee each quarter providing management's view of the Corporation's aggregate risk position.

Further discussion and analyses of each major risk area are included in the following sub-sections of the Risk Management section in this financial review.

Credit Risk

Credit risk represents the risk of loss due to failure of a customer or counterparty to meet its financial obligations in accordance with contractual terms. Credit risk is found in all activities where success depends on counterparty, issuer or borrower performance. It arises any time funds are extended, committed, invested or otherwise exposed, whether reflected on or off the balance sheet. The governance structure is administered through the Strategic Credit Committee. The Strategic Credit Committee is chaired by the Chief Credit Officer and approves recommendations to address credit risk matters through credit policy, credit risk management practices and required credit risk actions. The Strategic Credit Committee also ensures a comprehensive reporting of credit risk levels and trends, including exception levels, along with identification and mitigation of emerging risks. In order to facilitate the corporate credit risk management process, various other corporate functions provide the resources for the Strategic Credit Committee to carry out its responsibilities. The Corporation manages credit risk through underwriting and periodically reviewing and approving its credit exposures in accordance with established credit policies and guidelines. Additionally, the Corporation manages credit risk through loan portfolio diversification, limiting exposure to any single industry, customer or guarantor, and selling participations and/or syndicating credit exposures above those levels it deems prudent to third parties.

The Credit Division manages credit policy and provides the resources to manage the line of business transactional credit risk, assuring that all exposure is risk rated according to the requirements of the credit risk rating policy and providing

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business segment reporting support as necessary. The Enterprise Risk Division provides credible and well-documented challenge of overall portfolio credit risk, and other credit-related attributes of the Corporation's loan portfolios, with a particular emphasis on all attendant modeled results. The Corporation's Asset Quality Review function, a division of Internal Audit, audits the accuracy of internal risk ratings that are assigned by the lending and credit groups. The Special Assets Group is responsible for managing the recovery process on distressed or defaulted loans and loan sales.

Credit Analytics and Strategy, within the Credit Division, provides comprehensive reporting on portfolio credit risk levels and trends, continuous assessment and verification of risk rating models, quarterly calculation of the allowance for loan losses and the allowance for credit losses on lending-related commitments and calculations of both expected and unexpected loss.

Allowance for Credit Losses

The allowance for credit losses includes both the allowance for loan losses and the allowance for credit losses on lending-related commitments. The allowance for credit losses increased by $67 million from $661 million at December 31, 2022 to $728 million at December 31, 2023, reflecting an uncertain economic outlook and credit migration, as well as changes in portfolio composition.

The following table presents metrics of the allowance for credit losses and nonperforming loans.


December 31,	2023		2022
Allowance for credit losses as a percentage of total loans	1.40	%	1.24	%
Allowance for credit losses as a multiple of total nonaccrual loans	4.1x		2.8x
Allowance for credit losses as a multiple of total nonperforming loans	4.1x		2.7x

The economic forecasts informing the current expected credit loss (CECL) model reflect the cumulative effects of the Federal Reserve Bank's tight monetary policy that are weighing on the real economy, as well as several years of elevated inflation that have largely depleted excess savings that households accumulated during the pandemic. Energy prices are projected to level off amid crosswinds from the Russia-Ukraine conflict, rising U.S. crude production and weak demand from China and other major foreign economies. Residential and commercial real estate property prices face headwinds from the long and variable lags by which the Federal Reserve Bank's tighter monetary policy affect real asset prices.

Downside risks to growth from geopolitical risks, a potential government shutdown, the restart of student loan payments and less expansionary fiscal policy are projected to collectively contribute to slower growth in 2024. Price pressures are forecasted to gradually return to pre-pandemic norms as a modest margin of slack opens in the economy's productive capacity. The Federal Reserve Bank's aggressive tightening of monetary policy, including rapid increases in interest rates and reductions in the size of its balance sheet, contribute to elevated risk of a policy error or recession.

These factors shaped the 2-year reasonable and supportable forecast used by the Corporation in its CECL estimate at December 31, 2023. The U.S. economy is projected to grow at a below-trend rate through 2024 before gradually normalizing to its trend growth rate. Certain economic variables, like oil prices, are expected to increase in the short term before decreasing as inflation normalizes. Forecasts for other key economic variables are generally consistent with those of Gross Domestic Product (GDP), while interest rate forecasts reflect market expectations and recent guidance from the Federal Reserve Bank. The following table summarizes select economic variables representative of the economic forecasts used to develop the allowance for credit losses estimate at December 31, 2023.


Economic Variable			Base Forecast
Real GDP growth			Gradual growth to a peak near 3 percent in second quarter 2025 before returning to a growth rate of around 2 percent.
Unemployment rate			Remains near 4 percent throughout the forecast period.
Corporate BBB bond to 10-year Treasury bond spreads			Spreads widen to 2.4 percent by third quarter 2024 before normalizing to 2 percent by the end of the forecast period.
Oil Prices			Prices increase from current levels to $84 dollars in first quarter 2024 before declining to $76 by the end of the forecast period.

Due to the high degree of uncertainty regarding recessionary pressures, persistent inflation, continued high interest rates and other tail risks to the outlook, management considered other economic scenarios to make appropriate qualitative adjustments for certain sectors of its lending portfolio, including more benign as well as more severe scenarios.

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Refer to Note 1 to the consolidated financial statements for a discussion of the methodology used in the determination of the allowance for credit losses.

Allowance for Loan Losses

The allowance for loan losses represents management’s estimates of current expected credit losses in the Corporation’s loan portfolio. The allowance for loan losses increased $78 million to $ million at December 31, 2023, compared to $610 million at December 31, 2022.

Collective loss estimates are determined by applying reserve factors, designed to estimate current expected credit losses, to amortized cost balances over the remaining contractual life of the collectively evaluated portfolio. Loans with similar risk characteristics are aggregated into homogeneous pools. The allowance for loan losses also includes qualitative adjustments to bring the allowance to the level management believes is appropriate based on factors that have not otherwise been fully accounted for, including adjustments for foresight risk, input imprecisions and model imprecision. Credit losses for loans that no longer share risk characteristics with the loan pools are estimated on an individual basis. Individual credit loss estimates are typically performed for nonaccrual loans and are based on one of several methods, including the estimated fair value of the underlying collateral, observable market value of similar debt or the present value of expected cash flows.

Allowance for Credit Losses on Lending-Related Commitments

The allowance for credit losses on lending-related commitments estimates current expected credit losses on collective pools of letters of credit and unused commitments to extend credit based on reserve factors, determined in a manner similar to business loans, multiplied by a probability of draw estimate based on historical experience and credit risk, applied to commitment amounts. The allowance for credit losses on lending-related commitments totaled $40 million and $51 million at December 31, 2023 and December 31, 2022, respectively.

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Analysis of the Allowance for Credit Losses

The table below details net charge-offs (recoveries) as a percentage of total loans by loan category.


	2023				2022				2021
(dollar amounts in millions)	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	$	9	0.03	%	$	18	0.06	%	$	(15)	(0.05	%)

Commercial mortgage	(1)		(0.01)		—		—		2		0.02

International	13		1.06		—		—		4		0.38
Residential mortgage	—		—		(1)		(0.03)		(2)		(0.11)
Consumer	1		0.04		—		—		1		0.05
Total loans	$	22	0.04	%	$	17	0.03	%	$	(10)	(0.02	%)

(a)Net charge-offs (recoveries) as a percentage of related average loans outstanding.

Net loan charge-offs totaled $22 million for the year ended December 31, 2023, a $5 million increase from net loan charge-offs of $17 million for the year ended December 31, 2022. See "Provision for Credit Losses" in the "Results of Operations" section of this financial review for more information about net loan charge-offs.

Allocation of the Allowance for Credit Losses


	2023						2022
(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	$	303	1.11	%	52	%	$	287	0.93	%	58	%
Real estate construction	71		1.39		10		38		1.24		6
Commercial mortgage	226		1.66		26		200		1.51		25
Lease financing	12		1.44		2		6		0.78		1
International	8		0.71		2		10		0.79		2
Total business loans	620		1.29		92		541		1.10		92
Retail loans
Residential mortgage	28		1.50		4		32		1.74		4
Consumer	40		1.74		4		37		1.61		4
Total retail loans	68		1.63		8		69		1.67		8
Total loans	688		1.32	%	100	%	$	610	1.14		100	%
Allowance for credit losses on lending-related commitments
Business commitments
Retail commitments
Total commitments	40						51
Allowance for credit losses	$	728	1.40	%			$	661	1.24	%

(a)Allocated allowance as a percentage of related loans outstanding.

(b)Loans outstanding as a percentage of total loans.

For additional information regarding the allowance for credit losses, refer to the "Critical Accounting Estimates" section of this financial review and Notes 1 and 4 to the consolidated financial statements.

Nonperforming Assets

Nonperforming assets include loans on nonaccrual status and foreclosed assets. Effective January 1, 2023, the Corporation prospectively adopted the provisions of Accounting Standards Update No. 2022-02, "Financial Instruments - Credit Losses (Topic 326): Troubled Debt Restructuring and Vintage Disclosures", which eliminated the accounting for TDRs. Refer to Note 1 to the consolidated financial statements for further information. At December 31, 2022, reduced-rate loans represented TDRs which had been renegotiated to less than their original contractual rates.

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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	2023			2022
Nonaccrual loans	$	178		$	240
Reduced-rate loans	n/a			4
Total nonperforming loans	178			244
Foreclosed property
Total nonperforming assets	$	178		$	244
Nonaccrual loans as a percentage of total loans	0.34		%	0.45		%
Nonperforming loans as a percentage of total loans	0.34			0.46
Nonperforming assets as a percentage of total loans and foreclosed property	0.34			0.46
Loans past due 90 days or more and still accruing	$	20		$	23

(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 16 borrowers with a balance greater than $2 million, totaling $94 million, transferred to nonaccrual status in 2023, a decrease of 7 borrowers compared to 23 borrowers totaling $132 million in 2022. For further information about the composition of loans transferred to nonaccrual during the current period, refer to the nonaccrual information by industry category table below.

The following table presents the composition of nonaccrual loans by balance and the related number of borrowers at December 31, 2023 and 2022.


	2023			2022
(dollar amounts in millions)	Number of Borrowers	Balance		Number of Borrowers	Balance
Under $2 million	457	$	50	475	$	60
$2 million - $5 million	11	35		14	46
$5 million - $10 million	5	35		8	58
$10 million - $25 million	4	58		5	76
Total	477	$	178	502	$	240

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The following table presents a summary of nonaccrual loans at December 31, 2023 and loans transferred to nonaccrual and net loan charge-offs (recoveries) for the year ended December 31, 2023, based on North American Industry Classification System (NAICS) categories.


	December 31, 2023				Year Ended December 31, 2023
(dollar amounts in millions)	Nonaccrual Loans				Loans Transferred to Nonaccrual (a)				Net Loan Charge-Offs (Recoveries)
Industry Category
Manufacturing	$	42	23	%	$	26	28	%	$	5	23	%
Real Estate & Home Builders	38		21		27		29		(10)		(45)
Residential Mortgage	19		11		—		—		—		—
Transportation & Warehousing	16		9		5		5		5		23
Information & Communication	13		7		12		12		4		18
Services	7		4		7		7		5		22
Wholesale Trade	6		3		11		12		11		50
Arts, Entertainment & Recreation	6		3		—		—		—		—
Mining, Quarrying and Oil & Gas Extraction	4		2		—		—		(1)		(5)
Management of Companies and Enterprises	4		2		3		4		—		—
Retail Trade	1		1		—		—		—		—


Other (b)	22		14		3		3		3		14
Total	$	178	100	%	$	94	100	%	$	22	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 decreased $3 million to $20 million at December 31, 2023, compared to $23 million at December 31, 2022. Loans past due 30-89 days decreased $180 million to $198 million at December 31, 2023, compared to $378 million at December 31, 2022. Loans past due 30 days or more and still accruing interest as a percentage of total loans were 0.42 percent and 0.75 percent at December 31, 2023 and December 31, 2022, respectively. An aging analysis of loans included in Note 4 to the consolidated financial statements provides further information about the balances comprising past due loans.

The following table presents a summary of total criticized loans. The Corporation's criticized list is consistent with the Special Mention, Substandard and Doubtful categories defined by regulatory authorities. Criticized loans on nonaccrual status are individually subjected to quarterly credit quality reviews, and the Corporation may establish specific allowances for such loans. A table of loans by credit quality indicator included in Note 4 to the consolidated financial statements provides further information about the balances comprising total criticized loans.


(dollar amounts in millions)
December 31	2023			2022
Total criticized loans	$	2,405		$	1,572
As a percentage of total loans	4.6		%	2.9		%

The $833 million increase in criticized loans during the year ended December 31, 2023 was primarily driven by Commercial Real Estate and general Middle Market.

For further information regarding the Corporation's nonperforming assets policies, refer to Notes 1 and 4 to the consolidated financial statements.

Concentrations of Credit Risk

Concentrations of credit risk may exist when a number of borrowers are engaged in similar activities, or activities in the same geographic region, and have similar economic characteristics that would cause them to be similarly impacted by changes in economic or other conditions. The Corporation has concentrations of credit risk with the commercial real estate and automotive industries. All other industry concentrations, as defined by management, individually represented less than 10 percent of total loans at December 31, 2023.

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Commercial Real Estate Lending

At December 31, 2023, the Corporation's commercial real estate portfolio represented percent of total loans. The following table summarizes the Corporation's commercial real estate loan portfolio by loan category.


	December 31, 2023						December 31, 2022
(in millions)	Commercial Real Estate business line (a)		Other (b)		Total		Commercial Real Estate business line (a)		Other (b)		Total
Real estate construction loans	$		$		$	5,083	$		$		$	3,105
Commercial mortgage loans					13,686						13,306
Total commercial real estate	$	9,297	$	9,472	$	18,769	$	7,186	$	9,225	$	16,411

(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. Commercial real estate loans, consisting of real estate construction and commercial mortgage loans, totaled $18.8 billion at December 31, 2023. Commercial real estate loans made to borrowers in the Commercial Real Estate business line, which includes loans to real estate developers, totaled $9.3 billion, or 50 percent of total commercial real estate loans, an increase of $2.1 billion compared to December 31, 2022. The Commercial Real Estate business line at December 31, 2023 was predominantly secured by multi-family and industrial properties, comprising 46 percent and 34 percent of the portfolio, respectively, with only 6 percent secured by office properties. Commercial real estate loans in other business lines totaled $9.5 billion, or 50 percent of total commercial real estate loans, at December 31, 2023, an increase of $247 million compared to December 31, 2022. These loans consisted primarily of owner-occupied commercial mortgages, which bear credit characteristics similar to non-commercial real estate business loans. Generally, loans previously reported as real estate construction are classified as commercial mortgage loans upon receipt of a certificate of occupancy.

The real estate construction loan portfolio primarily contains loans made to long-tenured customers with satisfactory completion experience. Criticized real estate construction loans in the Commercial Real Estate business line totaled $86 million at December 31, 2023 compared to none at December 31, 2022. In other business lines, criticized real estate construction loans totaled $12 million at December 31, 2023, compared to $3 million at December 31, 2022. There were no real estate construction loan net charge-offs in the years ended December 31, 2023 and 2022.

Commercial mortgage loans are loans where the primary collateral is a lien on any real property and are primarily loans secured by owner-occupied real estate. Real property is generally considered primary collateral if the value of that collateral represents more than 50 percent of the commitment at loan approval. Loans in the commercial mortgage portfolio generally mature within three to five years. Criticized commercial mortgage loans in the Commercial Real Estate business line totaled $378 million and $16 million at December 31, 2023 and 2022, respectively, with the increase primarily in multi-family properties. In other business lines, $395 million and $151 million of commercial mortgage loans were criticized at December 31, 2023 and 2022, respectively. Commercial mortgage loan net recoveries were $1 million in 2023, compared to no net charge-offs in 2022.

Automotive Lending - Dealer:

The following table presents a summary of dealer loans.


	December 31, 2023				December 31, 2022
(in millions)	Loans Outstanding		Percent of Total Loans		Loans Outstanding		Percent of Total Loans
Dealer:
Floor plan	$	2,313			$	1,379
Other	3,878				3,988
Total dealer	$	6,191	11.9	%	$	5,367	10.1	%

Substantially all dealer loans are in the National Dealer Services business line and primarily include floor plan financing and other loans to automotive dealerships. Floor plan loans, included in commercial loans in the Consolidated Balance Sheets, totaled $2.3 billion at December 31, 2023, an increase of $934 million compared to $1.4 billion at December 31, 2022, resulting from increasing vehicle levels due to supply chain improvements. At December 31, 2023 and 2022, other loans in the National Dealer Services business line totaled $3.9 billion and $4.0 billion, respectively, including $2.2 billion and $2.3 billion of owner-occupied commercial real estate mortgage loans, respectively.

There were no nonaccrual dealer loans at both December 31, 2023, and 2022. Additionally, there were no net charge-offs of dealer loans in either of the years ended December 31, 2023 and 2022.

