COMERICA INC - Annual Report: 2024 (Form 10-K)

Average Loans By Loan Type:

Commercial loans

$26,278 $30,009 $(3,731)(12)%Real estate construction loans4,422 4,041 381 9 Commercial mortgage loans14,260 13,697 563 4 Lease financing791 776 15 2 International loans1,069 1,226 (157)(13)Residential mortgage loans1,902 1,877 25 1 Consumer loans:Home equity1,787 1,775 12 1 Other consumer470 502 (32)(6)Total consumer loans2,257 2,277 (20)(1)Total loans$50,979 $53,903 $(2,924)(5)%

F-13


(in millions)							Percent Change
Years Ended December 31	2024		2023		Change
Average Loans By Business Line:
General Middle Market	$	11,503	$	12,568	$	(1,065)	(8)	%
National Dealer Services	5,623		5,775		(152)		(3)
Environmental Services	2,519		2,366		153		6
Equity Fund Services	1,753		3,001		(1,248)		(42)
Energy	1,402		1,480		(78)		(5)
Entertainment	1,144		1,153		(9)		(1)
Technology and Life Sciences	716		865		(149)		(17)
Total Middle Market	24,660		27,208		(2,548)		(9)
Commercial Real Estate	10,329		9,085		1,244		14
Corporate Banking	5,438		6,044		(606)		(10)
Business Banking	3,140		3,150		(10)		—
Mortgage Banker Finance	17		945		(928)		(98)
Total Commercial Bank	43,584		46,432		(2,848)		(6)
Total Retail Bank	2,335		2,237		98		4
Total Wealth Management	5,050		5,232		(182)		(3)
Total Finance and Other	10		2		8		n/m
Total loans	$	50,979	$	53,903	$	(2,924)	(5)	%

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

On a period-end basis, investment securities were $15.0 billion at December 31, 2024, a decrease of $1.8 billion from $16.9 billion at December 31, 2023, due to paydowns of mortgage-backed securities, maturities of Treasury securities and an increase in unrealized losses, from $2.7 billion at December 31, 2023 to $2.9 billion at December 31, 2024. At December 31, 2024, the effective duration of the Corporation's securities portfolio was approximately 5.8 years. On an average basis, investment securities decreased $1.6 billion to $15.8 billion in 2024, compared to $17.4 billion in 2023, reflecting paydowns of mortgage-backed securities and maturities of Treasury securities, partially offset by a decline in average unrealized losses.

F-14


(weighted average yield) (a)	U.S. Treasury securities		Residential mortgage-backed securities (b)		Commercial mortgage-backed securities (b)		Total investment securities
December 31, 2024
Maturity (c)
Within 1 year	3.87	%	2.60	%	—	%	3.85	%
1-5 Years	4.28		2.10		2.66		3.83
5-10 Years	—		2.02		2.98		2.96
After 10 Years	—		1.95		—		1.95
Total	4.18	%	1.95	%	2.96	%	2.41	%
Weighted Average Maturity (years)	1.6		25.5		7.0		18.4

(a)Weighted average yields are calculated on the basis of yield to maturity based on the carrying value of each debt security, aggregated by type and agency.

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

(c)Based on final contractual maturity.

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

Interest-bearing deposits with banks, which are mostly used to manage liquidity requirements of the Corporation, primarily include deposits with the FRB and also include deposits with banks in developed countries or international banking facilities of foreign banks located in the United States. On a period-end basis, interest-bearing deposits with banks decreased $2.1 billion to $6.0 billion at December 31, 2024. On an average basis, interest-bearing deposits with banks decreased $1.5 billion to $6.0 billion in 2024.

Other short-term investments include federal funds sold, trading securities, money market investments and loans held-for-sale. Substantially all trading securities are deferred compensation plan assets. Loans held-for-sale include variable-rate demand notes for which the Corporation has purchased the underlying bonds as well as residential mortgage loans originated with management's intention to sell and, from time to time, other loans that are transferred to held-for-sale. On a period-end basis, other short-term investments decreased $24 million to $375 million at December 31, 2024, driven by declines in deferred compensation plan assets and variable-rate demand notes. On an average basis, other short-term investments increased $37 million to $376 million in 2024.

Deposits and Borrowed Funds

Period-End Deposits and Borrowed Funds


(in millions)							Percent Change
Years Ended December 31	2024		2023		Change
Noninterest-bearing deposits	$	24,425	$	27,849	$	(3,424)	(12)	%
Money market and interest-bearing checking deposits	32,714		28,246		4,468		16
Savings deposits	2,138		2,381		(243)		(10)
Customer certificates of deposit	3,450		3,723		(273)		(7)
Other time deposits	1,052		4,550		(3,498)		(77)
Foreign office time deposits	32		13		19		n/m
Total deposits	$	63,811	$	66,762	$	(2,951)	(4)	%
Short-term borrowings	$	—	$	3,565	$	(3,565)	n/m
Medium- and long-term debt	6,673		6,206		467		8
Total borrowed funds	$	6,673	$	9,771	$	(3,098)	(32)	%

n/m - not meaningful

On a period-end basis, total deposits decreased $3.0 billion to $63.8 billion at December 31, 2024, compared to $66.8 billion at December 31, 2023, reflecting a decrease of $3.4 billion in noninterest-bearing deposits, partially offset by a $473 million increase in interest-bearing deposits.

Uninsured deposits are defined as the portion of deposit accounts in U.S. offices that exceed the FDIC insurance limit and amounts in any other uninsured investment or deposit account that are classified as deposits and are not subject to any federal or state deposit insurance regimes. Total uninsured deposits were $33.4 billion and $31.5 billion at December 31, 2024 and 2023, respectively, as calculated per regulatory guidance. The portion of domestic time deposits in excess of insurance limits was $953 million and $797 million at December 31, 2024 and 2023, respectively. Time deposits otherwise uninsured, which consist of foreign office time deposits that mature in three months or less, totaled $32 million at December 31, 2024, compared to $13 million at December 31, 2023.

F-15

On a period-end basis, the Corporation had no short-term borrowings at December 31, 2024, compared to $3.6 billion of short-term borrowings at December 31, 2023. On a period-end basis, total medium- and long-term debt totaled $6.7 billion at December 31, 2024, an increase of $467 million from $6.2 billion at December 31, 2023. The Corporation uses medium- and long-term debt, which includes medium- and long-term senior notes, subordinated notes and FHLB advances, to provide funding for earning assets, liquidity and regulatory capital.

