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Table of Contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
______________________________
FORM 10-Q
______________________________
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2020
Or
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from              to             
Commission file number 1-10706
____________________________________________________________________________________
Comerica Incorporated

(Exact name of registrant as specified in its charter)
___________________________________________________________________________________
Delaware 38-1998421
(State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.)
Comerica Bank Tower
1717 Main Street, MC 6404
Dallas, Texas 75201
(Address of principal executive offices)
(Zip Code)
(214) 462-6831
(Registrant’s telephone number, including area code) 
_________________________________________________________________________
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Trading symbol Name of each exchange on which registered
Common Stock, $5 par value CMA New York Stock Exchange
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ý No o
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ý No o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer

Accelerated filer 


Non-accelerated filer 

Smaller reporting company 
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No 
Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date.
$5 par value common stock:
Outstanding as of July 27, 2020: 139,039,348 shares


Table of Contents
COMERICA INCORPORATED AND SUBSIDIARIES
TABLE OF CONTENTS
1
2
3
4
5
35
65
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Table of Contents
Part I. FINANCIAL INFORMATION
Item 1. Financial Statements
CONSOLIDATED BALANCE SHEETS
Comerica Incorporated and Subsidiaries
(in millions, except share data) June 30, 2020 December 31, 2019
(unaudited)
ASSETS
Cash and due from banks $ 1,048    $ 973   
Interest-bearing deposits with banks 12,263    4,845   
Other short-term investments 153    155   
Investment securities available-for-sale 12,759    12,398   
Commercial loans 33,826    31,473   
Real estate construction loans 3,952    3,455   
Commercial mortgage loans 9,925    9,559   
Lease financing 589    588   
International loans 1,104    1,009   
Residential mortgage loans 1,886    1,845   
Consumer loans 2,164    2,440   
Total loans 53,446    50,369   
Less allowance for loan losses (1,007)   (637)  
Net loans 52,439    49,732   
Premises and equipment 450    457   
Accrued income and other assets 5,285    4,842   
Total assets
$ 84,397    $ 73,402   
LIABILITIES AND SHAREHOLDERS’ EQUITY
Noninterest-bearing deposits $ 35,582    $ 27,382   
Money market and interest-bearing checking deposits 26,895    24,527   
Savings deposits 2,500    2,184   
Customer certificates of deposit 2,656    2,978   
Other time deposits —    133   
Foreign office time deposits 87    91   
Total interest-bearing deposits 32,138    29,913   
Total deposits 67,720    57,295   
Short-term borrowings 752    71   
Accrued expenses and other liabilities 1,602    1,440   
Medium- and long-term debt 6,521    7,269   
Total liabilities 76,595    66,075   
Fixed rate reset non-cumulative perpetual preferred stock, series A, no par value, $100,000 liquidation preference per share:
Authorized - 4,000 shares
Issued - 4,000 shares at 6/30/2020
395    —   
Common stock - $5 par value:
Authorized - 325,000,000 shares
Issued - 228,164,824 shares
1,141    1,141   
Capital surplus 2,173    2,174   
Accumulated other comprehensive income (loss) 158    (235)  
Retained earnings 9,404    9,538   
Less cost of common stock in treasury - 89,124,560 shares at 6/30/2020 and 86,069,234 shares at 12/31/2019
(5,469)   (5,291)  
Total shareholders’ equity 7,802    7,327   
Total liabilities and shareholders’ equity $ 84,397    $ 73,402   
See notes to consolidated financial statements (unaudited).
1

Table of Contents
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (unaudited)
Comerica Incorporated and Subsidiaries 

Three Months Ended June 30, Six Months Ended June 30,
(in millions, except per share data) 2020 2019 2020 2019
INTEREST INCOME
Interest and fees on loans $ 434    $ 635    $ 951    $ 1,256   
Interest on investment securities 74    75    148    147   
Interest on short-term investments   17    21    34   
Total interest income 511    727    1,120    1,437   
INTEREST EXPENSE
Interest on deposits 20    67    76    119   
Interest on short-term borrowings        
Interest on medium- and long-term debt 19    51    59    102   
Total interest expense 40    124    136    228   
Net interest income 471    603    984    1,209   
Provision for credit losses 138    44    549    31   
Net interest income after provision for credit losses
333    559    435    1,178   
NONINTEREST INCOME
Card fees 68    65    127    128   
Fiduciary income 52    52    106    101   
Service charges on deposit accounts 42    51    91    102   
Commercial lending fees 17    21    34    43   
Foreign exchange income   11    20    22   
Bank-owned life insurance   11    21    20   
Letter of credit fees   10    18    19   
Brokerage fees     12    14   
Net securities gains (losses)   —    —    (8)  
Other noninterest income 35    22    55    47   
Total noninterest income 247    250    484    488   
NONINTEREST EXPENSES
Salaries and benefits expense 249    245    491    510   
Outside processing fee expense 62    65    119    128   
Occupancy expense 37    37    74    74   
Software expense 39    28    76    57   
Equipment expense 12    12    24    24   
Advertising expense     15    14   
FDIC insurance expense     16    11   
Other noninterest expenses 25    22    50    39   
Total noninterest expenses 440    424    865    857   
Income before income taxes 140    385    54    809   
Provision for income taxes 27    87      172   
NET INCOME 113    298    48    637   
Less income allocated to participating securities        
Net income attributable to common shares $ 112    $ 297    $ 47    $ 634   
Earnings per common share:
Basic $ 0.81    $ 1.95    $ 0.34    $ 4.10   
Diluted 0.80    1.94    0.34    4.06   
Comprehensive income 97    429    441    864   
Cash dividends declared on common stock 98    100    192    205   
Cash dividends declared per common share 0.68    0.67    1.36    1.34   
See notes to consolidated financial statements (unaudited).

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CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY (unaudited)
Comerica Incorporated and Subsidiaries

Accumulated
Nonredeemable Common Stock Other Total
Preferred Shares Capital Comprehensive Retained Treasury Shareholders'
(in millions, except per share data) Stock Outstanding Amount Surplus Income (Loss) Earnings Stock Equity
BALANCE AT MARCH 31, 2019 $ —    155.4    $ 1,141    $ 2,159    $ (513)   $ 8,979    $ (4,357)   $ 7,409   
Net income —    —    —    —    —    298    —    298   
Other comprehensive income, net of tax —    —    —    —    131    —    —    131   
Cash dividends declared on common stock ($0.67 per share)
—    —    —    —    —    (100)   —    (100)  
Purchase of common stock —    (5.7)   —    —    —    —    (425)   (425)  
Net issuance of common stock under employee stock plans —    0.1    —      —    (1)      
Share-based compensation —    —    —      —    —    —     
BALANCE AT JUNE 30, 2019 $ —    149.8    $ 1,141    $ 2,168    $ (382)   $ 9,176    $ (4,780)   $ 7,323   
BALANCE AT MARCH 31, 2020 $ —    139.0    $ 1,141    $ 2,168    $ 174    $ 9,389    $ (5,470)   $ 7,402   
Net income —    —    —    —    —    113    —    113   
Other comprehensive loss, net of tax —    —    —    —    (16)   —    —    (16)  
Cash dividends declared on common stock ($0.68 per share)
—    —    —    —    —    (98)   —    (98)  
Purchase of common stock —    —    —    —    —    —       
Issuance of preferred stock 395    —    —    —    —    —    —    395   
Net issuance of common stock under employee stock plans —    —    —      —    —    —     
Share-based compensation —    —    —      —    —    —     
BALANCE AT JUNE 30, 2020 $ 395    139.0    $ 1,141    $ 2,173    $ 158    $ 9,404    $ (5,469)   $ 7,802   
BALANCE AT DECEMBER 31, 2018 $ —    160.1    $ 1,141    $ 2,148    $ (609)   $ 8,781    $ (3,954)   $ 7,507   
Cumulative effect of change in accounting principle —    —    —    —    —    (14)   —    (14)  
Net income —    —    —    —    —    637    —    637   
Other comprehensive income, net of tax —    —    —    —    227    —    —    227   
Cash dividends declared on common stock ($1.34 per share)
—    —    —    —    —    (205)   —    (205)  
Purchase of common stock —    (10.9)   —    —    —    —    (859)   (859)  
Net issuance of common stock under employee stock plans —    0.6    —    (12)   —    (23)   33    (2)  
Share-based compensation —    —    —    32    —    —    —    32   
BALANCE AT JUNE 30, 2019 $ —    149.8    $ 1,141    $ 2,168    $ (382)   $ 9,176    $ (4,780)   $ 7,323   
BALANCE AT DECEMBER 31, 2019 $ —    142.1    $ 1,141    $ 2,174    $ (235)   $ 9,538    $ (5,291)   $ 7,327   
Cumulative effect of change in accounting principle —    —    —    —    —    13    —    13   
Net income —    —    —    —    —    48    —    48   
Other comprehensive income, net of tax —    —    —    —    393    —    —    393   
Cash dividends declared on common stock ($1.36 per share)
—    —    —    —    —    (192)   —    (192)  
Purchase of common stock —    (3.4)   —    —    —    —    (194)   (194)  
Issuance of preferred stock 395    —    —    —    —    —    —    395   
Net issuance of common stock under employee stock plans —    0.3    —    (13)   —    (3)   16    —   
Share-based compensation —    —    —    12    —    —    —    12   
BALANCE AT JUNE 30, 2020 $ 395    139.0    $ 1,141    $ 2,173    $ 158    $ 9,404    $ (5,469)   $ 7,802   
See notes to consolidated financial statements (unaudited).


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CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)
Comerica Incorporated and Subsidiaries

Six Months Ended June 30,
(in millions) 2020 2019
OPERATING ACTIVITIES
Net income $ 48    $ 637   
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for credit losses 549    31   
Benefit for deferred income taxes (95)   (4)  
Depreciation and amortization 55    57   
Net periodic defined benefit credit (13)   (14)  
Share-based compensation expense 12    32   
Net amortization of securities    
Net securities losses —     
Net change in:
Accrued income receivable 43    (12)  
Accrued expenses payable (64)   (86)  
Other, net 208    (225)  
Net cash provided by operating activities 744    425   
INVESTING ACTIVITIES
Investment securities available-for-sale:
Maturities and redemptions 1,311    991   
Sales —    987   
Purchases (1,387)   (2,043)  
Net change in loans (3,229)   (1,685)  
Proceeds from sales of foreclosed property   —   
Net increase in premises and equipment (29)   (29)  
Federal Home Loan Bank stock:
Purchases (51)   (49)  
Redemptions 30    —   
Proceeds from bank-owned life insurance settlements 10     
Net cash used in investing activities (3,344)   (1,821)  
FINANCING ACTIVITIES
Net change in:
Deposits 10,327    (209)  
Short-term borrowings 681    1,689   
Medium- and long-term debt:
Maturities and redemptions (925)   (350)  
Issuances and advances —    350   
Preferred stock:
Issuance 395    —   
Common stock:
Repurchases (199)   (872)  
Cash dividends paid (191)   (203)  
Issuances under employee stock plans   11   
Net cash provided by financing activities 10,093    416   
Net increase (decrease) in cash and cash equivalents 7,493    (980)  
Cash and cash equivalents at beginning of period 5,818    4,561   
Cash and cash equivalents at end of period $ 13,311    $ 3,581   
Interest paid $ 152    $ 220   
Income tax paid 77    161   
Noncash investing and financing activities:
Loans transferred to other real estate    
See notes to consolidated financial statements (unaudited).
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Notes to Consolidated Financial Statements (unaudited)
Comerica Incorporated and Subsidiaries
NOTE 1 - BASIS OF PRESENTATION AND ACCOUNTING POLICIES
Organization
The accompanying unaudited consolidated financial statements were prepared in accordance with United States (U.S.) generally accepted accounting principles (GAAP) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, the statements do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation were included. The results of operations for the six months ended June 30, 2020 are not necessarily indicative of the results that may be expected for the year ending December 31, 2020. Certain items in prior periods were reclassified to conform to the current presentation. For further information, refer to the consolidated financial statements and footnotes thereto included in the Annual Report of Comerica Incorporated and Subsidiaries (the Corporation) on Form 10-K for the year ended December 31, 2019.
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 Corporation disaggregates the loan portfolio into segments for purposes of determining the allowance for credit losses. These segments are based on the level at which the Corporation develops, documents and applies a systematic methodology to determine the allowance for credit losses. The Corporation's portfolio segments are business loans and retail loans. Business loans include the commercial, real estate construction, commercial mortgage, lease financing and international loan portfolios. Retail loans consist of residential mortgage and consumer loans, including home equity loans.
        Effective January 1, 2020, the Corporation adopted the provisions of Accounting Standards Update (ASU) No. 2016-13, "Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments," commonly referred to as the current expected credit loss (CECL) model, for all financial assets, except those accounted for at fair value through net income, using the modified retrospective approach.
        Under Topic 326, current expected credit losses are estimated over the contractual life of the loan portfolio, considering all available relevant information, including historical and current conditions as well as reasonable and supportable forecasts of future events. The previous accounting principle estimated probable, estimable losses inherent in the portfolio.
        At adoption, the Corporation’s estimate of current expected credit losses in accordance with Topic 326 resulted in a $17 million day-one decrease in the overall allowance for credit losses, from $668 million at December 31, 2019 under the incurred loss model. The Corporation recognized a corresponding $13 million increase to retained earnings and a $4 million reduction to deferred tax assets. A similar adjustment at December 31, 2019 would have caused a 2-basis-point increase in the Common Equity Tier 1 (CET1) capital ratio. Business loans, comprising approximately 91 percent of the Corporation’s total loan portfolio at transition, consist of loans and lending arrangements with generally short contractual maturities. As a result, the allowance for credit losses for business loans decreased $42 million. The allowance for credit losses increased $25 million for retail loans, given their longer contractual maturities.
        Topic 326 also requires expected credit losses on available-for-sale (AFS) debt securities to be recorded as an allowance for credit losses. For certain types of debt securities, such as U.S. Treasuries and other securities with government guarantees, entities may expect zero credit losses. The zero-loss expectation applies to all the Corporation’s securities and no allowance for credit losses was recorded on its AFS securities portfolio at transition.
Allowance for Loan Losses
        The allowance for loan losses is estimated on a quarterly basis and represents management’s estimates of current expected credit losses in the Corporation’s loan portfolio. Pools of loans with similar risk characteristics are collectively evaluated while loans that no longer share risk characteristics with loan pools are evaluated individually.
        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. Business loans are assigned to pools based primarily on business line and the Corporation’s internal risk rating system. For retail loans, pools are based on loan type, past due status and credit scores. Reserve factors are based on estimated probability of default for each pool, set to a default horizon based on contractual life, and loss given default. Historical estimates are calibrated to economic forecasts over the reasonable and supportable forecast period based on the projected performance of specific economic variables that statistically correlate with each of the probability of default and loss given default pools.
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Notes to Consolidated Financial Statements (unaudited)
Comerica Incorporated and Subsidiaries
        The calculation of current expected credit losses is inherently subjective, as it requires management to exercise judgment in determining appropriate factors used to determine the allowance. Some of the most significant factors in the quantitative allowance estimate are assigning internal risk ratings to loans, selecting the economic forecasts used to calibrate the reserve factors and determining the reasonable and supportable forecast period.
Internal Risk Ratings: Loss factors are dependent on loan risk ratings for business loans. Risk ratings are assigned at origination, based on inherent credit risk, and may be updated based on new information that becomes available, periodic reviews of credit quality, a change in borrower performance or modifications to lending agreements.
Economic Forecasts: Management selects economic variables it believes to be most relevant based on the composition of the loan portfolio and customer base, including forecasted levels of employment, gross domestic product, corporate bond and treasury spreads, industrial production levels, consumer and commercial real estate price indices as well as housing statistics. Different economic forecast scenarios ranging from more benign to more severe are evaluated each reporting period to forecast losses over the contractual life of the loan portfolio.
Forecast Period: Economic forecasts are applied over the period management believes it can estimate reasonable and supportable forecasts. Forecast periods may be adjusted in response to changes in the economic environment. To estimate losses for contractual periods that extend beyond the forecast horizon, the Corporation reverts to an average historical loss experience. The Corporation typically forecasts economic variables over a two-year horizon, followed by an immediate reversion to an average historical loss experience that generally incorporates a full economic cycle. Management reviews this methodology on at least an annual basis.
        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 imprecision and model imprecision. Foresight risk reflects the inherent imprecision in forecasting economic variables, including determining the depth and duration of economic cycles and their impact to relevant economic variables. The Corporation may make qualitative adjustments based on its evaluation of different forecast scenarios and known recent events impacting relevant economic variables. Input imprecision factors address the risk that certain model inputs may not reflect all available information including (i) risk factors that have not been fully addressed in internal risk ratings, (ii) changes in lending policies and procedures, (iii) changes in the level and quality of experience held by lending management, (iv) imprecision in the risk rating system and (v) limitations in data available for certain loan portfolios. Model imprecision considers known model limitations and model updates not yet fully reflected in the quantitative estimate.
         The determination of the appropriate qualitative adjustment is based on management's analysis of current and expected economic conditions and their impact to the portfolio, as well as internal credit risk movements and a qualitative assessment of the lending environment, including underwriting standards. Management recognizes the sensitivity of various assumptions made in the quantitative modeling of expected losses and may adjust reserves depending upon the level of uncertainty that currently exists in one or more assumptions.
        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 modified loans classified as troubled debt restructurings (TDRs) 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. The Corporation considers certain loans to be collateral-dependent if the borrower is experiencing financial difficulty and management expects repayment for the loan to be substantially through the operation or sale of the collateral. For collateral-dependent loans, loss estimates are based on the fair value of collateral, less estimated cost to sell (if applicable). Collateral values supporting individually evaluated loans are assessed quarterly and appraisals are typically obtained at least annually.
        The total allowance for loan losses is sufficient to absorb expected credit losses over the contractual life of the portfolio. Unanticipated events impacting the economy, including political instability or global events affecting the U.S. economy, could cause changes to expectations for current conditions and economic forecasts that result in an unanticipated increase in the allowance. Significant increases in current portfolio exposures or changes in credit characteristics could also increase the amount of the allowance. Such events, or others of similar nature, may result in the need for additional provision for credit losses in order to maintain an allowance that complies with credit risk and accounting policies.
        Loans deemed uncollectible are charged off and deducted from the allowance. Recoveries on loans previously charged off are added to the allowance.
        Credit losses are not estimated for accrued interest receivable as interest that is deemed uncollectible is written off through interest income.

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Notes to Consolidated Financial Statements (unaudited)
Comerica Incorporated and Subsidiaries
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 is included in accrued expenses and other liabilities on the Consolidated Balance Sheets, with the corresponding charge included in the provision for credit losses on the Consolidated Statements of Comprehensive Income.
Goodwill
        Effective January 1, 2020, the Corporation prospectively adopted the provisions of ASU No. 2017-04, “Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment,” (ASU 2017-04), eliminating the second step of goodwill impairment testing, under which the implied fair value of goodwill was determined as if the reporting unit were being acquired in a business combination. Under ASU 2017-04, the Corporation will compare the fair value of a reporting unit with its carrying amount and recognize an impairment charge for any amount by which the carrying amount exceeds the reporting unit’s fair value, to the extent that the loss recognized does not exceed the amount of goodwill allocated to that reporting unit. The adoption of ASU 2017-04 did not impact the Corporation’s current financial condition or results of operations.
        Goodwill, included in accrued income and other assets on the Consolidated Balance Sheets, is initially recorded as the excess of the purchase price over the fair value of net assets acquired in a business combination and is subsequently evaluated at least annually for impairment. Goodwill impairment testing is performed at the reporting unit level, equivalent to a business segment or one level below. The Corporation has three reporting units: the Commercial Bank, the Retail Bank and Wealth Management.
        The Corporation performs its annual evaluation of goodwill impairment in the third quarter of each year and may elect to perform a quantitative impairment analysis or first conduct a qualitative analysis to determine if a quantitative analysis is necessary. Additionally, the Corporation evaluates goodwill impairment on an interim basis if events or changes in circumstances between annual tests indicate additional testing may be warranted to determine if goodwill might be impaired. Factors considered in the assessment of the likelihood of impairment include macroeconomic conditions, industry and market considerations, stock performance of the Corporation and its peers, financial performance of the reporting units, and previous results of goodwill impairment tests, amongst other factors. Based on the results of the qualitative analysis, the Corporation determines whether a quantitative test is deemed necessary. The quantitative test compares the estimated fair value of identified reporting units with their carrying amount, including goodwill. If the estimated fair value of the reporting unit is less than the carrying value, an impairment charge would be recorded for the excess, not to exceed the amount of goodwill allocated to the reporting unit.
Software
        Effective January 1, 2020, the Corporation adopted the provisions of ASU No. 2018-15, “Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract," using a prospective approach for implementation costs incurred subsequent to the adoption of the standard. Amortization expense from capitalized implementation costs of hosting arrangements that are service contracts and fees associated with the hosting elements of the arrangements, are included in software expense in the Consolidated Statements of Comprehensive Income, along with other software-related expenses. For the three- and six-month periods ended June 30, 2020, software expense included $8 million and $15 million of hosting fees that would have previously been included in outside processing fee expense.
        Capitalized software, stated at cost less accumulated amortization, includes purchased software, capitalizable application development costs associated with internally developed software and cloud computing arrangements, including capitalizable implementation costs associated with hosting arrangements that are service contracts. Amortization, computed on the straight-line method, is charged to software expense in the Consolidated Statements of Comprehensive Income over the estimated useful life of the software, generally 5 years, or the term of the hosting arrangement for implementation costs related to service contracts.
        Cloud computing arrangements include software as a service (SaaS), platform as a service (PaaS), infrastructure as a service (IaaS) and other similar hosting arrangements. The Corporation primarily utilizes SaaS and IaaS arrangements.
        Capitalized implementation costs of hosting arrangements that are service contracts were insignificant for the three- and six-month periods ended June 30, 2020.
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Notes to Consolidated Financial Statements (unaudited)
Comerica Incorporated and Subsidiaries
Reference Rate Reform
        In March 2020, the Financial Accounting Standards Board (FASB) issued ASU No. 2020-04, “Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting,” (ASU 2020-04), to provide temporary optional guidance to ease the potential accounting burden of reference rate reform. ASU 2020-04 is effective for eligible contract modifications from January 1, 2020 through December 31, 2022. Approximately 72 percent of the Corporation’s loans at June 30, 2020 were tied to the London Interbank Offered Rate (LIBOR). The Corporation uses interest rate swaps to convert variable-LIBOR rate loans to fixed rates for approximately 11 percent of the loan portfolio. Additional contracts with exposure to LIBOR include swaps converting fixed-rate long-term debt to variable LIBOR rates. The Corporation adopted the provisions of ASU 2020-04 for loan contract modifications as of January 1, 2020 and for all existing hedging relationships as of that date or entered into in the first quarter of 2020.
NOTE 2 – FAIR VALUE MEASUREMENTS
The Corporation utilizes fair value measurements to record fair value adjustments to certain assets and liabilities and to determine fair value disclosures. The determination of fair values of financial instruments often requires the use of estimates. In cases where quoted market values in an active market are not available, the Corporation uses present value techniques and other valuation methods to estimate the fair values of its financial instruments. These valuation methods require considerable judgment and the resulting estimates of fair value can be significantly affected by the assumptions made and methods used.
Investment securities available-for-sale, derivatives, deferred compensation plans and equity securities with readily determinable fair values (primarily money market mutual funds) are recorded at fair value on a recurring basis. Additionally, from time to time, the Corporation may be required to record other assets and liabilities at fair value on a nonrecurring basis, such as nonaccrual loans and loans classified as TDRs, other real estate (primarily foreclosed property), nonmarketable equity securities and certain other assets and liabilities. These nonrecurring fair value adjustments typically involve write-downs of individual assets or application of lower of cost or fair value accounting.
Refer to Note 1 to the consolidated financial statements in the Corporation's Annual Report on Form 10-K for the year ended December 31, 2019 for further information about the fair value hierarchy, descriptions of the valuation methodologies and key inputs used to measure financial assets and liabilities recorded at fair value, as well as a description of the methods and significant assumptions used to estimate fair value disclosures for financial instruments not recorded at fair value in their entirety on a recurring basis.
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Notes to Consolidated Financial Statements (unaudited)
Comerica Incorporated and Subsidiaries
Assets and Liabilities Recorded at Fair Value on a Recurring Basis
The following tables present the recorded amount of assets and liabilities measured at fair value on a recurring basis as of June 30, 2020 and December 31, 2019.
(in millions) Total Level 1 Level 2 Level 3
June 30, 2020
Deferred compensation plan assets $ 92    $ 92    $ —    $ —   
Equity securities 50    50    —    —   
Investment securities available-for-sale:
U.S. Treasury and other U.S. government agency securities 2,852    2,852    —    —   
Residential mortgage-backed securities (a) 9,907    —    9,907    —   
Total investment securities available-for-sale 12,759    2,852    9,907    —   
Derivative assets:
Interest rate contracts 649    —    605    44   
Energy derivative contracts 271    —    271    —   
Foreign exchange contracts 15    —    15    —   
Total derivative assets 935    —    891    44   
Total assets at fair value $ 13,836    $ 2,994    $ 10,798    $ 44   
Derivative liabilities:
Interest rate contracts $ 73    $ —    $ 73    $ —   
Energy derivative contracts 263    —    263    —   
Foreign exchange contracts 15    —    15    —   
Total derivative liabilities 351    —    351    —   
Deferred compensation plan liabilities 92    92    —    —   
Total liabilities at fair value $ 443    $ 92    $ 351    $ —   
December 31, 2019
Deferred compensation plan assets $ 95    $ 95    $ —    $ —   
Equity securities 54    54    —    —   
Investment securities available-for-sale:
U.S. Treasury and other U.S. government agency securities 2,792    2,792    —    —   
Residential mortgage-backed securities (a) 9,606    —    9,606    —   
Total investment securities available-for-sale 12,398    2,792    9,606    —   
Derivative assets:
Interest rate contracts 211    —    189    22   
Energy derivative contracts 96    —    96    —   
Foreign exchange contracts 10    —    10    —   
Total derivative assets 317    —    295    22   
Total assets at fair value $ 12,864    $ 2,941    $ 9,901    $ 22   
Derivative liabilities:
Interest rate contracts $ 39    $ —    $ 39    $ —   
Energy derivative contracts 92    —    92    —   
Foreign exchange contracts 10    —    10    —   
Total derivative liabilities 141    —    141    —   
Deferred compensation plan liabilities 95    95    —    —   
Total liabilities at fair value $ 236    $ 95    $ 141    $ —   
(a)Issued and/or guaranteed by U.S. government agencies or U.S. government-sponsored enterprises.

        There were no transfers of assets or liabilities recorded at fair value on a recurring basis into or out of Level 3 fair value measurements during each of the three- and six-month periods ended June 30, 2020 and 2019.
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Notes to Consolidated Financial Statements (unaudited)
Comerica Incorporated and Subsidiaries
The following table summarizes the changes in Level 3 assets and liabilities measured at fair value on a recurring basis for the three- and six-month periods ended June 30, 2020 and 2019.

Net Realized/Unrealized Gains (Losses) (Pretax) Recorded in Earnings (a)
Balance 
at
Beginning
of Period
Balance at End of Period
Payments, Sales and Redemptions
(in millions) Realized Unrealized
Three Months Ended June 30, 2020
Derivative assets:
Interest rate contracts $ 43    $ —    $   $ —    $ 44   
Three Months Ended June 30, 2019
Derivative assets:
Interest rate contracts $ 14    $ —    $   $ —    $ 21   
Six Months Ended June 30, 2020
Derivative assets:
Interest rate contracts $ 22    $ —    $ 22    $ —    $ 44   
Six Months Ended June 30, 2019
Derivative assets:
Interest rate contracts $   $ —    $ 12    $ —    $ 21   
(a)Realized and unrealized gains and losses due to changes in fair value are recorded in other noninterest income on the Consolidated Statements of Comprehensive Income.

Assets and Liabilities at Fair Value on a Nonrecurring Basis
The Corporation may be required to record certain assets and liabilities at fair value on a nonrecurring basis. These include assets that are recorded at the lower of cost or fair value, and were recognized at fair value since it was less than cost at the end of the period.
The following table presents assets recorded at fair value on a nonrecurring basis at June 30, 2020 and December 31, 2019. No liabilities were recorded at fair value on a nonrecurring basis at June 30, 2020 and December 31, 2019.
(in millions) Level 3
June 30, 2020
Loans:
Commercial $ 146   
Total assets at fair value $ 146   
December 31, 2019
Loans:
Commercial $ 70   
Total assets at fair value $ 70   
Level 3 assets recorded at fair value on a nonrecurring basis at June 30, 2020 and December 31, 2019 included both nonaccrual loans and TDRs for which a specific allowance was established based on the fair value of collateral. The unobservable inputs were the additional adjustments applied by management to the appraised values to reflect such factors as non-current appraisals and revisions to estimated time to sell. These adjustments are determined based on qualitative judgments made by management on a case-by-case basis and are not quantifiable inputs, although they are used in the determination of fair value.
Estimated Fair Values of Financial Instruments Not Recorded at Fair Value on a Recurring Basis
The Corporation typically holds the majority of its financial instruments until maturity and thus does not expect to realize many of the estimated fair value amounts disclosed. The disclosures also do not include estimated fair value amounts for items that are not defined as financial instruments, but which have significant value. These include such items as core deposit intangibles, the future earnings potential of significant customer relationships and the value of trust operations and other fee generating businesses. The Corporation believes the imprecision of an estimate could be significant.
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Table of Contents
Notes to Consolidated Financial Statements (unaudited)
Comerica Incorporated and Subsidiaries
The carrying amount and estimated fair value of financial instruments not recorded at fair value in their entirety on a recurring basis on the Corporation’s Consolidated Balance Sheets are as follows:
  Carrying
Amount
Estimated Fair Value
(in millions) Total Level 1 Level 2 Level 3
June 30, 2020
Assets
Cash and due from banks $ 1,048    $ 1,048    $ 1,048    $ —    $ —   
Interest-bearing deposits with banks 12,263    12,263    12,263    —    —   
Loans held-for-sale 11    11    —    11    —   
Total loans, net of allowance for loan losses (a) 52,439    52,273    —    —    52,273   
Customers’ liability on acceptances outstanding       —    —   
Restricted equity investments 269    269    269    —    —   
Nonmarketable equity securities (b)   10   
Liabilities
Demand deposits (noninterest-bearing) 35,582    35,582    —    35,582    —   
Interest-bearing deposits 29,482    29,482    —    29,482    —   
Customer certificates of deposit 2,656    2,662    —    2,662    —   
Total deposits 67,720    67,726    —    67,726    —   
Short-term borrowings 752    752    752    —    —   
Acceptances outstanding       —    —   
Medium- and long-term debt 6,521    6,465    —    6,465    —   
Credit-related financial instruments (81)   (81)   —    —    (81)  
December 31, 2019
Assets
Cash and due from banks $ 973    $ 973    $ 973    $ —    $ —   
Interest-bearing deposits with banks 4,845    4,845    4,845    —    —   
Loans held-for-sale     —      —   
Total loans, net of allowance for loan losses (a) 49,732    49,975    —    —    49,975   
Customers’ liability on acceptances outstanding       —    —   
Restricted equity investments 248    248    248    —    —   
Nonmarketable equity securities (b)   10   
Liabilities
Demand deposits (noninterest-bearing) 27,382    27,382    —    27,382    —   
Interest-bearing deposits 26,802    26,802    —    26,802    —   
Certificates of deposit 2,978    2,968    —    2,968    —   
Other time deposits 133    133    —    133    —   
Total deposits 57,295    57,285    —    57,285    —   
Short-term borrowings 71    71    71    —    —   
Acceptances outstanding       —    —   
Medium- and long-term debt 7,269    7,316    —    7,316    —   
Credit-related financial instruments (57)   (57)   —    —    (57)  
(a)Included $146 million and $70 million of loans recorded at fair value on a nonrecurring basis at June 30, 2020 and December 31, 2019, respectively.
(b)Certain investments that are measured at fair value using the net asset value have not been classified in the fair value hierarchy. The fair value amounts presented in the table are intended to permit reconciliation of the fair value hierarchy to the amounts presented in the Consolidated Balance Sheets.
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Table of Contents
Notes to Consolidated Financial Statements (unaudited)
Comerica Incorporated and Subsidiaries
NOTE 3 - INVESTMENT SECURITIES
A summary of the Corporation’s investment securities follows:
(in millions) Amortized
Cost
Gross
Unrealized
Gains
Gross
Unrealized
Losses
Fair Value
June 30, 2020
Investment securities available-for-sale:
U.S. Treasury and other U.S. government agency securities $ 2,747    $ 105    $ —    $ 2,852   
Residential mortgage-backed securities (a) 9,641    266    —    9,907   
Total investment securities available-for-sale $ 12,388    $ 371    $ —    $ 12,759   
December 31, 2019
Investment securities available-for-sale:
U.S. Treasury and other U.S. government agency securities $ 2,745    $ 47    $ —    $ 2,792   
Residential mortgage-backed securities (a) 9,568    66    28    9,606   
Total investment securities available-for-sale $ 12,313    $ 113    $ 28    $ 12,398   
(a)Issued and/or guaranteed by U.S. government agencies or U.S. government-sponsored enterprises.
A summary of the Corporation’s investment securities in an unrealized loss position as of June 30, 2020 and December 31, 2019 follows:
  Temporarily Impaired
  Less than 12 Months 12 Months or more Total
(in millions) Fair
Value
Unrealized
Losses
Fair
Value
Unrealized
Losses
Fair
Value
Unrealized
Losses
June 30, 2020
Residential mortgage-backed securities (a) $   $ —    $ —    $ —    $   $ —   
Total temporarily impaired securities $   $ —    $ —    $ —    $   $ —   
December 31, 2019
Residential mortgage-backed securities (a) $ 1,494    $   $ 1,906    $ 21    $ 3,400    $ 28   
Total temporarily impaired securities $ 1,494    $   $ 1,906    $ 21    $ 3,400    $ 28   
(a)Issued and/or guaranteed by U.S. government agencies or U.S. government-sponsored enterprises.
Unrealized losses resulted from changes in market interest rates and liquidity. The Corporation’s portfolio is comprised of securities issued or guaranteed by the U.S. government or government-sponsored enterprises. As such, it is expected that the securities would not be settled at a price less than the amortized cost of the investments. Further, the Corporation does not intend to sell the investments, and it is not more likely than not that it will be required to sell the investments before recovery of amortized costs.
Interest receivable on investment securities totaled $19 million at June 30, 2020 and $20 million at December 31, 2019 and was included in accrued income and other assets on the Consolidated Balance Sheets.
Sales, calls and write-downs of investment securities available-for-sale resulted in the following gains and losses recorded in net securities gains (losses) on the Consolidated Statements of Comprehensive Income, computed based on the adjusted cost of the specific security.
Three Months Ended June 30, Six Months Ended June 30,
(in millions) 2020 2019 2020 2019
Securities gains $   $ —    $   $ —   
Securities losses —    —    (1)   (8)  
Net securities gains (losses) $   $ —    $ —    $ (8)  
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Table of Contents
Notes to Consolidated Financial Statements (unaudited)
Comerica Incorporated and Subsidiaries
The following table summarizes the amortized cost and fair values of debt securities by contractual maturity. Securities with multiple maturity dates are classified in the period of final maturity. Expected maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.
(in millions)
June 30, 2020 Amortized Cost Fair Value
Contractual maturity
Within one year $ 780    $ 796   
After one year through five years 2,115    2,212   
After five years through ten years 872    898   
After ten years 8,621    8,853   
Total investment securities $ 12,388    $ 12,759   
Included in the contractual maturity distribution in the table above were residential mortgage-backed securities with a total amortized cost of $9.6 billion and a fair value of $9.9 billion. The actual cash flows of mortgage-backed securities may differ as borrowers of the underlying loans may exercise prepayment options.
At June 30, 2020, investment securities with a carrying value of $5.7 billion were pledged where permitted or required by law, including $5.2 billion pledged to the Federal Home Loan Bank (FHLB) as collateral for potential future borrowings of approximately $5.0 billion and $506 million to secure $432 million of liabilities, primarily public and other deposits of state and local government agencies as well as derivative instruments. For information on FHLB borrowings, refer to Note 7.

































