Company: CMA
Filing Date: 2025-07-30
Form Type: 10-Q
Source: 0000028412-25-000197
Chunk: 23

Company: COMERICA INC
Filing Date: 2025-07-30
Form: 10-Q
Item: Part I, Item 2
Chunk 23
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 into the estimate resulted in an unchanged allowance for credit losses to total loans ratio as of June 30, 2025 compared to December 31, 2024. Loan growth, in conjunction with the factors above, contributed to a $10 million increase in the allowance for credit losses to $735 million at June 30, 2025 from $725 million at December 31, 2024.

CECL Forecast and Economic Variables at June 30, 2025

The economic forecasts informing the CECL model reflected a moderately weaker outlook after including the impact of new tariff policies and continued to reflect an elevated degree of uncertainty amid ongoing rapid changes in domestic and foreign economic policies. The impact of potential additional tariff increases and changes to federal government operations were still unclear, creating challenges to economic forecasting. The FRB was assumed to gradually lower interest rates over the projection period as they remained vigilant toward inflation. Consumer spending growth continued to moderate amid slower, albeit continued, growth of the real economy. Inflation was anticipated to gradually moderate as a modest margin of slack capacity is expected to open in the labor market. Energy prices were projected to hold at lower levels than seen at the close of the first quarter, with supply outpacing demand and U.S. crude production holding near a record high. Residential real estate property prices were expected to rise at more moderate rates, while commercial real estate prices continued to face headwinds, both of which reflected the long and variable lags through which the FRB's tighter monetary policy prior to the beginning of rate cuts in the third quarter of 2024 affected the real economy.

Downside risks to growth from trade conflicts, cost-of-living pressures on household finances and less expansionary fiscal policy were projected to collectively contribute to slower growth for the remainder of 2025 and into 2026. Reduced demand for office space and subdued economic activity in the central business districts of major metro areas are also expected to persist as drags on the broader economy. These headwinds are expected to be partially offset by the expansionary effects of fiscal policies which, at June 30, 2025, looked likely to be enacted in future periods.

These factors shaped the 2-year reasonable and supportable forecasts used by the Corporation in its CECL estimate at June 30, 2025. The U.S. economy was projected to grow at a below-trend rate through the rest of 2025 before gradually normalizing to its trend growth rate in 2026. The unemployment rate was expected to hold below