Average Deposits and Borrowed Funds


(in millions)							Percent Change
Years Ended December 31	2024		2023		Change
Noninterest-bearing deposits	$	25,082	$	30,882	$	(5,800)	(19)	%
Money market and interest-bearing checking deposits	30,203		26,054		4,149		16
Savings deposits	2,243		2,774		(531)		(19)
Customer certificates of deposit	3,733		2,708		1,025		38
Other time deposits	2,617		3,577		(960)		(27)
Foreign office time deposits	23		23		—		—
Total deposits	$	63,901	$	66,018	$	(2,117)	(3)	%
Short-term borrowings	$	837	$	7,218	$	(6,381)	(88)
Medium- and long-term debt	6,882		5,847		1,035		18
Total borrowed funds	$	7,719	$	13,065	$	(5,346)	n/m

n/m - not meaningful


(in millions)							Percent Change
Years Ended December 31,	2024		2023		Change
Average Deposits By Business Line:
General Middle Market	$	17,259	$	16,962	$	297	2	%
Technology and Life Sciences	3,001		3,607		(606)		(17)
Equity Fund Services	904		976		(72)		(7)
National Dealer Services	864		1,022		(158)		(15)
Environmental Services	381		361		20		5
Energy	364		574		(210)		(37)
Entertainment	345		268		77		29
Total Middle Market	23,118		23,770		(652)		(3)
Corporate Banking	4,067		3,788		279		7
Business Banking	3,511		3,569		(58)		(2)
Commercial Real Estate	1,550		1,582		(32)		(2)
Mortgage Banker Finance	18		310		(292)		(94)
Total Commercial Bank	32,264		33,019		(755)		(2)
Total Retail Bank	24,292		24,363		(71)		—
Total Wealth Management	3,894		4,130		(236)		(6)
Total Finance and Other	3,451		4,506		(1,055)		(23)
Total deposits	$	63,901	$	66,018	$	(2,117)	(3)	%

Other comprehensive (loss) income, net of tax:Investment securities$(154)Cash flow hedges9 Defined benefit and other postretirement plans32 Total other comprehensive loss, net of tax(113)Net issuance of common stock under employee stock plans1 Share-based compensation54 Balance at December 31, 2024$6,543

(a) Effective January 1, 2024, the Corporation adopted ASU 2023-02, which expanded the permitted use of the proportional amortization method to certain tax credit investments.

The following table summarizes the Corporation’s repurchase activity for the year ended December 31, 2024.


(shares in thousands)	Total Number of Shares Purchased as Part of Publicly Announced Repurchase Plans or Programs	Remaining Share Repurchase Authorization (a)	Total Number of Shares Purchased (b)	Average Price Paid Per Share
First Quarter 2024	—	4,997	19	$	50.95
Second Quarter 2024	—	4,997	2	54.32
Third Quarter 2024	—	4,997	2	51.21

Higher criticized and nonperforming loans, partially offset by improved economic forecasts and reduced levels of uncertainty incorporated into the estimate, contributed to an overall higher allowance for credit losses to total loans ratio as of December 31, 2024 compared to December 31, 2023. A decrease in loan balances in combination with the factors above resulted in the allowance for credit losses remaining relatively stable at $725 million at December 31, 2024, compared to $728 million as of December 31, 2023.

Key credit metrics remained below historical levels at December 31, 2024, with some normalization in trends in 2024 leading to higher criticized loans and nonperforming assets than in 2023. Criticized loan balances increased 5% at December 31, 2024 from December 31, 2023, while nonperforming assets increased to $308 million from $178 million over the same period. Net charge-offs as a percentage of average loans remained low for 2024 at 10 basis points. These portfolio trends were impacted by persistent inflation and elevated interest rates that continued to pressure customer profitability and debt service ratios.

In isolation, slight improvements in economic forecasts contributed to a partial reduction to the allowance for credit losses to total loans ratio as of December 31, 2024, compared to December 31, 2023. At December 31, 2024, forecasts reflected a more stabilized economic outlook compared to the December 31, 2023 forecasts, with less volatility over the reasonable and supportable period and a return to normalized levels for key economic variables. Specifically, the two-year forecast at December 31, 2024 reflected improved Gross Domestic Product (GDP) growth, relatively flat unemployment trends, more normalized oil prices and bond spreads indicative of lower credit risk in the market.

The allowance for credit losses incorporates risks not captured in the underlying model, primarily forecast risk. In management’s view, forecast risk at December 31, 2024 was lower than at December 31, 2023 due to a tightening of the economic scenarios, signaling an overall decrease in uncertainty. Uncertainties considered by management at December 31, 2024 focused on portfolios with incremental monitoring, such as leveraged, senior housing and automotive production loans.

The economic forecasts informing the current expected credit loss (CECL) model continue to reflect the cumulative lagged effects of the FRB's tight monetary policy between 2022 and 2024 that are weighing on the real economy, as well as several years of elevated inflation that largely depleted the excess savings that households accumulated during the pandemic. Energy prices are projected to level off amid crosswinds from the Russia-Ukraine and Middle East conflicts, rising U.S. crude production and weak demand from China and other major foreign economies. Residential real estate prices are generally stronger than commercial real estate property prices, which face continued headwinds from the long and variable lags by which the FRB's tighter monetary policy affect real asset prices and an overhang of office space supply.

A reversion to trend after the boost from expansionary fiscal policy fades is expected to contribute to a moderation of economic growth in 2025 and 2026. Price pressures are forecasted to continue to revert toward to pre-pandemic norms as the modest margin of slack which opened in the economy's productive capacity in 2024 cools pricing power. The FRB is expected to gradually normalize its monetary stance but not return interest rates to their pre-crisis levels.

F-20

These factors shaped the two-year reasonable and supportable forecast used by the Corporation in its CECL estimate at December 31, 2024. The U.S. economy is projected to grow at a below-trend rate through 2025 before gradually normalizing to its trend growth rate. The unemployment rate is forecasted to move somewhat higher as private hiring remains subdued. Forecasts for other key economic variables are generally consistent with those of GDP and unemployment rate, while interest rate forecasts reflect market expectations and recent guidance from the FRB. The following table summarizes select economic variables representative of the economic forecasts used to develop the allowance for credit losses estimate at December 31, 2024.


Economic Variable			Base Forecast
Real GDP growth			Growth slows to 1.6 percent in the first quarter of 2025 before recovering to approximately 2.0 percent by the end of the forecast period.
Unemployment rate			Remains between 4.2 and 4.4 percent over the forecast period.
Corporate BBB bond to 10-year Treasury bond spreads			Spread gradually widens to 2.2 percent by the end of the forecast period.
Oil Prices			Prices generally remain close to $70 per barrel throughout the forecast period.

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

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

Allowance for Loan Losses

The allowance for loan losses represents management’s estimates of current expected credit losses in the Corporation’s loan portfolio. The allowance for loan losses increased $2 million to $690 million at December 31, 2024, compared to $688 million at December 31, 2023.

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

Allowance for Credit Losses on Lending-Related Commitments

The allowance for credit losses on lending-related commitments estimates current expected credit losses on collective pools of letters of credit and unused commitments to extend credit based on reserve factors, determined in a manner similar to business loans, multiplied by a probability of draw estimate based on historical experience and credit risk, applied to commitment amounts. The allowance for credit losses on lending-related commitments totaled $35 million and $40 million at December 31, 2024 and December 31, 2023, respectively.

F-21

Analysis of the Allowance for Credit Losses

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


	2024								2023				2022
(dollar amounts in millions)	Net Loan Charge-Offs (Recoveries)			Net Charge-Offs (Recoveries) Ratio (a)					Net Loan Charge-Offs (Recoveries)		Net Charge-Offs (Recoveries) Ratio (a)		Net Loan Charge-Offs (Recoveries)		Net Charge-Offs (Recoveries) Ratio (a)
Commercial	$	40		0.15	%				$	9	0.03	%	$	18	0.06	%

Total nonperforming loans and nonperforming assets	$	308				$	178
Nonaccrual loans as a percentage of total loans	0.61		%			0.34		%
Nonperforming loans as a percentage of total loans	0.61					0.34
Nonperforming assets as a percentage of total loans and foreclosed property	0.61					0.34
Loans past due 90 days or more and still accruing	$	44				$	20

(a)Based on an analysis of nonaccrual loans with book balances greater than $2 million.