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Table of Contents
Notes to Consolidated Financial Statements (unaudited)
Comerica Incorporated and Subsidiaries
NOTE 4 – CREDIT QUALITY AND ALLOWANCE FOR CREDIT LOSSES
The following table presents an aging analysis of the amortized cost basis of loans.
Loans Past Due and Still Accruing      
(in millions) 30-59
Days
60-89 
Days
90 Days
or More
Total Nonaccrual
Loans
Current
Loans (a)
Total 
Loans
June 30, 2020
Business loans:
Commercial $ 48    $ 53    $ 24    $ 125    $ 200    $ 33,501    $ 33,826   
Real estate construction:
Commercial Real Estate business line (b)
16    —    —    16    $ —    3,531    3,547   
Other business lines (c) —      —      —    402    405   
Total real estate construction 16      —    19    —    3,933    3,952   
Commercial mortgage:
Commercial Real Estate business line (b)
    —    10    $   2,279    2,292   
Other business lines (c) 25        33    18    7,582    7,633   
Total commercial mortgage 26    11      43    21    9,861    9,925   
Lease financing —    —    —    —      588    589   
International —    —        —    1,099    1,104   
Total business loans 90    67    35    192    222    48,982    49,396   
Retail loans:
Residential mortgage 27      —    36    24    1,826    1,886   
Consumer:
Home equity 12      —    13    21    1,635    1,669   
Other consumer   —        —    488    495   
Total consumer 13        20    21    2,123    2,164   
Total retail loans 40    10      56    45    3,949    4,050   
Total loans $ 130    $ 77    $ 41    $ 248    $ 267    $ 52,931    $ 53,446   
December 31, 2019
Business loans:
Commercial $ 27    $   $ 17    $ 51    $ 148    $ 31,274    $ 31,473   
Real estate construction:
Commercial Real Estate business line (b)
  —    —      —    3,038    3,044   
Other business lines (c) —      —      —    404    411   
Total real estate construction     —    13    —    3,442    3,455   
Commercial mortgage:
Commercial Real Estate business line (b)
  —    —        2,165    2,176   
Other business lines (c) 16    18      43    12    7,328    7,383   
Total commercial mortgage 25    18      52    14    9,493    9,559   
Lease financing   —    —      —    587    588   
International —      —      —    1,004    1,009   
Total business loans 59    37    26    122    162    45,800    46,084   
Retail loans:
Residential mortgage 15      —    17    20    1,808    1,845   
Consumer:
Home equity     —      17    1,685    1,711   
Other consumer     —      —    724    729   
Total consumer     —    14    17    2,409    2,440   
Total retail loans 21    10    —    31    37    4,217    4,285   
Total loans $ 80    $ 47    $ 26    $ 153    $ 199    $ 50,017    $ 50,369   
(a)Includes $4.5 billion of loans with deferred payments not considered past due in accordance with the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) at June 30, 2020.
(b)Primarily loans to real estate developers.
(c)Primarily loans secured by owner-occupied real estate.

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Table of Contents
Notes to Consolidated Financial Statements (unaudited)
Comerica Incorporated and Subsidiaries
The following table presents loans by credit quality indicator (CQI) and vintage year. CQI is based on internal risk ratings assigned to each business loan at the time of approval and subjected to subsequent reviews, generally at least annually, and to pools of retail loans with similar risk characteristics. Vintage year is the year of origination or major modification.
June 30, 2020 December 31, 2019
Vintage Year
(in millions) 2020 2019 2018 2017 2016 Prior Revolvers Revolvers Converted to Term Total Total
Business loans:
Commercial:
Pass (a) $ 5,029    (b) $ 2,673    $ 1,876    $ 1,259    $ 572    $ 966    $ 18,708    $ 16    $ 31,099    $ 29,785   
Criticized (c) 30    305    239    147    104    205    1,695      2,727    1,688   
Total commercial 5,059    2,978    2,115    1,406    676    1,171    20,403    18    33,826    31,473   
Real estate construction
Pass (a) 127    878    1,293    795    458    218    152    —    3,921    3,424   
Criticized (c) —        24    —      —    —    31    31   
Total real estate construction 127    880    1,297    819    458    219    152    —    3,952    3,455   
Commercial mortgage
Pass (a) 1,058    1,713    1,220    1,254    915    2,790    499    —    9,449    9,262   
Criticized (c) 31    96    32    47    47    215      —    476    297   
Total commercial mortgage 1,089    1,809    1,252    1,301    962    3,005    507    —    9,925    9,559   
Lease financing
Pass (a) 63    131    84    56    17    213    —    —    564    579   
Criticized (c)   18          —    —    —    25     
Total lease financing 64    149    87    58    18    213    —    —    589    588   
International
Pass (a) 272    185    129    13      75    374    —    1,051    972   
Criticized (c)   —    —    10        28    —    53    37   
Total international 277    185    129    23    11    77    402    —    1,104    1,009   
Total business loans 6,616    6,001    4,880    3,607    2,125    4,685    21,464    18    49,396    46,084   
Retail loans:
Residential mortgage
Pass (a) 355    251    149    305    255    538    —    —    1,853    1,823   
Criticized (c) —    —          21    —    —    33    22   
Total residential mortgage 355    251    154    309    258    559    —    —    1,886    1,845   
Consumer:
Home equity
Pass (a) —    —    —    —    —    19    1,544    82    1,645    1,682   
Criticized (c) —    —    —    —    —      17      24    29   
Total home equity —    —    —    —    —    20    1,561    88    1,669    1,711   
Other consumer
Pass (a) 13    79    19        58    306    —    485    722   
Criticized (c) —        —    —    —      —    10     
Total other consumer 13    80    22        58    312    —    495    729   
Total consumer 13    80    22        78    1,873    88    2,164    2,440   
Total retail loans 368    331    176    313    264    637    1,873    88    4,050    4,285   
Total loans $ 6,984    $ 6,332    $ 5,056    $ 3,920    $ 2,389    $ 5,322    $ 23,337    $ 106    $ 53,446    $ 50,369   
(a)Includes all loans not included in the categories of special mention, substandard or nonaccrual.
(b)Includes $3.8 billion of Small Business Administration Paycheck Protection Program (PPP) loans at June 30, 2020.
(c)Includes loans with an internal rating of special mention, substandard loans for which the accrual of interest has not been discontinued and nonaccrual loans. Special mention loans have potential credit weaknesses that deserve management’s close attention, such as loans to borrowers who may be experiencing financial difficulties that may result in deterioration of repayment prospects from the borrower at some future date. Accruing substandard loans have a well-defined weakness, or weaknesses, such as loans to borrowers who may be experiencing losses from operations or inadequate liquidity of a degree and duration that jeopardizes the orderly repayment of the loan. Substandard loans are also distinguished by the distinct possibility of loss in the future if these weaknesses are not corrected. Nonaccrual loans are loans for which the accrual of interest has been discontinued. For further information regarding nonaccrual loans, refer to the Nonperforming Assets subheading in Note 1 - Basis of Presentation and Accounting Policies - on page F-51 in the Corporation's 2019 Annual Report. These categories are generally consistent with the "special mention" and "substandard" categories as defined by regulatory authorities. A minority of nonaccrual loans are consistent with the "doubtful" category.
Loan interest receivable totaled $132 million and $172 million at June 30, 2020 and December 31, 2019, respectively, and was included in accrued income and other assets on the Consolidated Balance Sheets.


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Table of Contents
Notes to Consolidated Financial Statements (unaudited)
Comerica Incorporated and Subsidiaries
Allowance for Credit Losses
The following table details the changes in the allowance for credit losses.
  2020 2019
(in millions) Business Loans Retail Loans Total Business Loans Retail Loans Total
Three Months Ended June 30
Balance at beginning of period:
Allowance for loan losses $ 861    $ 55    $ 916    $ 608    $ 39    $ 647   
Allowance for credit losses on lending-related commitments 52    10    62    27      30   
Allowance for credit losses 913    65    978    635    42    677   
Loan charge-offs (56)   (1)   (57)   (43)   (1)   (44)  
Recoveries on loans previously charged-off       10      11   
Net loan charge-offs (50)   —    (50)   (33)   —    (33)  
Provision for credit losses:
Provision for loan losses 132      141    43    —    43   
Provision for credit losses on lending-related commitments (2)   (1)   (3)     —     
Provision for credit losses 130      138    44    —    44   
Balance at end of period:
Allowance for loan losses 943    64    1,007    618    39    657   
Allowance for credit losses on lending-related commitments 50      59    28      31   
Allowance for credit losses $ 993    $ 73    $ 1,066    $ 646    $ 42    $ 688   
Six Months Ended June 30
Balance at beginning of period
Allowance for loan losses $ 601    $ 36    $ 637    $ 627    $ 44    $ 671   
Allowance for credit losses on lending-related commitments 28      31    26      30   
Allowance for credit losses 629    39    668    653    48    701   
Cumulative effect of change in accounting principle (42)   25    (17)   —    —    —   
Loan charge-offs (143)   (3)   (146)   (62)   (2)   (64)  
Recoveries on loans previously charged-off
11      12    18      20   
Net loan charge-offs (132)   (2)   (134)   (44)   —    (44)  
Provision for credit losses:
Provision for loan losses 516      521    35    (5)   30   
Provision for credit losses on lending-related commitments 22      28      (1)    
Provision for credit losses 538    11    549    37    (6)   31   
Balance at end of period:
Allowance for loan losses 943    64    1,007    618    39    657   
Allowance for credit losses on lending-related commitments 50      59    28      31   
Allowance for credit losses $ 993    $ 73    $ 1,066    $ 646    $ 42    $ 688   
Allowance for loan losses as a percentage of total loans 1.91  % 1.59  % 1.88  % 1.30  % 0.89  % 1.27  %
Allowance for loan losses as a percentage of total loans excluding PPP loans 2.07  % n/a 2.03  % n/a n/a n/a
Allowance for credit losses as a percentage of total loans 2.01  % 1.82  % 1.99  % 1.36  % 0.96  % 1.33  %
Allowance for credit losses as a percentage of total loans excluding PPP loans 2.18  % n/a 2.15  % n/a n/a n/a
n/a - not applicable

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Table of Contents
Notes to Consolidated Financial Statements (unaudited)
Comerica Incorporated and Subsidiaries
Nonaccrual Loans
The following table presents additional information regarding nonaccrual loans. No interest income was recognized on nonaccrual loans for the three- and six-month periods ended June 30, 2020 and 2019, respectively.
(in millions) Nonaccrual
Loans with
No Related
Allowance
Nonaccrual
Loans with
Related
Allowance
Total
Nonaccrual
Loans
June 30, 2020
Business loans:
Commercial $ 32    $ 168    $ 200   
Commercial mortgage:
Commercial Real Estate business line (a)      
Other business lines (b)   12    18   
Total commercial mortgage   13    21   
Lease financing —       
Total business loans 40    182    222   
Retail loans:
Residential mortgage 24    —    24   
Consumer:
Home equity 21    —    21   
Total retail loans 45    —    45   
Total nonaccrual loans $ 85    $ 182    $ 267   
December 31, 2019
Business loans:
Commercial $ 29    $ 119    $ 148   
Commercial mortgage:
Commercial Real Estate business line (a)   —     
Other business lines (b)   11    12   
Total commercial mortgage   11    14   
Total business loans 32    130    162   
Retail loans:
Residential mortgage 20    —    20   
Consumer:
Home equity 17    —    17   
Total retail loans 37    —    37   
Total nonaccrual loans $ 69    $ 130    $ 199   
(a)Primarily loans to real estate developers.
(b)Primarily loans secured by owner-occupied real estate.

Foreclosed Properties
Foreclosed properties totaled $11 million at both June 30, 2020 and December 31, 2019. There were no retail loans secured by residential real estate properties in process of foreclosure included in nonaccrual loans at June 30, 2020 and December 31, 2019.

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Table of Contents
Notes to Consolidated Financial Statements (unaudited)
Comerica Incorporated and Subsidiaries
Troubled Debt Restructurings
The following table details the amortized cost basis at June 30, 2020 and 2019 of loans considered to be TDRs that were restructured during the three- and six-month periods ended June 30, 2020 and 2019, by type of modification. In cases of loans with more than one type of modification, the loans were categorized based on the most significant modification.
2020 2019
Type of Modification Type of Modification
(in millions) Principal Deferrals (a) Interest Rate Reductions Total Modifications Principal Deferrals (a) Interest Rate Reductions Total Modifications
Three Months Ended June 30,
Home equity (b) $ —    $ —    $ —    $ —    $   $  
Total loans $ —    $ —    $ —    $ —    $   $  
Six Months Ended June 30,
Business loans:
Commercial $ 16    $ —    $ 16    $ 11    $ —    $ 11   
Commercial mortgage:
Other business lines (c)   —    $     —     
Total business loans 17    —    17    12    —    12   
Retail loans:
Consumer:
Home equity (b) —    —    —    —       
Total loans $ 17    $ —    $ 17    $ 12    $   $ 13   
(a)Primarily represents loan balances where terms were extended by more than an insignificant time period, typically more than 180 days, at or above contractual interest rates. Also includes commercial loans restructured in bankruptcy.
(b)Includes bankruptcy loans for which the court has discharged the borrower's obligation and the borrower has not reaffirmed the debt.
(c)Primarily loans secured by owner-occupied real estate.
The Corporation charges interest on principal balances outstanding during deferral periods. Additionally, none of the modifications involved forgiveness of principal. At June 30, 2020 and December 31, 2019, commitments to lend additional funds to borrowers whose terms have been modified in TDRs totaled $2 million and $3 million, respectively. On an ongoing basis, the Corporation monitors the performance of modified loans to their restructured terms. The allowance for loan losses continues to be reassessed on the basis of an individual evaluation of the loan.
For principal deferrals, incremental deterioration in the credit quality of the loan, represented by a downgrade in the risk rating of the loan, for example, due to missed interest payments or a reduction of collateral value, is considered a subsequent default. For interest rate reductions, a subsequent payment default is defined in terms of delinquency, when a principal or interest payment is 90 days past due. Of the TDRs modified during the twelve-month periods ended June 30, 2020 and 2019, principal deferrals totaled $6 million and $15 million in the three- and six-month periods ended June 30, 2020, respectively compared to none in the comparable periods in 2019. There were no subsequent defaults of interest rate reductions during either of the three- and six-month periods ended June 30, 2020 and 2019.

NOTE 5 - DERIVATIVE AND CREDIT-RELATED FINANCIAL INSTRUMENTS
In the normal course of business, the Corporation enters into various transactions involving derivative and credit-related financial instruments to manage exposure to fluctuations in interest rate, foreign currency and other market risks and to meet the financing needs of customers (customer-initiated derivatives). These financial instruments involve, to varying degrees, elements of market and credit risk. Market and credit risk are included in the determination of fair value.
Market risk is the potential loss that may result from movements in interest rates, foreign currency exchange rates or energy commodity prices that cause an unfavorable change in the value of a financial instrument. The Corporation manages this risk by establishing monetary exposure limits and monitoring compliance with those limits. Market risk inherent in interest rate and energy contracts entered into on behalf of customers is mitigated by taking offsetting positions, except in those circumstances when the amount, tenor and/or contract rate level results in negligible economic risk, whereby the cost of purchasing an offsetting contract is not economically justifiable. The Corporation mitigates most of the inherent market risk in foreign exchange contracts entered into on behalf of customers by taking offsetting positions and manages the remainder through individual foreign currency position limits and aggregate value-at-risk limits. These limits are established annually and positions are monitored quarterly. Market risk inherent in derivative instruments held or issued for risk management purposes is typically offset by changes in the fair value of the assets or liabilities being hedged.

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Table of Contents
Notes to Consolidated Financial Statements (unaudited)
Comerica Incorporated and Subsidiaries
Credit risk is the possible loss that may occur in the event of nonperformance by the counterparty to a financial instrument. The Corporation attempts to minimize credit risk arising from customer-initiated derivatives by evaluating the creditworthiness of each customer, adhering to the same credit approval process used for traditional lending activities and obtaining collateral as deemed necessary. Derivatives with dealer counterparties are either cleared through a clearinghouse or settled directly with a single counterparty. For derivatives settled directly with dealer counterparties, the Corporation utilizes counterparty risk limits and monitoring procedures as well as master netting arrangements and bilateral collateral agreements to facilitate the management of credit risk. Master netting arrangements effectively reduce credit risk by permitting settlement of positive and negative positions and offset cash collateral held with the same counterparty on a net basis. Bilateral collateral agreements require daily exchange of cash or highly rated securities issued by the U.S. Treasury or other U.S. government entities to collateralize amounts due to either party. At June 30, 2020, counterparties with bilateral collateral agreements deposited $216 million of cash with the Corporation to secure the fair value of contracts in an unrealized gain position, and the Corporation had pledged $56 million of marketable investment securities and posted $30 million of cash as collateral for contracts in an unrealized loss position. For those counterparties not covered under bilateral collateral agreements, collateral is obtained, if deemed necessary, based on the results of management’s credit evaluation of the counterparty. Collateral varies, but may include cash, investment securities, accounts receivable, equipment or real estate. Included in the fair value of derivative instruments are credit valuation adjustments reflecting counterparty credit risk. These adjustments are determined by applying a credit spread for the counterparty or the Corporation, as appropriate, to the total expected exposure of the derivative. There were no derivative instruments with credit-risk-related contingent features that were in a liability position at June 30, 2020.
Derivative Instruments
Derivative instruments utilized by the Corporation are negotiated over-the-counter and primarily include swaps, caps and floors, forward contracts and options, each of which may relate to interest rates, energy commodity prices or foreign currency exchange rates. Swaps are agreements in which two parties periodically exchange cash payments based on specified indices applied to a specified notional amount until a stated maturity. Caps and floors are agreements which entitle the buyer to receive cash payments based on the difference between a specified reference rate or price and an agreed strike rate or price, applied to a specified notional amount until a stated maturity. Forward contracts are over-the-counter agreements to buy or sell an asset at a specified future date and price. Options are similar to forward contracts except the purchaser has the right, but not the obligation, to buy or sell the asset during a specified period or at a specified future date.
Over-the-counter contracts are tailored to meet the needs of the counterparties involved and, therefore, contain a greater degree of credit risk and liquidity risk than exchange-traded contracts, which have standardized terms and readily available price information. The Corporation reduces exposure to market and liquidity risks from over-the-counter derivative instruments entered into for risk management purposes, and transactions entered into to mitigate the market risk associated with customer-initiated transactions, by taking offsetting positions with investment grade domestic and foreign financial institutions and subjecting counterparties to credit approvals, limits and collateral monitoring procedures similar to those used in making other extensions of credit. In addition, certain derivative contracts executed bilaterally with a dealer counterparty in the over-the-counter market are cleared through a clearinghouse, whereby the clearinghouse becomes the counterparty to the transaction.




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Notes to Consolidated Financial Statements (unaudited)
Comerica Incorporated and Subsidiaries
The following table presents the composition of the Corporation’s derivative instruments held or issued for risk management purposes or in connection with customer-initiated and other activities at June 30, 2020 and December 31, 2019. The table excludes commitments and warrants accounted for as derivatives.
  June 30, 2020 December 31, 2019
    Fair Value   Fair Value
(in millions) Notional/
Contract
Amount (a)
Gross Derivative Assets Gross Derivative Liabilities Notional/
Contract
Amount (a)
Gross Derivative Assets Gross Derivative Liabilities
Risk management purposes
Derivatives designated as hedging instruments
Interest rate contracts:
Swaps - fair value - receive fixed/pay floating
$ 2,650    $ —    $ —    $ 3,325    $ —    $ —   
Swaps - cash flow - receive fixed/pay floating
5,550    —    —    4,550    —    —   
Derivatives used as economic hedges
Foreign exchange contracts:
Spot, forwards and swaps 330        330    —     
Total risk management purposes 8,530        8,205    —     
Customer-initiated and other activities
Interest rate contracts:
Caps and floors written 601    —      671    —    —   
Caps and floors purchased 601      —    671    —    —   
Swaps 20,039    648    72    16,485    211    39   
Total interest rate contracts 21,241    649    73    17,827    211    39   
Energy contracts:
Caps and floors written 439    —    46    477    —    23   
Caps and floors purchased 439    46    —    477    23    —   
Swaps 2,137    225    217    2,135    73    69   
Total energy contracts 3,015    271    263    3,089    96    92   
Foreign exchange contracts:
Spot, forwards, options and swaps 968    14    13    1,013    10     
Total customer-initiated and other activities 25,224    934    349    21,929    317    139   
Total gross derivatives $ 33,754    $ 935    $ 351    $ 30,134    $ 317    $ 141   
Amounts offset in the Consolidated Balance Sheets:
Netting adjustment - Offsetting derivative assets/liabilities
(54)   (54)   (63)   (63)  
Netting adjustment - Cash collateral received/posted
(214)   (28)   (11)   (12)  
Net derivatives included in the Consolidated Balance Sheets (b)
667    269    243    66   
Amounts not offset in the Consolidated Balance Sheets:
Marketable securities pledged under bilateral collateral agreements
—    (53)   —    (21)  
Net derivatives after deducting amounts not offset in the Consolidated Balance Sheets
$ 667    $ 216    $ 243    $ 45   
(a)Notional or contractual amounts, which represent the extent of involvement in the derivatives market, are used to determine the contractual cash flows required in accordance with the terms of the agreement. These amounts are typically not exchanged, significantly exceed amounts subject to credit or market risk and are not reflected in the Consolidated Balance Sheets.
(b)Net derivative assets are included in accrued income and other assets and net derivative liabilities are included in accrued expenses and other liabilities on the Consolidated Balance Sheets. Included in the fair value of net derivative assets and net derivative liabilities are credit valuation adjustments reflecting counterparty credit risk and credit risk of the Corporation. The fair value of net derivative assets included credit valuation adjustments for counterparty credit risk of $25 million and $9 million at June 30, 2020 and December 31, 2019, respectively.

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Notes to Consolidated Financial Statements (unaudited)
Comerica Incorporated and Subsidiaries
Risk Management
The Corporation's derivative instruments used for managing interest rate risk currently comprise swaps converting fixed-rate long-term debt to variable rates and variable-rate loans to fixed rates.
The following table details the effects of fair value hedging on the Consolidated Statements of Comprehensive Income.
Interest on Medium- and Long-Term Debt
  Three Months Ended June 30, Six Months Ended June 30,
(in millions) 2020 2019 2020 2019
Total interest on medium- and long-term debt (a) $ 19    $ 51    $ 59    $ 102   
Fair value hedging relationships:
Interest rate contracts:
Hedged items 28    26    58    52   
Derivatives designated as hedging instruments (12)   —    (18)    
(a) Includes the effects of hedging.
        For information on accumulated net gains on cash flow hedges, refer to Note 8.
        The following table summarizes the expected weighted average remaining maturity of the notional amount of risk management interest rate swaps, the carrying amount of the related hedged items and the weighted average interest rates associated with amounts expected to be received or paid on interest rate swap agreements as of June 30, 2020 and December 31, 2019.

Cash flow swaps - receive fixed/pay floating rate on variable-rate loans:
(dollar amounts in millions) June 30, 2020 December 31, 2019
Derivative notional amount $ 5,550    $ 4,550   
Weighted average:
   Remaining maturity (in years) 2.8    3.0   
   Receive rate 1.87  % 1.94  %
   Pay rate (a) 0.17    1.71   
(a)Variable rates paid on receive fixed swaps designated as cash flow hedges are based on one-month LIBOR rates in effect at June 30, 2020 and December 31, 2019.

Fair value swaps - receive fixed/pay floating rate on medium- and long-term debt:
(dollar amounts in millions) June 30, 2020 December 31, 2019
Derivative notional amount $ 2,650    $ 3,325   
Carrying value of hedged items (a) 2,971    3,469   
Weighted average:
   Remaining maturity (in years) 5.1    4.6   
   Receive rate 3.68  % 3.44  %
   Pay rate (b) 1.54    2.80   
(a)Included $322 million and $146 million of cumulative hedging adjustments at June 30, 2020 and December 31, 2019, respectively, which included $6 million and $7 million, respectively, of hedging adjustment on a discontinued hedging relationship.
(b)Variable rates paid on receive fixed swaps designated as fair value hedges are based on one- and six-month LIBOR rates in effect at June 30, 2020 and December 31, 2019.
Foreign exchange rate risk arises from changes in the value of certain assets and liabilities denominated in foreign currencies. The Corporation employs spot and forward contracts in addition to swap contracts to manage exposure to these and other risks. These instruments are used as economic hedges, and net gains or losses are included in other noninterest income in the Consolidated Statements of Comprehensive Income.



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Notes to Consolidated Financial Statements (unaudited)
Comerica Incorporated and Subsidiaries
Customer-Initiated and Other
The Corporation enters into derivative transactions at the request of customers and generally takes offsetting positions with dealer counterparties to mitigate the inherent market risk. Income primarily results from the spread between the customer derivative and the offsetting dealer position.
For customer-initiated foreign exchange contracts where offsetting positions have not been taken, the Corporation manages the remaining inherent market risk through individual foreign currency position limits and aggregate value-at-risk limits. These limits are established annually and reviewed quarterly. For those customer-initiated derivative contracts which were not offset or where the Corporation holds a position within the limits described above, the Corporation recognized no significant gains or losses in other noninterest income in the Consolidated Statements of Comprehensive Income for both the three- and six-month periods ended June 30, 2020 and 2019.
Fair values of customer-initiated and other derivative instruments represent the net unrealized gains or losses on such contracts and are recorded in the Consolidated Balance Sheets. Changes in fair value are recognized in the Consolidated Statements of Comprehensive Income. The net gains recognized in income on customer-initiated derivative instruments, net of the impact of offsetting positions, were as follows.
Three Months Ended June 30, Six Months Ended June 30,
(in millions) Location of Gain 2020 2019 2020 2019
Interest rate contracts Other noninterest income $   $   $ 16    $ 12   
Energy contracts Other noninterest income        
Foreign exchange contracts Foreign exchange income   11    20    22   
Total   $ 19    $ 19    $ 39    $ 37   
Credit-Related Financial Instruments
The Corporation issues off-balance sheet financial instruments in connection with commercial and consumer lending activities. The Corporation’s credit risk associated with these instruments is represented by the contractual amounts indicated in the following table.
(in millions) June 30, 2020 December 31, 2019
Unused commitments to extend credit:
Commercial and other $ 22,588    $ 23,681   
Bankcard, revolving check credit and home equity loan commitments 3,275    3,180   
Total unused commitments to extend credit $ 25,863    $ 26,861   
Standby letters of credit $ 3,185    $ 3,320   
Commercial letters of credit 19    18   
The Corporation maintains an allowance to cover current expected credit losses on lending-related commitments, including unused commitments to extend credit, letters of credit and financial guarantees. The allowance for credit losses on lending-related commitments, included in accrued expenses and other liabilities on the Consolidated Balance Sheets, was $59 million and $31 million at June 30, 2020 and December 31, 2019, respectively.
Unused Commitments to Extend Credit
Commitments to extend credit are legally binding agreements to lend to a customer, provided there is no violation of any condition established in the contract. These commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. Since many commitments expire without being drawn upon, the total contractual amount of commitments does not necessarily represent future cash requirements of the Corporation. Commercial and other unused commitments are primarily variable rate commitments. The allowance for credit losses on lending-related commitments included $47 million at June 30, 2020 and $25 million at December 31, 2019 for current expected credit losses on the Corporation’s unused commitments to extend credit.
Standby and Commercial Letters of Credit
Standby letters of credit represent conditional obligations of the Corporation which guarantee the performance of a customer to a third party. Standby letters of credit are primarily issued to support public and private borrowing arrangements, including commercial paper, bond financing and similar transactions. Commercial letters of credit are issued to finance foreign or domestic trade transactions. These contracts expire in decreasing amounts through the year 2028. The Corporation may enter

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Notes to Consolidated Financial Statements (unaudited)
Comerica Incorporated and Subsidiaries
into participation arrangements with third parties that effectively reduce the maximum amount of future payments which may be required under standby and commercial letters of credit. These risk participations covered $163 million and $161 million, respectively, of the $3.2 billion and $3.3 billion standby and commercial letters of credit outstanding at June 30, 2020 and December 31, 2019, respectively.
The carrying value of the Corporation’s standby and commercial letters of credit, included in accrued expenses and other liabilities on the Consolidated Balance Sheets, totaled $34 million at June 30, 2020, including $22 million in deferred fees and $12 million in the allowance for credit losses on lending-related commitments. At December 31, 2019, the comparable amounts were $32 million, $26 million and $6 million, respectively.
The following table presents a summary of criticized standby and commercial letters of credit at June 30, 2020 and December 31, 2019. The Corporation's criticized list is generally consistent with the Special Mention, Substandard and Doubtful categories defined by regulatory authorities. The Corporation manages credit risk through underwriting, periodically reviewing and approving its credit exposures using Board committee approved credit policies and guidelines.
(dollar amounts in millions) June 30, 2020 December 31, 2019
Total criticized standby and commercial letters of credit $ 83    $ 44   
As a percentage of total outstanding standby and commercial letters of credit 2.6  % 1.3  %
Other Credit-Related Financial Instruments
The Corporation enters into credit risk participation agreements, under which the Corporation assumes credit exposure associated with a borrower’s performance related to certain interest rate derivative contracts. The Corporation is not a party to the interest rate derivative contracts and only enters into these credit risk participation agreements in instances in which the Corporation is also a party to the related loan participation agreements for such borrowers. The Corporation manages credit risk on credit risk participation agreements by monitoring the creditworthiness of the borrowers, based on the normal credit review process as if the Corporation had entered into the derivative instruments directly with the borrowers. The notional amount of such credit risk participation agreements reflects the pro-rata share of the derivative instrument, consistent with the Corporation's share of the related participated loan. As of June 30, 2020 and December 31, 2019, the total notional amount of the credit risk participation agreements was approximately $1.1 billion and $786 million, respectively, and the fair value was $3 million at June 30, 2020 and insignificant at December 31, 2019. The maximum estimated exposure to these agreements, as measured by projecting a maximum value of the guaranteed derivative instruments, assuming 100 percent default by all obligors on the maximum values, was $76 million and $20 million at June 30, 2020 and December 31, 2019, respectively. In the event of default, the lead bank has the ability to liquidate the assets of the borrower, in which case the lead bank would be required to return a percentage of the recouped assets to the participating banks. As of June 30, 2020, the weighted average remaining maturity of outstanding credit risk participation agreements was 4.7 years.

NOTE 6 - VARIABLE INTEREST ENTITIES (VIEs)
The Corporation evaluates its interest in certain entities to determine if these entities meet the definition of a VIE and whether the Corporation is the primary beneficiary and should consolidate the entity based on the variable interests it held both at inception and when there is a change in circumstances that requires a reconsideration.
The Corporation holds ownership interests in funds in the form of limited partnerships or limited liability companies (LLCs) investing in affordable housing projects that qualify for the low-income housing tax credit (LIHTC). The Corporation also directly invests in limited partnerships and LLCs which invest in community development projects, which generate similar tax credits to investors (other tax credit entities). As an investor, the Corporation obtains income tax credits and deductions from the operating losses of these tax credit entities. These tax credit entities meet the definition of a VIE; however, the Corporation is not the primary beneficiary of the entities, as the general partner or the managing member has both the power to direct the activities that most significantly impact the economic performance of the entities and the obligation to absorb losses or the right to receive benefits that could be significant to the entities.
The Corporation accounts for its interests in LIHTC entities using the proportional amortization method. Ownership interests in other tax credit entities are accounted for under either the cost or equity method. Exposure to loss as a result of the Corporation's involvement in LIHTC entities and other tax credit entities at June 30, 2020 was limited to $451 million and $10 million, respectively.
Investment balances, including all legally binding commitments to fund future investments, are included in accrued income and other assets on the Consolidated Balance Sheets. A liability is recognized in accrued expenses and other liabilities

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Notes to Consolidated Financial Statements (unaudited)
Comerica Incorporated and Subsidiaries
on the Consolidated Balance Sheets for all legally binding unfunded commitments to fund tax credit entities ($173 million at June 30, 2020). Amortization and other write-downs of LIHTC investments are presented on a net basis as a component of the provision for income taxes on the Consolidated Statements of Comprehensive Income, while amortization and write-downs of other tax credit investments are recorded in other noninterest income. The income tax credits and deductions are recorded as a reduction of income tax expense and a reduction of federal income taxes payable.
The Corporation provided no financial or other support that was not contractually required to any of the above VIEs during the six months ended June 30, 2020 and 2019.
The following table summarizes the impact of these tax credit entities on the Corporation’s Consolidated Statements of Comprehensive Income.
Three Months Ended June 30, Six Months Ended June 30,
(in millions) 2020 2019 2020 2019
Other noninterest income:
Amortization of other tax credit investments $ —    $ —    $ —    $  
Provision for income taxes:
Amortization of LIHTC investments 17    17    34    32   
Low income housing tax credits (16)   (15)   (32)   (30)  
Other tax benefits related to tax credit entities (3)   (4)   (7)   (7)  
Total provision for income taxes $ (2)   $ (2)   $ (5)   $ (5)  
For further information on the Corporation’s consolidation policy, see Note 1 to the consolidated financial statements in the Corporation's 2019 Annual Report.

