COMERICA INC /NEW/ (Form: 10-K, Received: 03/31/2003 16:24:07)

United States
Securities and Exchange Commission
Washington, DC 20549

Form 10-K

Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934,
For the fiscal year ended December 31, 2002.

Commission file number 1-10706

Comerica Incorporated
Comerica Tower at Detroit Center
500 Woodward Avenue, MC 3391
Detroit, Michigan 48226
1-800-521-1190

Incorporated in the State of Delaware,
IRS Employer Identification No. 38-1998421.

Securities registered pursuant to Section 12(b) of the Act:

•Common Stock, $5 par value

•Rights to acquire Series D Preferred Stock, no par value

These securities are registered on the New York Stock Exchange.

Securities registered pursuant to Section 12(g) of the Act:

•7 1/4 percent Subordinated Notes due in 2007.

•9.98% Series B Capital Securities of Imperial Capital Trust I due 2026.*

•7.60% Trust Preferred of Comerica Capital Trust I due 2050.

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.

No disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is contained herein or, to the best knowledge of the registrant, will be contained in the definitive proxy statement incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.

The registrant is an accelerated filer as defined in Exchange Act Rule 12b-2.

At March 26, 2003, the registrant’s common stock, $5 par value, held by nonaffiliates had an aggregate market value of $6,422,879,250 based on the closing price on the New York Stock Exchange on that date of $38.80 per share and 165,538,125 shares of common stock held by nonaffiliates. For purposes of this Form 10-K only, it has been assumed that all common shares Comerica’s Trust Department holds for Comerica and Comerica’s employee plans, and all common shares the registrant’s directors and executive officers hold, are held by affiliates.

At March 26, 2003, the registrant had outstanding 175,161,100 shares of its common stock, $5 par value.

Documents Incorporated
by Reference:

1. Parts I and II:

Items 6-8—Annual Report to Shareholders for the year ended December 31, 2002.

2. Part III:

Items 10-13—Proxy Statement for the Annual Meeting of Shareholders to be held May 20, 2003.

*The registrant has reporting obligations for these securities which were acquired in connection with the merger of Imperial Bancorp with and into Comerica Holdings Incorporated, a wholly-owned subsidiary of the registrant. As a result of the merger, Imperial Capital Trust became a wholly-owned indirect subsidiary of the registrant.

TABLE OF CONTENTS


PART I
Item 1. Business
Item 2. Properties
Item 3. Legal Proceedings
Item 4. Submission of Matters to a Vote of Security Holders
PART II
Item 5. Market for Registrant’s Common Equity and Related Stockholder Matters
Item 6. Selected Financial Data
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
Item 8. Financial Statements and Supplementary Data
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
PART III
Item 10. Directors and Executive Officers of the Registrant
Item 11. Executive Compensation
Item 12. Security Ownership of Certain Beneficial Owners and Management
Item 13. Certain Relationships and Related Transactions
Item 14. Controls and Procedures
Form of Employment Agreement
Director Indemnification Agreement
1999 Comerica Inc Deferred Incentive Award Plan
Amended & Restated Comerica Inc Stock Option Plan
Amended & Restated Comerica Inc Stock Option Plan
Comerica Inc Director Fee Deferral Plan
Comerica Inc Common Stock Director Deferral Plan
Incorporated Sections of 2002 Annual Report
Subsidiaries of the Registrant
Consent of Ernst & Young LLP
Consent of KPMG LLP
Independent Auditors Report KPMG LLP
906 Certifications of Chief Executive Officer
906 Certification of Chief Financial Officer

PART I

Item 1. Business

GENERAL

Comerica Incorporated (“Comerica” or the “Corporation”) is a multi-state financial services provider, incorporated under the laws of the State of Delaware, headquartered in Detroit, Michigan. Based on assets as of December 31, 2002, it was among the 20 largest banking companies in the United States and the largest bank holding company headquartered in Michigan in terms of both total assets and total deposits. Comerica was formed in 1973 to acquire the outstanding common stock of Comerica Bank (formerly Comerica Bank-Detroit), one of Michigan’s oldest banks (“Comerica Bank”). Since that time, Comerica has acquired financial institutions in California, Texas and Florida, and, in 1997, formed Comerica Bank-Mexico, S.A. and Comerica Bank-Canada. In 2001, Comerica established its Canadian branch and the assets and the majority of the liabilities of Comerica Bank-Canada were transferred to Comerica Bank’s Canadian branch. As of December 31, 2002, Comerica owned directly or indirectly all the outstanding common stock of five active banking and fifty-four non-banking subsidiaries. At December 31, 2002, Comerica had total assets of approximately $53 billion, total deposits of approximately $42 billion, total loans (net of unearned income) of approximately $42 billion and common shareholders’ equity of approximately $5 billion.