(b)Includes net changes related to nonaccrual loans with balances less than or equal to $2 million, payments on nonaccrual loans with book balances greater than $2 million and transfers of nonaccrual loans to foreclosed property.

There were 27 borrowers with a balance greater than $2 million, totaling $280 million, transferred to nonaccrual status in 2024, an increase of 11 borrowers compared to 16 borrowers totaling $94 million in 2023. For further information about the composition of loans transferred to nonaccrual status during 2024, refer to the nonaccrual information by industry category table below.

The following table presents the composition of nonaccrual loans by balance and the related number of borrowers at December 31, 2024 and 2023.


	2024			2023
(dollar amounts in millions)	Number of Borrowers	Balance		Number of Borrowers	Balance
Under $2 million	490	$	68	457	$	50
$2 million - $5 million	18	64		11	35
$5 million - $10 million	5	33		5	35
$10 million - $25 million	6	112		4	58
Greater than $25 million	1	31		—	—
Total	520	$	308	477	$	178

F-23

The following table presents a summary of nonaccrual loans at December 31, 2024 and loans transferred to nonaccrual and net loan charge-offs (recoveries) for the year ended December 31, 2024, based on North American Industry Classification System categories.


	December 31, 2024				Year Ended December 31, 2024
(dollar amounts in millions)	Nonaccrual Loans				Loans Transferred to Nonaccrual (a)				Net Loan Charge-Offs (Recoveries)
Industry Category
Real Estate & Home Builders	$	68	22	%	$	43	15	%	$	3	6	%
Health Care & Social Assistance	48		16		57		20		10		19
Residential Mortgage	37		12		11		4		—		—
Information & Communication	37		12		35		13		6		12
Manufacturing	26		9		32		11		7		13
Retail Trade	22		6		42		16		22		43
Utilities	16		5		17		6		—		—
Services	10		3		15		5		6		12
Wholesale Trade	7		2		11		4		8		15
Arts, Entertainment & Recreation	5		2		—		—		—		—
Management of Companies and Enterprises	3		1		—		—		—		—
Mining, Quarrying and Oil & Gas Extraction	—		—		—		—		(10)		(20)

Other (b)	29		10		17		6		—		—
Total	$	308	100	%	$	280	100	%	$	52	100	%

(a)Based on an analysis of nonaccrual loans with book balances greater than $2 million.

(b)Other category includes other industry categories with smaller impacts, as well as consumer, excluding residential mortgage and certain personal purpose nonaccrual loans and net charge-offs.

Loans past due 90 days or more and still accruing interest generally represent loans that are well-collateralized and in the process of collection. Loans past due 90 days or more increased $24 million to $44 million at December 31, 2024, compared to $20 million at December 31, 2023. Loans past due 30-89 days increased $21 million to $219 million at December 31, 2024, compared to $198 million at December 31, 2023. Loans past due 30 days or more and still accruing interest as a percentage of total loans were 0.52 percent and 0.42 percent at December 31, 2024 and December 31, 2023, respectively. An aging analysis of loans included in Note 4 to the consolidated financial statements provides further information about the balances comprising past due loans.

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


(dollar amounts in millions)
December 31	2024			2023
Total criticized loans	$	2,530		$	2,405
As a percentage of total loans	5.0		%	4.6		%

The $125 million increase in criticized loans during the year ended December 31, 2024 was primarily driven by Corporate Banking, partially offset by a decrease in general Middle Market.

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

Concentrations of Credit Risk

Concentrations of credit risk may exist when a number of borrowers are engaged in similar activities, or activities in the same geographic region, and have similar economic characteristics that would cause them to be similarly impacted by changes in economic or other conditions. The Corporation has concentrations of credit risk with the commercial real estate and automotive industries. All other industry concentrations, as defined by management, individually represented less than 10 percent of total loans at December 31, 2024.

F-24

Commercial Real Estate Lending

At December 31, 2024, the Corporation's commercial real estate portfolio represented percent of total loans. The following table summarizes the Corporation's commercial real estate loan portfolio by loan category.


	December 31, 2024						December 31, 2023
(in millions)	Commercial Real Estate business line (a)		Other (b)		Total		Commercial Real Estate business line (a)		Other (b)		Total
Real estate construction loans	$		$		$	3,680	$		$		$	5,083
Commercial mortgage loans					14,493						13,686
Total commercial real estate	$	9,402	$	8,771	$	18,173	$	9,297	$	9,472	$	18,769

(a)Primarily loans to real estate developers.

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

The Corporation limits risk inherent in its commercial real estate lending activities by monitoring borrowers directly involved in the commercial real estate markets and adhering to conservative policies on loan-to-value ratios for such loans, which are based on third-party appraisals that are performed at the time of origination in accordance with regulatory requirements as well as generally at the time of renewal. Per Interagency guidelines, the Corporation may also require an updated appraisal or valuation when economic, financial or market conditions may have resulted in deterioration of the prior appraisal's property value conclusions. Commercial real estate loans, consisting of real estate construction and commercial mortgage loans, totaled $18.2 billion at December 31, 2024. Commercial real estate loans made to borrowers in the Commercial Real Estate business line, which includes loans to real estate developers, totaled $9.4 billion, or 52 percent of total commercial real estate loans, an increase of $105 million compared to December 31, 2023.

The Commercial Real Estate business line at December 31, 2024 was predominantly secured by multi-family and industrial properties, comprising 48 percent and 29 percent of the portfolio, respectively, with only 4 percent secured by office properties. Commercial real estate loans in other business lines totaled $8.8 billion, or 48 percent of total commercial real estate loans, at December 31, 2024, a decrease of $701 million compared to December 31, 2023. These loans consisted primarily of owner-occupied commercial mortgages, which bear credit characteristics similar to non-commercial real estate business loans. Generally, loans previously reported as real estate construction are classified as commercial mortgage loans upon receipt of a certificate of occupancy.

The real estate construction loan portfolio primarily contains loans made to long-tenured customers with satisfactory completion experience. Criticized real estate construction loans in the Commercial Real Estate business line totaled $36 million at December 31, 2024 compared to $86 million at December 31, 2023. In other business lines, criticized real estate construction loans totaled $2 million at December 31, 2024, compared to $12 million at December 31, 2023. There were no real estate construction loan net charge-offs in the years ended December 31, 2024 and 2023.

Commercial mortgage loans are loans where the primary collateral is a lien on any real property and are primarily loans secured by owner-occupied real estate. Real property is generally considered primary collateral if the value of that collateral represents more than 50 percent of the commitment at loan approval. Loans in the commercial mortgage portfolio generally mature within three to five years. Criticized commercial mortgage loans in the Commercial Real Estate business line totaled $379 million and $378 million at December 31, 2024 and 2023, respectively. In other business lines, $694 million and $395 million of commercial mortgage loans were criticized at December 31, 2024 and 2023, respectively, with the increase primarily in senior housing properties, largely maintained in the Corporate Banking line of business. Senior housing loans totaled $658 million at December 31, 2024, of which 57% were criticized, compared to $796 million at December 31, 2023, of which 11% were criticized. Commercial mortgage loan net charge-offs were $13 million in 2024, compared to net recoveries of $1 million in 2023.