NOTE 7 - MEDIUM- AND LONG-TERM DEBT
Medium- and long-term debt is summarized as follows:
(in millions) June 30, 2020 December 31, 2019
Parent company
Subordinated notes:
3.80% subordinated notes due 2026 (a)
$ 284    $ 264   
Medium- and long-term notes:
3.70% notes due 2023 (a)
917    884   
4.00% notes due 2029 (a)
647    587   
Total medium- and long-term notes 1,564    1,471   
Total parent company 1,848    1,735   
Subsidiaries
Subordinated notes:
4.00% subordinated notes due 2025 (a)
383    360   
7.875% subordinated notes due 2026 (a)
213    202   
Total subordinated notes 596    562   
Medium- and long-term notes:
2.50% notes due 2020 (a)
—    674   
2.50% notes due 2024 (a)
527    498   
Total medium- and long-term notes 527    1,172   
FHLB advances:
Floating-rate based on FHLB auction rate due 2026
2,800    2,800   
Floating-rate based on FHLB auction rate due 2028
750    1,000   
Total FHLB advances 3,550    3,800   
Total subsidiaries 4,673    5,534   
Total medium- and long-term debt $ 6,521    $ 7,269   
(a)The fixed interest rates on these notes have been swapped to a variable rate and designated in a hedging relationship. Accordingly, carrying value has been adjusted to reflect the change in the fair value of the debt as a result of changes in the benchmark rate.
        Subordinated notes with remaining maturities greater than one year qualify as Tier 2 capital.
        Comerica Bank (the Bank), a wholly-owned subsidiary of the Corporation, is a member of the FHLB, which provides short- and long-term funding to its members through advances collateralized by real estate-related assets. The interest rates on

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Notes to Consolidated Financial Statements (unaudited)
Comerica Incorporated and Subsidiaries
the FHLB advances resets between four and eight weeks, based on the FHLB auction rate. At June 30, 2020, the weighted-average rate on the FHLB advances was 0.31%. Each note may be prepaid in full, without penalty, at each scheduled reset date. Borrowing capacity is contingent on the amount of collateral available to be pledged to the FHLB. At June 30, 2020, $18.3 billion of real estate-related loans and $5.2 billion of investment securities were pledged to the FHLB as collateral for outstanding short- and long-term advances of $750 million and $3.6 billion, respectively, with an additional capacity for potential future borrowings of approximately $10.1 billion.
        Unamortized debt issuance costs deducted from the carrying amount of medium- and long-term debt totaled $11 million at June 30, 2020 and $12 million at December 31, 2019.

NOTE 8 - ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)
The following table presents a reconciliation of the changes in the components of accumulated other comprehensive income (loss) and details the components of other comprehensive income (loss) for the six months ended June 30, 2020 and 2019, including the amount of income tax expense (benefit) allocated to each component of other comprehensive income (loss).
Six Months Ended June 30,
(in millions) 2020 2019
Accumulated net unrealized gains on investment securities:
Balance at beginning of period, net of tax $ 65    $ (138)  
Net unrealized holding gains arising during the period 286    229   
Less: Provision for income taxes 68    54   
Net unrealized holding gains arising during the period, net of tax 218    175   
Less:
Net realized losses included in net securities losses —    (8)  
Less: Benefit for income taxes —    (2)  
Reclassification adjustment for net securities losses included in net income, net of tax —    (6)  
Change in net unrealized gains on investment securities, net of tax 218    181   
Balance at end of period, net of tax $ 283    $ 43   
Accumulated net gains on cash flow hedges:
Balance at beginning of period, net of tax $ 34    $ —   
Net cash flow hedge gains arising during the period 233    51   
Less: Provision for income taxes 56    12   
Change in net cash flow hedge gains arising during the period, net of tax 177    39   
Less:
Net cash flow hedge gains (losses) included in interest and fees on loans 22    (1)  
Less: Provision for income taxes   —   
Reclassification adjustment for net cash flow hedge gains (losses) included in net income, net of tax 15    (1)  
Change in net cash flow hedge gains, net of tax 162    40   
Balance at end of period, net of tax (a) $ 196    $ 40   
Accumulated defined benefit pension and other postretirement plans adjustment:
Balance at beginning of period, net of tax $ (334)   $ (471)  
Amortization of actuarial net loss 31    21   
Amortization of prior service credit (14)   (13)  
Amounts recognized in other noninterest expenses 17     
Less: Provision for income taxes    
Change in defined benefit pension and other postretirement plans adjustment, net of tax 13     
Balance at end of period, net of tax $ (321)   $ (465)  
Total accumulated other comprehensive income (loss) at end of period, net of tax $ 158    $ (382)  
(a)The Corporation expects to reclassify $73 million of net gains, net of tax, from accumulated other comprehensive income to earnings over the next twelve months if interest yield curves and notional amounts remain at June 30, 2020 levels.

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Notes to Consolidated Financial Statements (unaudited)
Comerica Incorporated and Subsidiaries
NOTE 9 - NET INCOME PER COMMON SHARE
Basic and diluted net income per common share are presented in the following table.
Three Months Ended June 30, Six Months Ended June 30,
(in millions, except per share data) 2020 2019 2020 2019
Basic and diluted
Net income $ 113    $ 298    $ 48    $ 637   
Less: Income allocated to participating securities        
Net income attributable to common share $ 112    $ 297    $ 47    $ 634   
Basic average common shares 139    152    140    155   
Basic net income per common share $ 0.81    $ 1.95    $ 0.34    $ 4.10   
Basic average common shares 139    152    140    155   
Dilutive common stock equivalents:
Net effect of the assumed exercise of stock awards —         
Diluted average common shares 139    153    141    156   
Diluted net income per common share $ 0.80    $ 1.94    $ 0.34    $ 4.06   
The following average shares related to outstanding options to purchase shares of common stock were not included in the computation of diluted net income per common share because the options were anti-dilutive for the period.
Three Months Ended June 30, Six Months Ended June 30,
2020 2019 2020 2019
Average outstanding options 2,056,133    470,162    1,633,078    446,610   
Range of exercise prices
$39.10 - $95.25
$79.01 - $95.25
$39.10 - $95.25
$79.01 - $95.25
In May 2020, the Corporation issued and sold 400,000 depositary shares, each representing a 1/100th ownership interest in a share of 5.625% Fixed-Rate Reset Non-Cumulative Perpetual Preferred Stock, Series A, without par value, with a liquidation preference of $100,000 per share (equivalent of $1,000 per depositary share). Holders of the depositary shares will be entitled to all proportional rights and preferences of the Series A preferred stock (including dividend, voting, redemption and liquidation rights). The $400 million issuance yielded $395 million in proceeds net of underwriting discounts and offering expenses. Dividends on the Series A preferred stock will accrue on a non-cumulative basis and will be payable in arrears when, as and if authorized by the Corporation’s board of directors or a duly authorized committee of the board and declared by the Corporation, on the first day of January, April, July, and October of each year, commencing on October 1, 2020. Under the terms of the Series A preferred stock, the ability of the Corporation to pay dividends on, make distributions with respect to, or to repurchase, redeem or acquire its common stock or any other stock ranking on parity with or junior to the Series A preferred stock, is subject to restrictions in the event that the Corporation does not declare and either pay or set aside a sum sufficient for payment of dividends on the Series A Preferred Stock for the immediately preceding dividend period. The Series A preferred stock is perpetual and has no maturity date, but is redeemable at specified times subject to regulatory considerations.
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Notes to Consolidated Financial Statements (unaudited)
Comerica Incorporated and Subsidiaries
NOTE 10 - EMPLOYEE BENEFIT PLANS
Net periodic defined benefit cost (credit) is comprised of service cost and other components of net benefit cost (credit). Service cost is included in salaries and benefits expense and other components of net benefit cost (credit) are included in other noninterest expenses on the Consolidated Statements of Comprehensive Income. For further information on the Corporation's employee benefit plans, refer to Note 17 to the consolidated financial statements in the Corporation's 2019 Annual Report.
The components of net periodic benefit cost (credit) for the Corporation's qualified pension plan, non-qualified pension plan and postretirement benefit plan are as follows.
Qualified Defined Benefit Pension Plan Three Months Ended June 30, Six Months Ended June 30,
(in millions) 2020 2019 2020 2019
Service cost $   $   $ 16    $ 15   
Other components of net benefit credit:
Interest cost 17    20    35    40   
Expected return on plan assets (42)   (41)   (85)   (83)  
Amortization of prior service credit (5)   (4)   (10)   (9)  
Amortization of net loss 13      27    17   
Total other components of net benefit credit (17)   (17)   (33)   (35)  
Net periodic defined benefit credit $ (9)   $ (10)   $ (17)   $ (20)  
Non-Qualified Defined Benefit Pension Plan Three Months Ended June 30, Six Months Ended June 30,
(in millions) 2020 2019 2020 2019
Service cost $ —    $   $   $  
Other components of net benefit cost:
Interest cost        
Amortization of prior service credit (2)   (2)   (4)   (4)  
Amortization of net loss        
Total other components of net benefit cost        
Net periodic defined benefit cost $   $   $   $  
Postretirement Benefit Plan Three Months Ended June 30, Six Months Ended June 30,
(in millions) 2020 2019 2020 2019
Other components of net benefit credit:
Interest cost $ —    $ —    $ —    $  
Expected return on plan assets (1)   —    (1)   (1)  
Net periodic defined benefit credit $ (1)   $ —    $ (1)   $ —   

NOTE 11 - INCOME TAXES AND TAX-RELATED ITEMS
At June 30, 2020, net unrecognized tax benefits were $18 million, compared to $17 million at December 31, 2019. The Corporation anticipates that it is reasonably possible that final settlement of federal and state tax issues will result in a decrease in net unrecognized tax benefits of $1 million within the next twelve months. Included in accrued expenses and other liabilities on the Consolidated Balance Sheets was a liability for tax-related interest and penalties of $6 million and $8 million on June 30, 2020 and December 31, 2019, respectively.
Net deferred tax assets were $11 million at June 30, 2020, compared to $42 million at December 31, 2019, primarily driven by increases to deferred tax liabilities related to unrealized losses on investment securities available-for-sale and net hedging gains, partially offset by increases to deferred tax assets related to the allowance for loan losses and allowance for depreciation. Included in deferred tax assets at both June 30, 2020 and December 31, 2019 were $3 million of state net operating loss carryforwards, which expire between 2020 and 2029. The Corporation believes that it is more likely than not that the benefit from certain of these state net operating loss carryforwards will not be realized and, accordingly, maintained a valuation allowance of $3 million at both June 30, 2020 and December 31, 2019. The determination regarding valuation allowance was based on evidence of loss carryback capacity, projected future reversals of existing taxable temporary differences to absorb the deferred tax assets and assumptions made regarding future events.
In the ordinary course of business, the Corporation enters into certain transactions that have tax consequences. From time to time, the Internal Revenue Service (IRS) or other tax jurisdictions may review and/or challenge specific interpretive tax
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Table of Contents
Notes to Consolidated Financial Statements (unaudited)
Comerica Incorporated and Subsidiaries
positions taken by the Corporation with respect to those transactions. The Corporation believes its tax returns were filed based upon applicable statutes, regulations and case law in effect at the time of the transactions. The IRS or other tax jurisdictions, an administrative authority or a court, if presented with the transactions, could disagree with the Corporation’s interpretation of the tax law.
Based on current knowledge and probability assessment of various potential outcomes, the Corporation believes that current tax reserves are adequate, and the amount of any potential incremental liability arising is not expected to have a material adverse effect on the Corporation’s consolidated financial condition or results of operations. Probabilities and outcomes are reviewed as events unfold, and adjustments to the reserves are made when necessary.

NOTE 12 - CONTINGENT LIABILITIES
Legal Proceedings
As previously reported in the Corporation's Form 10-K for the year ended December 31, 2019 and Form 10-Q for the period ended March 31, 2020, Comerica Bank, a wholly-owned subsidiary of the Corporation, was named in November 2011 as a third-party defendant in Butte Local Development v. Masters Group v. Comerica Bank (the case), for lender liability. The case was initially tried in January 2014, in the Montana Second District Judicial Court for Silver Bow County in Butte, Montana. On January 17, 2014, a jury found for Masters, resulting in an award against the Bank. On July 1, 2015, after an appeal filed by the Bank, the Montana Supreme Court reversed the judgment against the Bank and remanded the case for a new trial with instructions that Michigan contract law should apply and dismissing all other claims. In January 2017, the case was retried, without a jury, in the Second District Court, Silver Bow County, Montana. In November 2019, the court found the Bank breached its forbearance agreement. On January 17, 2020, the court conducted a hearing on the amount of costs and interest that Masters is entitled to recover. On June 12, 2020, the court found Masters is entitled to attorneys' fees, interest and costs. The Bank is considering its options, including additional appeals. Management believes that current reserves related to this case are adequate in the event of an adverse outcome.
The Corporation and certain of its subsidiaries are subject to various other pending or threatened legal proceedings arising out of the normal course of business or operations. The Corporation believes it has meritorious defenses to the claims asserted against it in its other currently outstanding legal proceedings and, with respect to such legal proceedings, intends to continue to defend itself vigorously, litigating or settling cases according to management’s judgment as to what is in the best interests of the Corporation and its shareholders. Settlement may result from the Corporation's determination that it may be more prudent financially to settle, rather than litigate, and should not be regarded as an admission of liability. On at least a quarterly basis, the Corporation assesses its potential liabilities and contingencies in connection with outstanding legal proceedings utilizing the latest information available. On a case-by-case basis, reserves are established for those legal claims for which it is probable that a loss will be incurred either as a result of a settlement or judgment, and the amount of such loss can be reasonably estimated. The actual costs of resolving these claims may be substantially higher or lower than the amounts reserved. Based on current knowledge, and after consultation with legal counsel, management believes current reserves are adequate, and the amount of any incremental liability arising from these matters is not expected to have a material adverse effect on the Corporation’s consolidated financial condition, results of operations or cash flows. Legal fees of $5 million and $4 million were included in other noninterest expenses on the Consolidated Statements of Comprehensive Income for the three-month periods ended June 30, 2020 and 2019, respectively, and $7 million and $5 million for the six-month periods ended June 30, 2020 and 2019, respectively.
For matters where a loss is not probable, the Corporation has not established legal reserves. The Corporation believes the estimate of the aggregate range of reasonably possible losses, in excess of reserves established, for all legal proceedings in which it is involved is from zero to approximately $46 million at June 30, 2020. This estimated aggregate range of reasonably possible losses is based upon currently available information for those proceedings in which the Corporation is involved, taking into account the Corporation’s best estimate of such losses for those cases for which such estimate can be made. For certain cases, the Corporation does not believe that an estimate can currently be made. The Corporation’s estimate involves significant judgment, given the varying stages of the proceedings (including the fact many are currently in preliminary stages), the existence in certain proceedings of multiple defendants (including the Corporation) whose share of liability has yet to be determined, the numerous yet-unresolved issues in many of the proceedings (including issues regarding class certification and the scope of many of the claims) and the attendant uncertainty of the various potential outcomes of such proceedings. Accordingly, the Corporation’s estimate will change from time to time, and actual losses may be more or less than the current estimate.
In the event of unexpected future developments, it is possible the ultimate resolution of these matters, if unfavorable, may be material to the Corporation's consolidated financial condition, results of operations or cash flows.
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Table of Contents
Notes to Consolidated Financial Statements (unaudited)
Comerica Incorporated and Subsidiaries
For information regarding income tax contingencies, refer to Note 11.
NOTE 13 - BUSINESS SEGMENT INFORMATION
The Corporation has strategically aligned its operations into three major business segments: the Commercial Bank, the Retail Bank and Wealth Management. These business segments are differentiated based on the type of customer and the related products and services provided. In addition to the three major business segments, the Finance Division is also reported as a segment. Business segment results are produced by the Corporation’s internal management accounting system. This system measures financial results based on the internal business unit structure of the Corporation. The performance of the business segments is not comparable with the Corporation's consolidated results and is not necessarily comparable with similar information for any other financial institution. Additionally, because of the interrelationships of the various segments, the information presented is not indicative of how the segments would perform if they operated as independent entities. The management accounting system assigns balance sheet and income statement items to each business segment using certain methodologies, which are regularly reviewed and refined. From time to time, the Corporation may make reclassifications among the segments to more appropriately reflect management's current view of the segments, and methodologies may be modified as the management accounting system is enhanced and changes occur in the organizational structure and/or product lines. For comparability purposes, amounts in all periods are based on business unit structure and methodologies in effect at June 30, 2020.
The following discussion provides information about the activities of each business segment. A discussion of the financial results and the factors impacting performance can be found in the section entitled "Business Segments" in the financial review.
The Commercial Bank meets the needs of small and middle market businesses, multinational corporations and governmental entities by offering various products and services including commercial loans and lines of credit, deposits, cash management, capital market products, international trade finance, letters of credit, foreign exchange management services and loan syndication services.
The Retail Bank includes a full range of personal financial services, consisting of consumer lending, consumer deposit gathering and mortgage loan origination. This business segment offers a variety of consumer products including deposit accounts, installment loans, credit cards, student loans, home equity lines of credit and residential mortgage loans.
Wealth Management offers products and services consisting of fiduciary services, private banking, retirement services, investment management and advisory services, investment banking and brokerage services. This business segment also offers the sale of annuity products, as well as life, disability and long-term care insurance products.
The Finance segment includes the Corporation’s securities portfolio and asset and liability management activities. This segment is responsible for managing the Corporation’s funding, liquidity and capital needs, performing interest sensitivity analysis and executing various strategies to manage the Corporation’s exposure to liquidity, interest rate risk and foreign exchange risk.
The Other category includes the income and expense impact of equity and cash, tax benefits not assigned to specific business segments, charges of an unusual or infrequent nature that are not reflective of the normal operations of the business segments and miscellaneous other expenses of a corporate nature.
For further information on the methodologies which form the basis for these results refer to Note 22 to the consolidated financial statements in the Corporation's 2019 Annual Report.
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Table of Contents
Notes to Consolidated Financial Statements (unaudited)
Comerica Incorporated and Subsidiaries
Business segment financial results are as follows:
Commercial
Bank
Retail
Bank
Wealth Management Finance Other Total
(dollar amounts in millions)
Three Months Ended June 30, 2020
Earnings summary:
Net interest income (expense) $ 402    $ 120    $ 40    $ (95)   $   $ 471   
Provision for credit losses 117      16    —    —    138   
Noninterest income 144    24    66    11      247   
Noninterest expenses 207    155    73        440   
Provision (benefit) for income taxes 47    (4)     (20)     27   
Net income (loss) $ 175    $ (12)   $ 14    $ (65)   $   $ 113   
Net credit-related charge-offs $ 48    $   $   $ —    $ —    $ 50   
Selected average balances:
Assets $ 47,392    $ 3,306    $ 5,191    $ 14,500    $ 11,255    $ 81,644   
Loans 45,914    2,479    5,077    —    28    53,498   
Deposits 36,318    22,647    4,217    950    150    64,282   
Statistical data:
Return on average assets (a) 1.49  % (0.21) % 1.00  % n/m n/m 0.55  %
Efficiency ratio (b) 37.67    107.15    69.86    n/m n/m 61.14   
Three Months Ended June 30, 2019
Earnings summary:
Net interest income (expense) $ 420    $ 146    $ 46    $ (23)   $ 14    $ 603   
Provision for credit losses 52      (5)   —    (4)   44   
Noninterest income 136    33    68    13    —    250   
Noninterest expenses 195    147    67    —    15    424   
Provision (benefit) for income taxes 71      13    (4)   —    87   
Net income (loss) $ 238    $ 24    $ 39    $ (6)   $   $ 298   
Net credit-related charge-offs (recoveries) $ 35    $ —    $ (2)   $ —    $ —    $ 33   
Selected average balances:
Assets $ 45,321    $ 2,839    $ 5,071    $ 13,907    $ 4,114    $ 71,252   
Loans 43,932    2,107    4,930    —    (6)   50,963   
Deposits 28,251    20,649    3,740    2,174    181    54,995   
Statistical data:
Return on average assets (a) 2.11  % 0.44  % 3.10  % n/m n/m 1.68  %
Efficiency ratio (b) 34.98    82.26    58.99    n/m n/m 49.65   
(a)Return on average assets is calculated based on the greater of average assets or average liabilities and attributed equity.
(b)Noninterest expenses as a percentage of the sum of net interest income and noninterest income excluding net gains (losses) from securities and a derivative contract tied to the conversion rate of Visa Class B shares.
n/m – not meaningful


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Notes to Consolidated Financial Statements (unaudited)
Comerica Incorporated and Subsidiaries
Commercial Bank Retail Bank Wealth Management Finance Other Total
(dollar amounts in millions)
Six Months Ended June 30, 2020
Earnings summary:
Net interest income (expense) $ 782    $ 245    $ 81    $ (139)   $ 15    $ 984   
Provision for credit losses 513      28    —    —    549   
Noninterest income 271    52    136    25    —    484   
Noninterest expenses 401    304    145      14    865   
Provision (benefit) for income taxes 27    (4)     (28)      
Net income (loss) $ 112    $ (11)   $ 35    $ (87)   $ (1)   $ 48   
Net credit-related charge-offs $ 131    $   $   $ —    $ —    $ 134   
Selected average balances:
Assets $ 45,823    $ 3,085    $ 5,134    $ 14,393    $ 9,019    $ 77,454   
Loans 44,253    2,277    5,007    —    14    51,551   
Deposits 33,274    21,921    4,120    1,043    166    60,524   
Statistical data:
Return on average assets (a) 0.49  % (0.10) % 1.34  % n/m n/m 0.12  %
Efficiency ratio (b) 38.05    101.41    67.00    n/m n/m 58.80   
Six Months Ended June 30, 2019
Earnings summary:
Net interest income (expense) $ 832    $ 292    $ 93    $ (37)   $ 29    $ 1,209   
Provision for credit losses 46    (3)   (10)   —    (2)   31   
Noninterest income 272    64    132    17      488   
Noninterest expenses 393    292    139      32    857   
Provision (benefit) for income taxes 153    16    23    (8)   (12)   172   
Net income (loss) $ 512    $ 51    $ 73    $ (13)   $ 14    $ 637   
Net credit-related charge-offs (recoveries) $ 47    $ —    $ (3)   $ —    $ —    $ 44   
Selected average balances:
Assets $ 44,619    $ 2,826    $ 5,121    $ 13,747    $ 4,202    $ 70,515   
Loans 43,241    2,105    4,983    —    (6)   50,323   
Deposits 28,356    20,560    3,770    1,655    157    54,498   
Statistical data:
Return on average assets (a) 2.31  % 0.49  % 2.88  % n/m n/m 1.82  %
Efficiency ratio (b) 35.61    81.80    61.67    n/m n/m 50.23   
(a)Return on average assets is calculated based on the greater of average assets or average liabilities and attributed equity.
(b)Noninterest expenses as a percentage of the sum of net interest income and noninterest income excluding net gains (losses) from securities and a derivative contract tied to the conversion rate of Visa Class B shares.
n/m – not meaningful

The Corporation operates in three primary markets - Texas, California and Michigan, as well as in Arizona and Florida, with select businesses operating in several other states and in Canada and Mexico. The Corporation produces market segment results for the Corporation’s three primary geographic markets as well as Other Markets. Other Markets includes Florida, Arizona, the International Finance division and businesses with a national perspective. The Finance & Other category includes the Finance segment and the Other category as previously described. Market segment results are provided as supplemental information to the business segment results and may not meet all operating segment criteria as set forth in GAAP. For comparability purposes, amounts in all periods are based on market segments and methodologies in effect at June 30, 2020.
A discussion of the financial results and the factors impacting performance can be found in the section entitled "Market Segments" in the financial review.
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Table of Contents
Notes to Consolidated Financial Statements (unaudited)
Comerica Incorporated and Subsidiaries
Market segment financial results are as follows:
Michigan California Texas Other
Markets
Finance
& Other
Total
(dollar amounts in millions)
Three Months Ended June 30, 2020
Earnings summary:
Net interest income (expense) $ 159    $ 176    $ 116    $ 111    $ (91)   $ 471   
Provision for credit losses 40    51    31    16    —    138   
Noninterest income 64    36    30    104    13    247   
Noninterest expenses 139    103    91    102      440   
Provision (benefit) for income taxes   13      21    (19)   27   
Net income (loss) $ 36    $ 45    $ 20    $ 76    $ (64)   $ 113   
Net credit-related charge-offs $ —    $   $ 46    $ —    $ —    $ 50   
Selected average balances:
Assets $ 13,643    $ 18,948    $ 11,597    $ 11,732    $ 25,724    $ 81,644   
Loans 13,014    18,663    11,184    10,640    (3)   53,498   
Deposits 23,460    18,463    10,209    11,050    1,100    64,282   
Statistical data:
Return on average assets (a) 0.59  % 0.93  % 0.68  % 2.53  % n/m 0.55  %
Efficiency ratio (b) 62.08    48.61    61.88    47.41    n/m 61.14   
Three Months Ended June 30, 2019
Earnings summary:
Net interest income (expense) $ 186    $ 208    $ 124    $ 94    $ (9)   $ 603   
Provision for credit losses (10)   (4)   49    13    (4)   44   
Noninterest income 72    40    34    91    13    250   
Noninterest expenses 134    99    84    92    15    424   
Provision (benefit) for income taxes 30    39      16    (4)   87   
Net income (loss) $ 104    $ 114    $ 19    $ 64    $ (3)   $ 298   
Net credit-related charge-offs $ —    $   $ 26    $ —    $ —    $ 33   
Selected average balances:
Assets $ 13,239    $ 19,108    $ 11,342    $ 9,542    $ 18,021    $ 71,252   
Loans 12,704    18,806    10,684    8,775    (6)   50,963   
Deposits 19,816    16,314    8,668    7,842    2,355    54,995   
Statistical data:
Return on average assets (a) 2.01  % 2.38  % 0.69  % 2.75  % n/m 1.68  %
Efficiency ratio (b) 52.04    40.07    52.86    49.36    n/m 49.65   
(a)Return on average assets is calculated based on the greater of average assets or average liabilities and attributed equity.
(b)Noninterest expenses as a percentage of the sum of net interest income and noninterest income excluding net gains (losses) from securities and a derivative contract tied to the conversion rate of Visa Class B shares.
n/m – not meaningful.

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Notes to Consolidated Financial Statements (unaudited)
Comerica Incorporated and Subsidiaries
Michigan California Texas Other Markets Finance & Other Total
(dollar amounts in millions)
Six Months Ended June 30, 2020
Earnings summary:
Net interest income (expense) $ 322    $ 358    $ 231    $ 197    $ (124)   $ 984   
Provision for credit losses 64    102    321    62    —    549   
Noninterest income 136    72    60    191    25    484   
Noninterest expenses 279    201    175    195    15    865   
Provision (benefit) for income taxes 23    30    (46)   25    (26)    
Net income (loss) $ 92    $ 97    $ (159)   $ 106    $ (88)   $ 48   
Net credit-related charge-offs $   $ 15    $ 116    $ —    $ —    $ 134   
Selected average balances:
Assets $ 13,269    $ 18,664    $ 11,371    $ 10,754    $ 23,396    $ 77,454   
Loans 12,601    18,346    10,870    9,735    (1)   51,551   
Deposits 22,104    17,965    9,705    9,541    1,209    60,524   
Statistical data:
Return on average assets (a) 0.81  % 1.02  % (2.82) % 1.99  % n/m 0.12  %
Efficiency ratio (b) 60.46    46.77    60.07    50.25    n/m 58.80   
Six Months Ended June 30, 2019
Earnings summary:
Net interest income (expense) $ 373    $ 411    $ 248    $ 185    $ (8)   $ 1,209   
Provision for credit losses (5)   (5)   38      (2)   31   
Noninterest income 144    80    66    178    20    488   
Noninterest expenses 273    199    169    183    33    857   
Provision (benefit) for income taxes 56    76    25    35    (20)   172   
Net income $ 193    $ 221    $ 82    $ 140    $   $ 637   
Net credit-related charge-offs (recoveries) $   $   $ 39    $ (3)   $ —    $ 44   
Selected average balances:
Assets $ 13,157    $ 19,020    $ 11,128    $ 9,261    $ 17,949    $ 70,515   
Loans 12,631    18,730    10,474    8,494    (6)   50,323   
Deposits 19,854    16,276    8,682    7,874    1,812    54,498   
Statistical data:
Return on average assets (a) 1.89  % 2.35  % 1.47  % 3.06  % n/m 1.82  %
Efficiency ratio (b) 52.85    40.49    53.74    50.30    n/m 50.23   
(a)Return on average assets is calculated based on the greater of average assets or average liabilities and attributed equity.
(b)Noninterest expenses as a percentage of the sum of net interest income and noninterest income excluding net gains (losses) from securities and a derivative contract tied to the conversion rate of Visa Class B shares.
n/m – not meaningful.
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Notes to Consolidated Financial Statements (unaudited)
Comerica Incorporated and Subsidiaries
NOTE 14 - REVENUE FROM CONTRACTS WITH CUSTOMERS
Revenue from contracts with customers comprises the noninterest income earned by the Corporation in exchange for services provided to customers. The following table presents the composition of revenue from contracts with customers, segregated from other sources of noninterest income, by business segment.
Commercial
Bank
Retail
Bank
Wealth Management Finance & Other Total
(in millions)
Three Months Ended June 30, 2020
Revenue from contracts with customers:
Card fees $ 59    $   $   $ —    $ 68   
Service charges on deposit accounts 30    11      —    42   
Fiduciary income —    —    52    —    52   
Commercial loan servicing fees (a)   —    —    —     
Brokerage fees —    —      —     
Other noninterest income (b) 11        —    17   
Total revenue from contracts with customers 104    21    63    —    188   
Other sources of noninterest income 40        13    59   
Total noninterest income $ 144    $ 24    $ 66    $ 13    $ 247   
Three Months Ended June 30, 2019
Revenue from contracts with customers:
Card fees $ 54    $ 10    $   $ —    $ 65   
Service charges on deposit accounts 33    17      —    51   
Fiduciary income —    —    52    —    52   
Commercial loan servicing fees (a)   —    —    —     
Brokerage fees —    —      —     
Other noninterest income (b)       —    10   
Total revenue from contracts with customers 93    31    65    —    189   
Other sources of noninterest income 43        13    61   
Total noninterest income $ 136    $ 33    $ 68    $ 13    $ 250   
Six Months Ended June 30, 2020
Revenue from contracts with customers:
Card fees $ 108    $ 17    $   $ —    $ 127   
Service charges on deposit accounts 62    27      —    91   
Fiduciary income —    —    106    —    106   
Commercial loan servicing fees (a)   —    —    —     
Brokerage fees —    —    12    —    12   
Other noninterest income (b) 15        —    29   
Total revenue from contracts with customers 193    49    131    —    373   
Other sources of noninterest income 78        25    111   
Total noninterest income $ 271    $ 52    $ 136    $ 25    $ 484   
Six Months Ended June 30, 2019
Revenue from contracts with customers:
Card fees $ 107    $ 19    $   $ —    $ 128   
Service charges on deposit accounts 66    34      —    102   
Fiduciary income —    —    101    —    101   
Commercial loan servicing fees (a)   —    —    —     
Brokerage fees —    —    14    —    14   
Other noninterest income (b)       —    20   
Total revenue from contracts with customers 185    60    128    —    373   
Other sources of noninterest income 87        20    115   
Total noninterest income $ 272    $ 64    $ 132    $ 20    $ 488   
(a)Included in commercial lending fees on the Consolidated Statements of Comprehensive Income.
(b)Excludes derivative, warrant and other miscellaneous income.
        Adjustments to revenue during the three- and six-month periods ended June 30, 2020 and 2019 for refunds or credits relating to prior periods were not significant.
        Revenue from contracts with customers did not generate significant contract assets and liabilities.
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ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

FORWARD-LOOKING STATEMENTS
This report includes forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. In addition, the Corporation may make other written and oral communications from time to time that contain such statements. All statements regarding the Corporation's expected financial position, strategies and growth prospects and general economic conditions expected to exist in the future are forward-looking statements. The words, "anticipates," "believes," "contemplates," "feels," "expects," "estimates," "seeks," "strives," "plans," "intends," "outlook," "forecast," "position," "target," "mission," "assume," "achievable," "potential," "strategy," "goal," "aspiration," "opportunity," "initiative," "outcome," "continue," "remain," "maintain," "on track," "trend," "objective," "looks forward," "projects," "models," and variations of such words and similar expressions, or future or conditional verbs such as "will," "would," "should," "could," "might," "can," "may" or similar expressions, as they relate to the Corporation or its management, are intended to identify forward-looking statements. These forward-looking statements are predicated on the beliefs and assumptions of the Corporation's management based on information known to the Corporation's management as of the date of this report and do not purport to speak as of any other date. Forward-looking statements may include descriptions of plans and objectives of the Corporation's management for future or past operations, products or services and forecasts of the Corporation's revenue, earnings or other measures of economic performance, including statements of profitability, business segments and subsidiaries as well as estimates of credit trends and global stability. Such statements reflect the view of the Corporation's management as of this date with respect to future events and are subject to risks and uncertainties. Should one or more of these risks materialize or should underlying beliefs or assumptions prove incorrect, the Corporation's actual results could differ materially from those discussed. Factors that could cause or contribute to such differences include credit risks (unfavorable developments concerning credit quality; declines or other changes in the businesses or industries of the Corporation's customers, in particular the energy industry; and changes in customer behavior); market risks (changes in monetary and fiscal policies; fluctuations in interest rates and their impact on deposit pricing; and transitions away from LIBOR towards new interest rate benchmarks); liquidity risks (the Corporation's ability to maintain adequate sources of funding and liquidity; reductions in the Corporation's credit rating; and the interdependence of financial service companies); technology risks (cybersecurity risks and heightened legislative and regulatory focus on cybersecurity and data privacy); operational risks (operational, systems or infrastructure failures; reliance on other companies to provide certain key components of business infrastructure; the impact of legal and regulatory proceedings or determinations; losses due to fraud; and controls and procedures failures); compliance risks (changes in regulation or oversight; the effects of stringent capital requirements; and the impacts of future legislative, administrative or judicial changes to tax regulations); financial reporting risks (changes in accounting standards and the critical nature of the Corporation's accounting policies); strategic risks (damage to the Corporation's reputation; the Corporation's ability to utilize technology to efficiently and effectively develop, market and deliver new products and services; competitive product and pricing pressures among financial institutions within the Corporation's markets; the implementation of the Corporation's strategies and business initiatives; management's ability to maintain and expand customer relationships; management's ability to retain key officers and employees; and any future strategic acquisitions or divestitures); and other general risks (changes in general economic, political or industry conditions; the effectiveness of methods of reducing risk exposures; the effects of catastrophic events; impacts from the COVID-19 global pandemic; and the volatility of the Corporation's stock price). The Corporation cautions that the foregoing list of factors is not all-inclusive. For discussion of factors that may cause actual results to differ from expectations, please refer to our filings with the Securities and Exchange Commission. In particular, please refer to “Item 1A. Risk Factors” beginning on page 12 of the Corporation's Annual Report on Form 10-K for the year ended December 31, 2019 and "Item 1A. Risk Factors" beginning on page 65 of the Corporation's Quarterly Report on Form 10-Q for the quarter ended June 30, 2020. Forward-looking statements speak only as of the date they are made. The Corporation does not undertake to update forward-looking statements to reflect facts, circumstances, assumptions or events that occur after the date the forward-looking statements are made. For any forward-looking statements made in this report or in any documents, the Corporation claims the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995.
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SERVING CUSTOMERS, COLLEAGUES AND COMMUNITIES DURING THE COVID-19 PANDEMIC
        The COVID-19 outbreak has affected countless people world-wide and continues to negatively impact the global economy. While the full effects of the pandemic remain unknown, the Corporation is committed to supporting its customers, colleagues and communities during this difficult time. The Corporation offers hardship relief assistance to customers, including the consideration of various loan payment deferral and fee waiver options, and encourages customers to reach out for assistance to support their individual circumstances. As a Small Business Administration preferred lender, the Corporation was well positioned to assist business customers in accessing funds available through the Paycheck Protection Program (PPP) and other lending initiatives. Through June 30, 2020, the Corporation funded $3.9 billion of PPP loans, granted payment deferrals for $4.5 billion in loans (primarily commercial), including $57 million of loans on their second deferral, and waived overdraft, late payment, ATM and other customer fees. The Corporation has continued to serve customers at banking center drive-throughs and offer lobby hours by appointment while adhering to social distancing standards.
        In response to the pandemic, the Corporation activated its disaster recovery protocol, successfully avoiding significant disruptions to internal and external functions. The Corporation has supported colleagues through additional compensation and benefits to those most impacted by the pandemic, as well as awarded bonuses for extraordinary service in support of the PPP process.
        The Corporation and the Comerica Charitable Foundation have pledged $8 million to support business needs and community service organizations that care for and provide critical services to our communities.