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Automotive Lending- Production:

The following table presents a summary of loans to borrowers involved with automotive production.


	December 31, 2023				December 31, 2022
	Loans Outstanding		Percent of Total Loans		Loans Outstanding		Percent of Total Loans
(in millions)
Production:
Domestic	$	591			$	797
Foreign	257				271
Total production	$	848	1.6	%	$	1,068	2.0	%

Loans to borrowers involved with automotive production, primarily Tier 1 and Tier 2 suppliers, totaled $848 million at December 31, 2023 and $1.1 billion at December 31, 2022. These borrowers have faced, and could face in the future, financial difficulties due to disruptions in auto production, issues with supply chains and logistics operations and impacts resulting from labor union strikes. As such, management continues to monitor this portfolio.

Nonaccrual loans to borrowers involved with automotive production totaled $17 million in at December 31, 2023, compared to $5 million at December 31, 2022. Automotive production loan net charge-offs totaled $7 million for the year ended December 31, 2023, compared to $2 million for the same period in 2022.

For further information regarding significant group concentrations of credit risk, refer to Note 5 to the consolidated financial statements.

Residential Real Estate Lending

At December 31, 2023, residential real estate loans represented 7 percent of total loans. The following table summarizes the Corporation's residential mortgage and home equity loan portfolios by geographic market.


	December 31, 2023								December 31, 2022
(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	$	548	29	%	$	444	25	%	$	497	27	%	$	487	27	%
California	871		46		911		51		866		48		852		48
Texas	272		14		351		20		258		14		354		20
Other Markets	198		11		86		4		193		11		83		5
Total	$	1,889	100	%	$	1,792	100	%	$	1,814	100	%	$	1,776	100	%

Residential real estate loans, which consist of traditional residential mortgages and home equity loans and lines of credit, totaled $3.7 billion at December 31, 2023. The residential real estate portfolio is principally located within the Corporation's primary geographic markets. Substantially all residential real estate loans past due 90 days or more are placed on nonaccrual status, and substantially all junior lien home equity loans that are current or less than 90 days past due are placed on nonaccrual status if full collection of the senior position is in doubt. At no later than 180 days past due, such loans are charged off to current appraised values less costs to sell.

Residential mortgages totaled $1.9 billion at December 31, 2023, and were primarily larger, variable-rate mortgages originated and retained for certain private banking relationship customers. Of the $1.9 billion of residential mortgage loans outstanding, $19 million were on nonaccrual status at December 31, 2023, a decrease of $34 million compared to December 31, 2022. The home equity portfolio totaled $1.8 billion at December 31, 2023, of which 96 percent was outstanding under primarily variable-rate, interest-only home equity lines of credit, 3 percent were in amortizing status and 1 percent were closed-end home equity loans. Of the $1.8 billion of home equity loans outstanding, $21 million were on nonaccrual status at December 31, 2023, an increase of $6 million compared to December 31, 2022. A majority of the home equity portfolio was secured by junior liens at December 31, 2023.

Energy Lending

The Corporation has a portfolio of Energy loans that are included entirely in commercial loans in the Consolidated Balance Sheets. Customers in the Corporation's Energy business line (approximately 120 relationships) are engaged in exploration and production (E&P) and midstream. E&P generally includes such activities as searching for potential oil and gas fields, drilling exploratory wells and operating active wells. Commitments to E&P borrowers are generally subject to semi-annual borrowing base re-determinations based on a variety of factors including updated prices (reflecting market and competitive conditions), energy reserve levels and the impact of hedging. The midstream sector is generally involved in the

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transportation, storage and marketing of crude and/or refined oil and gas products. The Corporation's energy services customers provide products and services primarily to the E&P segment. Approximately 94% of loans in the Energy business line are Shared National Credits (SNC), which are facilities greater than or equal to $100 million shared by three or more federally supervised institutions, reflecting the Corporation's focus on larger middle market companies that have financing needs that generally exceed internal individual borrower credit risk limits. The Corporation seeks to develop full relationships with SNC borrowers.

The following table summarizes information about loans in the Corporation's Energy business line.


(dollar amounts in millions)	2023								2022
December 31	Outstandings				Nonaccrual		Criticized (a)		Outstandings				Nonaccrual		Criticized (a)
Exploration and production (E&P)	$	1,070	77	%	$	4	$	4	$	1,162	82	%	$	7	$	12
Midstream	312		23		—		—		253		18		—		—

Total Energy business line	$	1,382	100	%	$	4	$	4	$	1,415	100	%	$	7	$	12

(a)Includes nonaccrual loans.

Loans in the Energy business line totaled $1.4 billion, or 3 percent of total loans, at December 31, 2023, a decrease of $33 million compared to December 31, 2022. Total exposure, including unused commitments to extend credit and letters of credit, was $3.3 billion (a utilization rate of 42 percent) and $3.4 billion (a utilization of 43 percent) at December 31, 2023 and December 31, 2022, respectively. Nonaccrual Energy loans decreased $3 million to $4 million at December 31, 2023, compared to $7 million at December 31, 2022. Criticized Energy loans decreased $8 million to $4 million at December 31, 2023, compared to $12 million at December 31, 2022. Energy net recoveries were $1 million for the year ended December 31, 2023, compared to net charge-offs of $3 million for the year ended December 31, 2022.

Leveraged Loans

Certain loans in the Corporation's commercial portfolio are considered leveraged transactions. These loans are typically used for mergers, acquisitions, business recapitalizations, refinancing and equity buyouts. To help mitigate the risk associated with these loans, the Corporation focuses on middle market companies with highly capable management teams, strong sponsors and solid track records of financial performance. Industries prone to cyclical downturns and acquisitions with a high degree of integration risk are generally avoided. Other considerations include the sufficiency of collateral, the level of balance sheet leverage and the adequacy of financial covenants. During the underwriting process, cash flows are stress-tested to evaluate the borrowers' abilities to handle economic downturns and an increase in interest rates.

The FDIC defines higher-risk commercial and industrial (HR C&I) loans for assessment purposes as loans generally with leverage of four times total debt to earnings before interest, taxes and depreciation (EBITDA) as well as three times senior debt to EBITDA, excluding certain collateralized loans.

The following table summarizes information about HR C&I loans, which represented 5 percent and 6 percent of total loans at December 31, 2023 and December 31, 2022, respectively.


(in millions) December 31	2023		2022
Outstandings	$	2,814	$	3,120
Criticized	332		393
Net loan charge-offs recorded during the years ended December 31,	5		20

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Market and Liquidity Risk

Market risk represents the risk of loss due to adverse movement in prices, including interest rates, foreign exchange rates, commodity prices and equity prices. Liquidity risk represents the risk that the Corporation does not have sufficient access to funds to maintain its normal operations at all times or does not have the ability to raise or borrow funds at a reasonable cost at all times.

The Asset Liability Management Committee (ALCO) of the Corporation establishes and monitors compliance with the policies and risk limits pertaining to market and liquidity risk management activities. ALCO meets regularly to discuss and review market and liquidity risk management strategies and consists of executive and senior management from various areas of the Corporation, including treasury, finance, economics, lending, deposit gathering and risk management. Corporate Treasury mitigates market and liquidity risk under the direction of ALCO through the actions it takes to manage the Corporation's market, liquidity and capital positions.

The Corporation performs monthly liquidity stress testing to evaluate its ability to meet funding needs in hypothetical stressed environments. Such environments cover a series of scenarios, including both idiosyncratic and market-wide in nature, which vary in terms of duration and severity. Recent events have created greater uncertainty with respect to normal deposit patterns. Following the March 2023 banking industry disruption, the Corporation activated its contingency funding plan by increasing its cash position through wholesale funding channels and brokered deposits. The Corporation's evaluation as of December 31, 2023 projected that sufficient sources of liquidity were available under each series of events.

In addition to assessing liquidity risk on a consolidated basis, Corporate Treasury also monitors the parent company's liquidity and has established liquidity coverage requirements for meeting expected obligations without the support of additional dividends from subsidiaries. ALCO's policy on liquidity risk management requires the parent company to maintain sufficient liquidity to meet expected cash obligations, such as debt service, dividend payments and normal operating expenses, over a period of no less than 12 months. The Corporation had liquid assets of $1.4 billion on an unconsolidated basis at December 31, 2023.

Corporate Treasury and the Enterprise Risk Division support ALCO in measuring, monitoring and managing interest rate risk as well as all other market risks. Key activities encompass: (i) providing information and analyses of the Corporation's balance sheet structure and measurement of interest rate and all other market risks; (ii) monitoring and reporting of the Corporation's positions relative to established policy limits and guidelines; (iii) developing and presenting analyses and strategies to adjust risk positions; (iv) reviewing and presenting policies and authorizations for approval; and (v) monitoring of industry trends and analytical tools to be used in the management of interest rate and all other market and liquidity risks.

Interest Rate Risk

Net interest income is the primary source of revenue for the Corporation. Interest rate risk arises in the normal course of business due to differences in the repricing and cash flow characteristics of assets and liabilities, primarily through the Corporation's core business activities of extending loans and acquiring deposits. The Corporation's balance sheet is predominantly characterized by floating-rate loans funded by core deposits. Including the impact of interest rate swaps converting floating-rate loans to fixed, the Corporation's loan composition at December 31, 2023 was 40 percent fixed-rate, 51 percent overnight to 30-day rate, 6 percent 90-day and greater rates and 3 percent prime. The composition of the loan portfolio creates sensitivity to interest rate movements due to the imbalance between the faster repricing of the floating-rate loan portfolio versus deposit products. In addition, the growth and/or contraction in the Corporation's loans and deposits may lead to changes in sensitivity to interest rate movements in the absence of mitigating actions. Examples of such actions are purchasing fixed-rate investment securities, which provide liquidity to the balance sheet and act to mitigate the inherent interest rate sensitivity, as well as hedging with interest rate swaps and options. Other mitigating factors include interest rate floors on a portion of the loan portfolio.

The Corporation actively manages its exposure to interest rate risk with the principal objective of optimizing net interest income and the economic value of equity while operating within acceptable limits established for interest rate risk and maintaining adequate levels of funding and liquidity.

Since no single measurement system satisfies all management objectives, a combination of techniques is used to manage interest rate risk. These techniques examine the impact of interest rate risk on net interest income and the economic value of equity under a variety of alternative scenarios, including changes in the level, slope and shape of the yield curve utilizing multiple simulation analyses. Simulation analyses produce only estimates of net interest income as the assumptions used are inherently uncertain. Actual results may differ from simulated results due to many factors, including, but not limited to, the timing, magnitude and frequency of changes in interest rates, market conditions, regulatory impacts and management strategies.

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Sensitivity of Net Interest Income to Changes in Interest Rates

The analysis of the impact of changes in interest rates on net interest income under various interest rate scenarios is management's principal risk management technique. Management models a base-case net interest income under an unchanged interest rate environment using a static balance sheet and generates sensitivity scenarios by changing certain model assumptions. Each scenario includes assumptions such as loan growth, investment security prepayment levels, depositor behavior and overall balance sheet mix and growth which are in line with historical patterns. Additionally, the analysis assumes that all loan hedges qualify for hedge accounting. Changes in actual economic activity may result in a materially different interest rate environment as well as a balance sheet structure that is different from the changes management included in its simulation analysis. Model assumptions in the sensitivity scenarios at December 31, 2023 included for the rising rate scenarios, a modest increase in loan balances and a moderate decrease in deposit balances, and for the declining rate scenarios, a modest decrease in loan balances and a moderate increase in deposit balances. In addition, both scenarios assumed loan spreads held at current levels, an incremental interest-bearing deposit beta of approximately 48%, deposit mix shifts based on historical observations, partial reinvestment of securities portfolio cash flows and no additions to interest rate swaps.

The average balance of the securities portfolio included in the analysis was $17.4 billion for the year ended December 31, 2023 with an average yield of 2.10% and effective duration of 5.5 years.

The table below details components of the variable-rate loan swap portfolio at December 31, 2023.


	Variable-Rate Loan Swaps (a)
(dollar amounts in millions)	Notional Amount		Weighted Average Yield		Years to Maturity (b)
Swaps under contract at December 31, 2023 (c)	$	24,850	2.49	%	3.9
Weighted average notional active per period:
Full year 2023	22,372		2.38		3.5
Full year 2024	23,575		2.50		3.9
Full year 2025	22,973		2.57		4.1

(a)Included $7.0 billion in swaps which no longer qualified for cash flow hedging designation following BSBY cessation. In January 2024, $4.2 billion of these swaps were re-designated, with the remaining expected to be re-designated in early 2024.

(b)Years to maturity calculated from a starting date of December 31, 2023.

(c)Includes forward starting swaps of $2.0 billion starting in 2024. Excluding forward starting swaps, the weighted average yield was 2.43%.

The analysis also includes interest rate swaps that convert $6.3 billion of fixed-rate medium- and long-term debt to variable rates through fair value hedges. Additionally, included in this analysis are $15.5 billion of loans that were subject to an average interest rate floor of 52 basis points at December 31, 2023. This base-case net interest income is then compared against interest rate scenarios in which short-term rates rise or decline 100 or 200 basis points (with a floor of zero percent) in a linear, non-parallel fashion from the base case over 12 months, resulting in an average change of 50 or 100 basis points over the period.

The table below, as of December 31, 2023 and 2022, displays the estimated impact on net interest income during the next 12 months by relating the base case scenario results to those from the rising and declining rate scenarios described above.


	Estimated Annual Change
(dollar amounts in millions)	2023					2022
December 31	Amount		%			Amount		%
Change in Interest Rates:					Change in Interest Rates:
Rising 100 basis points	$	(36)	(2	%)	Rising 100 basis points	$	10	—	%
(50 basis points on average)					(50 basis points on average)
Declining 100 basis points	23		1		Declining 100 basis points	(72)		(2)
(50 basis points on average)					(50 basis points on average)
Rising 200 basis points	(87)		(4)		Rising 200 basis points	(7)		—
(100 basis points on average)					(100 basis points on average)
Declining 200 basis points	33		1		Declining 200 basis points	(156)		(5)
(100 basis points on average)					(100 basis points on average)

In both the 100 and 200 basis point scenarios, sensitivity to declining interest rates shifted from reducing net interest income at December 31, 2022 to benefiting net interest income at December 31, 2023, resulting from a decline in non-maturity deposits, partially offset by an increase in time deposits. In the 100 basis point scenario, sensitivity to rising interest rates shifted from benefiting net interest income at December 31, 2022 to reducing net interest income at December 31, 2023, while in the 200 basis point scenario, negative sensitivity to rising interest rates increased compared to December 31, 2022, resulting from the change in liability mix that occurred in 2023.

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At December 31, 2023, additional sensitivity scenarios applied the rising and declining 100 basis point scenario assumptions with a 60% incremental deposit beta relative to the base case scenario to assess the impact of the Corporation's deposit beta assumptions. In these rising and declining scenarios, net interest income decreased by $65 million and increased by $44 million, respectively, due to a more rapid repricing pace compared to the standard model assumptions. All scenarios presented for December 31, 2023 reflected a change in balance sheet composition following the March 2023 banking industry disruption, as the balance sheet maintained a higher concentration of cash as well as increased wholesale funding and brokered deposits, which contributed to the decrease in net interest income in all scenarios presented.

Sensitivity of Economic Value of Equity to Changes in Interest Rates

In addition to the simulation analysis on net interest income, an economic value of equity analysis provides an alternative view of the interest rate risk position. The economic value of equity is the difference between the estimate of the economic value of the Corporation's financial assets, liabilities and off-balance sheet instruments, derived through discounting cash flows based on actual rates at the end of the period, and the estimated economic value after applying the estimated impact of rate movements. The Corporation primarily monitors the percentage change on the base-case economic value of equity. The economic value of equity analysis is based on an immediate parallel 100 or 200 basis point shock with a floor of zero percent.

The table below, as of December 31, 2023 and December 31, 2022, displays the estimated impact on the economic value of equity from the interest rate scenario described above.


(dollar amounts in millions)	2023					2022
December 31	Amount		%			Amount		%
Change in Interest Rates:					Change in Interest Rates:
Rising 100 basis points	$	(567)	(4	%)	Rising 100 basis points	$	(417)	(3	%)
Declining 100 basis points	794		6		Declining 100 basis points	627		4
Rising 200 basis points	(1,254)		(10)		Rising 200 basis points	(978)		(7)
Declining 200 basis points	1,363		11		Declining 200 basis points	1,033		7

The negative sensitivity of the economic value of equity to rising rates increased from December 31, 2022 to December 31, 2023 due to deposit runoff and adjustments to deposit behavioral assumptions, partially offset by a declining notional amount of cash flow swaps and a smaller securities portfolio. Sensitivity to declining rates increased the economic value of equity due to the same factors.

Loans by Maturity and Interest Rate Sensitivity

The contractual maturity distribution of the loan portfolio is presented below.