Automotive Lending - Dealer:

The following table presents a summary of dealer loans.


	December 31, 2024				December 31, 2023
(in millions)	Loans Outstanding		Percent of Total Loans		Loans Outstanding		Percent of Total Loans
Dealer:
Floor plan	$	2,279			$	2,313
Other	3,234				3,878
Total dealer	$	5,513	10.9	%	$	6,191	11.9	%

F-25

Substantially all dealer loans are in the National Dealer Services business line and primarily include floor plan financing and other loans to automotive dealerships. Floor plan loans, included in commercial loans in the Consolidated Balance Sheets, totaled $2.3 billion at December 31, 2024, a decrease of $34 million compared to $2.3 billion at December 31, 2023. At December 31, 2024 and 2023, other loans in the National Dealer Services business line totaled $3.2 billion and $3.9 billion, respectively, including $1.8 billion and $2.2 billion of owner-occupied commercial real estate mortgage loans, respectively.

There were no nonaccrual dealer loans at December 31, 2024, and 2023. Additionally, there were no net charge-offs of dealer loans in either of the years ended December 31, 2024 and 2023.

Automotive Lending- Production:

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


	December 31, 2024				December 31, 2023
	Loans Outstanding		Percent of Total Loans		Loans Outstanding		Percent of Total Loans
(in millions)
Production:
Domestic	$	499			$	591
Foreign	265				257
Total production	$	764	1.5	%	$	848	1.6	%

Loans to borrowers involved with automotive production, primarily Tier 1 and Tier 2 suppliers, totaled $ million at December 31, 2024 and $ million at December 31, 2023. These borrowers have faced, and could face in the future, financial difficulties due to disruptions in auto production, issues with supply chains and logistics operations and impacts resulting from labor union strikes. As such, management continues to monitor this portfolio.

There were no nonaccrual loans to borrowers involved with automotive production at December 31, 2024, compared to $17 million at December 31, 2023. Automotive production loan net recoveries totaled $1 million for the year ended December 31, 2024, compared to net charge-offs of $7 million for the year ended December 31, 2023.

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

Residential Real Estate Lending

At December 31, 2024, residential real estate loans represented 7 percent of total loans. The following table summarizes the Corporation's residential mortgage and home equity loan portfolios by geographic market.


	December 31, 2024								December 31, 2023
(dollar amounts in millions)	Residential Mortgage Loans		Percent of Total		Home Equity Loans		Percent of Total		Residential Mortgage Loans		Percent of Total		Home Equity Loans		Percent of Total
Geographic market:
Michigan	$	576	30	%	$	420	23	%	$	548	29	%	$	444	25	%
California	889		46		931		52		871		46		911		51
Texas	273		14		365		20		272		14		351		20
Other Markets	191		10		86		5		198		11		86		4
Total	$	1,929	100	%	$	1,802	100	%	$	1,889	100	%	$	1,792	100	%

Residential real estate loans, which consist of traditional residential mortgages and home equity loans and lines of credit, totaled $3.7 billion at December 31, 2024. The residential real estate portfolio is principally located within the Corporation's primary geographic markets. Substantially all residential real estate loans past due 90 days or more are placed on nonaccrual status, and substantially all junior lien home equity loans that are current or less than 90 days past due are placed on nonaccrual status if full collection of the senior position is in doubt. At no later than 180 days past due, such loans are charged off to current appraised values less costs to sell.

Residential mortgages totaled $1.9 billion at December 31, 2024, and were primarily larger, variable-rate mortgages originated and retained for certain private banking relationship customers. Of the $1.9 billion of residential mortgage loans outstanding, $37 million were on nonaccrual status at December 31, 2024, an increase of $18 million compared to December 31, 2023. The home equity portfolio totaled $1.8 billion at December 31, 2024, of which 95 percent were outstanding under primarily variable-rate, interest-only home equity lines of credit and 5 percent were in amortizing status. Of the $1.8 billion of home equity loans outstanding, $27 million were on nonaccrual status at December 31, 2024, an increase of

F-26

$6 million compared to December 31, 2023. A majority of the home equity portfolio was secured by junior liens at December 31, 2024.

Energy Lending

The Corporation has a portfolio of Energy loans that are included entirely in commercial loans in the Consolidated Balance Sheets. Customers in the Corporation's Energy business line are engaged in exploration and production (E&P) and midstream. E&P generally includes such activities as searching for potential oil and gas fields, drilling exploratory wells and operating active wells. Commitments to E&P borrowers are generally subject to semi-annual borrowing base re-determinations based on a variety of factors including updated prices (reflecting market and competitive conditions), energy reserve levels and the impact of hedging. The midstream sector is generally involved in the transportation, storage and marketing of crude and/or refined oil and gas products. The Corporation's energy services customers provide products and services primarily to the E&P industry. Approximately 94% of loans in the Energy business line are Shared National Credits (SNC), which are facilities greater than or equal to $100 million shared by three or more federally supervised institutions, reflecting the Corporation's focus on larger middle market companies that have financing needs that generally exceed internal individual borrower credit risk limits. The Corporation seeks to develop full relationships with SNC borrowers.

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


(dollar amounts in millions)	2024								2023
December 31	Outstandings				Nonaccrual		Criticized (a)		Outstandings				Nonaccrual		Criticized (a)
Exploration and production (E&P)	$	1,188	80	%	$	—	$	—	$	1,070	77	%	$	4	$	4
Midstream	298		20		—		—		312		23		—		—

Total Energy business line	$	1,486	100	%	$	—	$	—	$	1,382	100	%	$	4	$	4

(a)Includes nonaccrual loans.

Loans in the Energy business line totaled $1.5 billion, or 3 percent of total loans, at December 31, 2024, an increase of $104 million compared to December 31, 2023. Total exposure, including unused commitments to extend credit and letters of credit, was $3.5 billion (a utilization rate of 41%) and $3.3 billion (a utilization of 42 percent) at December 31, 2024 and December 31, 2023, respectively. There were no nonaccrual or criticized at Energy loans at December 31, 2024, compared to $4 million at December 31, 2023. Energy net recoveries were $10 million for the year ended December 31, 2024, compared to net recoveries of $1 million for the year ended December 31, 2023.

Leveraged Loans

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

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

The following table summarizes information about HR C&I loans, which represented 6 percent and 5 percent of total loans at December 31, 2024 and December 31, 2023, respectively.


(in millions) December 31	2024		2023
Outstandings	$	2,836	$	2,814
Criticized	300		332
Net loan charge-offs recorded during the years ended December 31,	23		5

F-27

Market and Liquidity Risk

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

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

The Corporation performs monthly liquidity stress testing to evaluate its ability to meet funding needs in hypothetical stressed environments. Such environments cover a series of scenarios, including both idiosyncratic and market-wide in nature, which vary in terms of duration and severity. The Corporation's evaluation as of December 31, 2024 projected that sufficient sources of liquidity were available under each series of events.

In addition to assessing liquidity risk on a consolidated basis, Corporate Treasury also monitors the parent company's liquidity and has established liquidity coverage requirements for meeting expected obligations without the support of additional dividends from subsidiaries. ALCO's policy on liquidity risk management requires the parent company to maintain sufficient liquidity to meet expected cash obligations, such as debt service, dividend payments and normal operating expenses, over a period of no less than 12 months. The Corporation had liquid assets of $1.3 billion on an unconsolidated basis at December 31, 2024.