OUTLOOK FOR THIRD QUARTER 2020 COMPARED TO SECOND QUARTER 2020
Based on current management expectations for recessionary conditions:
Decline in average loans reflects lending to small businesses with a full quarter benefit of PPP, more than offset by decreases in Mortgage Banker Finance, Large Corporate and National Dealer Services.
Average deposits relatively stable as customers utilize economic stimulus proceeds.
Decrease in net interest income resulting from a $10 million to $15 million net impact of lower interest rates (assumes one-month London Interbank Offered Rate (LIBOR) of 17 basis points and interest-bearing deposit cost of 20 basis points). Lower loan balances expected to be offset by lower wholesale debt and one additional day.
Provision for credit losses reflective of economic environment, including the effects resulting from the duration and severity of the COVID-19 pandemic.
Decline in noninterest income due to reduced card fees related to transaction activity and lower market-based investment banking and derivative fees, partially offset by higher service charges on deposit accounts due to increased activity. Higher securities trading income and deferred compensation levels in second quarter 2020 not expected to repeat.
Increase in noninterest expenses, reflecting technology and occupancy projects as well as higher charitable contributions and seasonal impacts of marketing and staff insurance expenses, mostly offset by continued expense discipline and reduction in COVID-19-related costs.
Capital reflects declaration of first preferred stock dividend and a focus on supporting customers' financing needs, as well as maintaining an attractive common dividend.

RESULTS OF OPERATIONS
Net income for the three months ended June 30, 2020 was $113 million, a decrease of $185 million compared to $298 million for the three months ended June 30, 2019. The decrease in net income reflected the net impact of lower short-term rates. Results for the three months ended June 30, 2020 were also impacted by an increase in the provision for credit losses, calculated using the current expected credit loss (CECL) model, which continues to reflect the forecasted impact of the COVID-19 pandemic and continued pressures on the Energy portfolio. Net income for the six months ended June 30, 2020 was $48 million, a decrease of $589 million compared to $637 million for the six months ended June 30, 2019. The decrease in net income was driven by an increase in the provision for credit losses as well as the net impact of lower short-term rates.
Net income per diluted common share was $0.80 and $1.94 for the three months ended June 30, 2020 and 2019, respectively, a decrease of $1.14 per diluted common share. Net income per diluted common share was $0.34 and $4.06 for the six months ended June 30, 2020 and 2019, respectively, a decrease of $3.72 per diluted common share.



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Three Months Ended June 30, 2020 compared to Three Months Ended June 30, 2019
Analysis of Net Interest Income
Three Months Ended
June 30, 2020 June 30, 2019
(dollar amounts in millions) Average
Balance
Interest Average
Rate
Average
Balance
Interest Average
Rate
Commercial loans (a) $ 33,944    $ 271    3.22  % $ 32,607    $ 405    4.99  %
Real estate construction loans 3,887    35    3.60    3,319    47    5.74   
Commercial mortgage loans 9,800    76    3.12    9,060    116    5.12   
Lease financing 592      3.34    546      2.32   
International loans 1,137    10    3.51    1,025    14    5.30   
Residential mortgage loans 1,895    17    3.49    1,943    19    3.92   
Consumer loans 2,243    20    3.62    2,463    31    5.02   
Total loans (b) 53,498    434    3.26    50,963    635    5.00   
Mortgage-backed securities 9,785    57    2.39    9,326    58    2.45   
Other investment securities 2,857    17    2.47    2,765    17    2.47   
Total investment securities 12,642    74    2.41    12,091    75    2.45   
Interest-bearing deposits with banks 9,709      0.11    2,694    16    2.37   
Other short-term investments 140      0.48    142      1.34   
Total earning assets 75,989    511    2.71    65,890    727    4.42   
Cash and due from banks 848    900   
Allowance for loan losses (932)   (660)  
Accrued income and other assets 5,739    5,122   
Total assets $ 81,644    $ 71,252   
Money market and interest-bearing checking deposits $ 26,320    12    0.18    $ 22,913    53    0.93   
Savings deposits 2,394    —    0.02    2,169    —    0.03   
Customer certificates of deposit 2,801      1.21    2,346      1.10   
Other time deposits —    —    —    1,156      2.46   
Foreign office time deposits 81    —    0.34    13    —    1.54   
Total interest-bearing deposits 31,596    20    0.26    28,597    67    0.94   
Short-term borrowings 882      0.25    927      2.46   
Medium- and long-term debt 7,206    19    1.09    6,712    51    3.05   
Total interest-bearing sources 39,684    40    0.41    36,236    124    1.37   
Noninterest-bearing deposits 32,686    26,398   
Accrued expenses and other liabilities 1,682    1,333   
Total shareholders’ equity 7,592    7,285   
Total liabilities and shareholders’ equity $ 81,644    $ 71,252   
Net interest income/rate spread $ 471    2.30    $ 603    3.05   
Impact of net noninterest-bearing sources of funds   0.20    0.61   
Net interest margin (as a percentage of average earning assets)
    2.50  %     3.66  %
(a)Includes hedge income (losses) of $19 million and $(1) million for the three months ended June 30, 2020 and June 30, 2019, respectively.
(b)Nonaccrual loans are included in average balances reported and in the calculation of average rates.

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Rate/Volume Analysis
Three Months Ended
June 30, 2020/June 30, 2019
(in millions) Decrease Due to Rate Increase Due to Volume (a) Net Decrease
Interest Income:
Loans $ (221)   $ 20    $ (201)  
Investment securities (2)     (1)  
Interest-bearing deposits with banks (16)     (14)  
Total interest income (239)   23    (216)  
Interest Expense:
Interest-bearing deposits (49)     (47)  
Short-term borrowings (5)   —    (5)  
Medium- and long-term debt (34)     (32)  
Total interest expense (88)     (84)  
Net interest income $ (151)   $ 19    $ (132)  
(a)Rate/volume variances are allocated to variances due to volume.
Net interest income was $471 million for the three months ended June 30, 2020, a decrease of $132 million compared to $603 million for the three months ended June 30, 2019. The decrease in net interest income primarily reflected the impact of lower short-term rates partially offset by the impact of a $2.5 billion increase in average loans, primarily PPP loans. The decline in rates led to the 116 basis point decrease in the net interest margin, to 2.50 percent for the three months ended June 30, 2020 from 3.66 percent for the three months ended June 30, 2019.
Provision for Credit Losses
        The provision for credit losses, which includes the provision for loan losses and the provision for credit losses on lending-related commitments, was $138 million for the three months ended June 30, 2020, compared to $44 million for the three months ended June 30, 2019. The provision for credit losses for the three months ended June 30, 2020, which was calculated under the CECL model, increased primarily due to the forecasted impact of the COVID-19 pandemic, including the economic impacts of social distancing, and sustained pressures on the Energy portfolio. Net loan charge-offs increased $17 million to $50 million, or 0.37 percent of average total loans for the three months ended June 30, 2020, compared to $33 million, or 0.26 percent of average total loans for the three months ended June 30, 2019. The increase was driven by a $20 million increase in net charge-offs of Energy loans.
        An analysis of the allowance for credit losses and a summary of nonperforming assets are presented under the "Credit Risk" subheading in the "Risk Management" section of this financial review. Further information about the adoption of CECL, which resulted in a $17 million decrease to the allowance for credit losses as of January 1, 2020, is presented in Note 1 to the consolidated financial statements.









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Noninterest Income
Three Months Ended June 30,
(in millions) 2020 2019
Card fees $ 68    $ 65   
Fiduciary income 52    52   
Service charges on deposit accounts 42    51   
Commercial lending fees 17    21   
Foreign exchange income   11   
Bank-owned life insurance   11   
Letter of credit fees   10   
Brokerage fees    
Net securities gains   —   
Other noninterest income (a) 35    22   
   Total noninterest income $ 247    $ 250   
(a)The table below provides further details on certain categories included in other noninterest income.
        Noninterest income decreased $3 million to $247 million for the three months ended June 30, 2020, including a reduction in service charges on deposit accounts reflecting the impacts of social distancing, syndication agent fees (a component of commercial lending fees) and smaller decreases in other categories, partially offset by higher securities trading income and customer derivative income (both included in other noninterest income and detailed below), as well as an increase in card fees.
        The following table presents certain categories included in other noninterest income on the Consolidated Statements of Comprehensive Income.
Three Months Ended June 30,
(in millions) 2020 2019
Customer derivative income $ 10    $  
Securities trading income 10     
Investment banking fees    
Deferred compensation asset returns (a)   —   
Income from principal investing and warrants —     
All other noninterest income   11   
Other noninterest income $ 35    $ 22   
(a) Compensation deferred by the Corporation's officers and directors is invested based on investment selections of the officers and directors. Income earned on these assets is reported in other noninterest income and the offsetting change in deferred compensation plan liabilities is reported in salaries and benefits expense.
Noninterest Expenses
Three Months Ended June 30,
(in millions) 2020 2019
Salaries and benefits expense $ 249    $ 245   
Outside processing fee expense (a) 62    65   
Occupancy expense 37    37   
Software expense (a) 39    28   
Equipment expense 12    12   
Advertising expense    
FDIC insurance expense    
Other noninterest expenses 25    22   
Total noninterest expenses $ 440    $ 424   
(a) Amounts reported for the three months ended June 30, 2020 included an $8 million classification adjustment for costs incurred in cloud computing arrangements, reducing outside processing fee expense and increasing software expense due to the prospective adoption of ASU No. 2018-15, effective January 1, 2020.
Noninterest expenses increased $16 million to $440 million. Excluding the $8 million classification adjustment for the prospective adoption of ASU No. 2018-15, the increase in noninterest expenses primarily reflected higher outside processing fee expense, salaries and benefits expense and software expense. The increase in salaries and benefits expense was driven by annual merit increases and the payment of COVID-19-related stipends, partially offset by lower technology-related labor costs.


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Six Months Ended June 30, 2020 compared to Six Months Ended June 30, 2019
Analysis of Net Interest Income
Six Months Ended
June 30, 2020 June 30, 2019
(dollar amounts in millions) Average
Balance
Interest Average
Rate
Average
Balance
Interest Average
Rate
Commercial loans (a) $ 32,321    $ 585    3.64  % $ 32,037    $ 799    5.03  %
Real estate construction loans 3,725    78    4.19    3,279    93    5.74   
Commercial mortgage loans 9,719    177    3.66    9,028    230    5.13   
Lease financing 587    10    3.49    533      3.08   
International loans 1,071    21    3.96    1,019    27    5.33   
Residential mortgage loans 1,875    34    3.58    1,954    38    3.89   
Consumer loans 2,253    46    4.12    2,473    61    5.00   
Total loans (b) 51,551    951    3.71    50,323    1,256    5.03   
Mortgage-backed securities 9,649    114    2.40    9,275    114    2.43   
Other investment securities 2,837    34    2.47    2,748    33    2.40   
Total investment securities 12,486    148    2.42    12,023    147    2.42   
Interest-bearing deposits with banks 7,558    20    0.55    2,773    33    2.38   
Other short-term investments 147      0.80    138      1.34   
Total earning assets 71,742    1,120    3.15    65,257    1,437    4.43   
Cash and due from banks 843    912   
Allowance for loan losses (812)   (666)  
Accrued income and other assets 5,681    5,012   
Total assets $ 77,454    $ 70,515   
Money market and interest-bearing checking deposits $ 25,486    57    0.45    $ 22,763    100    0.88   
Savings deposits 2,298    —    0.04    2,169    —    0.04   
Customer certificates of deposit 2,900    19    1.32    2,258    11    0.96   
Other time deposits 35    —    2.00    661      2.45   
Foreign office time deposits 82    —    0.82    13    —    1.54   
Total interest-bearing deposits 30,801    76    0.50    27,864    119    0.86   
Short-term borrowings 519      0.34    576      2.45   
Medium- and long-term debt 7,266    59    1.63    6,703    102    3.07   
Total interest-bearing sources 38,586    136    0.71    35,143    228    1.30   
Noninterest-bearing deposits 29,723    26,634   
Accrued expenses and other liabilities 1,630    1,367   
Total shareholders’ equity 7,515    7,371   
Total liabilities and shareholders’ equity $ 77,454    $ 70,515   
Net interest income/rate spread $ 984    2.44    $ 1,209    3.13   
Impact of net noninterest-bearing sources of funds   0.33    0.60   
Net interest margin (as a percentage of average earning assets)
    2.77  %     3.73  %
(a) Includes hedge income (losses) of $22 million and $(1) million for the six months ended June 30, 2020 and 2019, respectively.
(b)Nonaccrual loans are included in average balances reported and in the calculation of average rates.


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Rate/Volume Analysis
Six Months Ended
June 30, 2020/June 30, 2019
(in millions) Decrease Due to Rate Increase Due to Volume (a) Net (Decrease) Increase
Interest Income:
Loans $ (329)   $ 24    $ (305)  
Investment securities —       
Interest-bearing deposits with banks (26)   13    (13)  
Total interest income (355)   38    (317)  
Interest Expense:
Interest-bearing deposits (47)     (43)  
Short-term borrowings (6)   —    (6)  
Medium- and long-term debt (46)     (43)  
Total interest expense (99)     (92)  
Net interest income $ (256)   $ 31    $ (225)  
(a)Rate/volume variances are allocated to variances due to volume.
Net interest income was $984 million for the six months ended June 30, 2020, a decrease of $225 million compared to $1.2 billion for the six months ended June 30, 2019. Net interest margin was 2.77 percent for the six months ended June 30, 2020, a decrease of 96 basis points compared to 3.73 percent for the comparable period in 2019. The decrease in net interest income and margin reflected the impact of lower short-term rates partially offset by the impact of a $1.2 billion increase in average loans, primarily from PPP loans.
For further discussion of the effects of market rates on net interest income, refer to the "Market and Liquidity Risk" section of this financial review.
Provision for Credit Losses
The provision for credit losses, which includes both the provision for loan losses and the provision for credit losses on lending-related commitments, was $549 million for the six months ended June 30, 2020, compared to $31 million for the six months ended June 30, 2019. The provision for credit losses for the six months ended June 30, 2020, which was calculated under the CECL model, increased primarily due to the forecasted impact of the COVID-19 pandemic, including the economic impacts of social distancing, and sustained pressures on the Energy portfolio. Net loan charge-offs increased $90 million to $134 million for the six months ended June 30, 2020, compared to $44 million for the six months ended June 30, 2019, driven by a $79 million increase in net charge-offs of Energy loans.
An analysis of the allowance for credit losses and nonperforming assets is presented under the "Credit Risk" subheading in the "Risk Management" section of this financial review.
Noninterest Income
Six Months Ended June 30,
(in millions) 2020 2019
Card fees $ 127    $ 128   
Fiduciary income 106    101   
Service charges on deposit accounts 91    102   
Commercial lending fees 34    43   
Foreign exchange income 20    22   
Bank-owned life insurance 21    20   
Letter of credit fees 18    19   
Brokerage fees 12    14   
Net securities losses —    (8)  
Other noninterest income (a) 55    47   
Total noninterest income $ 484    $ 488   
(a)The table below provides further details on certain categories included in other noninterest income.
        Noninterest income decreased $4 million to $484 million, including a reduction in service charges on deposit accounts and syndication agent fees (included in commercial lending fees), as well as smaller decreases in other categories. These declines were partially offset by higher fiduciary income as well as increases included in other noninterest income and detailed

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below, primarily in securities trading income, customer derivative income, investment banking fees, and the impact of losses related to securities repositioning during the six-month period ended June 30, 2019.
        The following table presents certain categories included in other noninterest income on the Consolidated Statements of Comprehensive Income.
Six Months Ended June 30,
(in millions) 2020 2019
Customer derivative income (a) $ 19    $ 13   
Securities trading income 12     
Investment banking fees    
Income from principal investing and warrants —     
Deferred compensation asset returns (b) (1)    
All other noninterest income 18    22   
Other noninterest income $ 55    $ 47   
(a)Customer derivative income included unfavorable valuation adjustments of $16 million and $5 million for the six months ended June 30, 2020 and 2019, respectively.
(b) Compensation deferred by the Corporation's officers and directors is invested based on investment selections of the officers and directors. Income earned on these assets is reported in other noninterest income and the offsetting change in deferred compensation plan liabilities is reported in salaries and benefits expense.
Noninterest Expenses
Six Months Ended June 30,
(in millions) 2020 2019
Salaries and benefits expense $ 491    $ 510   
Outside processing fee expense (a) 119    128   
Occupancy expense 74    74   
Software expense (a) 76    57   
Equipment expense 24    24   
Advertising expense 15    14   
FDIC insurance expense 16    11   
Other noninterest expenses 50    39   
Total noninterest expenses $ 865    $ 857   
(a) Amounts reported for the six months ended June 30, 2020 included a $15 million classification adjustment for costs incurred in cloud computing arrangements, reducing outside processing fee expense and increasing software expense due to the prospective adoption of ASU No. 2018-15, effective January 1, 2020. 
Noninterest expenses increased $8 million to $865 million. Excluding the $15 million classification adjustment for the prospective adoption of ASU No. 2018-15, the increase in noninterest expenses primarily reflected higher operational losses (included in other noninterest expenses), outside processing fee expense and FDIC insurance expense, partially offset by a decrease in salaries and benefits expense. The decline in salaries and benefits expense included lower incentive and annual stock-based compensation, as well as a reduction in technology-related contingent labor costs, partially offset by annual merit increases and the payment of COVID-19-related stipends.

STRATEGIC LINES OF BUSINESS AND MARKETS
The Corporation has strategically aligned its operations into three major business segments: the Commercial Bank, the Retail Bank and Wealth Management. These business segments are differentiated based on the type of customer and the related products and services provided. In addition to the three major business segments, the Finance Division is also reported as a segment. The Other category includes items not directly associated with these business segments or the Finance segment. The performance of the business segments is not comparable with the Corporation's consolidated results and is not necessarily comparable with similar information for any other financial institution. Additionally, because of the interrelationships of the various segments, the information presented is not indicative of how the segments would perform if they operated as independent entities. Market segment results are also provided for the Corporation's three primary geographic markets: Michigan, California and Texas. In addition to the three primary geographic markets, Other Markets is also reported as a market segment. Note 13 to the consolidated financial statements describes the business activities of each business segment and presents financial results of the business and market segments for the three- and six-month periods ended June 30, 2020 and 2019.
The Corporation's management accounting system assigns balance sheet and income statement items to each segment using certain methodologies, which are regularly reviewed and refined. These methodologies may be modified as the management accounting system is enhanced and changes occur in the organizational structure and/or product lines. Note 22 to

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the consolidated financial statements in the Corporation's 2019 Annual Report describes the Corporation's segment reporting methodology.
Net interest income for each segment reflects the interest income generated by earning assets less interest expense on interest-bearing liabilities plus the net impact from associated internal funds transfer pricing (FTP). The FTP methodology allocates credits to each business segment for deposits and other funds provided as well as charges for loans and other assets being funded. FTP crediting rates for deposits and other funds provided reflect the long-term value of deposits and other funding sources based on their implied maturities. FTP charge rates for funding loans and other assets reflect a matched cost of funds based on the pricing and duration characteristics of the assets. Therefore, net interest income for each segment primarily reflects the volume and associated FTP impacts of loan and deposit levels. As overall interest rates decreased, business segments, particularly those focused on generating deposits, were impacted by lower FTP crediting rates on deposits in the six months ended June 30, 2020 compared to the same period in the prior year. Similarly, FTP charges for funding loans decreased in the six months ended June 30, 2020, compared to the same period in the prior year.
Business Segments
The following sections present a summary of the performance of each of the Corporation's business segments for the six months ended June 30, 2020 compared to the same period in the prior year.
Commercial Bank
Six Months Ended Percent
Change
(dollar amounts in millions) June 30, 2020 June 30, 2019 Change
Earnings summary:
Net interest income $ 782    $ 832    $ (50)   (6) %
Provision for credit losses 513    46    467    n/m
Noninterest income 271    272    (1)   (1)  
Noninterest expenses 401    393       
Provision for income taxes 27    153    (126)   (82)  
Net income $ 112    $ 512    $ (400)   (78) %
Net credit-related charge-offs $ 131    $ 47    $ 84    n/m
Selected average balances:
Loans $ 44,253    $ 43,241    $ 1,012    %
Deposits 33,274    28,356    4,918    17   
n/m - not meaningful
The $1.0 billion increase in average loans reflected growth in Commercial Real Estate, Mortgage Banker Finance, Corporate Banking and Environmental Services, partially offset by decreases in National Dealer Services and Energy. Average PPP loans totaled $1.0 billion. Average deposits increased $4.9 billion, reflecting increases in all deposit categories due to increased liquidity in the banking system from stimulus programs. The Commercial Bank's net income decreased $400 million to $112 million. Net interest income decreased $50 million to $782 million, due to a $293 million decrease in loan interest income, partially offset by decreases of $220 million in allocated net FTP charges and $23 million in deposit costs. The provision for credit losses increased $467 million to $513 million primarily due to the forecasted impact of the COVID-19 pandemic, including the economic impacts of social distancing and sustained pressures on the Energy portfolio, while net credit-related charge-offs increased $84 million to $131 million, primarily due to Energy net charge-offs of $112 million. Noninterest income was stable, while noninterest expenses increased $8 million, primarily reflecting a $4 million increase in transfer charges as well as higher operational losses, legal fees and outside processing fee expense, partially offset by lower incentive and stock-based compensation.

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Retail Bank
Six Months Ended Percent
Change
(dollar amounts in millions) June 30, 2020 June 30, 2019 Change
Earnings summary:
Net interest income $ 245    $ 292    $ (47)   (16) %
Provision for credit losses   (3)   11    n/m
Noninterest income 52    64    (12)   (17)  
Noninterest expenses 304    292    12     
(Benefit) provision for income taxes (4)   16    (20)   n/m
Net (loss) income $ (11)   $ 51    $ (62)   n/m
Net credit-related charge-offs $   $ —    $   n/m
Selected average balances:
Loans $ 2,277    $ 2,105    $ 172    %
Deposits 21,921    20,560    1,361     
n/m - not meaningful
Average loans increased $172 million due to loans to small businesses, including PPP. Average deposits increased $1.4 billion, reflecting increases in all deposit categories. The Retail Bank's net income decreased $62 million to a net loss of $11 million. Net interest income decreased $47 million to $245 million, due to decreases of $40 million in allocated net FTP credits and $8 million in loan income, partially offset by a $1 million decrease in deposit costs. The provision for credit losses increased $11 million from a benefit of $3 million. Noninterest income decreased $12 million, including a $7 million decrease in service charges on deposit accounts. Noninterest expenses increased $12 million, which included a $7 million increase in operational losses.
Wealth Management
Six Months Ended Percent
Change
(dollar amounts in millions) June 30, 2020 June 30, 2019 Change
Earnings summary:
Net interest income $ 81    $ 93    $ (12)   (13) %
Provision for credit losses 28    (10)   38    n/m
Noninterest income 136    132       
Noninterest expenses 145    139       
Provision for income taxes   23    (14)   (59)  
Net income $ 35    $ 73    $ (38)   (53) %
Net credit-related charge-offs (recoveries) $   $ (3)   $   n/m
Selected average balances:
Loans $ 5,007    $ 4,983    $ 24    —  %
Deposits 4,120    3,770    350     
n/m - not meaningful
        Average loans remained relatively stable at $5.0 billion. Average deposits increased $350 million, reflecting increases in all deposit categories. Wealth Management's net income decreased $38 million to $35 million. Net interest income decreased $12 million to $81 million, due to a $27 million decrease in loan income, partially offset by decreases of $12 million in allocated net FTP charges and $3 million in deposit costs. The provision for credit losses increased $38 million from a benefit of $10 million. Noninterest income increased $4 million, primarily due to increased fiduciary income, while noninterest expenses increased $6 million, primarily reflecting increases of $5 million in salaries and benefits expense and $3 million in software expense.
Market Segments
The following sections present a summary of the performance of each of the Corporation's market segments for the six months ended June 30, 2020 compared to the same period in the prior year.

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Michigan
Six Months Ended Percent
Change
(dollar amounts in millions) June 30, 2020 June 30, 2019 Change
Earnings summary:
Net interest income $ 322    $ 373    $ (51)   (13) %
Provision for credit losses 64    (5)   69    n/m
Noninterest income 136    144    (8)   (6)  
Noninterest expenses 279    273       
Provision for income taxes 23    56    (33)   (59)  
Net income $ 92    $ 193    $ (101)   (52) %
Net credit-related charge-offs $   $   $ (1)   (26) %
Selected average balances:
Loans $ 12,601    $ 12,631    $ (30)   —  %
Deposits 22,104    19,854    2,250    11   
n/m - not meaningful
Average loans were relatively stable at $12.6 billion and included loans to middle market and small businesses, including PPP loans. Average deposits increased $2.3 billion, reflecting increases in all deposit categories due to increased liquidity in the banking system from stimulus programs. The Michigan market's net income decreased $101 million to $92 million. Net interest income decreased $51 million to $322 million, due to an $84 million decrease in loan income, partially offset by a $27 million increase in allocated net FTP credits and a $6 million decrease in deposit costs. The provision for credit losses increased $69 million from a benefit of $5 million, primarily reflecting increases in general Middle Market and Business Banking. Noninterest income decreased $8 million, including a $5 million decrease in service charges on deposit accounts and a $3 million decline in card fees. Noninterest expenses increased $6 million, including a $3 million increase in operational losses.
California
Six Months Ended Percent
Change
(dollar amounts in millions) June 30, 2020 June 30, 2019 Change
Earnings summary:
Net interest income $ 358    $ 411    $ (53)   (13) %
Provision for credit losses 102    (5)   107    n/m
Noninterest income 72    80    (8)   (10)  
Noninterest expenses 201    199       
Provision for income taxes 30    76    (46)   (60)  
Net income $ 97    $ 221    $ (124)   (56) %
Net credit-related charge-offs $ 15    $   $ 11    n/m
Selected average balances:
Loans $ 18,346    $ 18,730    $ (384)   (2) %
Deposits 17,965    16,276    1,689    10   
n/m - not meaningful
Average loans decreased $384 million, primarily reflecting a decrease in National Dealer Services. Average deposits increased $1.7 billion, reflecting increases in all deposit categories. The California market's net income decreased $124 million to $97 million. Net interest income decreased $53 million to $358 million, due to a $138 million decrease in loan income, partially offset by decreases of $72 million in allocated net FTP charges and $13 million in deposit costs. The provision for credit losses increased $107 million from a benefit of $5 million, primarily reflecting increases in general Middle Market, Commercial Real Estate and Private Banking. Net credit-related charge-offs increased $11 million to $15 million, primarily reflecting increases in Technology and Life Sciences, Private Banking and general Middle Market. Noninterest income decreased $8 million, including declines in card fees and commercial lending fees, while noninterest expenses were relatively stable.

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Texas
Six Months Ended Percent
Change
(dollar amounts in millions) June 30, 2020 June 30, 2019 Change
Earnings summary:
Net interest income $ 231    $ 248    $ (17)   (7) %
Provision for credit losses 321    38    283    n/m
Noninterest income 60    66    (6)   (8)  
Noninterest expenses 175    169       
(Benefit) provision for income taxes (46)   25    (71)   n/m
Net (loss) income $ (159)   $ 82    $ (241)   n/m
Net credit-related charge-offs $ 116    $ 39    $ 77    n/m
Selected average balances:
Loans $ 10,870    $ 10,474    $ 396    %
Deposits 9,705    8,682    1,023    12   
n/m - not meaningful
Average loans increased $396 million, primarily reflecting increases in Commercial Real Estate and Corporate Banking, partially offset by decreases in Energy and National Dealer Services. Average deposits increased $1.0 billion, reflecting increases in all deposit categories. The Texas market's net income decreased $241 million to a net loss of $159 million. Net interest income decreased $17 million to $231 million, due to a $67 million decrease in loan income, partially offset by decreases of $48 million in allocated net FTP charges and $2 million in deposit costs. The provision for credit losses increased $283 million, primarily reflecting an increase in Energy, while net credit-related charge-offs included $112 million in Energy net charge-offs. Noninterest income decreased $6 million, primarily reflecting lower service charges on deposit accounts and commercial lending fees. Noninterest expenses increased $6 million, primarily due to increases of $3 million in transfer charges and $2 million in operational losses.
Other Markets
Six Months Ended Percent
Change
(dollar amounts in millions) June 30, 2020 June 30, 2019 Change
Earnings summary:
Net interest income $ 197    $ 185    $ 12    %
Provision for credit losses 62      57    n/m
Noninterest income 191    178    13     
Noninterest expenses 195    183    12     
Provision for income taxes 25    35    (10)   (28)  
Net income $ 106    $ 140    $ (34)   (24) %
Net credit-related recoveries $ —    $ (3)   $   n/m
Selected average balances:
Loans $ 9,735    $ 8,494    $ 1,241    15  %
Deposits 9,541    7,874    1,667    21   
n/m - not meaningful
Average loans increased $1.2 billion, primarily reflecting increases in general Middle Market and Mortgage Banker Finance, partially offset by a decrease in National Dealer Services. Average deposits increased $1.7 billion, including increases in noninterest-bearing and relationship-based interest-bearing deposits. Other Markets' net income decreased $34 million to $106 million. Net interest income increased $12 million to $197 million due to decreases of $46 million in allocated net FTP charges and $6 million in deposit costs, partially offset by a $40 million decrease in loan income. The provision for credit losses increased $57 million to $62 million, primarily reflecting increases in Corporate Banking and Environmental Services. Noninterest income increased $13 million, including $5 million increases in securities trading income and card fees as well as higher fiduciary income. Noninterest expenses increased $12 million, primarily reflecting increases of $6 million in operational losses and $4 million in software expense.