	Loans Maturing
(in millions) December 31, 2023	Within One Year (a)		After One But Within Five Years		After Five But Within Fifteen Years		After Fifteen Years		Total
Commercial loans	$	10,616	$	15,535	$967		$	133	$	27,251
Real estate construction loans	1,192		3,612		275		4		5,083
Commercial mortgage loans	2,784		7,707		3,169		26		13,686
Lease financing	270		383		154		—		807
International loans	508		518		76		—		1,102
Residential mortgage loans	5		7		215		1,662		1,889
Consumer loans	487		152		73		1,583		2,295
Total	$	15,862	$	27,914	$	4,929	$	3,408	$	52,113

(a)Includes demand loans, loans having no stated repayment schedule or maturity and overdrafts.

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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, 2023	Predetermined (Fixed) Interest Rate		Floating Interest Rate		Total
Commercial loans	$	375	$	16,260	$	16,635
Real estate construction loans	74		3,817		3,891
Commercial mortgage loans	1,524		9,378		10,902
Lease financing	286		251		537
International loans	3		591		594
Residential mortgage loans	522		1,362		1,884
Consumer loans	28		1,780		1,808
Total	$	2,812	$	33,439	$	36,251

Risk Management Derivative Instruments

The Corporation uses investment securities and derivative instruments as asset and liability management tools with the overall objective of managing the volatility of net interest income from changes in interest rates. These tools assist management in achieving the desired interest rate risk management objectives. Activity related to derivative instruments currently involves interest rate swaps effectively converting fixed-rate medium- and long-term debt to a floating rate as well as variable rate loans to a fixed rate. Notional activity for 2023 included the impact of LIBOR transition for centrally-cleared swaps, where LIBOR-based swaps were replaced with short-dated LIBOR bridge swaps that matured in 2023 and surviving forward-starting Secured Overnight Financing Rate (SOFR) swaps.


(in millions) Risk Management Notional Activity	Interest Rate Contracts		Foreign Exchange Contracts		Totals
Balance at January 1, 2022	$	10,700	$	452	$	11,152
Additions	20,850		8,638		29,488
Maturities/amortizations	(1,800)		(8,698)		(10,498)

Balance at December 31, 2022	$	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

The notional amount of risk management interest rate swaps totaled $31.2 billion at December 31, 2023, which included cash flow swaps that convert $24.9 billion of variable-rate loans to a fixed rate as well as fair value swaps that convert $6.3 billion of fixed-rate medium- and long-term debt to a floating rate. Risk management interest rate swaps generated $715 million of net interest expense for the year ended December 31, 2023, compared to no impact for the year ended December 31, 2022. Of the $24.9 billion of cash flow swaps, $7.0 billion were un-designated for accounting purposes as of December 31, 2023. Refer to Note 8 to the consolidated financial statements for further discussion of de-designated interest rate hedges.

In addition to interest rate swaps, the Corporation employs various other types of derivative instruments as offsetting positions to mitigate exposures to foreign currency risks associated with specific assets and liabilities (e.g., customer loans or deposits denominated in foreign currencies). Such instruments may include foreign exchange spot and forward contracts as well as foreign exchange swap agreements.

Further information regarding risk management derivative instruments is provided in Note 8 to the consolidated financial statements.

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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, 2022	$	21,000	$	7,770	$	1,716	$	30,486
Additions	7,593		14,145		42,017		63,755
Maturities/amortizations	(3,017)		(6,002)		(41,029)		(50,048)
Terminations	(5,278)		(1,392)		—		(6,670)
Balance at December 31, 2022	$	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

The Corporation sells and purchases interest rate caps and floors and enters into foreign exchange contracts, interest rate swaps and energy derivative contracts to accommodate the needs of customers requesting such services. Changes in the fair value of customer-initiated and other derivatives are recognized in earnings as they occur. To limit the market risk of these activities, the Corporation generally takes offsetting positions with dealers. The notional amounts of offsetting positions are included in the table above. Customer-initiated and other notional activity represented 55 percent of total interest rate, energy and foreign exchange contracts at both December 31, 2023 and 2022, respectively.

Further information regarding customer-initiated and other derivative instruments is provided in Note 8 to the consolidated financial statements.

LIBOR Transition

On July 27, 2017, the United Kingdom’s Financial Conduct Authority (FCA), which regulates LIBOR, publicly announced that it intends to stop persuading or compelling banks to submit LIBOR rates after 2021. Effective March 2021, the FCA confirmed that certain LIBOR tenors would no longer be supported after December 31, 2021 and that the remaining tenors, including those most commonly used by the Corporation, would no longer be supported after June 30, 2023. The Corporation had substantial exposure to LIBOR-based products, ceased originating LIBOR-based products in the fourth quarter 2021 and has worked to remediate its outstanding LIBOR contracts. As of December 31, 2023, LIBOR transition was substantially complete.

BSBY Cessation

On November 15, 2023, the Bloomberg Index Services Limited (Bloomberg) announced that it will discontinue publishing the BSBY on November 15, 2024; accordingly, the Corporation was required to “de-designate” $7.0 billion of interest rate swaps used in cash flow hedges of certain BSBY-indexed loans and reclassify amounts recognized in accumulated other comprehensive income into earnings. For each de-designated swap, settlement of interest payments and changes in fair value are recorded as risk management hedging losses within other noninterest income instead of net interest income until the swap is re-designated. In January 2024, $4.2 billion of these swaps were re-designated, with the remaining expected to be re-designated in early 2024. The net impact of BSBY cessation to interest income on commercial loans was a $3 million benefit for the year ended December 31, 2023. Additionally, the Corporation recognized a net loss of $91 million in other noninterest income. Refer to Note 8 to the consolidated financial statements for further discussion of de-designated interest rate hedges.

At December 31, 2023, the Corporation had $33.0 billion of exposure to BSBY-based products, including $21.7 billion in loans and $11.3 billion in interest rate swaps. The Corporation is currently evaluating contracts to ensure appropriate fallback language is included, and will remediate contracts as necessary. The Corporation expects that the majority of BSBY-based contracts will organically transition to SOFR over the upcoming year, with any remaining contracts transitioning to SOFR through fallback language at the first repricing date after BSBY cessation occurs in November 2024.

Sources of Liquidity

The Corporation maintains a liquidity position that it believes will adequately satisfy its financial obligations while taking into account potential commitment draws and deposit run-off that may occur in the normal course of business. The majority of the Corporation's balance sheet is funded by customer deposits. Cash flows from loan repayments, increases in deposit accounts (including brokered deposits), activity in the securities portfolio and wholesale funding channels serve as the Corporation's primary liquidity sources.

The Corporation satisfies incremental liquidity needs with either liquid assets or external funding sources. Available liquidity includes cash, FHLB advances and Federal Reserve Bank (FRB) borrowing, comprised of borrowing through the discount window and the newly established Bank Term Funding Program (BTFP). The Corporation has pledged its investment securities portfolio to access wholesale funding as needed and does not intend to sell or restructure securities at this time.

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The Bank is a member of the FHLB of Dallas, Texas, which provides short- and long-term funding to its members through advances collateralized by real estate-related loans, certain government agency-backed securities and other eligible assets. Actual borrowing capacity is contingent on the amount of collateral pledged to the FHLB and the fair value of pledged assets, as well as applicable FHLB haircuts.

At December 31, 2023, the Bank had pledged real estate-related loans totaling $21.9 billion and investment securities totaling $6.6 billion to the FHLB, which provided for up to $17.1 billion of collateralized borrowing with the FHLB.

The FRB provides liquidity through its discount window, where banks may borrow funds based on the discounted fair value of pledged assets. Additionally, in March 2023, the FRB established the BTFP in response to the 2023 industry disruption, offering loans with up to one year in maturity to eligible depository institutions in exchange for pledged collateral in the form of U.S Treasuries, agency debt and mortgage-backed securities and other qualifying assets. Unlike other funding sources, borrowing capacity under the BTFP is based on the par value, not fair value, of collateral.

At December 31, 2023, the Bank had pledged loans totaling $24.6 billion and investment securities totaling $7.7 billion to the FRB, which provided for up to $21.0 billion and $9.3 billion of collateralized borrowing through the discount window and BTFP program, respectively. The Bank did not rely on the BTFP facility as a funding source, except to perform an operational test at the onset, and does not plan to use the facility before its announced expiration on March 11, 2024. Total available collateralized borrowings with the FRB was $30.3 billion at December 31, 2023.

The table below details the Corporation's sources of available liquidity at December 31, 2023.


(dollar amounts in millions)	Total Capacity		Borrowings Outstanding		Available Liquidity
Cash on deposit with FRB (a)					$	7,860
FHLB	$	17,081	$	7,550	9,531
FRB:
BTFP	9,328		—		9,328
Discount Window	20,953		—		20,953
Total available liquidity					$	47,672

(a) Included in interest-bearing deposits with banks on the Consolidated Balance Sheet.

The Corporation may also use brokered deposits and external debt as additional sources of funding, and maintains a shelf registration statement with the Securities and Exchange Commission through which it may issue securities.The ability of the Corporation and the Bank to raise unsecured funding at competitive rates is impacted by rating agencies' views of the credit quality, liquidity, capital, earnings and other relevant factors related to the Corporation and the Bank. As of December 31, 2023, the three major rating agencies had assigned the following ratings to long-term senior unsecured obligations of the Corporation and the Bank, as well as long-term deposits at the Bank. A security rating is not a recommendation to buy, sell, or hold securities and may be subject to revision or withdrawal at any time by the assigning rating agency. Each rating should be evaluated independently of any other rating.

Debt Ratings

Deposit Ratings

Comerica Incorporated

Comerica Bank

December 31, 2023

Rating

Outlook

Rating

Moody’s Investors Service

Baa1

Negative

Fitch Ratings

A-

Negative

Standard and Poor’s

BBB

BBB+

Stable

not rated

Deposit Concentrations and Uninsured Deposits

The Corporation's focus is commercial customers, and accordingly, it has a larger percentage of uninsured deposits relative to financial institutions with a higher consumer focus. These deposits are well-diversified between geographies, industries and customers. At December 31, 2023, the Retail Bank and general Middle Market segments, both highly diversified and granular, accounted for 37% and 27% of the total deposit base, respectively.

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	December 31, 2023				December 31, 2022
(Dollar amount in millions)	Amount		Percentage of total deposits		Amount		Percentage of total deposits
Total uninsured deposits, as calculated per regulatory guidelines	$	31,485	47	%	$	45,492	64	%
Less: affiliate deposits	(4,064)				(4,458)
Total uninsured deposits, excluding affiliate deposits	$	27,421	41	%	$	41,034	57	%

Time deposits otherwise uninsured, which consist of foreign office time deposits, totaled $13 million at December 31, 2023 and all mature in three months or less. Collateralized deposits, consisting of trust deposits as well as deposits of public entities and state and local government agencies, totaled $687 million at December 31, 2023, compared to $843 million at December 31, 2022.

Potential Uses of Liquidity

Various financial obligations such as contractual obligations, unfunded commitments and deposit withdrawals may require future cash payments by the Corporation. Certain obligations are recognized on the Consolidated Balance Sheets, while others are off-balance sheet under U.S. generally accepted accounting principles.

The following table summarizes the Corporation's material noncancelable contractual obligations and future required minimum payments. Refer to Notes 10, 11, 12, and 25 to the consolidated financial statements for further information regarding these contractual obligations.

Selected Contractual Obligations


	Minimum Payments Due by Period
(in millions) December 31, 2023	Total		Less than 1 Year		1-3 Years		4-5 Years		More than 5 Years
Deposits without a stated maturity (a)	$	58,476	$	58,476
Certificates of deposit and other deposits with a stated maturity (a)	8,286		8,177		$	88	$	18	$	3
Short-term borrowings (a)	3,565		3,565		—		—		—
Medium- and long-term debt (a)	6,300		500		2,750		2,000		1,050
Operating leases	460		70		129		92		169
Commitments to fund low income housing partnerships
Other long-term obligations (b)
Total contractual obligations	$	77,087	$	70,788	$	2,967	$	2,110	$	1,222
Medium- and long-term debt (parent company only) (a) (b)	$	800	$	—	$	250	$	—	$	550

(a)Deposits and borrowings exclude accrued interest.

(b)Parent company only amounts are included in the medium- and long-term debt minimum payments above.

In addition to contractual obligations, other commercial commitments of the Corporation impact liquidity. These include unused commitments to extend credit, standby letters of credit and financial guarantees, and commercial letters of credit. The following table summarizes the Corporation's commercial commitments and expected expiration dates by period.

Commercial Commitments


	Expected Expiration Dates by Period
(in millions) December 31, 2023	Total		Less than 1 Year		1-3 Years		4-5 Years		More than 5 Years

Unused commitments to extend credit	$	31,385	$	8,091	$	12,497	$	6,986	$	3,811
Standby letters of credit and financial guarantees	3,586		3,196		231		158		1
Commercial letters of credit	48		48		—		—		—
Total commercial commitments	$	35,019	$	11,335	$	12,728	$	7,144	$	3,812

Since many of these commitments expire without being fully drawn, and each customer must continue to meet the conditions established in the contract, the total amount of these commercial commitments does not necessarily represent the future cash requirements of the Corporation. Refer to Note 8 to the consolidated financial statements for a further discussion of these commercial commitments.

Other Market Risks

Market risk related to the Corporation's trading instruments is not significant, as trading activities are limited. Certain components of the Corporation's noninterest income, primarily fiduciary income, are at risk to fluctuations in the market values of underlying assets, particularly equity and debt securities. Other components of noninterest income, primarily brokerage fees, are at risk to changes in the volume of market activity.

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Operational Risk

Operational risk represents the risk of loss resulting from inadequate or failed internal processes and people, or from external events, excluding in most cases those driven by technology (see Technology Risk below). The Corporation's definition of operational risk includes fraud; employment practice and workplace safety; clients, products and business practice; business continuity or disaster recovery; execution, delivery, and process management; third party and model risks. The definition does not include strategic or reputational risks. Although operational losses are experienced by all companies and are routinely incurred in business operations, the Corporation recognizes the need to identify and control operational losses and seeks to limit losses to a level deemed appropriate by management, as outlined in the Corporation’s risk appetite statement. The appropriate risk level is determined through consideration of the nature of the Corporation's business and the environment in which it operates, in combination with the impact from, and the possible impact on, other risks faced by the Corporation. Operational risk is mitigated through a system of internal controls that are designed to keep operating risks at appropriate levels. The Operational Risk Management Committee monitors risk management techniques and systems. The Corporation has developed a framework that includes a centralized operational risk reporting function in the Enterprise Risk Division and business/support unit risk liaisons responsible for managing operational risk specific to the respective business lines.

Technology Risk

Technology risk represents the risk of loss or adverse outcomes arising from the people, processes, applications and infrastructure that support the technology environment. The Corporation's definition of technology risk includes technology delivery risk, technology investment risk, cybersecurity risk, information security risk and information management risk. Technology risk is inclusive of the risks associated with the execution of technology processes and activities by third-party contractors and suppliers to the Corporation. Other risk types may materialize in the event of a technology risk event, such as the risk of a financial reporting error or regulatory non-compliance, and the impact of such risks are highly interdependent with operational risk.

The Technology Risk Committee, comprising senior and executive business unit managers, as well as managers responsible for technology, cybersecurity, information security and enterprise risk management, oversees technology risk. The Technology Risk Committee also ensures that appropriate actions are implemented in business units to mitigate risk to an acceptable level.

Compliance Risk

Compliance risk represents the risk of sanctions or financial loss resulting from the Corporation's failure to comply with all applicable laws, regulations and standards of good banking practice. The impact of such risks is highly interdependent with strategic risk, as the reputational impact from compliance breaches can be severe. Activities which may expose the Corporation to compliance risk include, but are not limited to, those dealing with the prevention of money laundering, privacy and data protection, community reinvestment initiatives, fair lending, consumer protection, employment and tax matters, over-the-counter derivative activities and other regulated activities.

The Enterprise-Wide Compliance Committee, comprising senior and executive business unit managers, as well as managers responsible for compliance, audit and overall risk, oversees compliance risk. This enterprise-wide approach provides a consistent view of compliance across the organization. The Enterprise-Wide Compliance Committee also ensures that appropriate actions are implemented in business units to mitigate risk to an acceptable level.

Strategic Risk

Strategic risk represents the risk of inadequate returns or possible losses due to impairment of reputation, failure to fully develop and execute business plans, failure to assess current and new opportunities in business, markets and products, failure to determine appropriate consideration for risks accepted, and any other event not identified in the defined risk categories of credit, market and liquidity, operational, technology or compliance risks. Mitigation of the various risk elements that represent strategic risk is achieved through numerous metrics and initiatives to help the Corporation better understand, measure and report on such risks.

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CRITICAL ACCOUNTING ESTIMATES

The Corporation’s consolidated financial statements are prepared based on the application of accounting policies, the most significant of which are described in Note 1. These policies require numerous estimates and strategic or economic assumptions, which may prove inaccurate or subject to variations. Changes in underlying factors, assumptions or estimates could have a material impact on the Corporation’s future financial condition and results of operations. At December 31, 2023, the most critical of these estimates related to the allowance for credit losses, fair value measurement, goodwill, pension plan accounting and income taxes. These estimates were reviewed with the Audit Committee of the Corporation’s Board of Directors and are discussed more fully below.

