Company: CMA
Filing Date: 2025-02-24
Form Type: 10-K
Source: 0000028412-25-000108
Chunk: 405

Company: COMERICA INC
Filing Date: 2025-02-24
Form: 10-K
Item: Item 8
Chunk 405
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 rating models, quarterly calculation of the allowance for loan losses and the allowance for credit losses on lending-related commitments and calculations of both expected and unexpected loss.

Allowance for Credit Losses

The allowance for credit losses includes both the allowance for loan losses and the allowance for credit losses on lending-related commitments. The following table presents metrics of the allowance for credit losses and nonperforming loans.

December 31,20242023Allowance for credit losses as a percentage of total loans1.44 %1.40 %Allowance for credit losses as a multiple of total nonaccrual loans2.4x4.1xAllowance for credit losses as a multiple of total nonperforming loans2.4x4.1x

Higher criticized and nonperforming loans, partially offset by improved economic forecasts and reduced levels of uncertainty incorporated into the estimate, contributed to an overall higher allowance for credit losses to total loans ratio as of December 31, 2024 compared to December 31, 2023. A decrease in loan balances in combination with the factors above resulted in the allowance for credit losses remaining relatively stable at $725 million at December 31, 2024, compared to $728 million as of December 31, 2023.

Key credit metrics remained below historical levels at December 31, 2024, with some normalization in trends in 2024 leading to higher criticized loans and nonperforming assets than in 2023. Criticized loan balances increased 5% at December 31, 2024 from December 31, 2023, while nonperforming assets increased to $308 million from $178 million over the same period. Net charge-offs as a percentage of average loans remained low for 2024 at 10 basis points. These portfolio trends were impacted by persistent inflation and elevated interest rates that continued to pressure customer profitability and debt service ratios. 

In isolation, slight improvements in economic forecasts contributed to a partial reduction to the allowance for credit losses to total loans ratio as of December 31, 2024, compared to December 31, 2023. At December 31, 2024, forecasts reflected a more stabilized economic outlook compared to the December 31, 2023 forecasts, with less volatility over the reasonable and supportable period and a return to normalized levels for key economic variables. Specifically, the two-year forecast at December 31, 2024 reflected improved Gross Domestic Product (GDP) growth, relatively flat unemployment trends, more normalized oil