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Finance & Other
Six Months Ended Percent Change
(dollar amounts in millions) June 30, 2020 June 30, 2019 Change
Earnings summary:
Net interest income $ (124)   $ (8)   $ (116)   n/m
Provision for credit losses —    (2)     n/m
Noninterest income 25    20      25   
Noninterest expenses 15    33    (18)   (54)  
Benefit for income taxes (26)   (20)   (6)   31   
Net (loss) income $ (88)   $   $ (89)   n/m
Selected average balances:
Loans $ (1)   $ (6)   $   (73) %
Deposits 1,209    1,812    (603)   (33)  
n/m - not meaningful
Average deposits decreased $603 million, primarily reflecting a decrease in other time deposits. Net income for the Finance & Other category decreased $89 million to a net loss of $88 million, from net income of $1 million. Net interest income decreased $116 million, primarily reflecting a decrease in net FTP revenue as a result of lower rates charged to the business segments under the Corporation's internal FTP methodology and higher levels of wholesale funding. Noninterest expenses decreased $18 million, driven by lower salaries and benefits expense.
The following table lists the Corporation's banking centers by geographic market segment.
June 30,
2020 2019
Michigan 190    192   
Texas 123    123   
California 96    96   
Other Markets 25    25   
Total 434    436   

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FINANCIAL CONDITION
Second Quarter 2020 Compared to Fourth Quarter 2019
Period-End Balances
Total assets increased $11.0 billion to $84.4 billion, primarily due to increases of $7.4 billion in interest-bearing deposits with banks and $3.1 billion in loans. The growth in interest-bearing deposits with banks (primarily deposits with the Federal Reserve Bank) resulted from increased liquidity in the banking system from stimulus programs. The increase in loans reflected growth in Mortgage Banker Finance due to seasonality and elevated refinancing activity as well as increases in Business Banking, Commercial Real Estate, general Middle Market, Retail Banking (small businesses) and Corporate Banking, partially offset by decreases in National Dealer Services and Equity Fund Services. At June 30, 2020, PPP loans totaled $3.8 billion, driving the growth in general Middle Market, Business Banking and Retail Banking (small businesses).
Total liabilities increased $10.5 billion to $76.6 billion, reflecting increases of $8.2 billion and $2.2 billion in noninterest-bearing and interest-bearing deposits, respectively, as customers conserved liquidity as described in the asset discussion above. Total shareholders' equity increased $475 million, including net proceeds of $395 million from the issuance of preferred stock in May 2020.
Average Balances
Total assets increased $8.5 billion to $81.6 billion, primarily due to increases of $4.9 billion in interest-bearing deposits with banks and $3.0 billion in loans. The following table provides information about the change in the Corporation's average loan portfolio by loan type and geographic market.
Three Months Ended Percent
Change
(average balances; dollar amounts in millions) June 30, 2020 December 31, 2019 Change
By Loan Type:
Commercial loans (a) $ 33,944    $ 31,808    $ 2,136    %
Real estate construction loans 3,887    3,398    489    14   
Commercial mortgage loans 9,800    9,356    444     
Lease financing 592    586       
International loans 1,137    1,030    107    10   
Residential mortgage loans 1,895    1,887      —   
Consumer loans 2,243    2,440    (197)   (8)  
Total loans $ 53,498    $ 50,505    $ 2,993    %
Loans By Geographic Market:
Michigan $ 13,014    $ 12,399    $ 615    %
California 18,663    17,943    720     
Texas 11,184    10,708    476     
Other Markets and Finance 10,637    9,455    1,182    13   
Total loans $ 53,498    $ 50,505    $ 2,993    %
(a)Includes PPP loans of $2.6 billion for the three months ended June 30, 2020.
The increase in loans reflected growth in Corporate Banking, Commercial Real Estate, general Middle Market, Mortgage Banker Finance (due to seasonality and elevated refinancing activity) and Business Banking, partially offset by a decrease in National Dealer Services and Energy. The average balance of PPP loans for the three months ended June 30, 2020 was $2.6 billion, driving the growth in general Middle Market and Business Banking.
Total liabilities increased $8.1 billion to $74.1 billion, reflecting increases of $5.7 billion and $1.4 billion in noninterest-bearing and interest-bearing deposits, respectively. Total shareholders' equity increased $355 million to $7.6 billion, resulting primarily from the same reasons as described in the period-end discussion above.



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Capital
The following table presents a summary of changes in total shareholders' equity for the six months ended June 30, 2020.
(in millions)
  
Balance at January 1, 2020 $ 7,327   
Cumulative effect of change in accounting principle (a)
13   
Net income 48   
Cash dividends declared on common stock (192)  
Purchase of common stock (194)  
Issuance of preferred stock 395   
Other comprehensive income:
Investment securities $ 218   
Cash flow hedges 162   
Defined benefit and other postretirement plans 13   
Total other comprehensive income 393   
Share-based compensation 12   
Balance at June 30, 2020   $ 7,802   
(a)Effective January 1, 2020, the Corporation adopted the provisions of ASU No. 2016-13, "Financial Instruments - Credit Losses" (Topic 326). For further information, refer to Note 1 to the consolidated financial statements.
The following table summarizes the Corporation's repurchase activity during the six months ended June 30, 2020.
(shares in thousands) Total Number of Shares Purchased as 
Part of Publicly Announced Repurchase Plans or Programs
Remaining Share
Repurchase
Authorization (a)
Total Number
of Shares
Purchased (b)
Average Price
Paid Per 
Share
Total first quarter 2020 3,227    4,870    3,322    $ 58.70   
April 2020 —    4,870      28.63   
May 2020 —    4,870    —    —   
June 2020 —    4,870    —    —   
Total second quarter 2020 —    4,870      28.62   
Total 2020 year-to-date 3,227    4,870    3,328    58.65   
(a)Maximum number of shares that may yet be purchased under the publicly announced plans or programs.
(b)Includes approximately 101,000 shares purchased pursuant to deferred compensation plans and shares purchased from employees to pay for taxes related to restricted stock vesting under the terms of an employee share-based compensation plan during the six months ended June 30, 2020. These transactions are not considered part of the Corporation's repurchase program.
In March 2020, the Corporation suspended its share repurchase program, with a focus on deploying capital to meet customers' growing financing requirements, resulting in no share repurchases under the program during second quarter 2020. The Corporation will continue to assess the resumption of repurchases subject to various factors including financial performance, capital needs and market conditions. Since its inception in 2010, a total of 87.2 million shares have been authorized for repurchase. There is no expiration date for the share repurchase program.
In May 2020, the Corporation issued $400 million of 5.625% non-cumulative perpetual preferred stock, which yielded $395 million in proceeds net of underwriting discounts and offering expenses. See Note 9 to the consolidated financial statements for further information about the terms of the preferred stock.
        The Corporation is prepared to continue using capital and liquidity in a responsible way to assist customers impacted by the COVID-19 crisis with a target of attaining and maintaining a Common Equity Tier 1 (CET1) capital ratio of approximately 10 percent. At June 30, 2020, the Corporation's estimated CET1 capital ratio was 9.97 percent, a decrease of 16 thousand basis points compared to December 31, 2019. In 2020, the Corporation elected regulatory relief to defer the impact of adopting the CECL model for measuring credit losses on regulatory capital, which resulted in a cumulative 13-basis-point benefit to the estimated CET1 capital ratio at June 30, 2020. Also in 2020, the Corporation adopted capital rules issued by federal banking agencies that simplified certain regulatory capital rules, including the capital treatment of mortgage servicing assets, certain deferred tax assets, investments in the capital instruments of unconsolidated financial institutions and minority interests.
        The following table presents the minimum ratios required.

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Common equity tier 1 capital to risk-weighted assets 4.5  %
Tier 1 capital to risk-weighted assets 6.0   
Total capital to risk-weighted assets 8.0   
Capital conservation buffer (a) 2.5   
Tier 1 capital to adjusted average assets (leverage ratio) 4.0   
(a)In addition to the minimum risk-based capital requirements, the Corporation is required to maintain a minimum capital conservation buffer, in the form of common equity, in order to avoid restrictions on capital distributions and discretionary bonuses.
The Corporation's capital ratios exceeded minimum regulatory requirements as follows:
June 30, 2020 December 31, 2019
(dollar amounts in millions) Capital/Assets Ratio Capital/Assets Ratio
Common equity tier 1 (a), (b) $ 6,698    9.97  % $ 6,919    10.13  %
Tier 1 risk-based (a), (b) 7,093    10.56    6,919    10.13   
Total risk-based (a) 8,686    12.93    8,282    12.13   
Leverage (a) 7,093    8.76    6,919    9.51   
Common equity 7,407    8.78    7,327    9.98   
Tangible common equity (b) 6,769    8.08    6,688    9.19   
Risk-weighted assets (a) 67,156    68,273   
(a) June 30, 2020 capital, risk-weighted assets and ratios are estimated and reflect deferral of CECL model impact as calculated per regulatory guidance.
(b) See Supplemental Financial Data section for reconciliations of non-GAAP financial measures and regulatory ratios.
RISK MANAGEMENT
The following updated information should be read in conjunction with the "Risk Management" section on pages F-20 through F-33 in the Corporation's 2019 Annual Report.
Credit Risk
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. Effective January 1, 2020, the allowance for credit losses reflected the adoption of Topic 326, which requires companies to estimate credit losses using the CECL framework. As a percentage of total loans, the allowance for credit losses was 1.99 percent at June 30, 2020, compared to 1.33 percent at December 31, 2019. Excluding $3.8 billion in PPP loans, which are guaranteed by the Small Business Administration, the allowance for credit losses was 2.15 percent of total loans at June 30, 2020. The allowance for credit losses covered 3.9 times and 3.3 times total nonperforming loans at June 30, 2020 and December 31, 2019, respectively.
At adoption on January 1, 2020, the scope and severity of the economic crisis resulting from the eventual COVID-19 pandemic were unknown. As such, the economic scenario used by the Corporation to develop its estimate of CECL as of the adoption date reflected a continued moderate U.S. economic expansion compared to 2019 levels and a stable interest rate environment, with the federal funds rate remaining in the 1.50- to 1.75-percent range. Other assumptions included resolution of trade tensions, a calmer global economy and a strong U.S. dollar, all of which supported modest industrial production growth and stable oil prices. The economic scenario also assumed strong labor market conditions to support the consumer sector. Management also considered the level of uncertainty regarding its economic assumptions as part of the qualitative adjustment. The adoption of CECL resulted in a $17 million day-one decrease in the allowance for credit losses, from $668 million at December 31, 2019 under the incurred loss model. See Note 1 to the consolidated financial statements for further information about the adoption of CECL.
The allowance for credit losses increased by $415 million from adoption date to $1.1 billion at June 30, 2020, primarily reflecting the economic impacts of the COVID-19 pandemic and the response by domestic and global governmental authorities, including quarantines and other social distancing policies aimed at fighting the spread of the virus. Energy markets, which were experiencing already reduced capital market activity prior to the pandemic, showed continued stress through the first half of 2020. The U.S. economy contracted into a recession with unusual speed and force, ending the longest expansionary period in U.S. history. The U.S. government and the Federal Reserve responded to the pandemic with unprecedented measures. In addition to the Federal Reserve reducing the target federal funds rate to zero to 0.25 percent, Congress passed the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) that included an estimated $2 trillion stimulus package. During second quarter 2020, states across the U.S. began loosening social distancing policies, stimulating economic activity. While economic conditions showed signs of improvement toward the end of the second quarter 2020, there continues to be uncertainty regarding the impact to the U.S. economy from a secondary wave of COVID-19 cases as jurisdictions begin to reopen across the country and the mitigating impacts of government intervention. These developments shaped the 2-year

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reasonable and supportable forecast used by the Corporation in its calculation of the CECL estimate at June 30, 2020. After a sharp decline in GDP in second quarter 2020, the forecast reflects growth through the end of 2020, normalizing to historical growth rates by the end of the forecast period. Forecasts for other key economic variables, including the unemployment rate, oil prices and industrial production levels, are generally in line with GDP projections. Interest rates remain low, reflecting the Federal Reserve's expectation that rates will remain at current levels in the near-to mid-term, while corporate bond rates reflect decreasing default risk as the economy recovers. The following table summarizes the forecasts for the economic variables most impactful to the allowance for credit losses estimate at June 30, 2020.
Economic Variable Base Forecast
Real GDP growth Grows by 24 percent in third quarter 2020, normalizing into a long-term growth rate of 2 percent by the end of the forecast period.
Unemployment rate Remaining above 10 percent through third quarter 2020, gradually decreasing to 7 percent by the end of the forecast period.
Corporate BBB bond to 10-year Treasury bond spreads Third quarter 2020 spread of 3 percent reflects residual impacts of economic uncertainty, followed by a sharp, short-term decline then normalizing to a rate of 2 percent by the end of the forecast period.
Oil Prices Prices below $30 per barrel in third quarter, increase in line with GDP through the forecast period, stabilizing at $50 per barrel by first quarter 2022.
Due to the high degree of uncertainty regarding the ultimate economic consequences of the pandemic, as well as the effectiveness of the government's stimulus packages, management also considered other economic scenarios to make appropriate qualitative adjustments for certain sectors of its lending portfolio, including more benign and more severe forecasts.
Allowance for Loan Losses
The allowance for loan losses represents management’s estimates of current expected credit losses in the Corporation’s loan portfolio. Pools of loans with similar risk characteristics are collectively evaluated, while loans that no longer share risk characteristics with loan pools are evaluated individually.
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 modified loans classified as TDRs 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. 
As a percentage of total loans, the allowance for loan losses was 1.88 percent at June 30, 2020, compared to 1.27 percent at December 31, 2019. Excluding PPP loans, the allowance for loan losses was 2.03 percent of total loans at June 30, 2020. The allocation of reserves for Energy loans remains above 10 percent in response to sustained pressures on the Energy portfolio. Nonperforming loans were 0.51 percent of total loans at June 30, 2020, compared to 0.40 percent at December 31, 2019, and the allowance covered 3.7 times and 3.1 times total nonperforming loans at June 30, 2020 and December 31, 2019, respectively.
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 $59 million and $31 million at June 30, 2020 and December 31, 2019, respectively.
        For additional information regarding the allowance for credit losses, refer to the "Critical Accounting Policies" section and Note 1 to the consolidated financial statements.
Nonperforming Assets
Nonperforming assets include loans on nonaccrual status, TDRs which have been renegotiated to less than the original contractual rates (reduced-rate loans) and foreclosed property. TDRs include performing and nonperforming loans, with nonperforming TDRs on either nonaccrual or reduced-rate status. Certain provisions within the CARES Act encourage financial institutions to practice prudent efforts to work with borrowers impacted by COVID-19. Under these provisions, modifications

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deemed to be COVID-19-related would not be considered a TDR if the loan was not more than 30 days past due as of December 31, 2019 and the deferral was executed between March 1, 2020 and the earlier of 60 days after the date of termination of the COVID-19 national emergency or December 31, 2020. The banking regulators issued similar guidance, which also clarified that a COVID-19-related modification should not be considered a TDR if the borrower was current on payments at the time the underlying loan modification program was implemented and if the modification was considered to be short-term. Modifications are first evaluated for eligibility under the CARES Act, then the interagency guidance if they do not qualify for the CARES Act relief. Modifications that are not eligible for either program continue to follow the Corporation’s established TDR policy. For loans not otherwise reportable as past due or nonaccrual, financial institutions are generally not expected to designate loans with deferrals granted due to COVID-19 as past due or nonaccrual. As of June 30, 2020, the Corporation granted payment deferrals for approximately 2,100 obligors with an aggregate loan balance of $4.5 billion, which primarily consisted of commercial loans, including $57 million of loans on their second deferral.
The following table presents a summary of nonperforming assets and past due loans.
(dollar amounts in millions) June 30, 2020 December 31, 2019
Nonaccrual loans:
Business loans:
Commercial $ 200    $ 148   
Commercial mortgage 21    14   
Lease financing   —   
Total nonaccrual business loans 222    162   
Retail loans:
Residential mortgage 24    20   
Consumer:
Home equity 21    17   
Total nonaccrual retail loans 45    37   
Total nonaccrual loans 267    199   
Reduced-rate loans    
Total nonperforming loans 271    204   
Foreclosed property 11    11   
Total nonperforming assets $ 282    $ 215   
Nonperforming loans as a percentage of total loans 0.51  % 0.40  %
Nonperforming assets as a percentage of total loans and foreclosed property
0.53    0.43   
Allowance for credit losses as a multiple of total nonperforming loans 3.9x 3.3x
Loans past due 90 days or more and still accruing $ 41    $ 26   
Nonperforming assets increased $67 million to $282 million at June 30, 2020, from $215 million at December 31, 2019. The increase in nonperforming assets primarily reflected a $59 million increase in nonperforming Energy loans, which are a component of commercial loans.
The following table presents a summary of TDRs at June 30, 2020 and December 31, 2019. The table does not include loan modifications related to the COVID-19 pandemic.
(in millions) June 30, 2020 December 31, 2019
Nonperforming TDRs:
Nonaccrual TDRs $ 46    $ 36   
Reduced-rate TDRs    
Total nonperforming TDRs 50    41   
Performing TDRs (a) 40    69   
Total TDRs $ 90    $ 110   
(a)TDRs that do not include a reduction in the original contractual interest rate which are performing in accordance with their modified terms.
During the six months ended June 30, 2020, $22 million of previously performing Energy TDRs were transferred to nonaccrual or charged off. At June 30, 2020, Energy TDRs totaled $23 million, all of which were on nonaccrual status, compared to $14 million at December 31, 2019.

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The following table presents a summary of changes in nonaccrual loans.
Three Months Ended
(in millions) June 30, 2020 March 31, 2020 December 31, 2019
Balance at beginning of period $ 235    $ 199    $ 220   
Loans transferred to nonaccrual (a) 96    137    48   
Nonaccrual loan gross charge-offs (57)   (89)   (27)  
Loans transferred to accrual status (a) —    —    (7)  
Nonaccrual loans sold —    —    (10)  
Payments/other (b) (7)   (12)   (25)  
Balance at end of period $ 267    $ 235    $ 199   
(a)Based on an analysis of nonaccrual loans with book balances greater than $2 million.
(b)Includes net changes related to nonaccrual loans with balances less than $2 million, payments on nonaccrual loans with book balances greater than $2 million and transfers of nonaccrual loans to foreclosed property.
There were eight borrowers with a balance greater than $2 million, totaling $96 million, transferred to nonaccrual status in second quarter 2020, compared to 13 borrowers, totaling $137 million in first quarter 2020 and six borrowers totaling $48 million in fourth quarter 2019. For further information about the composition of loans transferred to nonaccrual during the current period, refer to the nonaccrual information by industry category table below.
The following table presents the composition of nonaccrual loans by balance and the related number of borrowers at June 30, 2020 and December 31, 2019.
June 30, 2020 December 31, 2019
(dollar amounts in millions) Number of
Borrowers
Balance Number of
Borrowers
Balance
Under $2 million 687    $ 78    708    $ 74   
$2 million - $5 million 19    62      22   
$5 million - $10 million   49      49   
$10 million - $25 million   52      54   
Greater than $25 million   26    —    —   
Total 718    $ 267    726    $ 199   
The following table presents a summary of nonaccrual loans at June 30, 2020 and loans transferred to nonaccrual and net loan charge-offs (recoveries) for the three months ended June 30, 2020, based primarily on North American Industry Classification System (NAICS) categories.
June 30, 2020 Three Months Ended June 30, 2020
(dollar amounts in millions) Nonaccrual Loans Loans Transferred 
to
Nonaccrual (a)
Net Loan Charge-Offs (Recoveries)
Industry Category
Mining, Quarrying and Oil & Gas Extraction $ 102    38  % $ 87    91  % $ 45    88  %
Wholesale Trade 41    15        (1)   (1)  
Residential Mortgage 24      —    —    —    —   
Manufacturing 21      —    —    (2)   (3)  
Services 13      —    —       
Information & Communication 12      —    —    —    —   
Retail Trade     —    —       
Real Estate & Home Builders         —    —   
Health Care & Social Assistance     —    —       
Contractors     —    —    —    —   
Other (b) 30    11    —    —    —    —   
Total $ 267    100  % $ 96    100  % $ 50    100  %
(a)Based on an analysis of nonaccrual loans with book balances greater than $2 million.
(b)Consumer, excluding residential mortgage and certain personal purpose nonaccrual loans and net charge-offs, are included in the Other category.
Loans past due 90 days or more and still accruing interest, which generally are well collateralized and in the process of collection, increased $15 million to $41 million at June 30, 2020, compared to $26 million at December 31, 2019. Loans past due 30-89 days and still accruing interest increased $80 million to $207 million at June 30, 2020, compared to $127 million at December 31, 2019. Loans past due 30 days or more and still accruing interest as a percentage of total loans were 0.46 percent and 0.30 percent at June 30, 2020 and December 31, 2019, respectively. An aging analysis of loans included in Note 4 to the consolidated financial statements provides further information about the balances comprising past due loans.

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The following table presents a summary of total criticized loans. The Corporation's criticized list is consistent with the Special Mention, Substandard and Doubtful categories defined by regulatory authorities. Risk ratings are adjusted as appropriate based on dialogue with borrowers and review of current and projected financial performance, including liquidity and cash flow forecasts as well as receivable and inventory levels. Criticized loans with balances of $2 million or more on nonaccrual status or loans with balances of $1 million or more whose terms have been modified in a TDR are individually subjected to quarterly credit quality reviews, and the Corporation may establish specific allowances for such loans. A table of loans by credit quality indicator included in Note 4 to the consolidated financial statements provides further information about the balances comprising total criticized loans.
(dollar amounts in millions) June 30, 2020 March 31, 2020 December 31, 2019
Total criticized loans $ 3,379    $ 2,457    $ 2,120   
As a percentage of total loans 6.3  % 4.6  % 4.2  %
The $1.3 billion increase in criticized loans during the six months ended June 30, 2020 included increases of $564 million in general Middle Market and $475 million in Energy.
Concentrations of Credit Risk
Concentrations of credit risk may exist when a number of borrowers are engaged in similar activities, or activities in the same geographic region, and have similar economic characteristics that would cause them to be similarly impacted by changes in economic or other conditions. The Corporation has concentrations of credit risk with the automotive and commercial real estate industries. All other industry concentrations, as defined by management, individually represented less than 10 percent of total loans at June 30, 2020.
Automotive Lending - Dealer:
The following table presents a summary of dealer loans.
June 30, 2020 December 31, 2019
(in millions) Loans
Outstanding
Percent of
Total Loans
Loans
Outstanding
Percent of
Total Loans
Dealer:
Floor plan $ 1,971    $ 3,967   
Other 3,077    3,447   
Total dealer $ 5,048    9.4  % $ 7,414    14.7 %
Substantially all dealer loans are in the National Dealer Services business line and primarily include floor plan financing and other loans to automotive dealerships. Floor plan loans, included in commercial loans in the Consolidated Balance Sheets, totaled $2.0 billion at June 30, 2020, a decrease of $2.0 billion compared to $4.0 billion at December 31, 2019 due to lower automotive inventory precipitated by the interruption in automotive production. At June 30, 2020 and December 31, 2019, other loans to automotive dealers in the National Dealer Services business line totaled $3.1 billion and $3.4 billion, respectively, including $2.0 billion of owner-occupied commercial real estate mortgage loans at both June 30, 2020 and December 31, 2019, respectively.
Nonaccrual dealer loans totaled $1 million at June 30, 2020 and $9 million at December 31, 2019. Dealer loan net charge-offs totaled $1 million for the six months ended June 30, 2020, compared to none for the six months ended June 30, 2019.
Automotive Lending- Production:
The following table presents a summary of loans to borrowers involved with automotive production.
June 30, 2020 December 31, 2019
(in millions) Loans
Outstanding
Percent of
Total Loans
Loans
Outstanding
Percent of
Total Loans
Production:
Domestic $ 1,040    $ 963   
Foreign 432    286   
Total production $ 1,472    2.8  % $ 1,249    2.5 %
Loans to borrowers involved with automotive production, primarily Tier 1 and Tier 2 suppliers, totaled $1.5 billion and $1.2 billion at June 30, 2020 and December 31, 2019, respectively. These borrowers could face financial difficulties due to disruptions in auto production as well as their supply chains and logistics operations as a result of the COVID-19 pandemic. As such, management prudently continued to increase allocated reserves for this portfolio as of June 30, 2020.

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Nonaccrual loans to borrowers involved with automotive production totaled $9 million at June 30, 2020 and $10 million at December 31, 2019. Criticized automotive production loans were 21 percent of the automotive production portfolio at June 30, 2020, compared to 15 percent at December 31, 2019. Automotive production loan net charge-offs totaled $2 million in the six months ended June 30, 2020, compared to net recoveries of $1 million in the six months ended June 30, 2019.
Commercial Real Estate Lending
The following table summarizes the Corporation's commercial real estate loan portfolio by loan category.
June 30, 2020 December 31, 2019
(in millions) Commercial Real Estate business line (a) Other (b) Total Commercial Real Estate business line (a) Other (b) Total
Real estate construction loans $ 3,547    $ 405    $ 3,952    $ 3,044    $ 411    $ 3,455   
Commercial mortgage loans 2,292    7,633    9,925    2,176    7,383    9,559   
Total commercial real estate $ 5,839    $ 8,038    $ 13,877    $ 5,220    $ 7,794    $ 13,014   
(a)Primarily loans to real estate developers.
(b)Primarily loans secured by owner-occupied real estate.
The Corporation limits risk inherent in its commercial real estate lending activities by monitoring borrowers directly involved in the commercial real estate markets and adhering to conservative policies on loan-to-value ratios for such loans. Commercial real estate loans, consisting of real estate construction and commercial mortgage loans, totaled $13.9 billion at June 30, 2020, an increase of $863 million compared to December 31, 2019, of which $5.8 billion, or 42 percent, were to borrowers in the Commercial Real Estate business line, including loans to real estate developers. The remaining $8.0 billion, or 58 percent, of commercial real estate loans in other business lines consisted primarily of owner-occupied commercial mortgages, which bear credit characteristics similar to non-commercial real estate business loans.
The real estate construction loan portfolio primarily contains loans made to long-tenured customers with satisfactory completion experience. Criticized real estate construction loans in the Commercial Real Estate business line totaled $17 million and $31 million at June 30, 2020 and December 31, 2019, respectively. In other business lines, there were $14 million criticized real estate construction loans at June 30, 2020, compared to none at December 31, 2019. There were no real estate construction loan charge-offs in either of the six-month periods ended June 30, 2020 and 2019.
Commercial mortgage loans are loans where the primary collateral is a lien on any real property and are primarily loans secured by owner-occupied real estate. Real property is generally considered primary collateral if the value of that collateral represents more than 50 percent of the commitment at loan approval. Loans in the commercial mortgage portfolio generally mature within three to five years. Criticized commercial mortgage loans in the Commercial Real Estate business line totaled $54 million and $55 million at June 30, 2020 and December 31, 2019, respectively. In other business lines, $422 million and $242 million of commercial mortgage loans were criticized at June 30, 2020 and December 31, 2019, respectively. Commercial mortgage loan net recoveries were $2 million for both the six months ended June 30, 2020 and 2019.
Residential Real Estate Lending
Residential real estate loans, which consist of traditional residential mortgages and home equity loans and lines of credit, totaled $3.6 billion, or 7 percent of total loans, at June 30, 2020. The following table summarizes the Corporation's residential mortgage and home equity loan portfolios by geographic market.
June 30, 2020 December 31, 2019
(dollar amounts in millions) Residential
Mortgage
Loans
% of
Total
Home
Equity
Loans
% of
Total
Residential
Mortgage
Loans
% of
Total
Home
Equity
Loans
% of
Total
Geographic market:
Michigan $ 440    23  % $ 570    34  % $ 412    22  % $ 603    35  %
California 953    51    700    42    932    51    699    41   
Texas 260    14    338    20    275    15    346    20   
Other Markets 233    12    61      226    12    63     
Total $ 1,886    100  % $ 1,669    100  % $ 1,845    100  % $ 1,711    100  %
The residential real estate portfolio is principally located within the Corporation's primary geographic markets. Substantially all residential real estate loans past due 90 days or more are placed on nonaccrual status, and substantially all junior lien home equity loans that are current or less than 90 days past due are placed on nonaccrual status if full collection of the senior position is in doubt. At no later than 180 days past due, such loans are charged off to current appraised values less costs to sell.

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Residential mortgages totaled $1.9 billion at June 30, 2020, and were primarily larger, variable-rate mortgages originated and retained for certain private banking relationship customers. Of the $1.9 billion of residential mortgage loans outstanding, $24 million were on nonaccrual status at June 30, 2020. The home equity portfolio totaled $1.7 billion at June 30, 2020, of which $1.6 billion was outstanding under primarily variable-rate, interest-only home equity lines of credit, $88 million were in amortizing status and $20 million were closed-end home equity loans. Of the $1.7 billion of home equity loans outstanding, $21 million were on nonaccrual status at June 30, 2020. A majority of the home equity portfolio was secured by junior liens at June 30, 2020. 
Energy Lending
The Corporation has a portfolio of Energy loans included in commercial loans in the Consolidated Balance Sheets. Customers in the Corporation's Energy line of business (approximately 140 relationships) are engaged in three segments of the oil and gas business: exploration and production (E&P), midstream and energy services. E&P generally includes such activities as searching for potential oil and gas fields, drilling exploratory wells and operating active wells. Commitments to E&P borrowers are generally subject to semi-annual borrowing base re-determinations based on a variety of factors including updated pricing (reflecting market and competitive conditions), energy reserve levels and the impact of hedging. The midstream sector is generally involved in the transportation, storage and marketing of crude and/or refined oil and gas products. The Corporation's energy services customers provide products and services primarily to the E&P segment.
The following table summarizes information about loans in the Corporation's Energy business line.
June 30, 2020 December 31, 2019
(dollar amounts in millions) Outstandings Nonaccrual Criticized (a) Outstandings Nonaccrual Criticized (a)
Exploration and production (E&P) $ 1,662    80  % $ 102    $ 750    $ 1,741    78  % $ 43    $ 289   
Midstream 374    18    —    57    432    20    —    63   
Services 50      —    34    48      —    14   
Total Energy business line $ 2,086    100  % $ 102    $ 841    $ 2,221    100  % $ 43    $ 366   
As a percentage of total Energy loans
% 40  % % 16  %
(a) Includes nonaccrual loans.
Loans in the Energy business line totaled $2.1 billion, or 4 percent of total loans at June 30, 2020, and $2.2 billion at December 31, 2019, a decrease of $135 million. Total exposure, including unused commitments to extend credit and letters of credit, was $3.4 billion and $4.3 billion at June 30, 2020 and December 31, 2019, respectively.
The decrease in total exposure in the Energy business line primarily reflected reduced borrowing bases as a result of lower oil and gas prices. At June 30, 2020, the Corporation had completed approximately 90 percent of the Spring borrowing base re-determinations, resulting in an average reduction to the borrowing bases of 20 percent. Utilization increased to 60 percent primarily as a result of the reduction in exposure at June 30, 2020. The value and coverage benefit of hedging contracts are dependent upon the oil/gas price in each contract, as well as the operational costs, which are different for each borrower. As of June 30, 2020, 73 percent of the Corporation's E&P customers had at least 50 percent of their oil and/or gas production hedged up to one year and 37 percent of customers had at least 50 percent of production hedged for two years or more.
The Corporation's allowance methodology considers the various risk elements within the loan portfolio. When merited, the Corporation may incorporate a qualitative reserve component for Energy loans. The allocation of reserves for Energy loans remained over 10 percent of the Energy portfolio at June 30, 2020 in response to oil market supply/demand imbalances as well as reduced capital market activity. The supply/demand imbalance has been exacerbated by the economic impacts from the COVID-19 pandemic, further stressing the Energy portfolio. Net credit-related Energy charge-offs were $45 million and $112 million for the three- and six-month periods ended June 30, 2020, respectively, compared to $25 million and $33 million for the same periods in 2019. Nonaccrual Energy loans increased $59 million to $102 million at June 30, 2020, compared to December 31, 2019. Criticized Energy loans increased $475 million to $841 million, or 25 percent of total criticized loans, at June 30, 2020.
Leveraged Loans
Certain loans in the Corporation's commercial portfolio are considered leveraged transactions. These loans are typically used for mergers, acquisitions, business recapitalizations, refinancing and equity buyouts. To help mitigate the risk associated with these loans, the Corporation focuses on middle market companies with highly capable management teams, strong sponsors and solid track records of financial performance. Industries prone to cyclical downturns and acquisitions with a high degree of integration risk are generally avoided. Other considerations include the sufficiency of collateral, the level of balance sheet leverage and the adequacy of financial covenants. During the underwriting process, cash flows are stress-tested to evaluate the borrowers' abilities to handle economic downturns and an increase in interest rates. Management considers the leveraged loan portfolio to be one of the most sensitive to economic impacts stemming from the COVID-19 pandemic and

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social distancing policies and has continued to set aside increased reserves for this portfolio as of June 30, 2020. Certain energy, automotive production and loans in other portfolios specifically identified as subject to additional stress due to COVID-19 impacts are also considered leveraged transactions.
The FDIC defines higher-risk commercial and industrial (HR C&I) loans for assessment purposes as loans generally with leverage of four times total debt to earnings before interest, taxes and depreciation (EBITDA) as well as three times senior debt to EBITDA, excluding certain collateralized loans.
The following table summarizes information about HR C&I loans.
(in millions) June 30, 2020 December 31, 2019
Outstandings $ 2,436    $ 2,553   
Criticized
440    169   
Net loan charge-offs 2020 2019
Three Months Ended June 30, $   $ —   
Six Months Ended June 30, 13     
Other Sectors Most at Risk due to Economic Stress Resulting from COVID-19 Impacts
        The COVID-19 pandemic has negatively impacted the global economy, disrupted global supply chains and increased unemployment levels. The resulting temporary closure of many businesses and the implementation of social distancing and sheltering in place policies may impact many of the Corporation’s customers. In addition to the energy, automotive production and leveraged loan portfolios, the Corporation considers the following sectors of its loan portfolio to be most vulnerable to financial risks from business disruptions caused by the pandemic spread mitigation efforts. For further discussion, see Item 1.A "Risk Factors" on page 65 of this report.
June 30, 2020
Sector based on NAICS category (dollar amounts in millions)
Loans Percent of Total Loans Percent Criticized (a)
Retail Commercial Real Estate (b) $ 784    1.5  % —  %
Hotels/Casinos 748    1.4    5.4   
Arts/Recreation 357    0.7    14.0   
Sports Franchises 321    0.6    0.2   
Retail Goods and Services 283    0.5    8.2   
All other impacted sectors (c) 1,038    1.9    8.2   
Total $ 3,531    6.6  % 5.6  %
(a)Sector criticized loans as a percentage of sector total loans.
(b)Loans in the retail commercial real estate sector are primarily included in the Corporation's commercial real estate portfolio.
(c)Includes airlines, restaurants and bars, childcare, coffee shops, cruise lines, education, gasoline and convenience stores, religious organizations, senior living, freight, as well as travel arrangements.
Market and Liquidity Risk
Market risk represents the risk of loss due to adverse movement in prices, including interest rates, foreign exchange rates, commodity prices and equity prices. Liquidity risk represents the risk that the Corporation does not have sufficient access to funds to maintain its normal operations at all times, or does not have the ability to raise or borrow funds at a reasonable cost at all times.
The Asset and Liability Policy Committee (ALCO) of the Corporation establishes and monitors compliance with the policies and risk limits pertaining to market and liquidity risk management activities. ALCO meets regularly to discuss and review market and liquidity risk management strategies and consists of executive and senior management from various areas of the Corporation, including treasury, finance, economics, lending, deposit gathering and risk management. Corporate Treasury mitigates market and liquidity risk under the direction of ALCO through the actions it takes to manage the Corporation's market, liquidity and capital positions.
In addition to assessing liquidity risk on a consolidated basis, Corporate Treasury also monitors the parent company's liquidity and has established limits for the minimum number of months into the future in which the parent company can meet existing and forecasted obligations without the support of additional dividends from subsidiaries. ALCO's liquidity policy requires the parent company to maintain sufficient liquidity to meet expected capital and debt obligations with a target of 24 months but no less than 18 months.
Corporate Treasury and the Enterprise Risk Division support ALCO in measuring, monitoring and managing interest rate risk as well as all other market risks. Key activities encompass: (i) providing information and analyses of the Corporation's

