Company: CMA
Filing Date: 2025-02-24
Form Type: 10-K
Source: 0000028412-25-000108
Chunk: 407

Company: COMERICA INC
Filing Date: 2025-02-24
Form: 10-K
Item: Item 8
Chunk 407
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.6 percent in the first quarter of 2025 before recovering to approximately 2.0 percent by the end of the forecast period.Unemployment rateRemains between 4.2 and 4.4 percent over the forecast period.Corporate BBB bond to 10-year Treasury bond spreadsSpread gradually widens to 2.2 percent by the end of the forecast period.Oil PricesPrices 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