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

Interest Rate Risk

Net interest income is the primary source of revenue for the Corporation. Interest rate risk arises in the normal course of business due to differences in the repricing and cash flow characteristics of assets and liabilities, primarily through the Corporation's core business activities of extending loans and acquiring deposits. The Corporation's balance sheet is predominantly characterized by floating-rate loans funded by core deposits. Including the impact of interest rate swaps converting floating-rate loans to fixed, the Corporation's loan composition at December 31, 2024 was 56 percent fixed-rate, 34 percent overnight to 30-day rate, 7 percent 90-day and greater rates and 3 percent prime rate. The composition of the Corporation's loan portfolio creates sensitivity to interest rate movements due to the imbalance between the faster repricing of the floating-rate loan portfolio versus deposit products. In addition, the growth and/or contraction in the Corporation's loans and deposits may lead to changes in sensitivity to interest rate movements in the absence of mitigating actions. Examples of such actions are purchasing fixed-rate investment securities, which provide liquidity and act to mitigate the inherent interest rate sensitivity, as well as hedging with interest rate swaps and options. Other mitigating factors include interest rate floors on a portion of the loan portfolio.

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

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

F-28

Sensitivity of Net Interest Income to Changes in Interest Rates

The analysis of the impact of changes in interest rates on net interest income under various interest rate scenarios is management's principal risk management technique. Management models a base-case net interest income under an unchanged interest rate environment using a static balance sheet and generates sensitivity scenarios by changing certain model assumptions. Each scenario includes assumptions such as loan growth, investment security prepayment levels, depositor behavior and overall balance sheet mix and growth which are in line with historical patterns. Additionally, the analysis assumes that all loan hedges qualify for hedge accounting. Changes in actual economic activity may result in a materially different interest rate environment as well as a balance sheet structure that is different from the changes management included in its simulation analysis. Model assumptions in the sensitivity scenarios at December 31, 2024 included, for the rising interest rate scenarios, a modest increase in loan balances and a moderate decrease in deposit balances, and for the declining interest rate scenarios, a modest decrease in loan balances and a moderate increase in deposit balances. In addition, both scenarios assumed loan spreads held at current levels, an incremental interest-bearing deposit beta of approximately 47%, deposit mix shifts based on historical observations, partial reinvestment of securities portfolio cash flows and no additions to interest rate swaps.

The average balance of the securities portfolio included in the analysis was $15.8 billion for the year ended December 31, 2024 with an average yield of 2.16% and an effective duration of 5.8 years. During the year ended December 31, 2024, the Corporation repositioned a portion of its securities portfolio by selling $827 million of Treasury securities, resulting in a $19 million loss, and replacing them with higher-yielding Treasury securities with a duration of 1.9 years.

The table below details components of the variable-rate loan swap portfolio at December 31, 2024.


	Variable-Rate Loan Swaps
(dollar amounts in millions)	Notional Amount		Weighted Average Yield		Years to Maturity (b)
Swaps under contract at December 31, 2024 (a)	$	23,350	2.55	%	3.1
Weighted average notional active per period:
Full year 2024	23,575		2.50		2.4
Full year 2025	22,973		2.57		3.1

(a)Years to maturity calculated from a starting date of December 31, 2024.

The analysis also includes interest rate swaps that convert $6.8 billion of fixed-rate medium- and long-term debt to variable rates through fair value hedges. Additionally, included in this analysis are $15.1 billion of loans that were subject to an average interest rate floor of 52 basis points at December 31, 2024. This base-case net interest income is then compared against interest rate scenarios in which short-term rates rise or decline 100 or 200 basis points (with a floor of zero percent) in a linear, non-parallel fashion from the base case over 12 months, resulting in an average change of 50 or 100 basis points over the period.

The table below, as of December 31, 2024 and 2023, displays the estimated impact on net interest income during the next 12 months by relating the base case scenario results to those from the rising and declining interest rate scenarios described above.


	Estimated Annual Change
(dollar amounts in millions)	2024					2023
December 31	Amount		%			Amount		%
Change in Interest Rates:					Change in Interest Rates:
Rising 100 basis points	$	(26)	(1)	%	Rising 100 basis points	$	(36)	(2)	%
(50 basis points on average)					(50 basis points on average)
Declining 100 basis points	12		1		Declining 100 basis points	23		1
(50 basis points on average)					(50 basis points on average)
Rising 200 basis points	(67)		(3)		Rising 200 basis points	(87)		(4)
(100 basis points on average)					(100 basis points on average)
Declining 200 basis points	12		1		Declining 200 basis points	33		1
(100 basis points on average)					(100 basis points on average)

Sensitivity to both rising and declining interest rates decreased slightly from December 31, 2023 to December 31, 2024 due to changes in balance sheet mix dynamics.

At December 31, 2024, additional sensitivity scenarios applied the rising and declining 100 basis point scenario assumptions with a 60% incremental deposit beta relative to the base case scenario to assess the impact of the Corporation's deposit beta assumptions. In these rising and declining scenarios, net interest income decreased by $56 million and increased by $35 million, respectively, due to a more rapid repricing pace compared to the standard model assumptions.

F-29

Sensitivity of Economic Value of Equity to Changes in Interest Rates

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

The table below, as of December 31, 2024 and December 31, 2023, displays the estimated impact on the economic value of equity from the interest rate scenario described above.


(dollar amounts in millions)	2024					2023
December 31	Amount		%			Amount		%
Change in Interest Rates:					Change in Interest Rates:
Rising 100 basis points	$	(503)	(4)	%	Rising 100 basis points	$	(567)	(4)	%
Declining 100 basis points	598		5		Declining 100 basis points	794		6
Rising 200 basis points	(1,066)		(9)		Rising 200 basis points	(1,254)		(10)
Declining 200 basis points	1,097		9		Declining 200 basis points	1,363		11

The sensitivity of the economic value of equity to rising and declining rates decreased modestly from December 31, 2023 to December 31, 2024 due to a declining notional amount of cash flow swaps and a smaller securities portfolio, partially offset by updated deposit modeling assumptions.

Loans by Maturity and Interest Rate Sensitivity

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


	Loans Maturing
(in millions) December 31, 2024	Within One Year (a)		After One But Within Five Years		After Five But Within Fifteen Years		After Fifteen Years		Total
Commercial loans	$	9,873	$	15,573	$894		$	152	$	26,492
Real estate construction loans	1,287		2,280		113		—		3,680
Commercial mortgage loans	4,213		7,629		2,635		16		14,493
Lease financing	137		266		319		—		722
International loans	463		458		31		—		952
Residential mortgage loans	20		6		186		1,717		1,929
Consumer loans	447		134		43		1,647		2,271
Total	$	16,440	$	26,346	$	4,221	$	3,532	$	50,539

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

The interest rate composition of loans with a maturity date over one year are presented below based on contractual terms.