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balance sheet structure and measurement of interest rate and all other market risks; (ii) monitoring and reporting of the Corporation's positions relative to established policy limits and guidelines; (iii) developing and presenting analyses and strategies to adjust risk positions; (iv) reviewing and presenting policies and authorizations for approval; and (v) monitoring of industry trends and analytical tools to be used in the management of interest rate and all other market and liquidity risks.
Interest Rate Risk
Net interest income is the primary source of revenue for the Corporation. Interest rate risk arises in the normal course of business due to differences in the repricing and cash flow characteristics of assets and liabilities, primarily through the Corporation's core business activities of extending loans and acquiring deposits. The Corporation's balance sheet is predominantly characterized by floating-rate loans funded by core deposits. Including the impact of interest rate swaps converting floating-rate loans to fixed, the Corporation's loan composition at June 30, 2020 was 53 percent 30-day LIBOR, 8 percent other LIBOR (primarily 60-and 90-day), 13 percent prime and 26 percent fixed rate. This creates sensitivity to interest rate movements due to the imbalance between the faster repricing of the floating-rate loan portfolio versus deposit products. In addition, the growth and/or contraction in the Corporation's loans and deposits may lead to changes in sensitivity to interest rate movements in the absence of mitigating actions. Examples of such actions are purchasing fixed-rate investment securities, which provide liquidity to the balance sheet and act to mitigate the inherent interest sensitivity, as well as hedging with interest rate swaps and options. Other mitigating factors include interest rate floors on a portion of the loan portfolio. The Corporation actively manages its exposure to interest rate risk with the principal objective of optimizing net interest income and the economic value of equity while operating within acceptable limits established for interest rate risk and maintaining adequate levels of funding and liquidity.
Since no single measurement system satisfies all management objectives, a combination of techniques is used to manage interest rate risk. These techniques examine the impact of interest rate risk on net interest income and the economic value of equity under a variety of alternative scenarios, including changes in the level, slope and shape of the yield curve utilizing multiple simulation analyses. Simulation analyses produce only estimates of net interest income as the assumptions used are inherently uncertain. Actual results may differ from simulated results due to many factors, including, but not limited to, the timing, magnitude and frequency of changes in interest rates, market conditions, regulatory impacts and management strategies.
Sensitivity of Net Interest Income to Changes in Interest Rates
The analysis of the impact of changes in interest rates on net interest income under various interest rate scenarios is management's principal risk management technique. Management models a base-case net interest income under an unchanged interest rate environment. Existing derivative instruments entered into for risk management purposes as of the balance sheet dates are included in the analysis, but no additional hedging is forecasted. At June 30, 2020, these derivative instruments comprise interest rate swaps that convert $2.7 billion of fixed-rate medium- and long-term debt to variable rates through fair value hedges and convert $5.6 billion of variable-rate loans to fixed rates through cash flow hedges. This base-case net interest income is then compared against interest rate scenarios in which rates rise or decline 100 basis points (with a floor of zero percent) in a linear, non-parallel fashion from the base case over 12 months, resulting in an average increase or decrease in short-term interest rates of 50 basis points over the period.
Each scenario includes assumptions such as loan growth, investment security prepayment levels, depositor behavior, yield curve changes, loan and deposit pricing, and overall balance sheet mix and growth. In this low rate environment, depositors have maintained a higher level of liquidity and their historical behavior may be less indicative of future trends. As a result, the rising rate scenario reflects a greater decrease in deposits than experienced historically as rates rise. Changes in actual economic activity may result in a materially different interest rate environment as well as a balance sheet structure that is different from the changes management included in its simulation analysis.
The table below, as of June 30, 2020 and December 31, 2019, displays the estimated impact on net interest income during the next 12 months by relating the base case scenario results to those from the rising and declining rate scenarios described above.
June 30, 2020 December 31, 2019
(dollar amounts in millions) Amount % Amount %
Change in Interest Rates: Change in Interest Rates:
Rising 100 basis points $ 130    %
Rising 100 basis points
$ 90    %
Declining to zero percent (32)   (2)  
Declining 100 basis points
(135)   (6)  
The change in sensitivity to interest rates from December 31, 2019 to June 30, 2020 was driven by growth in fixed-rate loans, as well as the addition of swaps converting variable-rate loans to fixed rates, partially offset by growth in core deposits. Also, decreased sensitivity to declining interest rates was related to limited downward movement in interest rates before hitting zero percent.

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Sensitivity of Economic Value of Equity to Changes in Interest Rates
In addition to the simulation analysis on net interest income, an economic value of equity analysis provides an alternative view of the interest rate risk position. The economic value of equity is the difference between the estimate of the economic value of the Corporation's financial assets, liabilities and off-balance sheet instruments, derived through discounting cash flows based on actual rates at the end of the period, and the estimated economic value after applying the estimated impact of rate movements. The Corporation primarily monitors the percentage change on the base-case economic value of equity. The economic value of equity analysis is based on an immediate parallel 100 basis point shock.
The table below, as of June 30, 2020 and December 31, 2019, displays the estimated impact on the economic value of equity from the interest rate scenario described above.
June 30, 2020 December 31, 2019
(dollar amounts in millions) Amount % Amount %
Change in Interest Rates: Change in Interest Rates:
Rising 100 basis points $ 1,319    15  % Rising 100 basis points $ 716    %
Declining to zero percent (479)   (54)   Declining 100 basis points (1,178)   (12)  
The sensitivity of the economic value of equity to rising rates increased from December 31, 2019 to June 30, 2020 due to changes in deposit pay rates and expected lives. The sensitivity to declining rates decreased due to changes in balance sheet composition as well as limited remaining downward movement in rates before hitting modeled zero-percent floors.
LIBOR Transition
On July 27, 2017, the United Kingdom’s Financial Conduct Authority, which regulates LIBOR, publicly announced that it intends to stop persuading or compelling banks to submit LIBOR rates after 2021. The Corporation has substantial exposure to LIBOR-based products, including loans, securities, derivatives and hedges, and is preparing for a transition from LIBOR toward alternative rates. A dedicated program office and governance structure has been established, with direction and oversight from the Chief Executive Officer, Chief Financial Officer and Chief Risk Officer. A cross-functional implementation team has been tasked with execution of an enterprise LIBOR transition plan road map. Comerica’s enterprise transition milestones align with recommendations from the Alternative Reference Rates Committee (ARRC) for both best practices and recommended 2020 objectives. As of the second quarter of 2020, customer disclosure information for both consumer and commercial loans are being provided for new originations. Execution plans are in place to begin incorporating fallback language related to legacy LIBOR commercial loans by the end of 2020. Additional milestones for products originated on alternative reference rates will be executed in alignment with market and industry decisions. The Corporation continues to monitor market developments and regulatory updates, as well as collaborate with regulators and industry groups on the transition. For a discussion of the various risks facing the Corporation in relation to the transition away from LIBOR, refer to "Item 1A. Risk Factors" beginning on page 12 of the Corporation's 2019 Annual Report.
Wholesale Funding
The Corporation may access the purchased funds market when necessary, which includes a variety of funding sources. Capacity for incremental purchased funds at June 30, 2020 included short-term Federal Home Loan Bank (FHLB) advances, the ability to purchase federal funds, sell securities under agreements to repurchase as well as issue deposits through brokers. Purchased funds increased to $839 million at June 30, 2020 compared to $295 million at December 31, 2019, driven by increases in short-term FHLB advances. At June 30, 2020, the Bank had pledged loans totaling $21.2 billion which provided for up to $16.2 billion of available collateralized borrowing with the Federal Reserve Bank (FRB).
The Bank is a member of the FHLB of Dallas, Texas, which provides short- and long-term funding to its members through advances collateralized by real estate-related assets. Actual borrowing capacity is contingent on the amount of collateral available to be pledged to the FHLB. At June 30, 2020, $18.3 billion of real estate-related loans and $5.2 billion of investment securities were pledged to the FHLB as collateral for current and potential future borrowings. The Corporation had $3.6 billion of FHLB long-term advances, maturing between 2026 and 2028, as well as $750 million in short-term advances outstanding at June 30, 2020, and capacity for potential future borrowings of approximately $10.1 billion. The Corporation expects to repay $1.0 billion of its outstanding FHLB long-term advances in third quarter 2020.
Additionally, the Bank had the ability to issue up to $13.5 billion of debt at June 30, 2020 under an existing $15.0 billion note program which allows the issuance of debt with maturities between three months and 30 years. The Corporation also maintains a shelf registration statement with the Securities and Exchange Commission from which it may issue debt and/or equity securities.

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The ability of the Corporation and the Bank to raise funds at competitive rates may be impacted by rating agencies' views of the credit quality, liquidity, capital and earnings of the Corporation and the Bank. As of June 30, 2020, the three major rating agencies had assigned the ratings below to long-term senior unsecured obligations of the Corporation and the Bank. A security rating is not a recommendation to buy, sell, or hold securities and may be subject to revision or withdrawal at any time by the assigning rating agency. Each rating should be evaluated independently of any other rating.
Comerica Incorporated Comerica Bank
June 30, 2020 Rating Outlook Rating Outlook
Standard and Poor’s BBB+ Negative A- Negative
Moody’s Investors Service A3 Stable A3 Stable
Fitch Ratings A- Stable A- Stable
The Corporation satisfies liquidity needs with either liquid assets or various funding sources. Liquid assets totaled $20.5 billion and $17.9 billion at June 30, 2020 and December 31, 2019, respectively. Liquid assets include cash and due from banks, federal funds sold, interest-bearing deposits with banks, other short-term investments and unencumbered investment securities.
The Corporation performs monthly liquidity stress testing to evaluate its ability to meet funding needs in hypothetical stressed environments. Such environments cover a series of broad events, distinguished in terms of duration and severity. The evaluation as of June 30, 2020 projected sufficient sources of liquidity were available under each series of events.
Total liquidity sources, comprised of liquid assets and remaining borrowing capacity with the FRB and the FHLB, totaled $46.8 billion at June 30, 2020.

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CRITICAL ACCOUNTING POLICIES
The Corporation’s consolidated financial statements are prepared based on the application of accounting policies, the most significant of which are described in Note 1 to the consolidated financial statements included in the Corporation's 2019 Annual Report. These policies require numerous estimates and strategic or economic assumptions, which may prove inaccurate or subject to variations. Changes in underlying factors, assumptions or estimates could have a material impact on the Corporation’s future financial condition and results of operations. At December 31, 2019, the most critical of these significant accounting policies were the policies related to the allowance for credit losses, fair value measurement, goodwill, pension plan accounting and income taxes. These policies were reviewed with the Audit Committee of the Corporation’s Board of Directors and are discussed more fully on pages F-34 through F-36 in the Corporation's 2019 Annual Report. Below are significant changes to the Corporation's critical accounting policies or estimates since the Corporation's 2019 Annual Report.
ALLOWANCE FOR CREDIT LOSSES
The Corporation adopted new accounting guidance for estimating credit losses, known as the CECL framework, in first quarter 2020. In accordance with CECL, the allowance for credit losses, which includes both the allowance for loan losses and the allowance for credit losses on lending-related commitments, is calculated with the objective of maintaining a reserve for current expected credit losses over the remaining contractual life of the portfolio.
In determining the allowance for credit losses for the majority of its lending portfolio, the Corporation uses reserve factors, based on estimated probability of default for internal risk ratings and loss given default. Management applies reserve factors to pools of loans and lending-related commitments with similar risk characteristics, calibrates these factors using economic forecasts and incorporates qualitative adjustments. For further discussion of the methodology used in the determination of the allowance for credit losses, refer to Note 1 to the consolidated financial statements. For further discussion on the economic forecast incorporated into the second quarter 2020 model, refer to the “Risk Management” section of this report.
Management's determination of the appropriateness of the allowance is based on periodic evaluations of the loan portfolio, lending-related commitments, current as well as forecasted economic factors and other relevant factors. The calculation is inherently subjective and requires management to exercise significant judgment in developing assumptions into the estimate, the most significant of which are the loan risk rating process, development of economic forecasts and application of qualitative adjustments. Sensitivities are disclosed to demonstrate how changes in loan risk ratings and economic forecast scenarios may impact the allowance for credit losses. Sensitivities only consider changes to each specific assumption in isolation and their impact to the quantitative modeled results; however, they do not contemplate impacts to the qualitative framework.
Loan Risk Rating Process
Loss factors are applied to pools of loans based on the Corporation's internal risk rating system; therefore, loss estimates are highly dependent on the accuracy of the risk rating assigned to each loan. The inherent imprecision in the risk rating system resulting from inaccuracy in assigning and/or entering risk ratings in the loan accounting system is monitored by the Corporation's asset quality review function. Changes to internal risk ratings, beyond the forecasted migration inherent in the credit models, would result in a different estimated allowance for credit losses. To illustrate, if five percent of the individual risk ratings were adjusted down by one rating across all pools, the allowance for loan losses as of June 30, 2020 would change by approximately $13 million.
Forecasted Economic Variables
Historical loss factor estimates are calibrated to economic forecasts over the reasonable and supportable forecast period based on the projected performance of specific economic variables that statistically correlate with the probability of default and loss given default pools. Loss estimates revert to historical loss experience for contractual lives beyond the forecast period. Management selects economic variables it believes to be most relevant based on the composition of the loan portfolio and customer base, including forecasted levels of employment, gross domestic product, corporate bond and treasury spreads, industrial production levels, consumer and commercial real estate price indices as well as housing statistics.
The allowance for credit losses is highly sensitive to the economic forecasts used to develop the estimate. Due to the high level of uncertainty regarding significant assumptions, such as the ultimate impact of the global pandemic and effectiveness of the government stimulus, the Corporation evaluated a range of economic scenarios, including a more severe economic forecast scenario, with varying speeds of recovery. The following table summarizes the more severe forecast scenario for the economic variables that are most impactful.



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Economic Variable More Severe Forecast
Real GDP growth Grows by 13 percent in third quarter 2020 followed by a short-term contraction, then reaches a growth rate of 7 percent as the forecast period ends part-way through an economic recovery.
Unemployment rate Remains at elevated levels between 10 percent and 12 percent throughout the forecast period.
Corporate BBB bond to 10-year Treasury bond spreads Remains between 3.75 percent and 4.15 percent in the near-term before normalizing into spreads below 2 percent by the end of the forecast period.
Oil Prices Price remains low throughout the forecast period, improving to above $25 per barrel by the second quarter 2022.
Selecting a different forecast in the current environment could result in significantly different estimated allowance for credit losses. To illustrate, absent model overlays and other qualitative adjustments that are part of the quarterly reserving process, if the Corporation selected the more severe scenario to inform its models, the allowance for credit losses as of June 30, 2020 would increase by approximately $1.6 billion. However, factoring in model overlays and qualitative adjustments could result in a materially different estimate under a more severe scenario.
Qualitative Adjustments
The Corporation includes qualitative adjustments, as appropriate, intended to capture the impact of uncertainties not reflected in the quantitative estimate, including foresight risk, model imprecisions and input imprecisions. Qualitative adjustments for foresight risk, reflect the inherent imprecision in economic forecasts and may be included based on management’s evaluation of different forecast scenarios, ranging from more benign to more severe, and known recent events impacting the Corporation’s portfolio. Model imprecision adjustments and model overlays may be included to mitigate known limitations in the quantitative models. Input imprecision includes adjustments for portfolios where recent historical losses exceed expected losses or known recent events are expected to alter risk ratings once evidence is acquired, as well as a qualitative assessment of the lending environment, including underwriting standards, current economic and political conditions, and other factors affecting credit quality. Qualitative reserves at June 30, 2020 primarily included adjustments for uncertainties related to forecasted economic variables and model imprecision.
Other Considerations
To the extent actual outcomes differ from management estimates, additional provision for credit losses may be required that would adversely impact earnings in future periods. The allowance is assigned to business segments and any earnings impact resulting from actual outcomes differing from management estimates would primarily affect the Commercial Bank segment.
GOODWILL
Goodwill is initially recorded as the excess of the purchase price over the fair value of net assets acquired in a business combination and is subsequently evaluated at least annually for impairment. Goodwill impairment testing is performed at the reporting unit level, equivalent to a business segment or one level below. The Corporation has three reporting units: the Commercial Bank, the Retail Bank and Wealth Management. At June 30, 2020, goodwill totaled $635 million, including $473 million allocated to the Commercial Bank, $101 million allocated to the Retail Bank and $61 million allocated to Wealth Management.
The Corporation performs its annual evaluation of goodwill impairment in the third quarter of each year and may elect to perform a quantitative impairment analysis or first conduct a qualitative analysis to determine if a quantitative analysis is necessary. Additionally, the Corporation evaluates goodwill impairment on an interim basis if events or changes in circumstances between annual tests indicate additional testing may be warranted to determine if goodwill might be impaired.
In the first quarter of 2020, economic conditions deteriorated significantly with the spread of the coronavirus global pandemic. The outbreak resulted in social distancing requirements throughout the world, severely restricting the economy. In response to the crisis, the Federal Reserve lowered the Federal Funds rate in March 2020 to close to zero. Additionally, the U.S. government initiated numerous measures to support the economy, including the CARES Act. Given the economic deterioration in the first quarter of 2020, the Corporation assessed whether the events and circumstances resulted in it being more likely than not that the fair value of any reporting unit was less than its carrying value. Impairment indicators considered comprised economic conditions, including projections of the duration of current conditions and timing of a potential recovery; industry and market considerations; government intervention and regulatory updates; the impact of recent events to financial performance and cost factors of the reporting units; performance of the Corporation’s stock and other relevant events. The Corporation further considered the amount by which fair value exceeded book value for each unit in the most recent quantitative analysis

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and sensitivities performed. At the conclusion of the first quarter 2020 assessment, the Corporation determined that it was more likely than not that the fair value of each reporting unit exceeded its carrying value.
In second quarter 2020, the Corporation performed a quantitative goodwill impairment test in response to continued macroeconomic deterioration and the ongoing impacts to the banking industry and markets in which the Corporation operates. The estimated fair values of the reporting units were determined using a blend of two commonly used valuation techniques: the market approach and the income approach. For the market approach, valuations of reporting units considered a combination of earnings and equity multiples from companies with characteristics similar to the reporting unit. Since the fair values determined under the market approach are representative of noncontrolling interests, the valuations incorporated a control premium. For the income approach, estimated future cash flows were derived from internal forecasts and economic expectations for each reporting unit. In the short- and mid-term, forecasts incorporated current economic conditions and ongoing impacts of the global pandemic, including a federal funds target near zero and an elevated allowance for credit losses. Long-term projections reflected normalized rate and credit environments, as well as a long-term rate of return for each reporting unit. Projections were discounted using an applicable discount rate to calculate fair value. The discount rate was based on the imputed cost of equity capital appropriate for each reporting unit, which incorporates the risk-free rate of return, the level of non-diversified risk associated with companies with characteristics similar to the reporting unit, a size risk premium and a market equity risk premium. The discount rate further reflected the uncertainty of current economic conditions and potential impacts to the forecasted financial information. The combined fair value of all units was compared to the Corporation’s market capitalization for reasonableness. At the conclusion of the quantitative impairment test in second quarter 2020, the estimated fair values of all reporting units substantially exceeded their carrying amounts, including goodwill.
The test included evaluation of various factors that continue to rapidly evolve and for which significant uncertainty remains, including the impact of the coronavirus global pandemic to the economy and ongoing government intervention to mitigate that impact. Further weakening in the economic environment, such as continued decline in the performance of the reporting units or other factors, could cause the fair value of one or more of the reporting units to fall below their carrying value, resulting in a goodwill impairment charge. Additionally, new legislative or regulatory changes not anticipated in management's expectations may cause the fair value of one or more of the reporting units to fall below the carrying value, resulting in a goodwill impairment charge. Any impairment charge would not affect the Corporation's regulatory capital ratios, tangible common equity ratio or liquidity position.



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SUPPLEMENTAL FINANCIAL DATA
The Corporation believes non-GAAP measures are meaningful because they reflect adjustments commonly made by management, investors, regulators and analysts to evaluate the adequacy of common equity and our performance trends. Tangible common equity is used by the Corporation to measure the quality of capital and the return relative to balance sheet risk.
Common equity tier 1 capital ratio removes preferred stock from the Tier 1 capital ratio as defined by and calculated in conformity with bank regulations. The tangible common equity ratio removes the effect of intangible assets from capital and total assets. Tangible common equity per share of common stock removes the effect of intangible assets from common shareholders' equity per share of common stock.
The following table provides a reconciliation of non-GAAP financial measures and regulatory ratios used in this financial review with financial measures defined by GAAP.
(dollar amounts in millions) June 30, 2020 December 31, 2019
Common Equity Tier 1 Capital (a):
Tier 1 capital $ 7,093    $ 6,919   
Less:
Fixed-rate reset non-cumulative perpetual preferred stock 395    —   
Common equity tier 1 capital $ 6,698    $ 6,919   
Risk-weighted assets $ 67,156    $ 68,273   
Tier 1 capital ratio 10.56  % 10.13  %
Common equity tier 1 capital ratio 9.97    10.13   
Tangible Common Equity Ratio:
Total shareholders' equity $ 7,802    $ 7,327   
Less:
Fixed-rate non-cumulative perpetual preferred stock 395    —   
Goodwill 635    635   
Other intangible assets    
Tangible common equity $ 6,769    $ 6,688   
Total assets $ 84,397    $ 73,402   
Less:
Goodwill 635    635   
Other intangible assets    
Tangible assets $ 83,759    $ 72,763   
Common equity ratio 8.78  % 9.98  %
Tangible common equity ratio 8.08    9.19   
Tangible Common Equity per Share of Common Stock:
Common shareholders' equity $ 7,407    $ 7,327   
Tangible common equity 6,769    6,688   
Shares of common stock outstanding (in millions) 139    142   
Common shareholders' equity per share of common stock $ 53.28    $ 51.57   
Tangible common equity per share of common stock 48.69    47.07   
(a)Tier 1 capital as defined by regulation; estimated for June 30, 2020, reflects deferral of CECL model impact.  

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ITEM 3. Quantitative and Qualitative Disclosures about Market Risk
Quantitative and qualitative disclosures for the current period can be found in the "Market and Liquidity Risk" section of "Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations."

ITEM 4. Controls and Procedures
(a)Evaluation of Disclosure Controls and Procedures. The Corporation maintains a set of disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the "Exchange Act")) that are designed to ensure that information required to be disclosed by the Corporation in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission's rules and forms, and that such information is accumulated and communicated to the Corporation's management, including the Corporation's Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. Management has evaluated, with the participation of the Corporation's Chief Executive Officer and Chief Financial Officer, the effectiveness of the Corporation's disclosure controls and procedures as of the end of the period covered by this quarterly report (the "Evaluation Date"). Based on the evaluation, the Corporation's Chief Executive Officer and Chief Financial Officer have concluded that, as of the Evaluation Date, the Corporation's disclosure controls and procedures are effective.
(b)Changes in Internal Control Over Financial Reporting. During the period to which this report relates, there have not been any changes in the Corporation's internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that have materially affected, or that are reasonably likely to materially affect, such controls.

PART II. OTHER INFORMATION

ITEM 1. Legal Proceedings
For information regarding the Corporation's legal proceedings, see "Part I. Item 1. Note 12 – Contingent Liabilities," which is incorporated herein by reference.

ITEM 1A. Risk Factors
        Other than as set forth below, there have been no material changes in the Corporation’s risk factors as previously disclosed in our Form 10-K for the fiscal year ended December 31, 2019 in response to Part I, Item 1A. of such Form 10-K. Such risk factors are incorporated herein by reference.  
        The following risk factor is added under "General Risk":

The COVID-19 pandemic has impacted our business, and the ultimate impact on our business and financial results will depend on future developments, which are highly uncertain and cannot be predicted, including the scope and duration of the pandemic and actions taken by governmental authorities in response to the pandemic.

The COVID-19 pandemic has negatively impacted the global economy, disrupted global supply chains, lowered equity market valuations, created significant volatility and disruption in financial markets, and increased unemployment levels. In addition, the pandemic has resulted in temporary closures of many businesses and the institution of social distancing and sheltering in place requirements in many states and communities. As a result, the demand for our products and services may be significantly impacted. Furthermore, the pandemic has influenced and could further influence the recognition of credit losses in our loan portfolios and has increased and could further increase our allowance for credit losses, particularly as businesses remain closed and as more customers may draw on their lines of credit or seek additional loans to help finance their businesses. Similarly, because of changing economic and market conditions affecting issuers, the securities we hold may lose value. Our business operations may also be disrupted if significant portions of our workforce are unable to work effectively, including because of illness, quarantines, government actions, or other restrictions in connection with the pandemic, and we have already temporarily closed certain of our branches and offices. In response to the pandemic, we have also enacted hardship relief assistance for customers experiencing financial difficulty as a result of COVID-19, including fee and penalty waivers, loan deferrals or other scenarios that may help our customers. As well, we are a lender for the Small Business Administration's Paycheck Protection Program ("PPP") and other SBA, Federal Reserve or United States Treasury programs that have been or may be created in the future in response to the pandemic. These programs are new and

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their effects on Comerica's business are uncertain. The extent to which the COVID-19 pandemic impacts our business, results of operations, and financial condition, as well as our regulatory capital and liquidity ratios, will depend on future developments, which are highly uncertain and cannot be predicted, including the scope and duration of the pandemic and actions taken by governmental authorities and other third parties in response to the pandemic.

        Below we amend the following risk factor discussed under "Credit Risk" in Part II, "Item 1A. Risk Factors" in Part I, Item 1A. of our Form 10-K for the fiscal year ended December 31, 2019.

Declines in the businesses or industries of Comerica's customers - in particular, the energy industry - could cause increased credit losses or decreased loan balances, which could adversely affect Comerica.

Comerica's business customer base consists, in part, of customers in volatile businesses and industries such as the automotive, commercial real estate, residential real estate and energy industries. These industries are sensitive to global economic conditions, supply chain factors and/or commodities prices. Any decline in one of these businesses or industries could cause increased credit losses, which in turn could adversely affect Comerica. Further, any decline in these businesses or industries could cause decreased borrowings, either due to reduced demand or reductions in the borrowing base available for each customer loan.

In particular, oil and gas prices have fallen since the beginning of 2020 due to global events. Loans in the Energy business line were $2.1 billion, or approximately 4 percent of total loans, at June 30, 2020. At June 30, 2020, the reserve allocation for Energy loans was over 10 percent of total Energy loans. If oil and gas prices continue to remain depressed for a prolonged period of time, Comerica's energy portfolio could experience increased credit losses, which could adversely affect Comerica's financial results. Furthermore, a prolonged period of low oil prices could also have a negative impact on the Texas economy, which could have a material adverse effect on Comerica’s business, financial condition and results of operations. For more information regarding Comerica's energy portfolio, please see “Energy Lending” beginning on page 56 of this report.

For more information regarding certain of Comerica's lines of business, please see "Concentration of Credit Risk," "Automotive Lending," "Commercial Real Estate Lending," "Residential Real Estate Lending" and “Energy Lending” on pages F-25 through F-27 of Comerica’s Form 10-K for the fiscal year ended December 31, 2019.  


ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds
For information regarding the Corporation's purchase of equity securities, see "Part I. Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations – Capital," which is incorporated herein by reference.

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ITEM 6. Exhibits
Exhibit No. Description
3.1
3.2
3.3
3.4
4 [In accordance with Regulation S-K Item No. 601(b)(4)(iii), the Registrant is not filing copies of instruments defining the rights of holders of long-term debt because none of those instruments authorizes debt in excess of 10% of the total assets of the registrant and its subsidiaries on a consolidated basis. The Registrant hereby agrees to furnish a copy of any such instrument to the SEC upon request.]
4.1
10.1H†
10.11†
10.12†
31.1
31.2
32
101 Financial statements from Quarterly Report on Form 10-Q of the Registrant for the quarter ended June 30, 2020, formatted in Inline XBRL: (i) the Consolidated Balance Sheets (unaudited), (ii) the Consolidated Statements of Comprehensive Income (unaudited), (iii) the Consolidated Statements of Changes in Shareholders' Equity (unaudited), (iv) the Consolidated Statements of Cash Flows (unaudited) and (v) the Notes to Consolidated Financial Statements (unaudited).
104 The cover page from the Registrant's Quarterly Report on Form 10-Q for the quarter ended June 30, 2020, formatted in Inline XBRL (included in Exhibit 101).
Management contract or compensatory plan or arrangement.

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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
COMERICA INCORPORATED
(Registrant)
/s/ Mauricio A. Ortiz
Mauricio A. Ortiz
Senior Vice President and
Chief Accounting Officer and
Duly Authorized Officer
Date: July 30, 2020

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Exhibit 10.1H



COMERICA INCORPORATED
RESTRICTED STOCK UNIT AWARD AGREEMENT (CLIFF)
THIS AGREEMENT (this “Agreement”) between Comerica Incorporated (the “Company”) and XXXXXX (the “Participant”) is effective as of XXXXXX (the “Effective Date”). Any undefined terms appearing herein as defined terms shall have the same meaning as they do in the Comerica Incorporated 2018 Long-Term Incentive Plan, as amended and/or restated from time to time, or any successor plan thereto (the “Plan”). The Company shall provide a copy of the Plan to the Participant upon request.
WITNESSETH:
1.Award of Restricted Stock Units. Pursuant to the provisions of the Plan, the Company hereby awards the Participant, subject to the terms and conditions of the Plan (incorporated herein by reference), and subject further to the terms and conditions in this Agreement, XXXXXX restricted stock units (“RSUs”) (the “Award”). Each RSU shall represent an unfunded, unsecured right for the Participant to receive one (1) Share, as described in this Agreement.

2.Ownership Rights. The Participant shall have no voting or other ownership rights in the Company arising from the Award of RSUs under this Agreement prior to the delivery of Shares upon the vesting and settlement of RSUs underlying the Award.

3.Dividend Equivalents. If cash dividends are declared by the Board on the Common Stock on or after the Effective Date and prior to the Settlement Date (as defined below), cash dividend equivalents (the “Dividend Equivalents”) shall accrue on the Shares underlying RSUs, whether such RSUs are vested or unvested, which Dividend Equivalents shall be subject to vesting and forfeiture on the same terms and conditions as the underlying RSUs. Such Dividend Equivalents shall be in an amount of cash per RSU equal to the cash dividend paid with respect to each outstanding Share and shall be credited on the declaration date applicable to Shares. The Dividend Equivalents accrued prior to the Settlement Date shall be paid to the Participant with respect to all vested RSUs as soon as administratively feasible (and in no event more than forty-five (45) days) following the Settlement Date. The Dividend Equivalents accrued on Shares underlying RSUs that do not vest and are forfeited shall be forfeited for no consideration on the date such RSU is forfeited.

4.Vesting of Award.

a.General. Except as otherwise provided in the Plan and this Agreement, 100% of the RSUs covered by the Award shall vest on the second anniversary of the Effective Date (or, if such date is not a business day, the business day immediately preceding such date) (the “Vesting Date”), subject to the Participant’s continued employment by the Company or one of its Affiliates through the Vesting Date.

b.Death or Disability. In the event of the Participant’s Termination of Service due to death or Disability, prior to the Vesting Date, the Award shall immediately and fully vest effective as of the date of the Participant’s Termination of Service.

c.Change in Control. To the extent a Replacement Award is provided pursuant to Section 10(c) of the Plan, upon a Termination of Service of the Participant by the Company other than for Cause or by the Participant for Good Reason (as defined below), in each case, prior to the Vesting Date and within twenty-four (24) months following a Change in Control, the Award shall immediately and fully vest effective as of the date of the Participant’s Termination of Service. If a Replacement Award is not provided in respect of the Award, the vesting provisions set forth in Section 10(b) of the Plan shall apply.

Notwithstanding any provision of the Plan or any other agreement to the contrary, for purposes of this Agreement, the term “Good Reason” means the occurrence of any of the following without the Participant’s consent: (i) a material reduction in the Participant’s annual base salary or target short-term incentive compensation opportunity, in each case, from that in effect immediately prior to the Change in Control; or (ii) a mandatory relocation of the Participant’s principal location of employment to a location that is more than fifty (50) miles from his or her principal employment location immediately prior to the Change in Control and increases the distance between the Participant’s home and principal employment



        
Restricted Stock Unit Award Agreement (Cliff) Page 2 of 5

location. In order to invoke a termination for Good Reason, the Participant shall provide written notice to the Company of the existence of one or more of the conditions described in clauses (i) or (ii) within ninety (90) days following the Participant’s knowledge of the initial existence of such condition or conditions, and the Company shall have thirty (30) days following receipt of such written notice (the “Cure Period”) during which it may cure the condition, if curable. If the Company fails to cure the condition constituting Good Reason during the Cure Period, the Participant must terminate employment, if at all, within one (1) year following the end of the Cure Period in order for such termination to constitute a termination for Good Reason. The Participant’s mental or physical incapacity following the occurrence of an event described above in clauses (i) or (ii) shall not affect the Participant’s ability to terminate employment for Good Reason.
d.All Other Terminations. Except as provided in this Section 4, if the Participant’s Termination of Service occurs prior to the Vesting Date, the Award shall be forfeited for no consideration effective immediately as of the date of Termination of Service, unless the Committee determines otherwise.

