Company: CMA
Filing Date: 2025-02-24
Form Type: 10-K
Source: 0000028412-25-000108
Chunk: 97

Company: COMERICA INC
Filing Date: 2025-02-24
Form: 10-K
Item: Item 1
Chunk 97
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 stronger than commercial real estate property prices, which face continued headwinds from the long and variable lags by which the FRB's tighter monetary policy affect real asset prices and an overhang of office space supply.

A reversion to trend after the boost from expansionary fiscal policy fades is expected to contribute to a moderation of economic growth in 2025 and 2026. Price pressures are forecasted to continue to revert toward to pre-pandemic norms as the modest margin of slack which opened in the economy's productive capacity in 2024 cools pricing power. The FRB is expected to gradually normalize its monetary stance but not return interest rates to their pre-crisis levels.

F-20

These factors shaped the two-year reasonable and supportable forecast used by the Corporation in its CECL estimate at December 31, 2024. The U.S. economy is projected to grow at a below-trend rate through 2025 before gradually normalizing to its trend growth rate. The unemployment rate is forecasted to move somewhat higher as private hiring remains subdued. Forecasts for other key economic variables are generally consistent with those of GDP and unemployment rate, while interest rate forecasts reflect market expectations and recent guidance from the FRB. The following table summarizes select economic variables representative of the economic forecasts used to develop the allowance for credit losses estimate at December 31, 2024.

Economic VariableBase ForecastReal GDP growthGrowth slows to 1.6 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