	Loans Maturing After One Year
(in millions) December 31, 2024	Predetermined (Fixed) Interest Rate		Floating Interest Rate		Total
Commercial loans	$	307	$	16,312	$	16,619
Real estate construction loans	51		2,342		2,393
Commercial mortgage loans	1,591		8,689		10,280
Lease financing	241		344		585
International loans	1		488		489
Residential mortgage loans	576		1,333		1,909
Consumer loans	21		1,803		1,824
Total	$	2,788	$	31,311	$	34,099

F-30

Risk Management Derivative Instruments

The Corporation uses investment securities and derivative instruments as asset and liability management tools with the overall objective of managing the volatility of net interest income from changes in interest rates. These tools assist management in achieving the desired interest rate risk management objectives. Activity related to derivative instruments currently involves interest rate swaps effectively converting variable rate loans to a fixed rate and fixed-rate medium- and long-term debt to a floating rate. Notional activity for 2023 included the impact of LIBOR transition for centrally-cleared swaps, where LIBOR-based swaps were replaced with short-dated LIBOR bridge swaps that matured in 2023 and surviving forward-starting Secured Overnight Financing Rate (SOFR) swaps. In a similar manner, notional activity for 2024 included the impact of BSBY cessation, where existing BSBY-based swaps were replaced with short-dated BSBY swaps that matured in 2024 and surviving forward-starting SOFR swaps.


(in millions) Risk Management Notional Activity	Interest Rate Contracts		Foreign Exchange Contracts		Totals
Balance at January 1, 2023	$	29,750	$	392	$	30,142
Additions	17,100		9,534		26,634
Maturities/amortizations	(9,150)		(9,366)		(18,516)
Terminations	(6,550)		—		(6,550)
Balance at December 31, 2023	$	31,150	$	560	$	31,710
Additions	12,200		9,305		21,505
Maturities/amortizations	(7,600)		(9,412)		(17,012)
Terminations	(5,600)		—		(5,600)
Balance at December 31, 2024	$	30,150	$	453	$	30,603

The notional amount of risk management interest rate swaps totaled $30.2 billion at December 31, 2024, which included cash flow swaps that convert $23.4 billion of variable-rate loans to a fixed rate as well as fair value swaps that convert $6.8 billion of fixed-rate medium- and long-term debt to a floating rate. Risk management interest rate swaps generated $765 million and $715 million of net interest expense for the years ended December 31, 2024 and December 31, 2023, respectively.

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

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

Customer-Initiated and Other Derivative Instruments


(in millions) Customer-Initiated and Other Notional Activity	Interest Rate Contracts		Energy Derivative Contracts		Foreign Exchange Contracts		Totals
Balance at January 1, 2023	$	20,298	$	14,521	$	2,704	$	37,523
Additions	16,207		11,510		44,060		71,777
Maturities/amortizations	(5,651)		(10,761)		(44,013)		(60,425)
Terminations	(8,384)		(1,464)		—		(9,848)
Balance at December 31, 2023	$	22,470	$	13,806	$	2,751	$	39,027
Additions	14,396		11,928		39,220		65,544
Maturities/amortizations	(9,004)		(10,205)		(38,854)		(58,063)
Terminations	(5,111)		(2,271)		—		(7,382)
Balance at December 31, 2024	$	22,751	$	13,258	$	3,117	$	39,126

The Corporation sells and purchases interest rate caps and floors and enters into foreign exchange contracts, interest rate swaps and energy derivative contracts to accommodate the needs of customers requesting such services. Changes in the fair value of customer-initiated and other derivatives are recognized in earnings as they occur. To limit the market risk of these activities, the Corporation generally takes offsetting positions with dealers. The notional amounts of offsetting positions are included in the table above. Customer-initiated and other notional activity represented 56 percent and 55 percent of total interest rate, energy and foreign exchange contracts at December 31, 2024 and 2023, respectively.

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

F-31

BSBY Cessation

The Bloomberg Index Services Limited (Bloomberg) discontinued publishing BSBY on November 15, 2024. As a result, the Corporation was required to “de-designate” $7.0 billion of interest rate swaps used in cash flow hedges of certain BSBY-indexed loans and reclassify amounts recognized in accumulated other comprehensive income into earnings. For each de-designated swap, settlement of interest payments and changes in fair value were recorded as risk management hedging losses within other noninterest income instead of net interest income until re-designation. All impacted swaps were re-designated as of April 1, 2024.

BSBY cessation positively impacted interest income on commercial loans by $7 million for the year ended December 31, 2024, compared to $3 million for the year ended December 31, 2023. Additionally, the Corporation recognized net losses of $39 million and $91 million in noninterest income for the year ended December 31, 2024 and 2023, respectively. Refer to Note 8 to the consolidated financial statements for further discussion of re-designated interest rate hedges.

The Corporation has substantially completed its BSBY transition efforts and effectively all BSBY-based contracts had transitioned to other reference rates as of December 31, 2024. Any BSBY-based contracts that did not transition to SOFR or other indices in 2024 are expected to either not reprice prior to maturing in 2025 or convert to SOFR or another index at their next repricing date.

Sources of Liquidity

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

The Corporation satisfies incremental liquidity needs with either liquid assets or external funding sources. Available liquidity includes cash, FHLB advances and FRB borrowing through the discount window, as well as the market value of unencumbered investment securities, which, if needed, could be utilized as collateral for FHLB advances and FRB borrowings. The Corporation has pledged a portion of its investment securities portfolio to access wholesale funding as needed.

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

At December 31, 2024, the Bank had pledged real estate-related loans totaling $22.5 billion and investment securities totaling $6.0 billion to the FHLB, which provided for up to $17.0 billion of collateralized borrowing with the FHLB.

The FRB provides liquidity through its discount window, where banks may borrow funds based on the discounted fair value of pledged assets. At December 31, 2024, the Bank pledged $20.3 billion of loans to the FRB, which provided for up to $16.8 billion of collateralized borrowing through the discount window.

The table below details the Corporation's sources of available liquidity at December 31, 2024.


(dollar amounts in millions)	Total Capacity		Borrowings Outstanding		Available Liquidity
Cash on deposit with FRB (a)					$	5,811
Unencumbered investment securities (b)					8,018
Secured borrowing facilities:
FHLB	$	17,026	$	4,000	13,026
FRB	16,841		—		16,841
Total available liquidity					$	43,696

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

(b)Market value of available-for-sale investment securities that the Corporation can pledge or sell without third-party consent.

The Corporation may also use brokered deposits and external debt as additional sources of funding, and maintains a shelf registration statement with the Securities and Exchange Commission through which it may issue securities. The ability of the Corporation and the Bank to raise unsecured funding at competitive rates is impacted by rating agencies' views of the credit quality, liquidity, capital, earnings and other relevant factors related to the Corporation and the Bank. As of December 31, 2024, the three major rating agencies had assigned the following ratings to long-term senior unsecured obligations of the Corporation and the Bank, as well as long-term deposits at the Bank. A security rating is not a recommendation to buy, sell, or hold

F-32

securities and may be subject to revision or withdrawal at any time by the assigning rating agency. Each rating should be evaluated independently of any other rating.

Debt Ratings

Deposit Ratings

Comerica Incorporated

Comerica Bank

December 31, 2024

Rating

Outlook

Rating

Moody’s Investors Service (a)

Baa1

Negative

Fitch Ratings

A-

Negative

Standard and Poor’s

BBB

BBB+

Stable

not rated

(a)In January 2025, Moody's Investors Service (Moody's) downgraded the Corporation and Bank's debt ratings by one notch to Baa2 from Baa1, changed the Corporation and Bank's outlooks to Stable and downgraded the Bank's deposit rating to A2.

