Company: CMA
Filing Date: 2025-07-30
Form Type: 10-Q
Source: 0000028412-25-000197
Chunk: 24

Company: COMERICA INC
Filing Date: 2025-07-30
Form: 10-Q
Item: Part I, Item 2
Chunk 24
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 5%, while interest rate forecasts reflected market expectations and guidance from the FRB available during the second quarter of 2025. The following table summarizes select variables representative of the economic forecasts used to develop the CECL estimate at June 30, 2025.

Economic VariableBase ForecastReal GDP growthGrowth slows to less than 1.0% in third quarter 2025 before recovering to over 2.0% annualized in the second half of 2026. Unemployment rateRemains between 4.3% and 4.6% throughout the forecast period. Spread of Corporate BBB bond to 10-year Treasury bondSpread widens to 2.2% by second quarter 2026 before gradually narrowing to 2.0% over the remainder of the forecast period.Oil PricesPrices generally hover between $63 and $65 per barrel over the forecast period.

Due to the high level of uncertainty regarding assumptions used as inputs to the forecast, the Corporation evaluated a range of economic scenarios, including more benign and more severe economic forecasts. In a more severe scenario, real GDP was projected to contract through first quarter 2026, subsequently recovering to growth of 1.7% by the end of the forecast period. In this scenario, oil prices fell to $44 per barrel by third quarter 2026, followed by an increase to $54 per barrel by second quarter 2027, while the unemployment rate remained elevated through the forecast period. Selecting the more severe forecast would result in an increase in the quantitative calculation of the allowance for credit losses of approximately $313 

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million as of June 30, 2025. However, factoring in model overlays and qualitative adjustments could result in a materially different estimate under a more severe scenario. The Corporation monitors evolving economic conditions for impacts to its 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, which totaled $698 million at June 30, 2025, increased $8 million from $690 million at December 31, 2024. 

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