ALLOWANCE FOR CREDIT LOSSES

In accordance with CECL, the allowance for credit losses, which includes both the allowance for loan losses and the allowance for credit losses on lending-related commitments, is calculated with the objective of maintaining a reserve for current expected credit losses over the remaining contractual life of the portfolio. The Corporation uses loss factors, based on estimated probability of default for internal risk ratings and loss given default, to determine the allowance for credit losses for the majority of its portfolio. Management applies loss factors to pools of loans and lending-related commitments with similar risk characteristics, calibrates these factors using economic forecasts and incorporates qualitative adjustments. For further discussion of the methodology used in the determination of the allowance for credit losses, refer to Note 1 to the consolidated financial statements. For further discussion on the economic forecast incorporated into the 2023 model, refer to the “Risk Management” section of this financial review.

Management's determination of the appropriateness of the allowance is based on periodic evaluations of the loan portfolio, lending-related commitments, current as well as forecasted economic factors and other relevant information. The calculation is inherently subjective and requires management to exercise significant judgment in developing assumptions for the estimate, the most significant of which are the loan risk rating process, development of economic forecasts and application of qualitative adjustments. Sensitivities are disclosed to demonstrate how changes in loan risk ratings and economic forecast scenarios may impact the allowance for credit losses. Sensitivities only consider changes to each specific assumption in isolation and their impact to the quantitative modeled results. They do not contemplate impacts to the qualitative framework.

Loan Risk Rating Process

Reserve factors are applied to pools of loans based on risk characteristics, including the Corporation's internal risk rating system; therefore, loss estimates are highly dependent on the accuracy of the risk rating assigned to each loan. The inherent imprecision in the risk rating system resulting from inaccuracy in assigning and/or entering risk ratings in the loan accounting system is monitored by the Corporation's asset quality review function. Changes to internal risk ratings, beyond the forecasted migration inherent in the credit models, would result in a different estimated allowance for credit losses. To illustrate, if 5 percent of the individual risk ratings were adjusted down by one rating across all pools, the allowance for loan losses as of December 31, 2023 would change by approximately $6 million.

Forecasted Economic Variables

Management utilizes models through which historical reserve factor estimates are calibrated to economic forecasts over the reasonable and supportable forecast period based on the projected performance of specific economic variables that statistically correlate with the probability of default and loss given default pools. Loss estimates revert to historical loss experience for contractual lives beyond the forecast period. Management selects economic variables it believes to be most relevant based on the composition of the loan portfolio and customer base, including forecasted levels of employment, gross domestic product, corporate bond and treasury spreads, industrial production levels, consumer and commercial real estate price indices as well as housing statistics.

The allowance for credit losses is highly sensitive to the economic forecasts used to develop the estimate. Due to the high level of uncertainty regarding significant assumptions, the Corporation evaluated a range of economic scenarios, including a more severe economic forecast scenario, with varying responses to current economic risks. The following table summarizes the more severe forecast scenario for the economic variables that are most impactful.

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Economic Variable			More Severe Forecast
Real GDP growth			Contracts through third quarter 2024, peaking at a decline of 3.5 percent annualized in second quarter 2024, subsequently improving to a 2.2 percent annual growth rate by the end of the forecast period.
Unemployment rate			Increases to 7.7 percent by first quarter 2025 followed by a gradual decline to 6.9 percent by the end of the forecast period.
Corporate BBB bond to 10-year Treasury bond spreads			Spreads widen to a peak of over 4.2 percent before gradually narrowing to 2.3 percent by the end of the forecast period.
Oil Prices			Decline to $53 per barrel by first quarter 2025 before increasing to $61 per barrel by the end of the forecast period.

Selecting a different forecast in the current environment could result in a significantly different estimated allowance for credit losses. To illustrate, absent model overlays and other qualitative adjustments that are part of the quarterly reserving process, if the Corporation selected the more severe scenario to inform its models, the allowance for credit losses as of December 31, 2023 would increase by approximately $376 million. However, factoring in model overlays and qualitative adjustments could result in a materially different estimate under a more severe scenario.

Qualitative Adjustments and Model Overlays

The Corporation includes qualitative adjustments, as appropriate, intended to capture the impact of uncertainties not reflected in the quantitative estimate, including foresight risk, model imprecisions and input imprecisions. Qualitative adjustments for foresight risk reflect the inherent imprecision in economic forecasts and may be included based on management’s evaluation of different forecast scenarios, ranging from more benign to more severe, and known recent events impacting the Corporation’s portfolio. Model imprecision adjustments and model overlays may be included to mitigate known limitations in the quantitative models. Input imprecision includes adjustments for portfolios where recent historical losses exceed expected losses or known recent events are expected to alter risk ratings once evidence is acquired, as well as a qualitative assessment of the lending environment, including underwriting standards, current economic and political conditions, and other factors affecting credit quality. Qualitative reserves at December 31, 2023 primarily included adjustments for uncertainties related to forecasted economic variables.

Other Considerations

To the extent actual outcomes differ from management estimates, additional provision for credit losses may be required that would adversely impact earnings in future periods. The allowance is assigned to business segments, and any earnings impact resulting from actual outcomes differing from management estimates would primarily affect the Commercial Bank segment.

FAIR VALUE MEASUREMENT

Investment securities available-for-sale, derivatives and deferred compensation plan assets and associated liabilities are recorded at fair value on a recurring basis. Additionally, from time to time, other assets and liabilities may be recorded at fair value on a nonrecurring basis, such as impaired loans that have been measured based on the fair value of the underlying collateral, loans held-for-sale recorded at the lower of cost or market, other real estate (primarily foreclosed property), nonmarketable equity securities and certain other assets and liabilities. Nonrecurring fair value adjustments typically involve write-downs of individual assets or application of lower of cost or fair value accounting.

Fair value is an estimate of the exchange price that would be received to sell an asset or paid to transfer a liability in an orderly transaction (i.e., not a forced transaction, such as a liquidation or distressed sale) between market participants at the measurement date and is based on the assumptions market participants would use when pricing an asset or liability. Fair value measurement and disclosure guidance establishes a three-level hierarchy for disclosure of assets and liabilities recorded at fair value. Notes 1 and 2 to the consolidated financial statements include information about the fair value hierarchy, the extent to which fair value is used to measure assets and liabilities, as well as the valuation methodologies and key inputs used.

At December 31, 2023, assets and liabilities measured using observable inputs that are classified as Level 1 or Level 2 represented substantially all of total assets and liabilities recorded at fair value, respectively. Valuations generated from model-based techniques that use at least one significant assumption not observable in the market are considered Level 3 and reflect estimates of assumptions market participants would use in pricing the asset or liability. The valuation of Level 3 assets and liabilities are considered critical accounting estimates.

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GOODWILL

Goodwill is initially recorded as the excess of the purchase price over the fair value of the net assets acquired in a business combination and is subsequently evaluated at least annually for impairment. Goodwill impairment testing is performed at the reporting unit level, equivalent to a business segment or one level below. The Corporation has three reporting units: the Commercial Bank, the Retail Bank, and Wealth Management. At December 31, 2023 and 2022, goodwill totaled $635 million, including $473 million allocated to the Commercial Bank, $101 million allocated to the Retail Bank, and $61 million allocated to Wealth Management.

During the third quarter of 2023, the Corporation elected to perform a quantitative impairment analysis. The estimated fair values of the reporting units were determined using a blend of two commonly used valuation techniques: the market approach and the income approach. For the market approach, valuations of reporting units considered a combination of earnings and equity multiples from companies with characteristics similar to the reporting unit. Since the fair values determined under the market approach are representative of noncontrolling interests, the valuations incorporated a control premium. For the income approach, estimated future cash flows were derived from internal forecasts and economic expectations for each reporting unit. In the short- and mid-term, forecasts incorporated current economic conditions and impacts of expected monetary policy decisions by the Federal Reserve Bank. Long-term projections reflected normalized rate and credit environments, as well as a long-term rate of return for each reporting unit. Projections were discounted using an applicable discount rate to calculate the fair value. The discount rate was based on the imputed cost of equity capital for each reporting unit, which incorporates the risk-free rate of return, a market equity risk premium, potential stock volatility, and a size risk premium. The discount rate further reflected the uncertainty of current economic conditions and potential impacts to the forecasted financial information.

The combined fair value of all units was compared to the Corporation's market capitalization for reasonableness. At the conclusion of the quantitative impairment test in the third quarter 2023, the estimated fair values of all reporting units substantially exceeded their carrying amounts, including goodwill. The Corporation performed a hypothetical sensitivity analysis to evaluate the impact to the estimated fair value of each reporting unit from an adverse change in the discount rate. A 100 basis point increase in the discount rate would result in the fair value of each reporting unit to continue to substantially exceed its carrying value.

The Corporation continues to monitor economic conditions that could significantly impact the impairment analysis and result in future goodwill impairment charges that, if incurred, could have a material adverse effect on the Corporation's results of operations in the period such charges are recognized. Additionally, any new legislative or regulatory changes not anticipated in management's expectations may cause the fair value of one or more of the reporting units to fall below the carrying value, resulting in a goodwill impairment charge. Any impairment charge would not affect the Corporation's regulatory capital ratios, tangible common equity ratio or liquidity position.

PENSION PLAN ACCOUNTING

The Corporation has a qualified and a non-qualified defined benefit pension plan. Effective January 1, 2017, benefits are calculated using a cash balance formula based on years of service, age, compensation and an interest credit based on the 30-year Treasury rate. Participants under age 60 as of December 31, 2016 are eligible to receive a frozen final average pay benefit in addition to amounts earned under the cash balance formula. Participants age 60 or older as of December 31, 2016 continue to be eligible for a final average pay benefit. The Corporation makes assumptions concerning future events that will determine the amount and timing of required benefit payments, funding requirements and defined benefit pension expense. The major assumptions are the discount rate used in determining the current benefit obligation, the long-term rate of return expected on plan assets, mix of assets within the portfolio and the projected mortality rate.

The discount rate is determined by matching the expected cash flows of the pension plans to a portfolio of high quality corporate bonds as of the measurement date, December 31. The long-term rate of return expected on plan assets is set after considering both long-term returns in the general market and long-term returns experienced by the assets in the plan. The current target asset allocation model for the plans is provided in Note 17 to the consolidated financial statements. The expected returns on these various asset categories are blended to derive one long-term return assumption. The assets are primarily invested in certain collective investment funds, common stocks, U.S. Treasury and other U.S. government agency securities, as well as corporate and municipal bonds and notes. Mortality rate assumptions are based on mortality tables published by third

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parties such as the Society of Actuaries, considering other available information including historical data as well as studies and publications from reputable sources.

The Corporation reviews its pension plan assumptions on an annual basis with its actuarial consultants to determine if the assumptions are reasonable and adjusts the assumptions to reflect changes in future expectations. The major assumptions used to calculate 2024 and 2023 defined benefit plan pension expense (benefit) were as follows:


	2024		2023
Discount rate	5.33	%	5.60	%
Long-term rate of return on plan assets	6.75	%	6.50	%
Mortality table:
Base table (a)	Pri-2012		Pri-2012
Mortality improvement scale (a)	MP-2020		MP-2020

(a)Issued by the Society of Actuaries

Defined benefit plan benefit is expected to increase $19 million to approximately $45 million in 2024, compared to a benefit of $26 million in 2023. This includes service cost expense of $37 million and a benefit from other components of $82 million. Service costs are included in salaries and benefits expense, while the benefit from other components are included in other noninterest expenses on the Consolidated Statements of Income.

The Corporation’s pension plan is most sensitive to changes in discount rate and long-term rate of return. A change to the discount rate implies a corresponding change in interest rates that affect the value of the plan’s fixed income assets. An increase of 25 basis points to the discount rate, including the effect of higher interest rates on the plan’s fixed income assets, would result in a net increase to pension expense of $6 million, while a decrease of 25 basis points would reduce pension expense by $6 million. Increasing the long-term rate of return by 25 basis points would reduce pension expense by $7 million, while a decrease of 25 basis points would increase pension expense by $7 million.

Due to the long-term nature of pension plan assumptions, actual results may differ significantly from the actuarial-based estimates. Differences resulting in actuarial gains or losses are required to be recorded in shareholders' equity as part of accumulated other comprehensive loss and amortized to defined benefit pension expense in future years. Refer to Note 17 to the consolidated financial statements for further information.

INCOME TAXES

The provision for income taxes is the sum of income taxes due for the current year and deferred taxes. Deferred taxes arise from temporary differences between the income tax basis and financial accounting basis of assets and liabilities. Accrued taxes represent the net estimated amount due to or to be received from taxing jurisdictions, currently or in the future, and are included in accrued income and other assets or accrued expenses and other liabilities on the Consolidated Balance Sheets.

Included in net deferred taxes are deferred tax assets. Deferred tax assets are evaluated for realization based on available evidence of projected future reversals of existing taxable temporary differences, assumptions made regarding future events and, when applicable, state loss carryback capacity. A valuation allowance is provided when it is more-likely-than-not that some portion of the deferred tax asset will not be realized. Determining whether deferred tax assets are realizable is subjective and requires the use of significant judgment.

The Corporation assesses the relative risks and merits of tax positions for various transactions after considering statutes, regulations, judicial precedent and other available information and maintains tax accruals consistent with these assessments. This assessment is complex and requires judgment. The Corporation is subject to audit by taxing authorities that could question and/or challenge the tax positions taken by the Corporation. Changes in the estimate of accrued taxes occur due to changes in tax law, interpretations of existing tax laws, new judicial or regulatory guidance, the status of examinations conducted by taxing authorities that impact the relative risks and merits of tax positions taken by the Corporation. These changes, when they occur, impact the estimate of accrued taxes and could be significant to the operating results of the Corporation. For further information on tax accruals and related risks, see Note 18 to the consolidated financial statements.

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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	2023			2022
Common Equity Tier 1 Capital:
Tier 1 capital	$			$
Less:
Fixed-rate reset non-cumulative perpetual preferred stock
Common equity tier 1 capital	$	8,414		$	7,884
Risk-weighted assets	$			$
Tier 1 capital ratio			%			%
Common equity tier 1 capital ratio
Tangible Common Equity Ratio:
Total shareholders' equity	$	6,406		$	5,181
Less:
Fixed-rate reset non-cumulative perpetual preferred stock	394			394
Common shareholders' equity	$	6,012		$	4,787
Less:
Goodwill	635			635
Other intangible assets	8			9
Tangible common equity	$	5,369		$	4,143
Total assets	$	85,834		$	85,406
Less:
Goodwill	635			635
Other intangible assets	8			9
Tangible assets	$	85,191		$	84,762
Common equity ratio	7.00		%	5.60		%
Tangible common equity ratio	6.30			4.89
Tangible Common Equity per Share of Common Stock:
Common shareholders' equity	$	6,012		$	4,787
Tangible common equity	5,369			4,143
Shares of common stock outstanding (in millions)	132			131
Common shareholders' equity per share of common stock	$	45.58		$	36.55
Tangible common equity per share of common stock	40.70			31.62

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FORWARD-LOOKING STATEMENTS

This report includes forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. In addition, the Corporation may make other written and oral communications from time to time that contain such statements. All statements regarding the Corporation's expected financial position, strategies and growth prospects as well as general economic conditions expected to exist in the future are forward-looking statements. The words, “anticipates,” “believes,” "contemplates," “feels,” “expects,” “estimates,” “seeks,” “strives,” “plans,” “intends,” “outlook,” “forecast,” “position,” “target,” “mission,” “assume,” “achievable,” “potential,” “strategy,” “goal,” “aspiration,” “opportunity,” “initiative,” “outcome,” “continue,” “remain,” “maintain,” "on track," “trend,” “objective,” “looks forward,” "projects," "models" and variations of such words and similar expressions, or future or conditional verbs such as “will,” “would,” “should,” “could,” “might,” “can,” “may” or similar expressions, as they relate to the Corporation or its management, are intended to identify forward-looking statements. The Corporation cautions that forward-looking statements are subject to numerous assumptions, risks and uncertainties, which change over time. Forward-looking statements speak only as of the date the statement is made, and the Corporation does not undertake to update forward-looking statements to reflect facts, circumstances, assumptions or events that occur after the date the forward-looking statements are made. Actual results could differ materially from those anticipated in forward-looking statements and future results could differ materially from historical performance.