Deposit Concentrations and Uninsured Deposits

The Corporation's uninsured deposits are well-diversified between geographies, industries and customers. At December 31, 2024, the Retail Bank and general Middle Market segments, both highly diversified and granular, accounted for 37% and 30% of the total deposit base, respectively. Corporate Banking and Technology and Life Sciences comprised 7% and 5% each of total deposits, respectively, which were the largest deposit concentrations of the more specialized business lines.


	December 31, 2024				December 31, 2023
(Dollar amount in millions)	Amount		Percentage of total deposits		Amount		Percentage of total deposits
Total uninsured deposits, as calculated per regulatory guidelines	$	33,387	52	%	$	31,485	47	%
Less: affiliate deposits	(3,876)				(4,064)
Total uninsured deposits, excluding affiliate deposits	$	29,511	46	%	$	27,421	41	%

The $1.9 billion increase in uninsured deposits (as calculated per regulatory guidelines) was primarily due to an increase in uninsured commercial interest-bearing deposits, partially offset by a decline in uninsured noninterest-bearing deposits. Time deposits otherwise uninsured, which consist of foreign office time deposits, totaled $32 million at December 31, 2024 and all mature in three months or less. Collateralized deposits, consisting of trust deposits as well as deposits of public entities and state and local government agencies, totaled $348 million at December 31, 2024, compared to $687 million at December 31, 2023.

Direct Express Debit MasterCard Program

In July 2024, the Bank received preliminary notification that, following the contract expiration on January 2, 2025, it was not selected to continue serving as financial agent supporting the Direct Express Program; however, the Treasury elected to extend the contract term for up to three years past January 2, 2025 to facilitate an orderly transaction. While the length of the transition is currently unknown, the Corporation believes it may take some time given the scale and complexity of the program as well as its own transition experience.

For the years ended December 31, 2024 and 2023, average deposits related to the Direct Express program were $3.4 billion and $3.1 billion, respectively, all of which were noninterest-bearing. Card fee income related to the Direct Express program was $121 million and $137 million for the years ended December 31, 2024 and 2023, respectively. Noninterest expenses related to the Direct Express program were $119 million and $138 million, respectively, for the same periods, consisting primarily of outside processing fee expense and other noninterest expenses. The Corporation cannot currently predict the impact that the loss of this contract and the related deposits could have on its financial statements as it will be subject to many factors, including, but not limited to, the timing, costs and extent of securing any necessary alternative sources of funding. However, such impact could be material.

Potential Uses of Liquidity

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

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

F-33

Selected Contractual Obligations


	Minimum Payments Due by Period
(in millions) December 31, 2024	Total		Less than 1 Year		1-3 Years		4-5 Years		More than 5 Years
Deposits without a stated maturity (a)	$	59,277	$	59,277
Certificates of deposit and other deposits with a stated maturity (a)	4,534		4,455		$	68	$	8	$	3

Medium- and long-term debt (a)	6,800		1,350		2,400		1,550		1,500
Operating leases	423		67		123		84		149


Total contractual obligations	$	71,034	$	65,149	$	2,591	$	1,642	$	1,652
Medium- and long-term debt (parent company only) (a) (b)	$	1,800	$	—	$	250	$	550	$	1,000

(a)Deposits and borrowings exclude accrued interest.

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

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

Commercial Commitments


	Expected Expiration Dates by Period
(in millions) December 31, 2024	Total		Less than 1 Year		1-3 Years		4-5 Years		More than 5 Years

Unused commitments to extend credit	$	28,398	$	6,416	$	12,362	$	6,002	$	3,618
Standby letters of credit and financial guarantees	4,138		3,690		340		105		3
Commercial letters of credit	12		12		—		—		—
Total commercial commitments	$	32,548	$	10,118	$	12,702	$	6,107	$	3,621

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

Other Market Risks

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

Operational Risk

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

Technology Risk

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

F-34

the risk of a financial reporting error or regulatory non-compliance, and the impact of such risks are highly interdependent with operational risk.

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

Compliance Risk

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

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

Strategic Risk

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

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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, 2024, the most critical of these estimates related to the allowance for credit losses, fair value measurement, pension plan accounting and income taxes. These estimates were reviewed with the Audit Committee of the Corporation’s Board of Directors and are discussed more fully below.

ALLOWANCE FOR CREDIT LOSSES

In accordance with CECL, the allowance for credit losses, which includes both the allowance for loan losses and the allowance for credit losses on lending-related commitments, is calculated with the objective of maintaining a reserve for current expected credit losses over the remaining contractual life of the portfolio. The Corporation uses loss factors, based on estimated probability of default for internal risk ratings and loss given default, to determine the allowance for credit losses for the majority of its portfolio. Management applies loss factors to pools of loans and lending-related commitments with similar risk characteristics, calibrates these factors using economic forecasts and incorporates qualitative adjustments. For further discussion of the methodology used in the determination of the allowance for credit losses, refer to Note 1 to the consolidated financial statements. For further discussion on the economic forecast incorporated into the 2024 model, refer to the “Risk Management” section of this financial review.

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

Loan Risk Rating Process

Reserve factors are applied to pools of loans based on risk characteristics, including the Corporation's internal risk rating system; therefore, loss estimates are highly dependent on the accuracy of the risk rating assigned to each loan. The inherent imprecision in the risk rating system resulting from inaccuracy in assigning and/or entering risk ratings in the loan accounting system is monitored by the Corporation's asset quality review function. Changes to internal risk ratings beyond the forecasted migration inherent in the credit models would result in a different estimated allowance for credit losses. To illustrate, if five percent of the individual risk ratings were adjusted down by one rating across all pools, the allowance for loan losses as of December 31, 2024 would change by approximately $6 million.

Forecasted Economic Variables

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

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

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Economic Variable			More Severe Forecast
Real GDP			Contracts through third quarter 2025, followed by partial recovery, resulting in a cumulative contraction of 0.7 percent over the forecast period.
Unemployment rate			Increases to 8.3 percent by first quarter 2026, followed by a decline to 7.5 percent by the end of the forecast period.
Corporate BBB bond to 10-year Treasury bond spreads			Spreads widen to a peak of 4.0 percent before gradually narrowing to 2.3 percent by the end of the forecast period.
Oil Prices			Decline to $48 per barrel by first quarter 2026 before recovering to $57 per barrel by the end of the forecast period.

Selecting a different forecast in the current environment could result in a significantly different estimated allowance for credit losses. To illustrate, absent model overlays and other qualitative adjustments that are part of the quarterly reserving process, if the Corporation selected the more severe scenario to inform its models, the allowance for credit losses as of December 31, 2024 would increase by approximately $328 million. However, factoring in model overlays and qualitative adjustments could result in a materially different estimate under a more severe scenario.

Qualitative Adjustments and Model Overlays

The Corporation includes qualitative adjustments, as appropriate, intended to capture the impact of uncertainties not reflected in the quantitative estimate, including foresight risk, model imprecisions and input imprecisions. Qualitative adjustments for foresight risk reflect the inherent imprecision in economic forecasts and may be included based on management’s evaluation of different forecast scenarios, ranging from more benign to more severe, and known recent events impacting the Corporation’s portfolio. Model imprecision adjustments and model overlays may be included to mitigate known limitations in the quantitative models. Input imprecision includes adjustments for portfolios where recent historical losses exceed expected losses or known recent events are expected to alter risk ratings once evidence is acquired, as well as a qualitative assessment of the lending environment, including underwriting standards, current economic and political conditions, and other factors affecting credit quality. Qualitative reserves at December 31, 2024 primarily included adjustments for uncertainties related to forecasted economic variables.