5.Special Vesting and Forfeiture Terms.

a.Forfeiture Resulting from Acts Occurring During the Grant Year. Notwithstanding any other provision of this Agreement, if it shall be determined at any time subsequent to the Effective Date and prior to the Settlement Date (or, in the case of a termination due to death or Disability, the date of Termination of Service) that the Participant has, during the calendar year in which the Effective Date occurs (the “Grant Year”), (i) failed to comply with Company policies and procedures, including the Code of Business Conduct and Ethics or the Senior Financial Officer Code of Ethics (if applicable), (ii) violated any law or regulation, (iii) engaged in negligent or willful misconduct, (iv) engaged in activity resulting in a significant or material Sarbanes-Oxley control deficiency, or (v) demonstrated poor risk management or lack of judgment in discharge of Company duties, and such failure, violation, misconduct, activity or behavior (1) demonstrates an inadequate sensitivity to the inherent risks of Participant’s business line or functional area, and (2) results in, or is reasonably likely to result in, a material adverse impact (whether financial or reputational) on the Company or Participant’s business line or functional area, all or part of the Award granted under this Agreement that has not yet become vested at the time of such determination may be cancelled and forfeited. “Inadequate sensitivity” to risk is demonstrated by imprudent activities that subject the Company to risk outcomes in future periods, including risks that may not be apparent at the time the activities are undertaken.

b.Forfeiture of Award for Acts Occurring in Years Other Than the Grant Year. Notwithstanding any other provisions of this Agreement, if the Participant receives one or more equity awards in any calendar years other than the Grant Year (an “Other Grant Year”) pursuant to an Award Agreement that contains a clause substantially similar to Section 5(a) above, and it shall be determined that Participant, as a result of risk-related behavior, should be subject to the forfeiture of all or part of any such award granted in such Other Grant Year in accordance with the terms of such clause, then the unvested portion of the Award granted under this Agreement shall be subject to forfeiture to the extent necessary to equal the Unsatisfied Forfeiture Value (as defined below). The term “Unsatisfied Forfeiture Value” shall mean the value (as determined by the Committee in its absolute discretion) of any portion of the Award determined by the Committee to be subject to forfeiture with respect to the Other Grant Year (without regard to whether or not some portion thereof has already vested) that has in fact vested prior to such determination by the Committee. All or a portion of the RSUs granted under this Agreement that have not yet become vested shall be subject to forfeiture in order to satisfy as much as possible of the Unsatisfied Forfeiture Value, and the valuation of the Award for such purpose shall be determined in the absolute discretion of the Committee.

6.Settlement. Once vested, the Award shall be settled as follows:

a.In General. Subject to the terms of the Plan and this Agreement, the Award shall be settled in Common Stock as soon as reasonably practicable (and in no event more than forty-five (45) days) following the date on which the Award vests (the “Settlement Date”). On the Settlement Date, the Company shall issue to the Participant (or, in the case of the Participant’s death, to the Participant’s designated beneficiary pursuant to Section 13(f) of the Plan, as applicable or, in the case of the Participant’s



Restricted Stock Unit Award Agreement (Cliff) Page 3 of 5

Disability, to the Participant’s guardian or legal representative, if applicable and if permissible under applicable law) a number of whole Shares equal to the aggregate number of RSUs in respect of the Award (the “Settlement Shares”). Nothing herein shall preclude the Company from settling the RSUs upon a Section 409A CIC, if they are not replaced by a Replacement Award, to the extent such settlement is effectuated in accordance with Treas. Regs. § 1.409A-3(j)(4)(ix)(B).

b.Termination of Rights. Upon the issuance of the Settlement Shares in settlement of the vested RSUs in respect of the Award, the Award shall be settled in full and the Participant (or his or her designated beneficiary pursuant to Section 13(f) of the Plan, in the case of death) shall have no further rights with respect to the Award, other than with respect to the payment of the Dividend Equivalents accrued with respect to such vested RSUs.

7.Withholding. The Participant authorizes the Company to withhold from his or her compensation, including RSUs subject to the Award and the Settlement Shares issuable hereunder, to satisfy any income and employment tax withholding obligations in connection with the Award. No later than the date as of which an amount first becomes includible in the gross income of the Participant for Federal income tax purposes with respect to any Settlement Shares subject to the Award, the Participant shall pay to the Company, or make arrangements satisfactory to the Company regarding the payment of, all Federal, state and local income and employment taxes that are required by applicable laws and regulations to be withheld with respect to such amount. The Participant agrees that the Company may delay delivery of the Settlement Shares until proper payment of such taxes has been made by the Participant. If required pursuant to the Company’s policy as applied to the Participant or elected by the Participant, to the extent permitted by law, tax withholding obligations in respect of the Award shall be satisfied by authorizing the Company to withhold (provided the amount withheld does not exceed the maximum statutory tax rate in the Participant’s applicable tax jurisdiction or such lesser amount as is necessary to avoid adverse accounting treatment for the Company) from the Settlement Shares otherwise issuable to the individual pursuant to the settlement of the Award, a number of Shares having a Fair Market Value, as of the date the obligation to withhold such taxes arises, which will satisfy the amount of the withholding tax obligation. Further, unless determined otherwise by the Committee, the Participant may satisfy such obligations under this Section 7 by any other method authorized under Section 13(d) of the Plan.

8.Section 409A of the Code.

a.The Award is intended to qualify for the “short-term deferral” exception under Section 409A of the Code. To the extent that the Award is construed to be nonqualified deferred compensation subject to Section 409A of the Code, the Company shall use its reasonable efforts to operate, administer, construe and interpret this Agreement in a manner that minimizes adverse tax consequences to the Participant and is consistent with the requirements of Section 409A of the Code. Each payment of compensation under this Agreement shall be treated as a separate payment of compensation. In no event may the Participant, directly or indirectly, designate the calendar year of any payment or distribution under this Agreement. Notwithstanding any other provision of the Plan or this Agreement to the contrary, if the Participant is a “specified employee” within the meaning of Section 409A of the Code (as determined in accordance with the methodology established by the Company), amounts that constitute “nonqualified deferred compensation” subject to Section 409A of the Code that would otherwise be payable by reason of the Participant's Termination of Service during the six (6)-month period immediately following such Termination of Service shall instead be paid or provided on the first business day following the date that is six (6) months following the Participant’s Termination of Service. If the Participant dies following the Termination of Service and prior to the payment of any amounts delayed on account of Section 409A of the Code, such amounts shall be paid to the designated beneficiary of the Participant pursuant to Section 13(f) of the Plan within forty-five (45) days following the date of the Participant's death.

b.This Agreement shall be subject to amendment, with or without advance notice to the Participant, and on a prospective or retroactive basis, including, but not limited to, amendment in a manner that adversely affects the rights of the Participant, to the extent necessary to effect compliance with Section 409A of the Code. Notwithstanding anything contained in this Agreement or the Plan, the Company shall have no liability whatsoever for or in respect of any decision to take action to attempt to comply with Section 409A of the Code, any omission to take such action or for the failure of any such action taken by the Company to so comply.



Restricted Stock Unit Award Agreement (Cliff) Page 4 of 5

9.Cancellation of Award. The Committee has the right to cancel for no consideration all or any portion of the Award in accordance with Section 2(d) of the Plan if the Committee determines in good faith that the Participant has done any of the following: (i) been convicted of, or plead guilty or nolo contendere to, a charge of commission of a felony under federal law or the law of the state in which such action occurred; (ii) committed fraud; (iii) embezzled; (iv) disclosed confidential information or trade secrets; (v) was terminated for Cause; (vi) engaged in any activity in competition with the business of the Company or any Subsidiary or Affiliate of the Company; or (vii) engaged in conduct that adversely affected the Company.

The Delegate shall have the power and authority to suspend the vesting of or the right to receive the Settlement Shares in respect of all or any portion of the Award if the Delegate makes in good faith the determination described in the preceding sentence. Any such suspension of an Award shall remain in effect until the suspension shall be presented to and acted on by the Committee at its next meeting. This Section 9 shall have no application following a Change in Control.
10.Compliance with Laws and Regulations. The Award and the obligation of the Company to deliver the Settlement Shares subject to the Award are subject to compliance with all applicable laws, rules and regulations, to receipt of any approvals by any government or regulatory agency as may be required, and to any determinations the Company may make regarding the application of all such laws, rules and regulations.

11.Binding Nature of Plan. The Award is subject to the Plan. The Participant agrees to be bound by all terms and provisions of the Plan and related administrative rules and procedures, including, without limitation, terms and provisions and administrative rules and procedures adopted and/or modified after the granting of the Award. If any provisions hereof are inconsistent with those of the Plan, the provisions of the Plan shall control, except to the extent expressly modified herein pursuant to authority granted under the Plan.

12.Notices. Any notice to the Company under this Agreement shall be in writing to the following address or facsimile number: Human Resources - Total Rewards, Comerica Incorporated, 1717 Main Street, MC 6515, Dallas, TX 75201; Facsimile Number: 214-462-4430. The Company shall address any notice to the Participant to his or her current address according to the Company’s personnel files. All written notices provided in accordance with this Section 12 shall be deemed to be given when (a) delivered to the appropriate address(es) by hand or by a nationally recognized overnight courier service (costs prepaid); (b) sent by facsimile to the appropriate facsimile number, with confirmation by telephone of transmission receipt; or (c) received by the addressee, if sent by U.S. mail to the appropriate address or by Company inter-office mail to the appropriate mail code. Either party may designate in writing some other address or facsimile number for notice under this Agreement.
13.Force and Effect. The various provisions of this Agreement are severable in their entirety. Any judicial or legal determination of invalidity or unenforceability of any one provision shall have no effect on the continuing force and effect of the remaining provisions.

14.Successors. This Agreement shall be binding upon and inure to the benefit of the successors of the respective parties.

15.No Right to Continued Employment. Nothing in the Plan or this Agreement shall confer on the Participant any right to continue in the employment of the Company or its Affiliates for any given period or on any specified terms nor in any way affect the Company’s or its Affiliates’ right to terminate the Participant’s employment without prior notice at any time for any reason or for no reason.

16.Voluntary Participation. Participation in the Plan is voluntary. The value of the Award is an extraordinary item of compensation outside the scope of the Participant’s employment contract, if any. As such, the Award is not part of normal or expected compensation for purposes of calculating any severance, resignation, redundancy, end of service payments, bonuses, long-service awards, pension or retirement benefits or similar payments.

17.Recoupment. In addition to the cancellation provisions of Sections 5 and 9, RSUs granted pursuant to this Agreement shall be subject to the terms of the recoupment (clawback) policy adopted by the Company as in effect from time to time, as well as any recoupment/forfeiture provisions required by law and applicable to the Company or its subsidiaries; provided, however, unless prohibited by applicable law, the Company’s recoupment (clawback) policy shall have no application to the Award following a Change in Control.



Restricted Stock Unit Award Agreement (Cliff) Page 5 of 5


IN WITNESS WHEREOF, this Agreement has been executed by an appropriate officer of Comerica Incorporated and accepted by the Participant, both as of the day and year first above written.

COMERICA INCORPORATED
By:________________________
Name:
Title:




Exhibit 10.11
Governance, Compensation and Nominating Committee Approval: June 24, 2020
Board Approval: July 28, 2020










AMENDED AND RESTATED COMERICA INCORPORATED
NON-EMPLOYEE DIRECTOR FEE DEFERRAL PLAN






AMENDED AND RESTATED COMERICA INCORPORATED
NON-EMPLOYEE DIRECTOR FEE DEFERRAL PLAN



TABLE OF CONTENTS

SECTION I PURPOSE
1
SECTION II DEFINITIONS
1
SECTION III ELIGIBILITY
3
SECTION IV PROCEDURES RELATING TO DEFERRALS
3
SECTION V CREDITING AND ADJUSTING ACCOUNTS
4
SECTION VI DISTRIBUTION OF DEFERRED FEES
6
SECTION VII DESIGNATION OF BENEFICIARY
9
SECTION VIII AMENDMENT AND TERMINATION
9
SECTION IX MISCELLANEOUS PROVISIONS
10


i


AMENDED AND RESTATED COMERICA INCORPORATED
NON-EMPLOYEE DIRECTOR FEE DEFERRAL PLAN


SECTION I
PURPOSE

The purpose of the Amended and Restated Comerica Incorporated Non-Employee Director Fee Deferral Plan (the "Plan") is to allow Eligible Directors to defer their Director Fees, under the conditions provided herein, into an Investment Fund Unit Account. Eligible directors of the Corporation, directors of any Subsidiary or directors of any Advisory Board may defer all or any portion of their Director Fees into an Investment Fund Unit Account, as requested by such director.
The Plan was originally established as the "Comerica Incorporated Plan for Deferring the Payment of Director's Fees." In 1997, such plan was amended and restated as the "Comerica Incorporated Director Fee Deferral Plan." Then on May 21, 1999, the plan was divided into two plans, one of which became the "Comerica Incorporated 1999 Discretionary Director Fee Deferral Plan," and which was subsequently amended and restated on November 26, 2002 as the "Comerica Incorporated Director Fee Deferral Plan," and on January 27, 2004 as the "Comerica Incorporated Non-Employee Director Fee Deferral Plan".1 Subsequently, on November 18, 2008, the Plan was amended and restated, effective December 31, 2008, to accurately reflect its administration and to comply with the requirements of Code Section 409A. The Plan was again amended on June 16, 2010, effective as of January 1, 2010, was further amended and restated on January 27, 2015 and was again amended and restated as of July 1, 2020.
SECTION II
DEFINITIONS

The following words and phrases, wherever capitalized, shall have the following meanings respectively:
A. "Advisory Board" means a special board of directors appointed to advise a Subsidiary or unit of the Corporation.
B. "Aggregated Plan" means all agreements methods, programs, and other arrangements sponsored by the Corporation that would be aggregated with this Plan under Section 1.409A-1(c) of the Regulations.

1 The second plan which resulted from the division was named the "Comerica Incorporated 1999 Common Stock Director Fee Deferral Plan," which was amended and restated on November 26, 2002 as the "Comerica Incorporated Common Stock Director Fee Deferral Plan" and was further amended and restated on January 27, 2004 as the "Amended and Restated Comerica Incorporated Common Stock Non-Employee Director Fee Deferral Plan" and again amended and restated, effective November 18, 2008.
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C. "Beneficiary(ies)" means such individual(s) or entity(ies) designated on the most recent valid Beneficiary Designation Form that the Participant has properly submitted to the Corporation or in accordance with Section VII of this Plan, if there is no valid Beneficiary designation.

D. "Beneficiary Designation Form" is the form used to designate the Participant's Beneficiary(ies), as modified by the Plan Administrator or the Committee from time to time.

E. "Code" means the Internal Revenue Code of 1986, as amended, or any successor statute.

F. "Committee" means the Governance, Compensation and Nominating Committee of the Board of Directors of the Corporation, or any successor committee duly authorized by the Board of Directors of the Corporation.

G. "Corporation" means Comerica Incorporated, a Delaware corporation, and its successors and assigns.

H. "Deferral Election Form" is the form used to defer the payment of unearned Director Fees timely submitted by a Participant, as modified by the Plan Administrator or the Committee from time to time.

I. "Director Fees" means the fees paid in connection with the performance of duties as an Eligible Director, including attendance fees, retainer fees and fees for serving as chair or vice-chair of any committee of the board of the Corporation or its Subsidiaries or an Advisory Board.

J. "Eligible Director" means a director of the Corporation, a Subsidiary or Advisory Board who is not an employee of the Corporation or any Subsidiary.

K. "Investment Fund Unit" means a unit equivalent to a fund share that is maintained for the benefit of a Participant in an Investment Fund Unit Account of such Participant.

L. "Investment Fund Unit Account" means an account established under Section V of this Plan, solely for bookkeeping purposes, in the name of each Participant to record those Director Fees that have been deferred to such account and the earnings thereon.

M. "Participant" means an Eligible Director for whom an Investment Fund Unit Account is maintained under the Plan.

N. "Plan" means the Amended and Restated Comerica Incorporated Non-Employee Director Fee Deferral Plan, the provisions of which are set forth herein, as it may be further amended and restated from time to time.

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O. "Plan Administrator" means one or more individuals appointed by the Committee to handle the day-to-day administration of the Plan.

P. "Regulations" means the Treasury Regulations promulgated under the Code.

Q. "Retirement" means the date of the next annual shareholder's meeting of the Corporation immediately following the Director's 72nd birthday.

R. "Subsidiary" means any corporation, partnership or other entity, a majority of whose stock or interests is or are owned by the Corporation.

S. "Unforeseeable Emergency" means a severe financial hardship to the Participant resulting from a sudden and unexpected illness or accident of the Participant, the Participant's spouse, or a dependent (as defined in Code Section 152, without regard to Section 152(b)(1), (b)(2), and (d)(1)(B)) of the Participant; loss of the Participant's property due to casualty (including the need to rebuild a home following damage to a home not otherwise covered by insurance, for example not as a result of a natural disaster); or other similar extraordinary and unforeseeable circumstances arising as a result of events beyond the control of the Participant. This definition shall be construed in a manner that is consistent with Code Section 409A and the Regulations promulgated thereunder.

SECTION III
ELIGIBILITY

Each Eligible Director shall be eligible to participate in the Plan.
SECTION IV
PROCEDURES RELATING TO DEFERRALS

A. Deferral of Director Fees. Eligible Directors may defer any portion (0% - 100%) of their Director Fees under this Plan.

1. Deferral Period. Director Fees may be deferred pursuant to this Section IV(A) for the period specified by the Eligible Director or Participant in a Deferral Election Form. The minimum deferral period for Director Fees deferred pursuant to this Section IV(A) shall be the lesser of the number of years remaining before Retirement, as defined in Section II(R), or five (5) years from the date of service for which the Director Fees became payable, notwithstanding the deferral election under this Plan. With respect to a Director whose service commences during a calendar year, the deferral period with respect to Director Fees earned during such year shall include the full calendar year in which his or her services commence.
2. Deferred Director Fees. Once Director Fees are deferred under this Plan, the Participant may not receive distributions of such deferred amounts, except in accordance with Section VI of this Plan.

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B. Deferral Procedures. Any Eligible Director wishing to defer Director Fees must submit a Deferral Election Form to the Plan Administrator within the time frame permitted by the Plan Administrator, which shall in no event be later than the last business date preceding the calendar year during which the Director Fees are to be earned. However, any newly-appointed or newly-elected director may submit a Deferral Election Form with respect to unearned Director Fees within thirty (30) days of his or her appointment or election. A deferral election pursuant to this Plan may cover all or a portion (0% - 100%) of the Director Fees which may be deferred, and shall designate into which investment fund and in what proportions the Director Fees should be recorded.

In the event a Participant does not indicate an appropriate minimum deferral period in a Deferral Election Form, such Participant's applicable Director Fees shall be deferred for a period of five (5) years from the date of service for which the Director Fees became payable, notwithstanding the deferral election under this Plan. If a Participant does not indicate the method of deferral, such Director Fees shall be paid out in a single lump sum at the end of the deferral period.
C. Modifications/Irrevocability. The Participant's deferral election shall remain in effect with respect to all unearned Director Fees unless the Participant modifies such election prior to the date on which the election becomes irrevocable with respect to such fees. Except to the extent expressly provided under the Plan or permitted under Code Section 409A and the Regulations promulgated thereunder, the provisions of the Deferral Election Form relating to an election to defer Director Fees and the selection of the deferral period and manner of payment of the deferrals shall be irrevocable as of the last date on which such Deferral Election Form may be submitted in accordance with Article IV(B). If a director has submitted a Deferral Election Form relating to Director Fees to be earned in the future, he or she may modify or cancel such election by submitting a new Deferral Election Form at any time prior to the date on which such election is irrevocable with respect to such fees.

D. Subsequent Elections. A Director is not permitted to make a subsequent election with respect to the timing or form of payment of any Director Fees deferred under this Plan pursuant to a Deferral Election Form that has become irrevocable in accordance with Article IV(C)above.

SECTION V
CREDITING AND ADJUSTING ACCOUNTS

A. Value of Investment Fund Unit Account. Director Fees which have been deferred under this Plan, and deemed earnings thereon, shall be credited to Investment Fund Unit Accounts created by and recorded on the books of the Corporation from time to time. Each Investment Fund Unit Account shall be adjusted as follows:

1. Each Participant's Investment Fund Unit Account shall be deemed to be invested in one or more of the investment funds offered for investment and designated by such Participant in the manner determined by the Plan
4


Administrator. No Participant shall have any right to vote any shares of the investment funds held in the rabbi trust or otherwise owned by the Corporation in respect of its obligations hereunder.
The deemed purchase price for Investment Fund Units under this Plan shall be based upon the closing price for the corresponding investment fund shares on the exchange on which the relevant investment fund is listed or the market on which such investment fund is traded on the day that the Director Fees would have otherwise been paid to the Participant had they not been deferred.
2. Participant's Investment Fund Unit Account shall be charged each business day with any distributions made on such day. Such Investment Fund Unit Account shall also be credited with deemed earnings, gains and losses each business day, using the closing price for the designated investment fund on the exchange on which such investment fund is listed or the market on which such investment fund is traded as of the most recent prior trading day.  Dividends shall be deemed to be reinvested in like investment funds and shall be credited at the time actual dividends are paid, with the number of Investment Fund Units attributable to a dividend being calculated by dividing the dollar amount of the dividend by the closing price of a share of the designated investment fund on the dividend payment date; provided that if the Corporation, in its sole and absolute discretion, has established a rabbi trust for its own benefit to fund the Corporation's obligations under this Plan, or otherwise purchased shares to be held in its own name, or for its own account (as general assets of the Corporation), that may be used for meeting its obligations to provide benefits under this Plan, then dividends shall be credited based on the purchase price(s) for the investment fund shares, as determined under Section V.A.1. above. Finally, a Participant's Investment Fund Unit Account shall be credited with the amount, if any, of Director Fees deferred and designated to be credited to such account during each quarter, or on a more frequent basis if deemed appropriate by the Committee.
B. Reallocation of Existing Account Balances. Each Participant may reallocate all or a portion of his or her existing Investment Fund Unit Account to an alternate investment fund or funds, as an investment option with respect to existing deferred Director Fees, in the manner designated by the Corporation for this purpose. To the extent the Corporation has purchased investment fund shares on the open market that may be used for meeting its obligations to provide benefits under this Plan, whether such shares are held in a rabbi trust established in the Corporation's sole and absolute discretion for its own benefit to fund the Corporation's obligations under this Plan or otherwise held in the Corporation's own name or for its own account (as general assets of the Corporation), (1) the Plan Administrator may delay any reallocation request because of a trading blackout period or any other trading restriction which may be imposed on the Corporation, whether voluntary or involuntary, and (2) no transfers between investment options will be allowed if prohibited by the rules applicable to the particular investment fund from or to which a transfer is to be made or by rules adopted by the Plan Administrator and communicated to the Participants.

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C. Reallocation of Future Deferral Elections. Each Participant may reallocate all or a portion of his or her Investment Fund Unit Account to change prospectively the percentage(s) of an investment and/or designate an alternate investment fund or funds, as an investment option with respect to future deferred Director Fees in the manner designated by the Corporation for this purpose. To the extent the Corporation purchases investment fund shares on the open market that may be used for meeting its obligations to provide benefits under this Plan, whether such shares are held in a rabbi trust established in the Corporation's sole and absolute discretion for its own benefit to fund the Corporation's obligations under this Plan or otherwise held in the Corporation's own name or for its own account (as general assets of the Corporation), the Plan Administrator may delay any reallocation request because of a trading blackout period or any other trading restriction which may be imposed on the Corporation, whether voluntary or involuntary.
SECTION VI
DISTRIBUTION OF DEFERRED FEES

A. Time and Manner. Subject to the provisions of Section IV of this Plan, distribution of the Participant's Investment Fund Unit Account shall be made in cash at such time and in such manner, i.e., a lump sum or installments, as the Participant has specified in the Deferral Election Form.

1. Lump Sum Distributions. If the Participant elects to receive a lump sum distribution, the Corporation shall make a single payment of the amounts subject to that election in the applicable Deferral Election Form in the calendar year following the calendar year in which the deferral period ends. If a Participant fails to indicate a payment method, the Participant shall be deemed to have elected a lump sum distribution.
2. Installment Distributions. If the Participant elects to receive installment distributions, the Corporation shall make installment payments of the amounts subject to that election in the applicable Deferral Election Form over a period of time as specified by the Participant on the applicable Deferral Election Form. Installment payments shall commence in the calendar year following the calendar year in which the deferral period ends. A Participant may choose an applicable installment period from the options designated by the Corporation on the Deferral Election Form, which shall not exceed ten (10) years from the date of distribution of the first installment. The amount of each installment payment shall be determined by multiplying the amounts subject to such Deferral Election Form on the date the installment is scheduled to be paid by a fraction, the numerator of which is one and the denominator of which is the number of unpaid installments remaining at such time.
a. Less than $10,000. If, at the time an installment distribution of an Investment Fund Unit Account is scheduled to commence, the fair market value of all the Investment Fund Units in such Investment Fund Unit Account does not exceed $10,000, notwithstanding an election by the
6


Participant that such account be distributed in installments, the balance of such account shall be distributed to the Participant in a lump sum, in cash.
B. Death. Notwithstanding any other provision of the Plan, upon the death of a Participant, the remaining balance of his or her Investment Fund Unit Account shall be distributed in one lump sum to the Participant's Beneficiary(ies) within ninety (90) days after the date of the Participant's death.

C. Hardship Distributions. In the event of an Unforeseeable Emergency prior to distribution of the entire balance of the Participant's Investment Fund Unit Account, the Committee may, in its sole discretion, direct a distribution to the Participant, within ninety (90) days following such Unforeseeable Emergency, in an amount reasonably necessary, in the judgment of the Committee, to satisfy the financial hardship occasioned by the Unforeseeable Emergency, plus amounts necessary to pay any Federal, state, local or foreign income taxes anticipated as a result of the distribution or cancel a future deferral election with respect to the amount reasonably necessary, in the judgment of the Committee, to alleviate such financial hardship. However, no distribution will be made on account of an Unforeseeable Emergency to the extent that such emergency is or may be relieved through reimbursement or compensation from insurance or otherwise, by liquidation of the Participant's assets, to the extent the liquidation of such assets would not cause severe financial hardship, or by cessation of deferrals under the Plan. Any Participant desiring a distribution under the Plan on account of an Unforeseeable Emergency shall submit to the Committee a written request for such distribution which sets forth in reasonable detail the Unforeseeable Emergency which would cause the Participant severe financial hardship, and the amount which the Participant believes to be necessary to alleviate the financial hardship. Any Participant who receives a hardship distribution shall have his deferral election cancelled hereunder and shall not again be eligible to submit a deferral election until the next enrollment period after the calendar year in which the hardship distribution is made.

D. Distribution in the Event of Income Inclusion Under Code Section 409A. If any portion of a Participant's Investment Fund Unit Account is required to be included in income by the Participant prior to receipt due to a failure of this Plan or any Aggregated Plan to comply with the requirements of Code Section 409A and the Regulations, the Committee may determine that such Participant shall receive a distribution from the Plan in an amount equal to the lesser of: (i) the portion of the Participant's Investment Fund Unit Account required to be included in income as a result of the failure of the Plan or any Aggregated Plan to comply with the requirements of Code Section 409A and the Regulations, or (ii) the balance of the Participant's Investment Fund Unit Account.

E. Delay for Payments in Violation of Federal Securities Laws or Other Applicable Law. In the event the Corporation reasonably anticipates that the payment of benefits as specified hereunder would violate Federal securities laws or other applicable law, the Committee may delay the payment under this Section VI until the earliest date at which the Corporation reasonably anticipates that making of such payment would not cause such violation.
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F. Delay for Insolvency or Compelling Business Reasons. In the event the Corporation determines that the making of any payment of benefits on the date specified hereunder would jeopardize the ability of the Corporation to continue as a going concern, the Committee may delay the payment of benefits under this Section VI until the first calendar year in which the Corporation notifies the Committee that the payment of benefits would not have such effect.

G. Administrative Delay in Payment. The payment of benefits hereunder shall begin at the date specified in accordance with the provisions of the foregoing paragraphs of this Section VI; provided that, in the case of administrative necessity, the payment of such benefits may be delayed up to the later of the last day of the calendar year in which payment would otherwise be made or the 15th day of the third calendar month following the date on which payment would otherwise be made. Further, if, as a result of events beyond the control of the Participant (or following the Participant's death, the Participant's Beneficiary), it is not administratively practicable for the Plan Administrator to calculate the amount of benefits due to Participant as of the date on which payment would otherwise be made, the payment may be delayed until the first calendar year in which calculation of the amount is administratively practicable.

H. No Participant Election. Notwithstanding the foregoing provisions, if the period during which payment of benefits hereunder will be made occurs, or will occur, in two calendar years, the Participant shall not be permitted to elect the calendar year in which the payment shall be made.
SECTION VII
DESIGNATION OF BENEFICIARY

Upon becoming a Participant of the Plan, each director shall submit to the Plan Administrator a Beneficiary Designation Form designating one or more Beneficiaries to whom distributions otherwise due the Participant, shall be made in a lump sum payment in the event of the Participant's death before distribution of the Participant's Investment Fund Unit Account has been completed. A Beneficiary Designation Form will be effective only if it is validly submitted by the Participant to the Plan Administrator before the Participant's death. Any subsequent Beneficiary Designation Form properly submitted will supersede any previous Beneficiary Designation Form so submitted. If a Participant designates a spouse as a Beneficiary, such designation shall automatically terminate and be of no effect following the divorce of the Participant and such individual, unless ratified in writing post-divorce.
If the primary Beneficiary shall predecease the Participant, or the primary Beneficiary and the Participant die in a common disaster under such circumstances that it is impossible to determine who survived the other, the portion of the Investment Fund Unit Account that remains undistributed at the time of the Participant's death shall be distributed to the alternate Beneficiary(ies) who survive(s) the Participant in the manner set forth in the Beneficiary Designation Form. If there are no alternate Beneficiaries living or in existence at the date of the Participant's death, or if the Participant has not submitted a valid Beneficiary Designation Form to the Corporation, the balance of the
8


account shall be paid in a lump sum distribution to the legal representative for the benefit of the Participant's estate.
SECTION VIII
AMENDMENT AND TERMINATION

A. Amendment of Plan. This Plan may be amended at any time in the sole discretion of the Board or Committee, by a written resolution, to the extent that such amendment complies with applicable laws including Code Section 409A and the Regulations promulgated thereunder. No such amendment shall affect the time of distribution of any of the Incentive Awards earned prior to the time of such amendment except as the Committee may determine to be necessary to carry out the purpose of the Plan.

B. Termination of Plan. The Plan may be terminated at any time in the sole discretion of the Board or Committee by a written resolution of its members. Following the termination of the Plan, the Investment Fund Unit Accounts may be liquidated in accordance with one of the following:

1. the termination and liquidation of the Plan within twelve (12) months of a complete dissolution of the Corporation taxed under Section 331 of the Code or with the approval of a bankruptcy court pursuant to 11 U.S.C. § 503(b)(1)(A); provided that the amounts deferred under this Plan are included in the Participants' gross incomes in the latest of the following years (or, if earlier, the taxable year in which the amount is actually or constructively received): (i) the calendar year in which the Plan is terminated; (ii) the first calendar year in which the amount is no longer subject to a substantial risk of forfeiture; or (iii) the first calendar year in which the payment is administratively practicable.
2. the termination and liquidation of the Plan pursuant to irrevocable action taken by the Committee or the Corporation within the thirty (30) days preceding or the twelve (12) months following a change in control event (as such term is defined in Section 1.409A-3(i)(5) of the Regulations; provided that all Aggregated Plans are terminated and liquidated with respect to each Participant that experienced the change in control, so that under the terms of the termination and liquidation, all such Participants are required to receive all amounts of deferred compensation under this Plan and any other Aggregated Plans within twelve (12) months of the date the Committee or the Corporation irrevocably takes all necessary action to terminate and liquidate this Plan and the date the Committee (or the Corporation, as the case may be) irrevocably takes all necessary action to terminate and liquidate such other Aggregated Plans;
3. the termination and liquidation of the Plan, provided that: (i) the termination and liquidation does not occur proximate to a downturn in the Corporation's financial health; (ii) the Committee or the Corporation, as the case may be, terminates and liquidates all Aggregated Plans; (iii) no payments in liquidation of this Plan are made within twelve (12) months of the date the
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Committee or the Corporation irrevocably takes all necessary action to terminate and liquidate this Plan, other than payments that would be payable under the terms of this Plan if the action to terminate and liquidate this Plan had not occurred; (iv) all payments are made within twenty four (24) months of the date on which the Committee or the Corporation irrevocably takes all action necessary to terminate and liquidate this Plan; and (iv) the Corporation does not adopt a new Aggregated Plan at any time within three (3) years following the date on which the Committee or the Corporation irrevocably takes all action necessary to terminate and liquidate the Plan.
SECTION IX
MISCELLANEOUS PROVISIONS

A. Participant Consent. By electing to defer compensation pursuant to the Plan, Participants shall be deemed conclusively to have accepted and consented to all terms of the Plan as amended from time to time, and all actions or decisions made or to be made by the Corporation, the Board of Directors, the Committee or the Plan Administrator with regard to the Plan. Such terms and consent shall also apply to, and be binding upon, the Beneficiaries, distributees and personal representatives and other successors in interest of each Participant.

B. Notice. Any election made, or notice given by a Participant pursuant to the Plan shall be in writing to the Committee, or to such representative as may be designated by the Committee for such purpose. Notice shall be deemed to have been made or given on the date received by the Committee or its designated representative.

C. Competency. If the Committee determines that any person to whom a payment is due hereunder is a minor, or is adjudicated incompetent by reason of physical or mental disability, the Committee shall have the power to cause the payments becoming due to such person to be made to the legal guardian for the benefit of the minor or incompetent, without responsibility of the Corporation or the Committee to see to the application of such payment, unless prior to such payment claim is made therefore by a duly appointed legal representative. Payments made pursuant to such power shall operate as a complete discharge of the Corporation, the Board of Directors and the Committee.