In addition to factors mentioned elsewhere in this report or previously disclosed in the Corporation's SEC reports (accessible on the SEC's website at www.sec.gov or on the Corporation's website at www.comerica.com), actual results could differ materially from forward-looking statements and future results could differ materially from historical performance due to a variety of reasons, including but not limited to, the following factors:

•changes in customer behavior may adversely impact the Corporation's business, financial condition and results of operations;

•unfavorable developments concerning credit quality could adversely affect the Corporation's financial results;

•declines in the businesses or industries of the Corporation's customers could cause increased credit losses or decreased loan balances, which could adversely affect the Corporation;

•governmental monetary and fiscal policies may adversely affect the financial services industry, and therefore impact the Corporation's financial condition and results of operations;

•fluctuations in interest rates and their impact on deposit pricing could adversely affect the Corporation's net interest income and balance sheet;

•the Corporation's transition away from the Bloomberg Short-Term Bank Yield Index could adversely affect its financial results;

•the Corporation must maintain adequate sources of funding and liquidity to meet regulatory expectations, support its operations and fund outstanding liabilities;

•reduction in the Corporation's credit ratings could adversely affect the Corporation and/or the holders of its securities;

•the soundness of other financial institutions could adversely affect the Corporation;

•security risks, including denial of service attacks, hacking, social engineering attacks targeting the Corporation’s colleagues and customers, malware intrusion or data corruption attempts, and identity theft, could result in the disclosure of confidential information, adversely affect its business or reputation, and create significant legal and financial exposure;

•cybersecurity and data privacy are areas of heightened legislative and regulatory focus;

•the Corporation’s operational or security systems or infrastructure, or those of third parties, could fail or be breached, , which could disrupt Comerica’s business and adversely impact the Corporation’s results of operations, liquidity and financial condition, as well as cause legal or reputational harm;

•the Corporation relies on other companies to provide certain key components of its delivery systems, and certain failures could materially adversely affect operations;

•legal and regulatory proceedings and related financial services industry matters, including those directly involving the Corporation and its subsidiaries, could adversely affect the Corporation or the financial services industry in general;

•the Corporation may incur losses due to fraud;

•controls and procedures may fail to prevent or detect all errors or acts of fraud;

•changes in regulation or oversight, or changes in Comerica’s status with respect to existing regulations or oversight, may have a material adverse impact on the Corporation's operations;

•compliance with more stringent capital requirements may adversely affect the Corporation;

•changes to tax law or regulations, or changes to administrative or judicial interpretations of tax law or regulations, could adversely affect the Corporation;

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•damage to the Corporation’s reputation could damage its businesses;

•the Corporation may not be able to utilize technology to develop, market and deliver new products and services to its customers;

•competitive product and pricing pressures within the Corporation's markets may change;

•the introduction, implementation, withdrawal, success and timing of business initiatives and strategies may be less successful or may be different than anticipated, which could adversely affect the Corporation's business;

•management's ability to maintain and expand customer relationships may differ from expectations;

•management's ability to retain key officers and employees may change;

•any future strategic acquisitions or divestitures may present certain risks to the Corporation's business and operations;

•general political, economic or industry conditions, either domestically or internationally, may be less favorable than expected;

•inflation could negatively impact the Corporation's business, profitability and stock price;

•methods of reducing risk exposures might not be effective;

•catastrophic events, including pandemics, may adversely affect the general economy, financial and capital markets, specific industries, and the Corporation;

•climate change manifesting as physical or transition risks could adversely affect the Corporation's operations, businesses and customers;

•changes in accounting standards could materially impact the Corporation's financial statements;

•the Corporation's accounting policies and processes are critical to the reporting of financial condition and results of operations and require management to make estimates about matters that are uncertain;

•the Corporation's stock price can be volatile; and

•an investment in the Corporations' equity securities is not insured or guaranteed by the FDIC.

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CONSOLIDATED BALANCE SHEETS

Comerica Incorporated and Subsidiaries


(in millions, except share data)
December 31	2023	2022

ASSETS
Cash and due from banks	$	$
Interest-bearing deposits with banks
Other short-term investments
Investment securities available-for-sale
Commercial loans
Real estate construction loans
Commercial mortgage loans
Lease financing
International loans
Residential mortgage loans
Consumer loans
Total loans
Allowance for loan losses	()	()
Net loans
Premises and equipment
Accrued income and other assets
Total assets	$	$
LIABILITIES AND SHAREHOLDERS’ EQUITY
Noninterest-bearing deposits	$	$
Money market and interest-bearing checking deposits
Savings deposits
Customer certificates of deposit
Other time deposits
Foreign office time deposits
Total interest-bearing deposits
Total deposits
Short-term borrowings
Accrued expenses and other liabilities
Medium- and long-term debt
Total liabilities
Fixed-rate reset non-cumulative perpetual preferred stock, series A, par value, $100,000 liquidation preference per share:
Authorized - shares
Issued - shares
Common stock - $ par value:
Authorized - shares
Issued - shares
Capital surplus
Accumulated other comprehensive loss	()	()
Retained earnings
Less cost of common stock in treasury - shares at 12/31/2023 and shares at 12/31/2022	()	()
Total shareholders’ equity
Total liabilities and shareholders’ equity	$	$

See notes to consolidated financial statements.

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CONSOLIDATED STATEMENTS OF INCOME

Comerica Incorporated and Subsidiaries

(in millions, except per share data)

Years Ended December 31

2023

2022

2021

INTEREST INCOME

Interest and fees on loans

Interest on investment securities

Interest on short-term investments

Total interest income

INTEREST EXPENSE

Interest on deposits

Interest on short-term borrowings

Interest on medium- and long-term debt

Total interest expense

Net interest income

Provision for credit losses

()

Net interest income after provision for credit losses

NONINTEREST INCOME

Card fees

Fiduciary income

Service charges on deposit accounts

Capital markets income

Commercial lending fees

Bank-owned life insurance

Letter of credit fees

Brokerage fees

Risk management hedging (loss) income

()

Other noninterest income

Total noninterest income

NONINTEREST EXPENSES

Salaries and benefits expense

Outside processing fee expense

FDIC insurance expense

Occupancy expense

Software expense

Equipment expense

Advertising expense

Other noninterest expenses

Total noninterest expenses

Income before income taxes

Provision for income taxes

NET INCOME

Less:

Income allocated to participating securities

Preferred stock dividends

Net income attributable to common shares

Earnings per common share:

Basic

Diluted

Cash dividends declared on common stock

Cash dividends declared per common share

See notes to consolidated financial statements.

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CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

Comerica Incorporated and Subsidiaries


(in millions)
Years Ended December 31	2023	2022		2021
NET INCOME	$	$		$
OTHER COMPREHENSIVE INCOME (LOSS)
Unrealized gains (losses) on investment securities:
Net unrealized holding gains (losses) arising during the period		()		()


Change in net unrealized gains (losses) before income taxes		()		()
Net gains (losses) on cash flow hedges:
Net cash flow hedge gains (losses) arising during the period before income taxes		()		()
Reclassification of loss related to de-designation of derivatives to other noninterest income	()
Less:
Net cash flow hedge (losses) gains recognized in interest and fees on loans before taxes	()	()
Amortization of unrealized losses related to de-designated derivatives included in interest and fees on loans	()
Change in net cash flow hedge gains (losses) before income taxes		()		()
Defined benefit pension and other postretirement plans adjustment:
Actuarial gain (loss) arising during the period		()
Prior service credit arising during the period
Adjustments for amounts recognized as components of net periodic benefit cost:
Amortization of actuarial net loss
Amortization of prior service credit	()	()		()

Change in defined benefit pension and other postretirement plans adjustment before income taxes		()
Total other comprehensive income (loss) before income taxes		()		()
Provision (benefit) for income taxes		()		()
Total other comprehensive income (loss), net of tax		()		()
COMPREHENSIVE INCOME (LOSS)	$	$	()	$

See notes to consolidated financial statements.

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CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

Comerica Incorporated and Subsidiaries

Accumulated

Nonredeemable

Common Stock

Other

Total

Preferred

Capital

Comprehensive

Retained

Treasury

Shareholders'

(in millions, except per share data)

Stock

Outstanding

Amount

Surplus

Income (Loss)

Earnings

Stock

Equity

BALANCE AT DECEMBER 31, 2020

()

Net income

—

Other comprehensive loss, net of tax

—

()

—

()

Cash dividends declared on common stock ($2.72 per share)

—

()

—

()

Cash dividends declared on preferred stock

—

()

—

()

Purchase of common stock

—

()

—

()

—

()

Net issuance of common stock under employee stock plans

—

()

—

()

Share-based compensation

—

BALANCE AT DECEMBER 31, 2021

()

Net income

—

Other comprehensive loss, net of tax

—

()

—

()

Cash dividends declared on common stock ($2.72 per share)

—

()

—

()

Cash dividends declared on preferred stock

—

()

—

()

Purchase of common stock

—

()

—

()

Net issuance of common stock under employee stock plans

—

()

—

()

Share-based compensation

—

BALANCE AT DECEMBER 31, 2022

()

Net income

—

Other comprehensive income, net of tax

—

Cash dividends declared on common stock ($2.84 per share)

—

()

—

()

Cash dividends declared on preferred stock

—

()

—

()

Net issuance of common stock under employee stock plans

—

()

—

()

Share-based compensation

—

BALANCE AT DECEMBER 31, 2023

()

See notes to consolidated financial statements.

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CONSOLIDATED STATEMENTS OF CASH FLOWS

Comerica Incorporated and Subsidiaries



(in millions)
Years Ended December 31	2023	2022	2021

OPERATING ACTIVITIES
Net income	$	$	$
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for credit losses			()
(Benefit) provision for deferred income taxes	()	()
Depreciation and amortization
Net periodic defined benefit credit	()	()	()
Share-based compensation expense
Net amortization of securities


Net gains on sales of foreclosed and other bank property	()	()


Net change in:

Accrued income receivable	()	()
Accrued expenses payable
Other, net	()	()	()
Net cash provided by operating activities
INVESTING ACTIVITIES
Investment securities available-for-sale:
Maturities and redemptions

Purchases		()	()
Net change in loans		()
Proceeds from sales of foreclosed and other bank property
Net increase in premises and equipment	()	()	()
Federal Home Loan Bank stock:
Purchases	()	()
Redemptions
Proceeds from bank-owned life insurance settlements
Other, net			()
Net cash provided by (used in) investing activities		()
FINANCING ACTIVITIES
Net change in:
Deposits	()	()
Short-term borrowings
Medium- and long-term debt:
Maturities and redemptions	()		()
Issuances and advances



Cash dividends paid on preferred stock	()	()	()
Common stock:
Repurchases	()	()	()
Cash dividends paid	()	()	()
Issuances under employee stock plans
Other, net	()	()
Net cash (used in) provided by financing activities	()	()
Net increase (decrease) in cash and cash equivalents		()
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period	$	$	$
Interest paid	$	$	$
Income taxes paid

See notes to consolidated financial statements.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Comerica Incorporated and Subsidiaries

NOTE 1 -

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.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Comerica Incorporated and Subsidiaries

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Comerica Incorporated and Subsidiaries

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Comerica Incorporated and Subsidiaries

For further information about fair value measurements refer to Note 2.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Comerica Incorporated and Subsidiaries

million and $ million at December 31, 2023 and 2022, respectively.

Loan fees on unused commitments and net origination fees related to loans sold are recognized in noninterest income.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Comerica Incorporated and Subsidiaries

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Comerica Incorporated and Subsidiaries

million and $ million, net of accumulated depreciation of $ million and $ million at December 31, 2023 and December 31, 2022, respectively. Depreciation expense related to these costs was $9 million and $4 million for the years ended December 31, 2023 and 2022, respectively.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Comerica Incorporated and Subsidiaries

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.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Comerica Incorporated and Subsidiaries

billion of notional of fair value hedges of medium- and long-term debt. This method allows for the assumption of perfect effectiveness and eliminates the requirement to further assess hedge effectiveness on these transactions. For hedge relationships to which the Corporation does not apply the short-cut method, statistical regression analysis is used at inception to assess whether the derivative used is expected to be highly effective in offsetting changes in the fair value or cash flows of the hedged item. A statistical regression or qualitative analysis is performed at each reporting period thereafter to evaluate hedge effectiveness. As part of the adoption of Topic 848, certain hedge accounting requirements for qualifying modifications to derivative instruments due to LIBOR transition were suspended through the completion of LIBOR transition in third quarter 2023. For further information on Topic 848, refer to the "Loans" policy in this Note.

Further information on the Corporation’s derivative instruments and hedging activities is included in Note 8.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Comerica Incorporated and Subsidiaries

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Comerica Incorporated and Subsidiaries

percent of the fair value of assets. Prior service costs or credits include the impact of plan amendments on the liabilities and are amortized over the future service periods of active employees expected to receive benefits under the plan. Actuarial gains and losses result from experience different from that assumed and from changes in assumptions (excluding asset gains and losses not yet reflected in market-related value). Amortization of actuarial gains and losses is included as a component of net periodic defined benefit pension cost for a year if the actuarial net gain or loss exceeds 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.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Comerica Incorporated and Subsidiaries

NOTE 2 –

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Comerica Incorporated and Subsidiaries

$ $ $ Equity securities Investment securities available-for-sale:U.S. Treasury securities Residential mortgage-backed securities (a) Commercial mortgage-backed securities (a) Total investment securities available-for-sale Derivative assets:Interest rate contracts Energy contracts Foreign exchange contracts Total derivative assets Total assets at fair value$ $ $ $ Derivative liabilities:Interest rate contracts$ $ $ $ Energy contracts Foreign exchange contracts Other financial derivative liabilities Total derivative liabilities Deferred compensation plan liabilities Total liabilities at fair value$ $ $ $ December 31, 2022Deferred compensation plan assets$ $ $ $ Equity securities Investment securities available-for-sale:U.S. Treasury securities Residential mortgage-backed securities (a) Commercial mortgage-backed securities (a) Total investment securities available-for-sale Derivative assets:Interest rate contracts Energy contracts Foreign exchange contracts Total derivative assets Total assets at fair value$ $ $ $ Derivative liabilities:Interest rate contracts$ $ $ $ Energy contracts Foreign exchange contracts Other financial derivative liabilities Total derivative liabilities Deferred compensation plan liabilities Total liabilities at fair value$ $ $ $ $()) ()

Level 3 assets recorded at fair value on a nonrecurring basis at December 31, 2023 and December 31, 2022 included loans with a specific allowance and certain bank property held for sale, both measured based on the fair value of collateral. The unobservable inputs were the additional adjustments applied by management to the appraised values to reflect such factors as non-current appraisals and revisions to estimated time to sell. These adjustments are determined based on qualitative judgments made by management on a case-by-case basis and are not observable inputs, although they are used in the determination of fair value. At December 31, 2023, loans held-for-sale classified as Level 3 represented loans held-for-sale in less liquid markets requiring significant management assumptions when determining fair value.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Comerica Incorporated and Subsidiaries

$ $ $ $ Interest-bearing deposits with banks Other short-term investments Total loans, net of allowance for loan losses (a) Liabilities

Demand deposits

Time deposits

Total deposits Short-term borrowings Medium- and long-term debt

Liabilities for credit-related financial instruments

()() ()December 31, 2022AssetsCash and due from banks$ $ $ $ $ Interest-bearing deposits with banks Other short-term investments Total loans, net of allowance for loan losses (a) Liabilities

Demand deposits

Time deposits

Total deposits Short-term borrowings Medium- and long-term debt Liabilities for credit-related financial instruments()() ()

(a)

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Comerica Incorporated and Subsidiaries

NOTE 3 -

$ $ $ Residential mortgage-backed securities (a) Commercial mortgage-backed securities (a) Total investment securities available-for-sale$ $ $ $ December 31, 2022Investment securities available-for-sale:U.S. Treasury securities$ $ $ $ Residential mortgage-backed securities (a) Commercial mortgage-backed securities (a) Total investment securities available-for-sale$ $ $ $

(a)Issued and/or guaranteed by U.S. government agencies or U.S. government-sponsored enterprises.

$ $ $ $ $ Residential mortgage-backed securities (a) Commercial mortgage-backed securities (a) Total temporarily impaired securities$ $ $ $ $ $ December 31, 2022U.S. Treasury securities$ $ $ $ $ $ Residential mortgage-backed securities (a) Commercial mortgage-backed securities (a) Total temporarily impaired securities$ $ $ $ $ $

(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, 2023 or December 31, 2022.

Interest receivable on investment securities totaled $ million and $ million at December 31, 2023 and 2022, respectively, and was included in accrued income and other assets on the Consolidated Balance Sheets.