Other Considerations

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

FAIR VALUE MEASUREMENT

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

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

At December 31, 2024, assets and liabilities measured using observable inputs that are classified as Level 1 or Level 2 represented substantially all of total assets and liabilities recorded at fair value, respectively. Valuations generated from model-based techniques that use at least one significant assumption not observable in the market are considered Level 3 and reflect estimates of assumptions market participants would use in pricing the asset or liability. The valuation of Level 3 assets and liabilities are considered critical accounting estimates.

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PENSION PLAN ACCOUNTING

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

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

The Corporation reviews its pension plan assumptions on an annual basis with its actuarial consultants to determine if the assumptions are reasonable and adjusts the assumptions to reflect changes in future expectations. The major assumptions used to calculate 2025 and 2024 defined benefit plan pension expense (benefit) were as follows:


	2025		2024
Discount rate	5.72	%	5.33	%
Long-term rate of return on plan assets	6.75	%	6.75	%
Mortality table:
Base table (a)	Pri-2012		Pri-2012
Mortality improvement scale (a)	MP-2021		MP-2020

(a)Issued by the Society of Actuaries

Defined benefit plan benefit is expected to decrease $8 million to approximately $38 million in 2025, compared to a benefit of $46 million in 2024. This includes service cost expense of $38 million and a benefit from other components of $76 million. Service costs are included in salaries and benefits expense, while the benefit from other components are included in other noninterest expenses on the Consolidated Statements of Income.

The Corporation’s pension plan is most sensitive to changes in discount rate and long-term rate of return. A change to the discount rate implies a corresponding change in interest rates that affect the value of the plan’s fixed income assets. An increase of 25 basis points to the discount rate, including the effect of higher interest rates on the plan’s fixed income assets, would result in a net increase to pension expense of $5 million, while a decrease of 25 basis points would reduce pension expense by $5 million. Increasing the long-term rate of return by 25 basis points would reduce pension expense by $7 million, while a decrease of 25 basis points would increase pension expense by $7 million.

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

INCOME TAXES

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

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

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

SUPPLEMENTAL FINANCIAL DATA

The Corporation believes non-GAAP measures are meaningful because they reflect adjustments commonly made by management, investors, regulators and analysts to evaluate the adequacy of common equity and performance trends. Tangible common equity is used by the Corporation to measure the quality of capital and the return relative to balance sheet risk. Common equity tier 1 capital ratio removes preferred stock from the Tier 1 capital ratio as defined by and calculated in conformity with bank regulations. The tangible common equity ratio removes the effect of intangible assets from capital and total assets. Tangible common equity per share of common stock removes the effect of intangible assets from common shareholders' equity per share of common stock.

The following table provides a reconciliation of non-GAAP financial measures and regulatory ratios used in this financial review with financial measures defined by GAAP.


(dollar amounts in millions)
December 31	2024			2023
Common Equity Tier 1 Capital:
Tier 1 capital	$			$
Less:
Fixed-rate reset non-cumulative perpetual preferred stock
Common equity tier 1 capital	$	8,667		$	8,414
Risk-weighted assets	$			$
Tier 1 capital ratio			%			%
Common equity tier 1 capital ratio
Tangible Common Equity Ratio:
Total shareholders' equity	$	6,543		$	6,406
Less:
Fixed-rate reset non-cumulative perpetual preferred stock	394			394
Common shareholders' equity	$	6,149		$	6,012
Less:
Goodwill	635			635
Other intangible assets	6			8
Tangible common equity	$	5,508		$	5,369
Total assets	$	79,297		$	85,834
Less:
Goodwill	635			635
Other intangible assets	6			8
Tangible assets	$	78,656		$	85,191
Common equity ratio	7.75		%	7.00		%
Tangible common equity ratio	7.00			6.30
Tangible Common Equity per Share of Common Stock:
Common shareholders' equity	$	6,149		$	6,012
Tangible common equity	5,508			5,369
Shares of common stock outstanding (in millions)	131			132
Common shareholders' equity per share of common stock	$	46.79		$	45.58
Tangible common equity per share of common stock	41.91			40.70

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(in millions, except share data)
December 31	2024	2023

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, $ 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 12/31/2024 and shares at 12/31/2023	()	()
Total shareholders’ equity
Total liabilities and shareholders’ equity	$	$


(dollar amounts in millions)	Postretirement Benefit Plan
Years Ended December 31	2024			2023			2022
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


	Estimated Future Benefit Payments
(in millions) Years Ended December 31	Qualified Defined Benefit Pension Plan	Non-Qualified Defined Benefit Pension Plan	Postretirement Benefit Plan (a)
2025	$	$	$
2026
2027
2028
2029
2030 - 2034


						Allowance for credit losses
Description of the Matter						The Corporation’s loan portfolio and the associated allowance for credit losses (ACL) were $50.5 billion and $725 million as of December 31, 2024, respectively. The allowance for credit losses represents management’s estimate of expected credit losses over the contractual life of the loan portfolio at the balance sheet date. The allowance for credit losses includes credit loss estimates for loans evaluated on an individual basis, such as for certain nonaccrual loans and collective loss estimates for pools of loans with similar risk characteristics. The Corporation determines the allowance for pools of loans with similar risk characteristics by applying loss factors to amortized cost balances over the remaining contractual life. Loss factors are based on estimated probability of default, set to a default horizon based on contractual life, and loss given default. Through the use of various models, historical estimates are calibrated to economic forecasts over the reasonable and supportable forecast period based on economic variables that statistically correlate with each of the probability of default and loss given default pools. Qualitative adjustments are then made to bring the allowance to the level management believes is appropriate based on factors that have not otherwise been fully accounted for in the quantitative analysis. Examples of these adjustments include 1) foresight risk, 2) input imprecision, and 3) model imprecision. Auditing management’s estimate of the allowance for credit losses involved a high degree of subjectivity due to the highly judgmental nature of the expected loss models and the qualitative adjustments included in the ACL. Management applies significant judgment in developing assumptions used to determine the allowance estimate and the inputs used in those models as well as in applying qualitative adjustments and model overlays. These determinations could have a significant effect on the ACL.


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


			COMERICA INCORPORATED

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


/s/ Curtis C. Farmer						Chairman, President, Chief Executive Officer and
Curtis C. Farmer						Director (Principal Executive Officer)

/s/ James J. Herzog						Senior Executive Vice President and Chief Financial Officer
James J. Herzog						(Principal Financial Officer)

/s/ Mauricio A. Ortiz						Executive Vice President, Chief Accounting Officer
Mauricio A. Ortiz						and Controller (Principal Accounting Officer)

/s/ Arthur G. Angulo						Director
Arthur G. Angulo

/s/ Nancy Avila						Director
Nancy Avila

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

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

/s/ Derek J. Kerr						Director
Derek J. Kerr

/s/ Richard G. Lindner						Director
Richard G. Lindner

/s/ Jennifer H. Sampson						Director
Jennifer H. Sampson

/s/ Barbara R. Smith						Director
Barbara R. Smith

/s/ Robert S. Taubman						Director
Robert S. Taubman

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

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

COMERICA INC - Annual Report: 2024 (Form 10-K)

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