Company: CMA
Filing Date: 2025-07-30
Form Type: 10-Q
Source: 0000028412-25-000197
Chunk: 222

Company: COMERICA INC
Filing Date: 2025-07-30
Form: 10-Q
Item: Part I, Item 8
Chunk 222
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 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 not otherwise been fully accounted for, including adjustments for foresight risk, input imprecisions and model imprecision. Credit losses for loans that no longer share risk characteristics with the loan pools are estimated on an individual basis. Individual credit loss estimates are typically performed for nonaccrual loans and are based on one of several methods, including the estimated fair value of the underlying collateral, observable market value of similar debt or the present value of expected cash flows.    

Allowance for Credit Losses on Lending-Related Commitments

The allowance for credit losses on lending-related commitments estimates current expected credit losses on collective pools of letters of credit and unused commitments to extend credit based on reserve factors, determined in a manner similar to business loans, multiplied by a probability of draw estimate based on historical experience and credit risk, applied to commitment amounts. The allowance for credit losses on lending-related commitments totaled $37 million and $35 million at June 30, 2025 and December 31, 2024, respectively.

For additional information regarding the allowance for credit losses, refer to the "Critical Accounting Estimates" section and pages F-49 through F-50 in Note 1 to the consolidated financial statements of the Corporation's