Sales, calls and write-downs of investment securities available-for-sale, computed based on the adjusted cost of the specific security, resulted in gains or losses during the years ended December 31, 2023, 2022 and 2021.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Comerica Incorporated and Subsidiaries

$ After one year through five years After five years through ten years After ten years Total investment securities$ $

(a)

(b)

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Comerica Incorporated and Subsidiaries

(b)$ (b)$ (b)$ $ $ $ $ $ Criticized (b) Total commercial Commercial gross charge-offs Real estate construction Pass (a) Criticized (b) Total real estate construction Real estate construction gross charge-offs Commercial mortgage Pass (a) Criticized (b) Total commercial mortgage Commercial mortgage gross charge-offs Lease financing Pass (a) Criticized (b) Total lease financing Lease financing gross charge-offs International Pass (a) Criticized (b) Total international International gross charge-offs Total business loans Retail loans:Residential mortgage Pass (a) Criticized (b) Total residential mortgage Residential mortgage gross charge-offs Consumer:Home equity Pass (a) Criticized (b) Total home equity Home equity gross charge-offs Other consumer Pass (a) Criticized (b) Total other consumer Other consumer gross charge-offs Total consumer Total retail loans Total loans$ $ $ $ $ $ $ $ $ Table continues on the following page.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Comerica Incorporated and Subsidiaries

(b)$ (b)$ $ $ $ $ $ $ Criticized (b) Total commercial Real estate construction: Pass (a) Criticized (b) Total real estate construction Commercial mortgage: Pass (a) Criticized (b) Total commercial mortgage Lease financing Pass (a) Criticized (b) Total lease financing International Pass (a) Criticized (b) Total international Total business loans Retail loans:Residential mortgage Pass (a) Criticized (b) Total residential mortgage Consumer:Home equity Pass (a) Criticized (b) Total home equity Other consumer Pass (a) Criticized (b) Total other consumer Total consumer Total retail loans Total loans$ $ $ $ $ $ $ $ $

(a)

(b).

Loan interest receivable totaled $ million and $ million at December 31, 2023 and 2022, respectively, and was included in accrued income and other assets on the Consolidated Balance Sheets.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Comerica Incorporated and Subsidiaries

$ $ $ $ $ $ $ $ Allowance for credit losses on lending-related commitments Allowance for credit losses Loan charge-offs()()()()()()()()()Recoveries on loans previously charged-off Net loan (charge-offs) recoveries()()()() () Provision for credit losses:Provision for loan losses () ()Provision for credit losses on lending-related commitments()()() ()()()Provision for credit losses () () ()Balance at end of period:Allowance for loan losses Allowance for credit losses on lending-related commitments Allowance for credit losses$ $ $ $ $ $ $ $ $ Allowance for loan losses as a percentage of total loans % % % % % % % % %Allowance for credit losses as a percentage of total loans

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Comerica Incorporated and Subsidiaries

million, $ million and $ million was recognized on nonaccrual loans for the years ended December 31, 2023, 2022 and 2021, respectively.

(in millions)

Nonaccrual Loans with No Related Allowance

Nonaccrual Loans with Related Allowance

Total
Nonaccrual
Loans

December 31, 2023

Business loans:

Commercial

Real estate construction:

Other business lines (a)

Commercial mortgage:

Commercial Real Estate business line (b)

Other business lines (a)

Total commercial mortgage

International

Total business loans

Retail loans:

Residential mortgage

Consumer:

Home equity

Total consumer

Total retail loans

Total nonaccrual loans

December 31, 2022

Business loans:

Commercial

Real estate construction:

Other business lines (a)

Commercial mortgage:

Commercial Real Estate business line (b)

Other business lines (a)

Total commercial mortgage

International

Total business loans

Retail loans:

Residential mortgage

Consumer:

Home equity

Other consumer

Total consumer

Total retail loans

Total nonaccrual loans

(a)

(b)Primarily loans to real estate developers.

Foreclosed Properties

Foreclosed properties were insignificant at December 31, 2023 and December 31, 2022. Retail loans secured by residential real estate properties in process of foreclosure included in nonaccrual loans were insignificant at December 31, 2023 and December 31, 2022.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Comerica Incorporated and Subsidiaries

$ $ $ $ %Real estate construction:Other business lines (c) Total real estate construction Commercial mortgage:

Other business lines (c)

Total commercial mortgage Total business loans Retail loans:Consumer:Home equity Total consumer Total retail loans Total loans$ $ $ $ $ %

(a)Represents loan balances where terms were extended or payments were delayed by a more than an insignificant time period, typically more than 180 days, at or above contractual interest rates. See Note 1 to the consolidated financial statements for further information.

(b)Relates to FDMs where more than one type of modification was made. For the year ended December 31, 2023, this primarily related to modifications where the interest rate was reduced and the term was extended.

(c)Primarily loans secured by owner-occupied real estate.

There were commitments to lend additional funds to borrowers experiencing financial difficulty whose terms had been restructured at December 31, 2023.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Comerica Incorporated and Subsidiaries

)%Real estate construction:Other business lines (a)9.3 — Total real estate construction9.3 — Commercial mortgage:

Other business lines (a)

17.6 ()Total commercial mortgage17.6 ()Total business loans11.7 ()Retail loans:Consumer:Home equity145.4()

(a)

(b)Primarily loans secured by owner-occupied real estate

(c)Includes bankruptcy loans for which the court has discharged the borrower's obligation and the borrower has not reaffirmed the debt

The Corporation charges interest on principal balances outstanding during deferral periods. Additionally, none of the modifications involved forgiveness of principal. There were no significant commitments to lend additional funds to borrowers

whose terms have been modified in TDRs at December 31, 2022.

million of subsequent defaults of principal deferrals and subsequent defaults of interest rate reductions.

NOTE 5 -

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percent of total loans. $ Other business lines (b) Total real estate construction loans Commercial mortgage loans:Commercial Real Estate business line (a) Other business lines (b) Total commercial mortgage loans Total commercial real estate loans$ $ Total unused commitments on commercial real estate loans$ $

(a)Primarily loans to real estate developers.

(b)Primarily loans secured by owner-occupied real estate.

The Corporation also has a concentration of credit risk with the automotive industry, which represented percent of total loans at December 31, 2023.

Total automotive loans$ $ Total automotive exposure:Production$ $ Dealer Total automotive exposure$ $

NOTE 6 -

$ Buildings and improvements Furniture and equipment Total cost Less: Accumulated depreciation and amortization()()Net book value$ $

The Corporation conducts a portion of its business from leased facilities and leases certain equipment. Refer to Note 25 for more information on leased facilities and equipment.

Other assets included unamortized capitalized software costs of $ million and $ million at December 31, 2023 and 2022, respectively. Noninterest expenses included software amortization expense of $ million, $ million and $ million for the years ending December 31, 2023, 2022 and 2021, respectively.

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NOTE 7 -

$ Retail Bank Wealth Management Total$ $

NOTE 8 -

million of cash with the Corporation to secure the fair value of contracts in an unrealized gain position, and the Corporation had pledged $ million of marketable investment securities and posted $ million of cash as collateral for contracts in an unrealized loss position. For those counterparties not covered under bilateral collateral agreements, collateral is obtained, if deemed necessary, based on the results of management’s credit evaluation of the counterparty. Collateral varies, but may include cash, investment securities, accounts receivable, equipment or real estate.

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$ $ $ $ $ Cash flow swaps - receive fixed/

pay floating (b)

Derivatives used as economic hedgesForeign exchange contracts:Spot, forwards and swaps Total risk management purposes Customer-initiated and other activitiesInterest rate contracts:Caps and floors written Caps and floors purchased Swaps Total interest rate contracts Energy contracts:Caps and floors written Caps and floors purchased Swaps Total energy contracts Foreign exchange contracts:Spot, forwards, options and swaps Total customer-initiated and other activities Total gross derivatives$ $ Amounts offset in the Consolidated Balance Sheets:Netting adjustment - Offsetting derivative assets/liabilities()()()()Netting adjustment - Cash collateral received/posted()()()()Net derivatives included in the Consolidated Balance Sheets (c) Amounts not offset in the Consolidated Balance Sheets:Marketable securities pledged under bilateral collateral agreements()()()()Net derivatives after deducting amounts not offset in the Consolidated Balance Sheets$ $ $ $

(a)

(c)

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) million, $() million and $ million for the years ended December 31, 2023, 2022 and 2021, respectively. $ $ Fair value hedging relationships:Interest rate contracts:Hedged items Derivatives designated as hedging instruments ()()

(a)

% %

Pay rate (b), (c)

(a)Includes $ billion of de-designated interest rate swaps.

(b)Excludes forward starting swaps not effective as of the period shown. December 31, 2023 excluded $2.0 billion of forward starting swaps. December 31, 2022 excluded $4.6 billion of forward starting swaps.

Weighted average: Time to maturity (in years)3.1 3.9 Receive rate % % Pay rate (b)

(a)

De-designated Interest Rate Swaps and Price Alignment Income

On November 15, 2023, the Bloomberg Index Services Limited announced a permanent cessation of BSBY and all of its tenors effective November 15, 2024. Accordingly, the Corporation de-designated $ billion of interest rate swaps accounted for as cash flow hedges of BSBY-indexed loans, as of November 15, 2023, because it was no longer probable that the BSBY-based loan cash flows would occur through the duration of the hedging relationships.

As a result of the de-designation, a pre-tax loss of $195 million was reclassified out of AOCI and into earnings for cash flows no longer probable of occurring. In addition, periodic settlement losses of $ million and fair market value gains of $133 million for de-designated positions were recognized as part of noninterest income from the de-designation date of November 15, 2023 through December 31, 2023. This resulted in a net loss of $91 million recorded as a component of risk management hedging (loss) income in the Consolidated Statement of Income.

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million for the year ending December 31, 2023, $ million for the year ending December 31, 2022 and was insignificant for the year ending December 31, 2021.

Customer-Initiated and Other

The Corporation enters into derivative transactions at the request of customers and generally takes offsetting positions with dealer counterparties to mitigate the inherent market risk. Income primarily results from the spread between the customer derivative and the offsetting dealer position.

For customer-initiated foreign exchange contracts where offsetting positions have not been taken, the Corporation manages the remaining inherent market risk through individual foreign currency position limits and aggregate value-at-risk limits. These limits are established annually and reviewed quarterly.

Fair values of customer-initiated and other derivative instruments represent the net unrealized gains or losses on such contracts and are recorded on the Consolidated Balance Sheets. Changes in fair value are recognized on the Consolidated Statements of Income.

$ $ Energy contracts Foreign exchange contracts Total$ $ $

Credit-Related Financial Instruments

The Corporation issues off-balance sheet financial instruments in connection with commercial and consumer lending activities.

$ Bankcard, revolving credit and home equity loan commitments Total unused commitments to extend credit$ $ Standby letters of credit$ $ Commercial letters of credit

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 $ million and $ million at December 31, 2023 and 2022, respectively.

Unused Commitments to Extend Credit

Commitments to extend credit are legally binding agreements to lend to a customer, provided there is no violation of any condition established in the contract. These commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. Since many commitments expire without being drawn upon, the total contractual amount of commitments does not necessarily represent future cash requirements of the Corporation. Commercial and other unused commitments are primarily variable rate commitments. The allowance for credit losses on lending-related commitments

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million and $ million at December 31, 2023 and 2022, respectively, for expected credit losses inherent in the Corporation’s unused commitments to extend credit.

Standby and Commercial Letters of Credit

Standby letters of credit represent conditional obligations of the Corporation which guarantee the performance of a customer to a third party. Standby letters of credit are primarily issued to support public and private borrowing arrangements, including commercial paper, bond financing and similar transactions. Commercial letters of credit are issued to finance foreign or domestic trade transactions. These contracts expire in decreasing amounts through the year . 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 $ million and $ million at December 31, 2023 and 2022, respectively, of the $ billion and $ billion of standby and commercial letters of credit outstanding at December 31, 2023 and 2022, respectively.

The carrying value of the Corporation’s standby and commercial letters of credit, included in accrued expenses and other liabilities on the Consolidated Balance Sheets, totaled $ million at December 31, 2023, including $ million in deferred fees and $ million in the allowance for credit losses on lending-related commitments. At December 31, 2022, the comparable amounts were $ million, $ million and $ million, respectively.

$ As a percentage of total outstanding standby and commercial letters of credit % %

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 $ billion and $ million at December 31, 2023 and 2022, respectively, and the fair value was insignificant at both December 31, 2023 and December 31, 2022. The maximum estimated exposure to these agreements, as measured by projecting a maximum value of the guaranteed derivative instruments as of the balance sheet date, assuming 100 percent default by all obligors on the maximum values, was $ million at December 31, 2023 and insignificant at December 31, 2022. In the event of default, the lead bank has the ability to liquidate the assets of the borrower, in which case the lead bank would be required to return a percentage of the recouped assets to the participating banks. As of December 31, 2023, the weighted average remaining maturity of outstanding credit risk participation agreements was 4.1 years.

In 2008, the Corporation sold its remaining ownership of Visa Class B shares and entered into a derivative contract. Under the terms of the derivative contract, the Corporation will compensate the counterparty primarily for dilutive adjustments made to the conversion factor of the Visa Class B shares to Class A shares based on the ultimate outcome of litigation involving Visa. Conversely, the Corporation will be compensated by the counterparty for any increase in the conversion factor from anti- dilutive adjustments. The notional amount of the derivative contract was equivalent to approximately 780,000 Visa Class B Shares. The fair value of the derivative liability, included in accrued expenses and other liabilities on the Consolidated Balance Sheets, was $ million at both December 31, 2023 and 2022.

NOTE 9 -

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million and $ million, respectively.

Investment balances, including all legally binding commitments to fund future investments, are included in accrued income and other assets on the Consolidated Balance Sheets. A liability is recognized in accrued expenses and other liabilities on the Consolidated Balance Sheets for all legally binding unfunded commitments to fund tax credit entities ($ million at December 31, 2023). Amortization and other write-downs of LIHTC investments are presented on a net basis as a component of the provision for income taxes on the Consolidated Statements of Income, while amortization and write-downs of other tax credit investments are recorded in other noninterest income. The income tax credits and deductions are recorded as a reduction of income tax expense and a reduction of federal income taxes payable.

The Corporation provided financial or other support that was not contractually required to any of the above VIEs during the years ended December 31, 2023, 2022 and 2021.

)$ $ Provision for income taxes:Amortization of LIHTC Investments $ Low income housing tax credits()()()Other tax benefits related to tax credit entities()()()Total provision for income taxes$()$()$()

For further information on the Corporation’s consolidation policy, see Note 1.

NOTE 10 -

2025 2026 2027 2028 Thereafter Total$

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$ Over three months to six months Over six months to twelve months Over twelve months Total$ $

billion and $ million at December 31, 2023 and 2022, respectively. All foreign office time deposits were in denominations of $250,000 or more and totaled $ million and $ million at December 31, 2023 and 2022, respectively.

NOTE 11 -

billion and investment securities totaling $ billion to the FHLB, which provided for up to $ billion of collateralized borrowing with the FHLB. Of the $ billion total capacity at FHLB at December 31, 2023, $ billion in short-term advances and $ billion in medium- and long-term advances were outstanding, leaving $ billion available at the FHLB at December 31, 2023.

At December 31, 2023, the Bank had pledged loans totaling $ billion and investment securities totaling $ billion to the FRB, which provided for up to $ billion and $ billion of collateralized borrowing through the discount window and BTFP program, respectively. The Bank did not rely on the BTFP facility as a funding source, except to perform an operational test at the onset, and does not plan to use the facility for the remainder of its existence. Total available collateralized borrowings with the FRB was $ billion at December 31, 2023.

$ Weighted average interest rate at year-end % %Maximum month-end balance during the year$ $ Average balance outstanding during the year Weighted average interest rate during the year % %December 31, 2022Amount outstanding at year-end$ $ Weighted average interest rate at year-end % %Maximum month-end balance during the year$ $ Average balance outstanding during the year Weighted average interest rate during the year % %December 31, 2021Amount outstanding at year-end$ $ Weighted average interest rate at year-end % %Maximum month-end balance during the year$ $ Average balance outstanding during the year Weighted average interest rate during the year % %

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NOTE 12 -


(in millions)
December 31	2023	2022
Parent company
Subordinated notes:
% subordinated notes due (a)	$	$
Medium- and long-term notes:
% notes due July
% notes due (a)
Total medium- and long-term notes
Total parent company
Subsidiaries
Subordinated notes:
% subordinated notes due (a)
% subordinated notes due (a)
% subordinated notes due (a)
Total subordinated notes
Medium- and long-term notes:
% notes due (a)
Total medium- and long-term notes
Federal Home Loan Bank (FHLB) advances:
% advance due (a)
% advance due (a)
% advance due (a)
% advance due (a)
Total FHLB advances
Total subsidiaries
Total medium- and long-term debt	$	$

(a)The fixed interest rates on these notes have been swapped to a variable rate and designated in a hedging relationship. Accordingly, carrying value has been adjusted to reflect the change in the fair value of the debt as a result of changes in the benchmark rate.

Subordinated notes with remaining maturities greater than one year qualify as Tier 2 capital.

In first quarter 2023, the Bank borrowed $ billion of fixed-rate FHLB advances due between 2025 and 2028. Interest is due monthly, with principal due at maturity. Additionally, the Bank entered into fair value fixed-to-floating rate swaps in which the Bank received a weighted-average fixed rate of % and pays a floating rate based on SOFR. See Note 11 - Short-Term Borrowings for additional information about FHLB advances.

In January 2024, the Corporation issued $1.0 billion of fixed-to-floating rate senior notes due in 2030, with a rate of 5.982% for the first five years. The rate on the senior notes will reset on January 30, 2029 to SOFR plus 215.5 basis points until called or matured. Additionally, the Corporation entered into two fair value fixed-to-floating rate swaps in which the Corporation received a weighted average fixed rate of 3.77% and will pay a floating rate based on SOFR for the first five years.

