Company: CMA
Filing Date: 2025-04-30
Form Type: 10-Q
Source: 0000028412-25-000154
Chunk: 120

Company: COMERICA INC
Filing Date: 2025-04-30
Form: 10-Q
Item: Part I, Item 1
Chunk 120
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ingsNonaccrualCriticized (a)Exploration and production (E&P)$1,098 81 %$— $— $1,188 80 %$— $— Midstream266 19 — — 298 20 — — Total Energy business line$1,364 100 %$— $— $1,486 100 %$— $— 

(a)    Includes nonaccrual loans.

Loans in the Energy business line totaled $1.4 billion, or less than 3 percent of total loans, at March 31, 2025, a decrease of $122 million compared to December 31, 2024. Total exposure, including unused commitments to extend credit and letters of credit, was $3.4 billion at March 31, 2025 (a utilization rate of 38 percent) and $3.3 billion at December 31, 2024 (a utilization rate of 42 percent). There were no nonaccrual or criticized Energy loans at both March 31, 2025 and December 31, 2024. There were no Energy net charge-offs for the three month periods ended March 31, 2025 and March 31, 2024, compared to net recoveries of $1 million for the three months ended December 31, 2024.

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 tables summarize