D. Nonalienation of Benefits. Neither the Participant nor any Beneficiary designated by him or her shall have any right to alienate, assign, or encumber any benefits that are or may be distributed hereunder, nor may any such amount be subject to attachment, garnishment, levy, execution or other legal or equitable process for the debts, contracts, liabilities, engagements or acts of any Participant or Beneficiary.

E. Administration of Plan. Full power and authority to construe, interpret, and administer the Plan shall be vested in the Committee. To the extent permitted by law, the Committee may delegate any authority it possesses to the Plan Administrator. To
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the extent the Committee has delegated authority concerning a matter to the Plan Administrator, any reference in the Plan to the "Committee" insofar as it pertains to such matter, shall refer likewise to the Plan Administrator. Decisions of the Committee shall be final, conclusive, and binding upon all parties.

F. Fees and Expenses of Administration. If the Committee so determines, reasonable trustee's fees (if applicable) and reasonable out-of-pocket expenses of administering the Plan may be ratably deducted (using average balances) on an annual basis from Investment Fund Unit Accounts. In the event the Corporation, in its sole and absolute discretion, has established a rabbi trust for its own benefit to fund the Corporation's obligations under this Plan, or otherwise purchased shares to be held in its own name, or for its own account (as general assets of the Corporation), that may be used for meeting its obligations to provide benefits under this Plan and fees of any kind, including, without limitation, redemption fees, are assessed or imposed thereto by an investment fund company in connection with any purchase or sale, including, without limitation, a Participant's early trading activity, such fees shall be charged to the applicable Participant's Investment Fund Unit Account.

G. Effective Date. The terms of this Plan shall apply to all Director Fees deferred under this Plan or one of its predecessors on and after July 1, 2020, except to the extent that retroactive application would adversely affect the rights of a Participant or Beneficiary to the amounts in the applicable Investment Fund Unit Account at the time of the adoption of this amendment and restatement of the Plan.

H. Statements to Participants. Statements will be provided to Participants under the Plan on at least an annual basis.

I. Nonforfeitability of Participant Accounts. Each Participant shall be fully vested in his or her Investment Fund Unit Account, and the right to receive the amounts in the Investment Fund Unit Account shall be nonforfeitable.

J. Successors Bound. The contractual agreement between the Corporation and each Participant resulting from the execution of a Deferral Election Form shall be binding upon and inure to the benefit of the Corporation, its successors and assigns, and to the Participant and to the Participant's beneficiaries, heirs, executors, administrators and other legal representatives.

K. Governing Law and Rules of Construction. This Plan shall be governed in all respects, whether as to construction, validity or otherwise, by the laws of the State of Delaware unless preempted by Federal law.

L. Compliance & Severability. It is the Corporation's intent to comply with all applicable tax and other laws, including Code Section 409A and the Regulations promulgated thereunder, so that all rights under the Plan will be limited as necessary in the judgment of the Committee to conform therewith. Therefore, consistent with the effectuation of the purposes hereof, each provision of this Plan shall be treated as severable, to the end that, if any one or more provisions shall be adjudged or declared
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illegal, invalid or unenforceable, this Plan shall be interpreted, and shall remain in full force and effect, as though such provision or provisions had never been contained herein. It is the intention of the Corporation that the Plan established hereunder be "unfunded" for income tax purposes, whether or not the Corporation establishes a rabbi trust, and the provisions hereof shall be construed in a manner to carry out that intention.

M. Ownership of Deferred Director Fees and Continued Director Status. Title to and beneficial ownership of any assets, of whatever nature, which may be allocated by the Corporation to any Investment Fund Unit Account in the name of any Participant shall at all times remain with the Corporation and its Subsidiaries, and no Participant or Beneficiary shall have any property interest whatsoever in any specific assets of the Corporation or its Subsidiaries by reason of the establishment of the Plan. The rights of each Participant and Beneficiary hereunder shall be limited to enforcing the unfunded, unsecured promise of the Corporation and its Subsidiaries to pay benefits under the Plan, and the status of any Participant or Beneficiary shall be that of an unsecured general creditor of the Corporation and its Subsidiaries. Neither the establishment of the Plan nor the distribution of any benefits hereunder or any action of the Corporation, its Board of Directors or any committee thereto, shall be held or construed to confer upon any person the legal right to remain a director of the Corporation or any Subsidiary or any Advisory Board beyond the term for which he or she was elected or appointed to the board(s) on which he or she serves.
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Exhibit 10.12

Governance, Compensation and Nominating Committee Approval: June 24, 2020
Board Approval: July 28, 2020


















AMENDED AND RESTATED COMERICA INCORPORATED
COMMON STOCK NON-EMPLOYEE DIRECTOR FEE DEFERRAL PLAN




AMENDED AND RESTATED COMERICA INCORPORATED
COMMON STOCK NON-EMPLOYEE DIRECTOR FEE DEFERRAL PLAN

TABLE OF CONTENTS
SECTION I  PURPOSE.............................................................
 
SECTION II  DEFINITIONS........................................................
 
SECTION III ELIGIBILITY...........................................................
 
SECTION IV  PROCEDURES RELATING TO DEFERRALS......
 
SECTION V  CREDITING AND ADJUSTING ACCOUNTS........
 
SECTION VI  DISTRIBUTION OF DEFERRED FEES................
 
SECTION VII  DESIGNATION OF BENEFICIARY........................
 
SECTION VIII  AMENDMENT AND TERMINATION......................
 
SECTION IX  MISCELLANEOUS PROVISIONS.........................
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ii


AMENDED AND RESTATED COMERICA INCORPORATED
COMMON STOCK NON-EMPLOYEE DIRECTOR FEE DEFERRAL PLAN

SECTION I
PURPOSE

The purpose of the Amended and Restated Comerica Incorporated Common Stock Non-Employee Director Fee Deferral Plan (the "Common Stock Plan") is to allow Eligible Directors to defer their Director Fees, under the conditions provided herein, into a Corporation Stock Unit Account. Eligible Directors may defer all or any portion of their Director Fees into a Corporation Stock Unit Account as requested by such director.
The Common Stock Plan was originally established as the "Comerica Incorporated Plan for Deferring the Payment of Director's Fees." In 1997, such plan was amended and restated as the "Comerica Incorporated Director Fee Deferral Plan." Then on May 21, 1999, the plan was divided into two plans, one of which became the "Comerica Incorporated 1999 Common Stock Director Fee Deferral Plan," and which was subsequently amended and restated on November 26, 2002 as the "Comerica Incorporated Common Stock Director Fee Deferral Plan," and on January 27, 2004 as the "Amended and Restated Comerica Incorporated Common Stock Non-Employee Director Fee Deferral Plan". Subsequently, on November 18, 2008, the Plan was amended and restated, effective December 31, 2008, to accurately reflect its administration and to comply with the requirements of Code Section 409A. The Plan was again amended on June 16, 2010, effective as of January 1, 2010, was further amended and restated on January 27, 2015 and was again amended and restated as of July 1, 2020.

SECTION II
DEFINITIONS

The following words and phrases, wherever capitalized, shall have the following meanings respectively:
i."Advisory Board" means a special board of directors appointed to advise a Subsidiary or unit of the Corporation.
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B. "Aggregated Plan" means all agreements methods, programs, and other arrangements sponsored by the Corporation that would be aggregated with the Common Stock Plan under Section 1.409A-1(c) of the Regulations.
C. "Beneficiary(ies)" means such individual(s) or entity(ies) designated on the most recent valid Beneficiary Designation Form that the Participant has properly submitted to the Corporation, or in accordance with Section VII of this Common Stock Plan, if there is no valid Beneficiary designation.
D. "Beneficiary Designation Form" is the form used to designate the Participant's Beneficiary(ies), as modified by the Plan Administrator or the Committee from time to time.
E. "Code" means the Internal Revenue Code of 1986, as amended, or any successor statute.
F. "Committee" means the Governance, Compensation and Nominating Committee of the Board of Directors of the Corporation, or any successor committee duly authorized by the Board of Directors of the Corporation.
G. "Common Stock" means the common stock of the Corporation, par value $5.00 per share.
H. "Common Stock Plan" means the Amended and Restated Comerica Incorporated Common Stock Non-Employee Director Fee Deferral Plan, the provisions of which are set forth herein, as it may be further amended and restated from time to time.
I. "Corporation" means Comerica Incorporated, a Delaware corporation, and its successors and assigns.
J. "Corporation Stock Unit Account" means an account established under Section V of this Common Stock Plan, solely for bookkeeping purposes, in the name of each Participant to record those Director Fees that are deferred under this Common Stock Plan on the Participant's behalf and the earnings and dividends thereon.
K. "Deferral Election Form" is the form used to defer the payment of unearned Director Fees timely submitted by a Participant, as modified by the Plan Administrator or the Committee from time to time.
L. "Director Fees" means the fees paid in connection with the performance of duties as an Eligible Director, including attendance fees, retainer fees and fees for serving as chair or vice-chair of any committee of the board of the Corporation or its Subsidiaries or an Advisory Board.
M. "Eligible Director" means a director of the Corporation, a Subsidiary or Advisory Board who is not an employee of the Corporation or any Subsidiary.
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N. "Participant" means an Eligible Director for whom a Corporation Stock Unit Account is maintained under the Common Stock Plan.
O. "Plan Administrator" means one or more individuals appointed by the Committee to handle the day-to-day administration of the Common Stock Plan.
P. "Regulations" means the Treasury Regulations promulgated under the Code.
Q. "Retirement" means the date of the next annual shareholder's meeting of the Corporation immediately following the Director's 72nd birthday.
R. "Stock Unit" means a unit equivalent to a share of Common Stock that is maintained for the benefit of a Participant in the Corporation Stock Unit Account of such Participant.
S. "Subsidiary" means any corporation, partnership or other entity, a majority of whose stock or interests is or are owned by the Corporation.
T. "Unforeseeable Emergency" means a severe financial hardship to the Participant resulting from a sudden and unexpected illness or accident of the Participant, the Participant's spouse, or a dependent (as defined in Code Section 152, without regard to Section 152(b)(1), (b)(2), and (d)(1)(B)) of the Participant; loss of the Participant's property due to casualty (including the need to rebuild a home following damage to a home not otherwise covered by insurance, for example not as a result of a natural disaster); or other similar extraordinary and unforeseeable circumstances arising as a result of events beyond the control of the Participant. This definition shall be construed in a manner that is consistent with Code Section 409A and the Regulations promulgated thereunder.
SECTION III
ELIGIBILITY

Each Eligible Director shall be eligible to participate in the Plan.
SECTION IV
PROCEDURES RELATING TO DEFERRALS

A. Deferral of Director Fees. Eligible Directors may defer any portion (0% – 100%) of their Director Fees under this Common Stock Plan.
1. Deferral Period. Director Fees may be deferred pursuant to this Section IV(A) for the period specified by the Eligible Director or Participant in a Deferral Election Form. The minimum deferral period for Director Fees deferred pursuant to this Section IV(A) shall be the lesser of the number of years remaining before Retirement, as defined in Section II(R), or five (5) years from the date of service for which the Director Fees became payable, notwithstanding the deferral election under this Common Stock Plan. With respect to a Director
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whose service commences during a calendar year, the deferral period with respect to Director Fees earned during such year shall include the full calendar year in which his or her services commence.
2. Deferred Director Fees. Once Director Fees are deferred under this Common Stock Plan, a Participant may not receive distributions of such deferred amounts, except in accordance with Section VI of this Common Stock Plan.
B. Deferral Procedures. Any Eligible Director wishing to defer Director Fees must submit a Deferral Election Form to the Plan Administrator within the time frame permitted by the Plan Administrator, which shall in no event be later than the last business date preceding the calendar year during which the Director Fees are to be earned. However, any newly-appointed or newly-elected director may submit a Deferral Election Form, with respect to unearned Director Fees, within thirty (30) days of his or her appointment or election. A deferral election pursuant to this Common Stock Plan may cover all or a portion (0% – 100%) of the Director Fees which may be deferred.
In the event a Participant does not indicate an appropriate minimum deferral period in a Deferral Election Form, such Participant's applicable Director Fees shall be deferred for a period of five (5) years from the date of service for which the Director Fees became payable, notwithstanding the deferral election under this Common Stock Plan. If a Participant does not indicate the method of deferral, such Director Fees shall be paid out in a single lump sum at the end of the deferral period.
C. Modifications/Irrevocability. The Participant's deferral election shall remain in effect with respect to all unearned Director Fees unless the Participant modifies such election prior to the date on which the election becomes irrevocable with respect to such fees. Except to the extent expressly provided under the Plan or permitted under Code Section 409A and the Regulations promulgated thereunder, the provisions of the Deferral Election Form relating to an election to defer Director Fees and the selection of the deferral period and manner of payment of the deferrals shall be irrevocable as of the last date on which such Deferral Election Form may be submitted in accordance with Article IV(B). If a director has submitted a Deferral Election Form relating to Director Fees to be earned in the future, he or she may modify or cancel such election by submitting a new Deferral Election Form at any time prior to the date on which such election is irrevocable with respect to such fees.
D. Subsequent Elections. A Director is not permitted to make a subsequent election with respect to the timing or form of payment of any Director Fees deferred under this Plan pursuant to a Deferral Election Form that has become irrevocable in accordance with Article IV(C) above.
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SECTION V
CREDITING AND ADJUSTING ACCOUNTS

A. Director Fees, which have been deferred under the Common Stock Plan, and deemed earnings thereon, shall be credited to a Corporation Stock Unit Account created by and recorded on the books of the Corporation from time to time. The Corporation Stock Unit Account shall be adjusted as follows:
1. A Participant's Corporation Stock Unit Account shall be deemed to be invested in Common Stock. In the event the Corporation, in its sole and absolute discretion, has purchased shares of Common Stock that may be used for meeting its obligations to provide benefits under this Common Stock Plan, whether such shares are held in a rabbi trust for its own benefit to fund the Corporation's obligations under this Common Stock Plan, or held in the Corporation's own name or for its own account (as general assets of the Corporation), the purchase price for the Stock Units shall be the actual price of the corresponding shares of Common Stock that the Corporation purchases on the open market, provided such purchase(s) occurs within two (2) business days of the date the Director Fees would have otherwise been paid to the director had they not been deferred.
2. In the event that the Corporation, in its sole and absolute discretion, has not purchased shares of Common Stock that may be used for meeting its obligations to provide benefits under this Common Stock Plan within the designated time frame, then the purchase price of Stock Units shall be based upon the closing price for the Common Stock on the New York Stock Exchange on the day that the Director Fees would have otherwise been paid to the director had they not been deferred.
3. To the extent the Corporation, in its sole and absolute discretion, has purchased shares of Common Stock that may be used for meeting its obligations to provide benefits under this Common Stock Plan, whether such shares are held in a rabbi trust for its own benefit to fund the Corporation's obligations under this Common Stock Plan, or held in the Corporation's own name or for its own account (as general assets of the Corporation), no Participant shall have any right to vote any shares of Common Stock held in the rabbi trust or otherwise owned by the Corporation in respect of its obligations hereunder.
4. A Participant's Corporation Stock Unit Account shall be charged each business day with any distributions made on such day. Such Corporation Stock Unit Account shall also be credited with deemed earnings, gains and losses each business day, using the closing price for Common Stock on the New York Stock Exchange as of the most recent prior trading day. Dividends shall be deemed to be reinvested in Common Stock and shall be credited at the time actual dividends are paid, with the number of Stock Units attributable to a dividend being calculated by dividing the dollar amount of the dividend by the
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closing price of the Common Stock on the dividend payment date; provided that if the Corporation, in its sole and absolute discretion, has established a rabbi trust for its own benefit to fund the Corporation's obligations under this Common Stock Plan, or otherwise purchased shares to be held in its own name, or for its own account (as general assets of the Corporation), that may be used for meeting its obligations to provide benefits under this Common Stock Plan, then dividends shall be credited based on the purchase price(s) for the shares of Common Stock determined as in Section V(A) above. Finally, a Participant's Corporation Stock Unit Account shall be credited with the amount, if any, of Director Fees deferred and designated to be credited to such account during each quarter, or on a more frequent basis if deemed appropriate by the Committee.
B. Changes in Capitalization. The shares of Common Stock in the Corporation Stock Unit Accounts shall be subject to adjustment or substitution, as determined in the sole discretion of the Board of Directors of the Corporation, in the event of any change in corporate capitalization, such as a stock split or a corporate transaction, such as any merger, consolidation, separation, including a spin off, or other distribution of stock or property of the Corporation, any reorganization (whether or not such reorganization comes within the definition of such term in Section 368 of the Code) or any partial or complete liquidation of the Corporation.
SECTION VI
DISTRIBUTION OF DEFERRED FEES

A. Time and Manner. Subject to the provisions of Section IV of this Common Stock Plan, distribution of the Participant's Corporation Stock Unit Account shall be made in Common Stock at such time and in such manner, i.e., a lump sum or installments, as the Participant has specified in the Deferral Election Form. Fractional shares of Common Stock shall be paid in cash.
1. Lump Sum Distributions. If the Participant elects to receive a lump sum distribution, the Corporation shall make a single payment of the amounts subject to that election in the applicable Deferral Election Form in the calendar year following the calendar year in which the deferral period ends. If a Participant fails to indicate a payment method, the Participant shall be deemed to have elected a lump sum distribution.
2. Installment Distributions. If the Participant elects to receive installment distributions, the Corporation shall make installment payments of the amounts subject to that election in the applicable Deferral Election Form over a period of time as specified by the Participant on the applicable Deferral Election Form. Installment distributions shall commence in the calendar year following the calendar year in which the deferral period ends. A Participant may choose an applicable installment period from the options designated by the Corporation on the Deferral Election Form, which shall not exceed ten (10) years from the date of distribution of the first installment. The number of shares of Common Stock distributable in each installment shall be determined by multiplying the
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amounts subject to the Deferral Election Form on the date the installment is scheduled to be distributed by a fraction, the numerator of which is one and the denominator of which is the number of unpaid installments remaining at such time.
a. Less than $10,000. If, at the time an installment distribution is scheduled to commence, the fair market value of the Participant's Corporation Stock Unit Account does not exceed $10,000, notwithstanding an election by the Participant that such account be distributed in installments, the Stock Units in such account shall be distributed in shares of Common Stock to the Participant in a lump sum.
B. Death. Notwithstanding any other provision of the Common Stock Plan, upon the death of a Participant, the remaining balance of his or her Corporation Stock Unit Account shall be distributed in one lump sum to the Participant's Beneficiary(ies) within ninety (90) days after the date of the Participant's death.
C. Hardship Distributions. In the event of an Unforeseeable Emergency prior to distribution of the entire balance of the Participant's Corporation Stock Unit Account, the Committee may, in its sole discretion, direct a distribution to the Participant, within ninety (90) days following such Unforeseeable Emergency, of the number of shares of Common Stock with a fair market value equal to an amount reasonably necessary, in the judgment of the Committee, to satisfy the financial hardship occasioned by the Unforeseeable Emergency, plus amounts necessary to pay any Federal, state, local or foreign income taxes anticipated as a result of the distribution or cancel a future deferral election with respect to the amount reasonably necessary, in the judgment of the Committee, to alleviate such financial hardship. However, no distribution will be made on account of an Unforeseeable Emergency to the extent that such emergency is or may be relieved through reimbursement or compensation from insurance or otherwise, by liquidation of the Participant's assets, to the extent the liquidation of such assets would not cause severe financial hardship, or by cessation of deferrals under the Plan. Any Participant desiring a distribution under the Common Stock Plan on account of an Unforeseeable Emergency shall submit to the Committee a written request for such distribution which sets forth in reasonable detail the Unforeseeable Emergency which would cause the Participant severe financial hardship, and the amount which the Participant believes to be necessary to alleviate the financial hardship. Any Participant who receives a hardship distribution shall have his deferral election cancelled hereunder and shall not again be eligible to submit a deferral election until the next enrollment period after the calendar year in which the hardship distribution is made.
D. Distribution in the Event of Income Inclusion Under Code Section 409A. If any portion of a Participant's Corporation Stock Unit Account is required to be included in income by the Participant prior to receipt due to a failure of this Common Stock Plan or any Aggregated Plan to comply with the requirements of Code Section 409A and the Regulations, the Committee may determine that such Participant shall receive a distribution from the Plan in an amount equal to the lesser of: (i) the portion of the Participant's Corporation Stock Unit Account required to be included in income as a
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result of the failure of the Common Stock Plan or any Aggregated Plan to comply with the requirements of Code Section 409A and the Regulations, or (ii) the balance of the Participant's Corporation Stock Unit Account.
E. Delay for Payments in Violation of Federal Securities Laws or Other Applicable Law. In the event the Corporation reasonably anticipates that the payment of benefits as specified hereunder would violate Federal securities laws or other applicable law, the Committee may delay the payment under this Section VI until the earliest date at which the Corporation reasonably anticipates that making of such payment would not cause such violation.
F. Delay for Insolvency or Compelling Business Reasons. In the event the Corporation determines that the making of any payment of benefits on the date specified hereunder would jeopardize the ability of the Corporation to continue as a going concern, the Committee may delay the payment of benefits under this Section VI until the first calendar year in which the Corporation notifies the Committee that the payment of benefits would not have such effect.
G. Administrative Delay in Payment. The payment of benefits hereunder shall begin at the date specified in accordance with the provisions of the foregoing paragraphs of this Section VI; provided that, in the case of administrative necessity, the payment of such benefits may be delayed up to the later of the last day of the calendar year in which payment would otherwise be made or the 15th day of the third calendar month following the date on which payment would otherwise be made. Further, if, as a result of events beyond the control of the Participant (or following the Participant's death, the Participant's Beneficiary), it is not administratively practicable for the Plan Administrator to calculate the amount of benefits due to Participant as of the date on which payment would otherwise be made, the payment may be delayed until the first calendar year in which calculation of the amount is administratively practicable.
H. No Participant Election. Notwithstanding the foregoing provisions, if the period during which payment of benefits hereunder will be made occurs, or will occur, in two calendar years, the Participant shall not be permitted to elect the calendar year in which the payment shall be made.
SECTION VII
DESIGNATION OF BENEFICIARY

Upon becoming a Participant of the Common Stock Plan, each director shall submit to the Plan Administrator a Beneficiary Designation Form designating one or more Beneficiaries to whom distributions otherwise due the Participant shall be made in a lump sum payment in the event of the Participant's death before distribution of the Participant's Corporation Stock Unit Account has been completed. A Beneficiary Designation Form will be effective only if it is validly submitted by the Participant to the Plan Administrator before the Participant's death. Any subsequent Beneficiary Designation Form properly submitted will supersede any previous Beneficiary Designation Form so submitted. If a Participant designates a spouse as a Beneficiary,
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such designation shall automatically terminate and be of no effect following the divorce of the Participant and such individual, unless ratified in writing post-divorce.
If the primary Beneficiary shall predecease the Participant or the primary Beneficiary and the Participant die in a common disaster under such circumstances that it is impossible to determine who survived the other, the undistributed Stock Units in the Participant's Corporation Stock Unit Account remaining at the time of the Participant's death shall be distributed in shares to the alternate Beneficiary(ies) who survive(s) the Participant in the manner set forth in the Beneficiary Designation Form. If there are no alternate Beneficiaries living or in existence at the date of the Participant's death, or if the Participant has not submitted a valid Beneficiary Designation Form to the Corporation, the remaining Stock Units in the Participant's Corporation Stock Unit Account shall be distributed in shares in a single distribution to the legal representative for the benefit of the Participant's estate.
SECTION VIII
AMENDMENT AND TERMINATION

A. Amendment of Plan. The Common Stock Plan may be amended at any time in the sole discretion of the Committee or the Board, by written resolution, to the extent that such amendment complies with applicable laws including Code Section 409A and the Regulations promulgated thereunder. No such amendment shall affect the time of distribution of any of the Incentive Awards earned prior to the time of such amendment except as the Committee may determine to be necessary to carry out the purpose of the Common Stock Plan.
B. Termination of Plan. The Common Stock Plan may be terminated at any time in the sole discretion of the Board or Committee by a written resolution of its members. Following the termination of the Common Stock Plan, the Corporation Stock Unit Accounts may be liquidated in accordance with one of the following:
1. the termination and liquidation of the Common Stock Plan within twelve (12) months of a complete dissolution of the Corporation taxed under Section 331 of the Code or with the approval of a bankruptcy court pursuant to 11 U.S.C. § 503(b)(1)(A); provided that the amounts deferred under the Common Stock Plan are included in the Participants' gross incomes in the latest of the following years (or, if earlier, the taxable year in which the amount is actually or constructively received): (i) the calendar year in which the Common Stock Plan is terminated; (ii) the first calendar year in which the amount is no longer subject to a substantial risk of forfeiture; or (iii) the first calendar year in which the payment is administratively practicable.
2. the termination and liquidation of the Common Stock Plan pursuant to irrevocable action taken by the Committee or the Corporation within the thirty (30) days preceding or the twelve (12) months following a change in control event (as such term is defined in Section 1.409A-3(i)(5) of the Regulations; provided that all Aggregated Plans are terminated and liquidated with respect to
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each Participant that experienced the change in control, so that under the terms of the termination and liquidation, all such Participants are required to receive all amounts of deferred compensation under this Plan and any other Aggregated Plans within twelve (12) months of the date the Committee or the Corporation irrevocably takes all necessary action to terminate and liquidate this Plan and the Committee or the Corporation, as the case may be, irrevocably takes all necessary action to terminate and liquidate such other Aggregated Plans;
3. the termination and liquidation of the Common Stock Plan, provided that: (i) the termination and liquidation does not occur proximate to a downturn in the Corporation's financial health; (ii) the Committee or the Corporation, as the case may be, terminates and liquidates all Aggregated Plans; (iii) no payments in liquidation of the Common Stock Plan are made within twelve (12) months of the date the Committee or the Corporation irrevocably takes all necessary action to terminate and liquidate the Common Stock Plan, other than payments that would be payable under the terms of the Common Stock Plan if the action to terminate and liquidate the Common Stock Plan had not occurred; (iv) all payments are made within twenty four (24) months of the date on which the Committee or the Corporation irrevocably takes all action necessary to terminate and liquidate the Common Stock Plan; and (v) the Corporation does not adopt a new Aggregated Plan at any time within three (3) years following the date on which the Committee or the Corporation irrevocably takes all action necessary to terminate and liquidate the Common Stock Plan.
SECTION IX
MISCELLANEOUS PROVISIONS

A. Participant Consent. By electing to defer compensation pursuant to the Common Stock Plan, Participants shall be deemed conclusively to have accepted and consented to all terms of the Common Stock Plan, as amended from time to time, and all actions or decisions made or to be made by the Corporation, the Board of Directors, the Committee or the Plan Administrator with regard to the Common Stock Plan. Such terms and consent shall also apply to, and be binding upon, the Beneficiaries, distributees and personal representatives and other successors in interest of each Participant.
B. Notice. Any election made, or notice given by a Participant pursuant to the Common Stock Plan shall be in writing to the Committee, or to such representative as may be designated by the Committee for such purpose. Notice shall be deemed to have been made or given on the date received by the Committee or its designated representative.
C. Competency. If the Committee determines that any person to whom a payment is due hereunder is a minor, or is adjudicated incompetent by reason of physical or mental disability, the Committee shall have the power to cause the payments becoming due to such person to be made to the legal guardian for the benefit of the minor or incompetent, without responsibility of the Corporation or the Committee
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to see to the application of such payment, unless prior to such payment claim is made therefore by a duly appointed legal representative. Payments made pursuant to such power shall operate as a complete discharge of the Corporation, the Board of Directors and the Committee.
D. Nonalienation of Benefits. Neither the Participant nor any Beneficiary designated by him or her shall have any right to alienate, assign, or encumber any benefits that are or may be distributed hereunder, nor may any such amounts be subject to attachment, garnishment, levy, execution or other legal or equitable process for the debts, contracts, liabilities, engagements or acts of any Participant or Beneficiary.
E. Administration of Common Stock Plan. Full power and authority to construe, interpret, and administer the Common Stock Plan shall be vested in the Committee. To the extent permitted by law, the Committee may delegate any authority it possesses to the Plan Administrator. To the extent the Committee has delegated authority concerning a matter to the Plan Administrator, any reference in the Common Stock Plan to the "Committee" insofar as it pertains to such matter, shall refer likewise to the Plan Administrator. Decisions of the Committee shall be final, conclusive, and binding upon all parties.
F. Fees and Expenses of Administration. If the Committee so determines, reasonable trustee's fees (if applicable) and reasonable out-of-pocket expenses of administering the Common Stock Plan may be ratably deducted (using average balances) on an annual basis from Corporation Stock Unit Accounts.
G. Effective Date. The terms of this Common Stock Plan, as amended and restated, shall apply to all Director Fees deferred under this Common Stock Plan or one of its predecessors on and after July 1, 2020, except to the extent that retroactive application would adversely affect the rights of a Participant or Beneficiary to the amounts in the applicable Corporation Stock Unit Account at the time of the adoption of this amendment and restatement of the Common Stock Plan.
H. Statements to Participants. Statements will be provided to Participants under the Common Stock Plan on at least an annual basis.
I. Nonforfeitability of Participant Accounts. Each Participant shall be fully vested in his or her Corporation Stock Unit Account, and the right to receive the amounts in the Corporation Stock Unit Account shall be nonforfeitable.
J. Successors Bound. The contractual agreement between the Corporation and each Participant resulting from the execution of a Deferral Election Form shall be binding upon and inure to the benefit of the Corporation, its successors and assigns, and to the Participant and to the Participant's beneficiaries, heirs, executors, administrators and other legal representatives.
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K. Governing Laws and Rules of Construction. This Common Stock Plan shall be governed in all respects, whether as to construction, validity or otherwise, by the laws of the State of Delaware unless preempted by Federal law.
L. Compliance & Severability. It is the Corporation's intent to comply with all applicable tax and other laws, including Code Section 409A and the Regulations promulgated thereunder, so that all rights under the Plan will be limited as necessary in the judgment of the Committee to conform therewith. Therefore, consistent with the effectuation of the purposes hereof, each provision of this Common Stock Plan shall be treated as severable, to the end that, if any one or more provisions shall be adjudged or declared illegal, invalid or unenforceable, this Common Stock Plan shall be interpreted, and shall remain in full force and effect, as though such provision or provisions had never been contained herein. It is the intention of the Corporation that the Common Stock Plan established hereunder be "unfunded" for income tax purposes, whether or not the Corporation establishes a rabbi trust, and the provisions hereof shall be construed in a manner to carry out that intention.
M. Ownership of Deferred Director Fees and Continued Director Status. Title to and beneficial ownership of any assets, of whatever nature, which may be allocated by the Corporation to any Corporation Stock Unit Account in the name of any Participant, shall at all times remain with the Corporation and its Subsidiaries, and no Participant or Beneficiary shall have any property interest whatsoever in any specific assets of the Corporation or its Subsidiaries by reason of the establishment of the Common Stock Plan. The rights of each Participant and Beneficiary hereunder shall be limited to enforcing the unfunded, unsecured promise of the Corporation and its Subsidiaries to pay benefits under the Common Stock Plan, and the status of any Participant or Beneficiary shall be that of an unsecured general creditor of the Corporation and its Subsidiaries. Neither the establishment of the Common Stock Plan nor the distribution of any benefits hereunder or any action of the Corporation, its Board of Directors, or any committee thereto, shall be held or construed to confer upon any person the legal right to remain a director of the Corporation or any Subsidiary or any Advisory Board beyond the term for which he or she was elected or appointed to the board(s) on which he or she serves.

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Exhibit 31.1
Chairman, President and CEO Rule 13a-14(a)/15d-14(a) Certification of Periodic Report (pursuant to Section 302 of the Sarbanes-Oxley Act of 2002)
CERTIFICATION OF PERIODIC REPORT
PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Curtis C. Farmer, certify that:
1.I have reviewed this report on Form 10-Q for the quarterly period ended June 30, 2020 of Comerica Incorporated (the “Registrant”);
2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this report;
4.The Registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15(d)-15(f)) for the Registrant and have:
(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c)Evaluated the effectiveness of the Registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d)Disclosed in this report any change in the Registrant's internal control over financial reporting that occurred during the Registrant's most recent fiscal quarter (the Registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Registrant's internal control over financial reporting; and
5.The Registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Registrant's auditors and the audit committee of the Registrant's board of directors (or persons performing the equivalent functions):
(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant's ability to record, process, summarize and report financial information; and
(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant's internal control over financial reporting.
Date: July 30, 2020 /s/ Curtis C. Farmer
Curtis C. Farmer
Chairman, President and Chief Executive Officer


Exhibit 31.2
Executive Vice President and CFO Rule 13a-14(a)/15d-14(a) Certification of Periodic Report (pursuant to Section 302 of the Sarbanes-Oxley Act of 2002)
CERTIFICATION OF PERIODIC REPORT
PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, James J. Herzog, certify that:
1.I have reviewed this report on Form 10-Q for the quarterly period ended June 30, 2020 of Comerica Incorporated (the “Registrant”);
2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this report;
4.The Registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15(d)-15(f)) for the Registrant and have:
(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c)Evaluated the effectiveness of the Registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d)Disclosed in this report any change in the Registrant's internal control over financial reporting that occurred during the Registrant's most recent fiscal quarter (the Registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Registrant's internal control over financial reporting; and
5.The Registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Registrant's auditors and the audit committee of the Registrant's board of directors (or persons performing the equivalent functions):
(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant's ability to record, process, summarize and report financial information; and
(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant's internal control over financial reporting.
Date: July 30, 2020 /s/ James J. Herzog
James J. Herzog
Executive Vice President and Chief Financial Officer


Exhibit 32
Section 1350 Certification of Periodic Report (pursuant to Section 906 of the Sarbanes-Oxley Act of 2002)
CERTIFICATION OF PERIODIC REPORT
PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
The undersigned, Curtis C. Farmer, Chairman, President and Chief Executive Officer, and James J. Herzog, Executive Vice President and Chief Financial Officer, of Comerica Incorporated (the “Company”), certify, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350, that:
(1)the Quarterly Report on Form 10-Q of the Company for the quarterly period ended June 30, 2020 (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m or 78o(d)); and
(2)the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
Dated: July 30, 2020 /s/ Curtis C. Farmer
Curtis C. Farmer
Chairman, President and Chief Executive Officer
/s/ James J. Herzog
James J. Herzog
Executive Vice President and Chief Financial Officer