Unamortized debt issuance costs deducted from the carrying amount of medium- and long-term debt totaled $ million and $ million at December 31, 2023 and 2022, respectively.

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2025 2026 2027 2028 Thereafter Total$

NOTE 13 -

thousand shares at an average price paid of $ per share and million shares at an average price paid of $ per share, respectively. There were no repurchases of common stock under the share repurchase program in 2023. There is no expiration date for the share repurchase program.

At December 31, 2023, the Corporation had million shares of common stock reserved for stock option exercises and restricted stock unit vesting.

In May 2020, the Corporation issued and sold depositary shares, each representing a 1/100th ownership interest in a share of % Fixed-Rate Reset Non-Cumulative Perpetual Preferred Stock, Series A, without par value, with a liquidation preference of $ per share (equivalent of 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 $ million issuance yielded $ million in proceeds net of underwriting discounts and offering expenses. Dividends on the Series A preferred stock accrue on a non-cumulative basis and are payable in arrears when, as and if authorized by the Corporation’s Board of Directors or a duly authorized committee of the Board and declared by the Corporation, on the first day of January, April, July and October of each year, and commenced on October 1, 2020. Under the terms of the Series A preferred stock, the ability of the Corporation to pay dividends on, make distributions with respect to, or to repurchase, redeem or acquire its common stock or any other stock ranking on parity with or junior to the Series A preferred stock, is subject to restrictions in the event that the Corporation does not declare and either pay or set aside a sum sufficient for payment of dividends on the Series A preferred stock for the immediately preceding dividend period. The Series A preferred stock is perpetual and has no maturity date, but is redeemable by the Corporation at specified times subject to regulatory considerations.

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NOTE 14 -

)$()$

Net unrealized gains (losses) arising during the period

()()

Less: Provision (benefit) for income taxes

()()

Change in net unrealized gains (losses) on investment securities, net of tax

()()Balance at end of period, net of tax$()$()$()

Accumulated net (losses) gains on cash flow hedges:

Balance at beginning of period, net of tax$()$ $

Net cash flow hedge gains (losses) arising during the period

()()Reclassification of loss related to de-designation of derivatives to other noninterest income()

Less: Benefit for income taxes

()()()Change in net cash flow hedge losses arising during the period, net of tax()()()Less:

Net cash flow (losses) gains included in interest and fees on loans

()()

Amortization of unrealized losses related to de-designated derivatives included in interest and fees on loans

() Less: (Benefit) provision for income taxes()()

Reclassification adjustment for net cash flow hedge (losses) gains included in net income, net of tax

()()

Change in net cash flow hedge gains (losses), net of tax

()()Balance at end of period, net of tax (a)$()$()$ Accumulated defined benefit pension and other postretirement plans adjustment:Balance at beginning of period, net of tax $()$()$()

Actuarial gain (loss) arising during the period

() Prior service credit arising during the period Net defined benefit pension and other postretirement plans adjustment arising during the period ()

Less: Provision (benefit) for income taxes

() Net defined benefit pension and other postretirement plans adjustment arising during the period, net of tax () Amounts recognized in other noninterest expenses:Amortization of actuarial net loss Amortization of prior service credit()()()Total amounts recognized in other noninterest expenses Less: Provision for income taxes Adjustment for amounts recognized as components of net periodic benefit credit during the period, net of tax Change in defined benefit pension and other postretirement plans adjustment, net of tax () Balance at end of period, net of tax $()$()$()

Total accumulated other comprehensive loss at end of period, net of tax

$()$()$()

(a)The Corporation expects to reclassify $383 million of losses, net of tax, from accumulated other comprehensive loss to earnings over the next twelve months if interest yield curves and notional amounts remain at December 31, 2023 levels.

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NOTE 15 -

$ $ Less:Income allocated to participating securities Preferred stock dividends Net income attributable to common shares$ $ $ Basic average common shares Basic net income per common share$ $ $ Basic average common shares Dilutive common stock equivalents:Net effect of the assumed exercise of stock awards Diluted average common shares Diluted net income per common share$ $ $

Declared dividends on preferred stock are excluded from net income attributable to common shares. Refer to Note 13 for further information on preferred stock.

Range of exercise prices

$ - $

NOTE 16 -

$ $ Related tax benefits recognized in net income$ $ $ Weighted-average expected recognition period (in years)2.1

The Corporation has share-based compensation plans under which it awards shares of restricted stock units to executive officers, directors and key personnel and stock options to executive officers and key personnel of the Corporation and its subsidiaries. Restricted stock units fully vest after a period ranging from three years to five years, and stock options fully vest after four years. A majority of share-based compensation awards include a retirement eligibility clause where qualified employees are exempt from the service requirements of the award. This generally results in the recognition of compensation expense at the grant date for retirement eligible employees. The maturity of each option is determined at the date of grant; however, no options may be exercised later than ten years from the date of grant. The options may have restrictions regarding exercisability. The plans provide for a grant of up to million common shares, plus shares under certain plans that are

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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.

$ $ Weighted-average assumptions:Risk-free interest rates % % %Expected dividend yield Volatility Expected option life (in years)7.8 8.0 7.8 $ Granted Forfeited or expired() Exercised()

Outstanding-December 31, 2023

5.0 $

Exercisable-December 31, 2023

$ 3.8 $

The aggregate intrinsic value of outstanding options shown in the table above represents the total pretax intrinsic value at December 31, 2023, based on the Corporation’s closing stock price of $ at December 31, 2023.

The total intrinsic value of stock options exercised was $ million, $ million and $ million for the years ended December 31, 2023, 2022 and 2021, respectively.

There was no restricted stock award activity in 2023. The plan was fully vested as of December 31, 2022. The total fair value of restricted stock awards that fully vested in 2022 and 2021 was $ million and $ million, respectively.

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$ $ Granted Forfeited() () Vested() ()

Outstanding-December 31, 2023

The total fair value of restricted stock units that fully vested was $ million, $ million and $ million for the years ended December 31, 2023, 2022 and 2021, respectively.

The Corporation expects to satisfy the exercise of stock options and the vesting of restricted stock units by issuing shares of common stock out of treasury. At December 31, 2023, the Corporation held 96 million shares in treasury.

For further information on the Corporation’s share-based compensation plans, refer to Note 1.

NOTE 17 -

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$ $ $ $ $ Actual return on plan assets () ()Benefits paid()()— — ()()Fair value of plan assets at December 31$ $ $ $ $ $ Change in projected benefit obligation:Projected benefit obligation at January 1$ $ $ $ $ $ Service cost Interest cost

Actuarial gain (loss)

() ()()()Benefits paid()()()()()()Projected benefit obligation at December 31$ $ $ $ $ $ Accumulated benefit obligation$ $ $ $ $ $

Funded status at December 31 (a) (b)

$ $ $()$()$ $ Weighted-average assumptions used:Discount rate % % % % % %Rate of compensation increase n/an/aInterest crediting rate

n/an/a

Amounts recognized in accumulated other comprehensive loss before income taxes:

Net actuarial loss$()$()$()$()$()$()Prior service credit Balance at December 31$()$()$()$()$()$()

(a)

(b)

Because the non-qualified defined benefit pension plan has no assets, the accumulated benefit obligation exceeded the fair value of plan assets at December 31, 2023 and December 31, 2022.

$()$ $ Amortization of net actuarial loss Amortization of prior service credit()() ()

Total recognized in other comprehensive income (loss)

$ $()$ $

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$ $ $ $ $ Other components of net benefit (credit) cost:Interest cost Expected return on plan assets()()() Amortization of prior service credit()()()()()()Amortization of actuarial net loss Total other components of net benefit (credit) cost (b)()()() Net periodic defined benefit (credit) cost$()$()$()$ $ $ Actual return on plan assets$ $()$ n/an/an/aActual rate of return on plan assets %()% %n/an/an/aWeighted-average assumptions used:Discount rate % % % % % %Expected long-term return on plan assets n/an/an/aRate of compensation increase

(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	2023			2022			2021
Other components of net benefit credit:
Interest cost	$			$			$
Expected return on plan assets	()			()			()



Net periodic postretirement benefit credit	$	()		$	()		$	()
Actual return on plan assets	$			$	()		$	()
Actual rate of return on plan assets			%	()		%	()		%
Weighted-average assumptions used:
Discount rate			%			%			%
Expected long-term return on plan assets
Healthcare cost trend rate (a):
Cost trend rate assumed	n/a			n/a
Rate to which the cost trend rate is assumed to decline (the ultimate trend rate)	n/a			n/a
Year that the rate reaches the ultimate trend rate	n/a			n/a

(a)Beginning January 1, 2022, the healthcare cost trend assumption is no longer a relevant assumption due to the change from a self-insured plan to the Medicare and pre-65 individual marketplace with a funded Health Reimbursement Arrangement account.

n/a - not applicable

The expected long-term rate of return of plan assets is the average rate of return expected to be realized on funds invested or expected to be invested over the life of the plan, which has an estimated duration of approximately years as of December 31, 2023. The expected long-term rate of return on plan assets is set after considering both long-term returns in the general market and long-term returns experienced by the assets in the plan. The returns on the various asset categories are blended to derive an equity and a fixed income long-term rate of return. The Corporation reviews its pension plan assumptions on an annual basis with its actuarial consultants to determine if assumptions are reasonable and adjusts the assumptions to reflect changes in future expectations.

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percent to percent for equity securities and 55 percent to 65 percent for fixed income, including cash. Equity securities include collective investment and mutual funds and common stock. Fixed income securities include U.S. Treasury and other U.S. government agency securities, mortgage-backed securities, corporate bonds and notes, municipal bonds, collateralized mortgage obligations and money market funds.

Fair Value Measurements

The Corporation’s qualified defined benefit pension plan utilizes fair value measurements to record fair value adjustments and to determine fair value disclosures. The Corporation’s qualified benefit pension plan categorizes investments recorded at fair value into a three-level hierarchy, based on the markets in which the investment are traded and the reliability of the assumptions used to determine fair value. Refer to Note 1 for a description of the three-level hierarchy.

Following is a description of the valuation methodologies and key inputs used to measure the fair value of the Corporation’s qualified defined benefit pension plan investments, including an indication of the level of the fair value hierarchy in which the investments are classified.

Mutual funds

Fair value measurement is based upon the net asset value (NAV) provided by the administrator of the fund. Mutual fund NAVs are quoted in an active market exchange, such as the New York Stock Exchange, and are included in Level 1 of the fair value hierarchy.

Common stock

Fair value measurement is based upon the closing price quoted in an active market exchange, such as the New York Stock Exchange. Level 1 common stock includes domestic and foreign stock and real estate investment trusts.

U.S. Treasury and other U.S. government agency securities

Level 1 securities include U.S. Treasury securities that are traded by dealers or brokers in active over-the-counter markets. Fair value measurement is based upon quoted prices in an active market exchange, such as the New York Stock Exchange. Level 2 securities include debt securities issued by U.S. government agencies and U.S. government-sponsored entities. The fair value of Level 2 securities is determined using quoted prices of securities with similar characteristics, or pricing models based on observable market data inputs, primarily interest rates and spreads.

Corporate and municipal bonds and notes

Fair value measurement is based upon quoted prices of securities with similar characteristics or pricing models based on observable market data inputs, primarily interest rates, spreads and prepayment information. Level 2 securities include corporate bonds, municipal bonds, foreign bonds and foreign notes.

Mortgage-backed securities

Fair value measurement is based upon independent pricing models or other model-based valuation techniques such as the present value of future cash flows, adjusted for the security's credit rating, prepayment assumptions and other factors, such as credit loss and liquidity assumptions, and are included in Level 2 of the fair value hierarchy.

Private placements

Fair value is measured using the NAV provided by fund management as quoted prices in active markets are not available. Management considers additional discounts to the provided NAV for market and credit risk. Private placements are included in Level 3 of the fair value hierarchy.

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$ $ $ Corporate and municipal bonds and notes Private placements Total investments in the fair value hierarchy$ $ $ $ Investments measured at net asset value:Collective investment funds Total investments at fair value$ December 31, 2022Fixed income securities:U.S. Treasury and other U.S. government agency securities$ $ $ $ Corporate and municipal bonds and notes Mortgage-backed securities Private placements Total investments in the fair value hierarchy$ $ $ $ Investments measured at net asset value:

Collective investment funds

Total investments at fair value$ $()$ $ $()$ Year Ended December 31, 2022Private placements$ $()$()$ $()$

There were assets in the non-qualified defined benefit pension plan at December 31, 2023 and 2022. The postretirement benefit plan is fully invested in bank-owned life insurance policies. The fair value of bank-owned life insurance policies is based on the cash surrender values of the policies as reported by the insurance companies and is classified in Level 2 of the fair value hierarchy.

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Comerica Incorporated and Subsidiaries

employer contributions to the qualified and non-qualified defined benefit pension plans and postretirement benefit plan for the year ended December 31, 2024.


	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)
2024	$	$	$
2025
2026
2027
2028
2029 - 2033

(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 percent of the first 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 $ million for the year ended December 31, 2023 and $ million for both years ended December 31, 2022 and 2021.

Deferred Compensation Plans

The Corporation offers optional deferred compensation plans under which certain employees and non-employee directors (participants) may make an irrevocable election to defer incentive compensation and/or a portion of base salary until retirement or separation from the Corporation. The participant may direct deferred compensation into one or more deemed investment options. Although not required to do so, the Corporation invests actual funds into the deemed investments as directed by participants, resulting in a deferred compensation asset, recorded in other short-term investments on the Consolidated Balance Sheets that offsets the liability to participants under the plan, recorded in accrued expenses and other liabilities. The earnings from the deferred compensation asset are recorded in interest on short-term investments and other noninterest income and the related change in the liability to participants under the plan is recorded in salaries and benefits expense on the Consolidated Statements of Income.

NOTE 18 -

$ $ Foreign State and local Total current Deferred:Federal()() State and local()() Total deferred()() Total$ $ $

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Comerica Incorporated and Subsidiaries

million of foreign taxable income.

The provision for income taxes does not reflect the tax effects of unrealized gains and losses on investment securities available-for-sale, hedging transactions or the change in defined benefit pension and other postretirement plans adjustment included in accumulated other comprehensive (loss) income. Refer to Note 14 for additional information on accumulated other comprehensive (loss) income.

%$ %$ %State income taxes Affordable housing and historic credits()()()()()()Bank-owned life insurance()()()()()()FDIC insurance expense Employee stock transactions()()()()()()Tax-related interest and penalties()() Other ()()()()Provision for income taxes$ %$ %$ %

The liability for tax-related interest and penalties, included in accrued expenses and other liabilities on the Consolidated Balance Sheets, was less than $1 million and $ million at December 31, 2023 and 2022, respectively. The decrease in tax-related interest and penalties was primarily due to a state settlement received in 2023.

In the ordinary course of business, the Corporation enters into certain transactions that have tax consequences. From time to time, the Internal Revenue Service (IRS) may review and/or challenge specific interpretive tax positions taken by the Corporation with respect to those transactions. The Corporation believes that its tax returns were filed based upon applicable statutes, regulations and case law in effect at the time of the transactions. The IRS or other tax jurisdictions, an administrative authority or a court, if presented with the transactions, could disagree with the Corporation’s interpretation of the tax law.

$ $ (Decrease) increase as a result of tax positions taken during a prior period () Increase as a result of tax positions taken during the current period Decreases related to settlements with tax authorities()()()Reduction as a result of expiration of statute of limitations ()Balance at December 31$ $ $

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 $ million and $ million at December 31, 2023 and 2022, respectively.

-New York

California

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.

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$ Deferred compensation Deferred loan origination fees and costs Net hedging losses Net unrealized losses on investment securities available-for-sale Operating lease liabilities Other temporary differences, net Total deferred tax assets before valuation allowance Valuation allowance()()Total deferred tax assets Deferred tax liabilities:Lease financing transactions()()Defined benefit plans()()Allowance for depreciation()()

Leasing right of use assets

()()Total deferred tax liabilities()()Net deferred tax assets$ $

million and $ million of federal foreign tax credit carryforwards at December 31, 2023 and 2022, respectively, expiring between and . In addition, there were $ million of state net operating loss (NOL) carryforwards at both December 31, 2023 and 2022, expiring between and . 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 $ million and a state valuation allowance of $ million at December 31, 2023, compared to a federal valuation of $ million and a state valuation allowance of $ million in the comparable period in 2022. For further information on the Corporation’s valuation policy for deferred tax assets, refer to Note 1.

NOTE 19 -

million at the beginning of 2023 and $ million at the end of 2023. During 2023, new loans to related parties aggregated $ million and repayments totaled $ million.

NOTE 20 -

million at January 1, 2024, plus 2024 net profits. Substantially all the assets of the Corporation’s banking subsidiaries are restricted from transfer to the parent company of the Corporation in the form of loans or advances.

The Corporation’s subsidiary banks declared dividends of $ million, $ billion and $ million in 2023, 2022 and 2021, respectively.

