Company: CMA
Filing Date: 2025-04-30
Form Type: 10-Q
Source: 0000028412-25-000154
Chunk: 23

Company: COMERICA INC
Filing Date: 2025-04-30
Form: 10-Q
Item: Part I, Item 2
Chunk 23
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 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 in 2025 and 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. The FRB's gradual rate cuts driven by a softening labor market and expectations of disinflation would aim to contain the risk of recession.

These factors shaped the 2-year reasonable and supportable forecasts used by the Corporation in its CECL estimate at March 31, 2025. The U.S. economy was projected to grow at a below-trend rate through 2025 and 2026, before gradually normalizing to its trend growth rate. The unemployment rate was expected to hold below 5 percent, while interest rate forecasts reflected market expectations and guidance from the FRB available during the first quarter of 2025. The following table summarizes select variables representative of the economic forecasts used to develop the CECL estimate at March 31, 2025.

Economic VariableBase ForecastReal GDP growthGrowth improves unevenly through the forecast period to 2.1 percent by the end of 2026.Unemployment rateExpected to hold at approximately 4.2 percent throughout the forecast period.Spread of Corporate BBB bond to 10-year Treasury bondSpread widens to 2.2 percent by second quarter 2026 and maintains such levels for the remainder of the forecast period.Oil PricesPrices generally hover between $70 and $72 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 fourth quarter 2025, subsequently recovering to growth of 2.2 percent by the end of the forecast period. In this scenario, oil prices fell to $46 per barrel by second quarter 2026, followed by an increase to $56 per barrel by first 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 $302 million as of March 31, 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