The Corporation and its U.S. banking subsidiaries are subject to various regulatory capital requirements administered by federal and state banking agencies under the Basel III regulatory framework (Basel III). This regulatory framework establishes comprehensive methodologies for calculating regulatory capital and risk-weighted assets (RWA). Basel III also set minimum capital ratios as well as overall capital adequacy standards.

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Comerica Incorporated and Subsidiaries

percent, percent, percent and percent, respectively, at December 31, 2023 and 2022. For the Corporation, requirements to be considered "well capitalized" were total risk-based capital and Tier 1 risk-based capital ratios greater than percent and percent, respectively, at December 31, 2023 and 2022. There have been no conditions or events since December 31, 2023 that management believes have changed the capital adequacy classification of the Corporation or its U.S. banking subsidiaries. billion (Consolidated))$ $

Tier 1 capital (minimum $ billion (Consolidated))

Total capital (minimum $ billion (Consolidated))

Risk-weighted assets Average assets (fourth quarter)

CET1 capital to risk-weighted assets (minimum-%)

% %

Tier 1 capital to risk-weighted assets (minimum-%)

Total capital to risk-weighted assets (minimum-%)

Tier 1 capital to average assets (minimum-%)

Capital conservation buffer (minimum-%)

December 31, 2022

CET1 capital (minimum $ billion (Consolidated))

$ $

Tier 1 capital (minimum $ billion (Consolidated))

Total capital (minimum $ billion (Consolidated))

Risk-weighted assets Average assets (fourth quarter)

CET1 capital to risk-weighted assets (minimum-%)

% %

Tier 1 capital to risk-weighted assets (minimum-%)

Total capital to risk-weighted assets (minimum-%)

Tier 1 capital to average assets (minimum-%)

Capital conservation buffer (minimum-%)

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NOTE 21 -

million, $ million and $ million for the years ended December 31, 2023, 2022 and 2021, respectively, were included in other noninterest expenses on the Consolidated Statements of Income.

For matters where a loss is not probable, the Corporation has not established an accrual. The Corporation believes the estimate of the aggregate range of reasonably possible losses, in excess of established accruals, for all legal proceedings and regulatory matters in which it is involved is from to approximately $ million at December 31, 2023. This estimated aggregate range of reasonably possible losses is based upon currently available information for those legal proceedings and regulatory matters in which the Corporation is involved, taking into account the Corporation’s best estimate of such losses for those legal cases and regulatory matters for which such estimate can be made. For certain legal cases and regulatory matters, the Corporation does not believe that an estimate can currently be made. The Corporation’s estimate involves significant judgment, given the varying stages of the legal proceedings and regulatory matters (including the fact many are currently in preliminary stages), the existence in certain legal proceedings of multiple defendants (including the Corporation) whose share of liability has yet to be determined, the numerous yet-unresolved issues in many of the legal proceedings and regulatory matters (including issues regarding class certification and the scope of many of the claims) and the attendant uncertainty of the various potential outcomes of such legal proceedings and regulatory matters. Accordingly, the Corporation’s estimate will change from time to time, and actual losses may be more or less than the current estimate.

In the event of unexpected future developments, it is possible that the ultimate resolution of these matters, if unfavorable, may be material to the Corporation's consolidated financial condition, results of operations or cash flows.

For information regarding income tax contingencies, refer to Note 18.

NOTE 22 -

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 major business segments, the Finance Division is also reported as a segment. Business segment results are produced by the Corporation’s internal management accounting system. This system measures financial results based on the internal business unit structure of the Corporation. The performance of the business segments is not comparable with the Corporation's consolidated results and is not necessarily comparable with similar information for any other financial institution. Additionally, because of the interrelationships of the various segments, the information presented is not indicative of how the segments would perform if they operated as independent entities. The management accounting system assigns balance sheet and income statement items to each business segment using certain methodologies, which are regularly reviewed and refined. From time to time, the Corporation may make reclassifications among the segments to more appropriately reflect management's current view of the segments, and methodologies may be

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$ $ $()$ $ Provision for credit losses () Noninterest income Noninterest expenses Provision (benefit) for income taxes ()() Net income (loss)$ $ $ $()$ $ Net charge-offs$ $ $ $ $ $ Selected average balances:Assets$ $ $ $ $ $ Loans Deposits Statistical data:Return on average assets (a) % % %n/mn/m %Efficiency ratio (b) n/mn/m Year Ended December 31, 2022Earnings summary:Net interest income$ $ $ $()$ $ Provision for credit losses Noninterest income () Noninterest expenses () Provision (benefit) for income taxes ()() Net income (loss)$ $ $ $()$ $ Net charge-offs (recoveries)$ $()$()$ $ $ Selected average balances:Assets$ $ $ $ $ $ Loans Deposits Statistical data:Return on average assets (a) % % %n/mn/m %Efficiency ratio (b) n/mn/m

Table continues on the following page.

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$ $ $()$ $ Provision for credit losses()()() ()()Noninterest income

Noninterest expenses

Provision (benefit) for income taxes ()() Net income (loss)$ $ $ $()$ $ Net credit-related (recoveries) charge-offs$()$ $ $ $ $()Selected average balances:Assets$ $ $ $ $ $ Loans Deposits Statistical data:

Return on average assets (a)

% % %n/mn/m %

Efficiency ratio (b)

n/mn/m

(a)Return on average assets is calculated based on the greater of average assets or average liabilities and attributed equity.

(b)Noninterest expenses as a percentage of the sum of net interest income and noninterest income excluding net gains (losses) from securities, a derivative contract tied to the conversion rate of Visa Class B shares and changes in the value of shares obtained through monetization of warrants.

n/m – not meaningful

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NOTE 23 -

$ Other short-term investments Receivable due from subsidiary bank Investment in subsidiaries, principally banks Accrued income and other assets Total assets$ $ Liabilities and Shareholders’ EquityMedium- and long-term debt$ $ Accrued expenses and other liabilities Total liabilities

Fixed-rate reset non-cumulative perpetual preferred stock, series A, par value, $100,000 liquidation preference per share:

Authorized - shares

Issued - shares

Common stock - $ par value:

Authorized - shares

Issued - shares

Capital surplus Accumulated other comprehensive loss()()Retained earnings

Less cost of common stock in treasury - shares at 12/31/2023 and shares at 12/31/2022

()()Total shareholders’ equity Total liabilities and shareholders’ equity$ $ $ $ Other interest income Intercompany management fees Total income ExpensesInterest on medium- and long-term debt Salaries and benefits expense Other noninterest expenses Total expenses Income before benefit for income taxes and equity in undistributed earnings of subsidiaries Benefit for income taxes()()()Income before equity in undistributed earnings of subsidiaries Equity in undistributed earnings of subsidiaries, principally banks Net income Less income allocated to participating securities Preferred stock dividends Net income attributable to common shares$ $ $

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Comerica Incorporated and Subsidiaries

$ $ Adjustments to reconcile net income to net cash provided by operating activities:

Undistributed losses of subsidiaries, principally banks

()()()Net periodic defined benefit cost Share-based compensation expense

(Benefit) provision for deferred income taxes

() ()Other, net Net cash provided by operating activities Investing ActivitiesAdvance to subsidiary bank ()

Repayment of subsidiary advance

Other, net ()

Net cash provided by (used in) investing activities

()Financing Activities

Maturities of medium- and long-term debt

()

Cash dividends paid on preferred stock

()()()

Common Stock:

Repurchases()()()

Cash dividends paid

()()()

Issuances under employee stock plans

Net cash used in financing activities

()()()

Net (decrease) increase in cash and cash equivalents

() ()Cash and cash equivalents at beginning of period Cash and cash equivalents at end of period$ $ $ Interest paid$ $ $

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NOTE 24 -

$ $ $ $ Fiduciary income Service charges on deposit accounts Commercial loan servicing fees (a)

Capital markets income (b)

Brokerage fees Other noninterest income (b) Total revenue from contracts with customers Other sources of noninterest income Total noninterest income$ $ $ $ $ Year Ended December 31, 2022Revenue from contracts with customers:Card fees $ $ $ $ $ Fiduciary income Service charges on deposit accounts Commercial loan servicing fees (a)

Capital markets income (b)

— — — Brokerage fees Other noninterest income (b) Total revenue from contracts with customers Other sources of noninterest income Total noninterest income$ $ $ $ $ Year Ended December 31, 2021Revenue from contracts with customers:Card fees$ $ $ $ $ Fiduciary income Service charges on deposit accounts Commercial loan servicing fees (a)

Capital markets income (b)

— — — Brokerage fees Other noninterest income (b)() Total revenue from contracts with customers Other sources of noninterest income Total noninterest income$ $ $ $ $

(a)

(b)

Revenue from contracts with customers did not generate significant contract assets and liabilities.

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NOTE 25 -

$ $ Variable lease expense Less sublease income()()()Total lease expense$ $ $ $ $ Included in accrued expenses and other liabilitiesOperating lease liabilities Weighted average discount rate % % %

Weighted average remaining lease term in years

9 9 8 $ $ ROU assets obtained in exchange for new liabilities 2025 2026 2027 2028 Thereafter Total contractual maturities Less imputed interest()Total operating lease liabilities$

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 $ million, $ million and $ million for the years ended December 31, 2023, 2022 and 2021, respectively. The Corporation's net investment in sales-type and direct financing leases was $ million and $ million at and 2022, respectively.

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2025 2026 2027 2028 Thereafter Total lease payments receivable Unguaranteed residual values Less deferred interest income()Total lease receivables (a)$

(a)

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REPORT OF MANAGEMENT

The management of Comerica Incorporated (the Corporation) is responsible for the accompanying consolidated financial statements and all other financial information in this Annual Report. The consolidated financial statements have been prepared in conformity with U.S. generally accepted accounting principles and include amounts which of necessity are based on management’s best estimates and judgments and give due consideration to materiality. The other financial information herein is consistent with that in the consolidated financial statements.

In meeting its responsibility for the reliability of the consolidated financial statements, management develops and maintains effective internal controls, including those over financial reporting, as defined in the Securities and Exchange Act of 1934, as amended. The Corporation’s internal control over financial reporting includes policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Corporation; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of the consolidated financial statements in conformity with U.S. generally accepted accounting principles, and that receipts and expenditures of the Corporation are made only in accordance with authorizations of management and directors of the Corporation; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Corporation’s assets that could have a material effect on the consolidated financial statements.

Management assessed, with participation of the Corporation’s Chief Executive Officer and Chief Financial Officer, internal control over financial reporting as it relates to the Corporation’s consolidated financial statements presented in conformity with U.S. generally accepted accounting principles as of December 31, 2023. The assessment was based on criteria for effective internal control over financial reporting described in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria). Based on this assessment, management determined that internal control over financial reporting is effective as it relates to the Corporation’s consolidated financial statements presented in conformity with U.S. generally accepted accounting principles as of December 31, 2023.

Because of inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

The Corporation's internal control over financial reporting as of December 31, 2023 has been audited by Ernst & Young LLP, an independent registered public accounting firm, as stated in their accompanying report.

The Corporation’s Board of Directors oversees management’s internal control over financial reporting and financial reporting responsibilities through its Audit Committee as well as various other committees. The Audit Committee, which consists of directors who are not officers or employees of the Corporation, meets regularly with management, internal audit and the independent public accountants to assure that the Audit Committee, management, internal auditors and the independent public accountants are carrying out their responsibilities, and to review auditing, internal control and financial reporting matters.

Curtis C. Farmer

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

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Shareholders and the Board of Directors of Comerica Incorporated

Opinion on Internal Control over Financial Reporting

We have audited Comerica Incorporated and subsidiaries’ internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria). In our opinion, Comerica Incorporated and subsidiaries (the Corporation) maintained, in all material respects, effective internal control over financial reporting as of December 31, 2023, based on the COSO criteria.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Corporation as of December 31, 2023 and 2022, and the related consolidated statements of income, comprehensive income, changes in shareholders' equity and cash flows for each of the three years in the period ended December 31, 2023, and the related notes of the Corporation and our report dated February 28, 2024 expressed an unqualified opinion thereon.

Basis for Opinion

The Corporation’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Report of Management. Our responsibility is to express an opinion on the Corporation’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Corporation in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects.

Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

Definition and Limitations of Internal Control over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

/s/

February 28, 2024

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Shareholders and the Board of Directors of Comerica Incorporated

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Comerica Incorporated and subsidiaries (the Corporation) as of December 31, 2023 and 2022, and the related consolidated statements of income, comprehensive income, changes in shareholders' equity and cash flows for each of the three years in the period ended December 31, 2023, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Corporation at December 31, 2023 and 2022, and the consolidated results of its operations and its cash flows for each of the three years in the period ended December 31, 2023, in conformity with U.S. generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Corporation’s internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) and our report dated February 28, 2024, expressed an unqualified opinion thereon.

Basis for Opinion

These financial statements are the responsibility of the Corporation’s management. Our responsibility is to express an opinion on the Corporation’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Corporation in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.


						Allowance for credit losses
Description of the Matter						The Corporation’s loan portfolio and the associated allowance for credit losses (ACL) were $52.1 billion and $728 million as of December 31, 2023, respectively. The allowance for credit losses represents management’s estimate of expected credit losses over the contractual life of the loan portfolio at the balance sheet date. The allowance for credit losses includes credit loss estimates for loans evaluated on an individual basis, such as for certain nonaccrual loans and collective loss estimates for pools of loans with similar risk characteristics. The Corporation determines the allowance for pools of loans with similar risk characteristics by applying loss factors to amortized cost balances over the remaining contractual life. Loss factors are based on estimated probability of default, set to a default horizon based on contractual life, and loss given default. Through the use of various models, historical estimates are calibrated to economic forecasts over the reasonable and supportable forecast period based on economic variables that statistically correlate with each of the probability of default and loss given default pools. Qualitative adjustments are then made to bring the allowance to the level management believes is appropriate based on factors that have not otherwise been fully accounted for in the quantitative analysis. Examples of these adjustments include 1) foresight risk, 2) input imprecision, and 3) model imprecision. Auditing management’s estimate of the allowance for credit losses involved a high degree of subjectivity due to the highly judgmental nature of the expected loss models and the qualitative adjustments included in the ACL. Management applies significant judgment when selecting the expected loss models to be used to determine the allowance and the inputs used in those models as well as in applying qualitative adjustments. These determinations could have a significant effect on the ACL.

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How We Addressed the Matter in Our Audit						We obtained an understanding of the Corporation’s process for establishing the ACL, including selection of the models, inputs used in the models, monitoring of the models, and the qualitative adjustments made to the ACL. We evaluated the design and tested the operating effectiveness of the controls over 1) determining the appropriateness of the models used to estimate quantitative components of the ACL, 2) validating the models used to estimate quantitative components of the ACL, 3) selecting the appropriate inputs and assumptions within the models, 4) monitoring of the models including the assessment of the output, 5) determining the appropriateness of the qualitative reserve methodology, including the identification and the assessment for the need for qualitative adjustments, 6) validating the relevance and reliability of data used to estimate the various components of the qualitative reserves, and 7) management’s review and approval of qualitative adjustments and model output. To test the appropriateness of the models used by management to estimate quantitative components of the ACL, with the support of specialists, we evaluated the model methodology and model performance, and tested key modeling assumptions used within the models. To test the qualitative adjustments, we evaluated the identification and measurement of the qualitative adjustments, including the basis for concluding an adjustment was warranted when considering the potential impact of foresight risk, input imprecision and model imprecision, evaluated the appropriateness of the data used by the Corporation to estimate the qualitative adjustments, recalculated the analyses used by management to determine the qualitative adjustments, and analyzed the changes in assumptions and components of the qualitative reserves relative to changes in the Corporation’s loan portfolio. For example, we evaluated the data and information utilized by management to estimate the qualitative adjustments by independently obtaining and comparing to historical loan data, third-party macroeconomic data, and peer bank data to assess the appropriateness of the information and to consider whether new or contradictory information existed. We also evaluated if qualitative adjustments were based on a comprehensive framework, well-documented, and consistently applied.

/s/ Ernst & Young LLP

We have served as the Corporation’s auditor since 1992.

Dallas, TX

February 28, 2024

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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 28, 2024.


			COMERICA INCORPORATED

			By:						/s/ Curtis C. Farmer
									Curtis C. Farmer Chairman, President and Chief Executive Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed by the following persons on behalf of the registrant in the capacities indicated as of February 28, 2024.


/s/ Curtis C. Farmer						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/ Michael E. Collins						Director
Michael E. Collins

/s/ Roger A. Cregg						Director
Roger A. Cregg

/s/ M. Alan Gardner						Director
M. Alan Gardner

/s Jacqueline P. Kane						Director
Jacqueline P. Kane

/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/ Robert S. Taubman						Director
Reginald M. Turner, Jr.

/s/ Nina G. Vaca						Director
Nina G. Vaca

/s/ Michael G. Van de Ven						Director
Michael G. Van de Ven

S-1

COMERICA INC - Annual Report: 2023 (Form 10-K)

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