BUSINESS STRATEGY

Comerica has strategically aligned its operations into three major lines of business: the Business Bank, the Individual Bank and the Investment Bank. The Business Bank is comprised of middle market lending, asset-based lending, large corporate banking, international financial services and speciality businesses, including technology and life sciences, specialty deposit gathering and entertainment lending. This line of business meets the needs of medium-size 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 Individual Bank includes consumer lending, consumer deposit gathering, mortgage loan origination, small business banking (annual sales under $10 million) and private banking. This line of business offers a variety of consumer products, including deposit accounts, installment loans, credit cards, student loans, home equity lines of credit and residential mortgage loans. In addition, a full range of financial services is provided to small businesses and municipalities. Private lending and personal trust services are also provided to meet the personal financial needs of affluent individuals (as defined by individual net income or wealth).

The Investment Bank is responsible for institutional trust products, retirement services and provides investment management and advisory services (including Munder), investment banking and discount securities brokerage services. This line of business also offers the sale of mutual fund and annuity products, as well as life, disability and long-term care insurance products.

Comerica has positioned itself to deliver financial services in its four primary geographic markets: Michigan, California, Texas, and Florida, with operations in numerous other states, Canada and Mexico.

In addition to the three major lines of business, the Finance segment is also significant. The Finance segment includes Comerica’s securities portfolio and asset and liability management activities. This segment is responsible for managing Comerica’s funding, liquidity and capital needs, performing interest sensitivity gap and earnings simulation analysis and executing various strategies to manage Comerica’s exposure to liquidity and interest rate risks.

SUPERVISION AND REGULATION

Banks, bank holding companies and financial institutions are highly regulated at both the state and federal level. Comerica is subject to supervision and regulation by the Federal Reserve Board (“FRB”) under the Bank Holding Company Act of 1956, as amended (the “Act”).

The Gramm-Leach-Bliley Act of 1999 expanded the activities in which a bank holding company registered as a financial holding company can engage. The conditions to be a financial holding company, among others, include the requirement that each depository institution subsidiary of the holding company be well capitalized and well managed.

Comerica became a financial holding company in 2000. As a financial holding company, in addition to bank holding company powers, Comerica may affiliate with securities firms and insurance companies and engage in activities that are financial in nature. Activities that are “financial in nature” include, but are not limited to: securities underwriting; dealing and market making; sponsoring mutual funds and investment companies; insurance underwriting and agency; merchant banking; travel agent services; and activities that the FRB has determined to be closely related to banking. A bank holding company that is not also a financial holding company is limited to engaging in banking and other activities previously determined by the FRB to be closely related to banking.

Comerica Bank is chartered by the State of Michigan and is primarily supervised and regulated by the Division of Financial Institutions, Office of Financial and Insurance Services of the State of Michigan and the FRB. Comerica Bank-California is chartered by the State of California and is primarily supervised and regulated by the California Department of Financial Institutions and the FRB. Comerica Bank-Texas is chartered by the State of Texas and is primarily supervised and regulated by the Texas Department of Banking and the FRB. Comerica Bank & Trust, National Association is chartered under federal law and subject to supervision and regulation by the Office of the Comptroller of the Currency (“OCC”). Comerica Bank, Comerica Bank- California, Comerica Bank-Texas and Comerica Bank & Trust, National Association, are members of the Federal Reserve System (“FRS”). The deposits of all the foregoing banks are insured by the Bank Insurance Fund (“BIF”) of the Federal Deposit Insurance Corporation (“FDIC”) to the extent provided by law. Comerica Bank-Mexico, S.A. is chartered under the laws of Mexico and is supervised and regulated by the Ministry of Finance and Public Credit, the Bank of Mexico, and the Mexican National Banking Commission. Comerica Bank-Canada (which is in the winding up process, with active operations conducted by the Canadian branch) is chartered under the laws of Ontario, Canada and is supervised and regulated by the Office of the Superintendent of Financial Institutions Canada and the Canada Deposit Insurance Corporation.

The FRB supervises non-banking activities conducted by companies owned by Comerica Bank, Comerica Bank-California and Comerica Bank-Texas and the OCC supervises non-banking activities conducted by companies owned by Comerica Bank & Trust, National Association. In addition, Comerica’s non-banking subsidiaries are subject to supervision and regulation by various state, federal and self-regulatory agencies, including, but not limited to, the National Association of Securities Dealers, Inc. (in the case of Comerica Securities, Inc. and Comerica Capital Markets Corporation), the Department of Insurance of the State of Michigan (in the case of Comerica Insurance Services, Inc.), and the Securities and Exchange Commission (in the case of Munder Capital Management, the Corporation’s investment advisory subsidiary).

In most cases, no FRB approval is required for Comerica to acquire a company, other than a bank holding company or insured depository institution, engaged in activities that are financial in nature or incidental to activities that are financial in nature, as determined by the FRB. Prior FRB approval is required before Comerica may acquire the beneficial ownership or control of more than 5% of the voting shares or substantially all of the assets of a bank holding company or bank. If any subsidiary bank of Comerica ceases to be “well capitalized” or “well managed” under applicable regulatory standards, the Federal Reserve Board may place limitations on the Corporation’s ability to conduct the broader financial activities permissible for financial holding companies or impose any limitations or conditions on the conduct or activities of the Corporation or any of its affiliates as the Federal Reserve Board finds appropriate and consistent with the purpose of the Bank Holding Company Act. If the deficiencies persist, the Federal Reserve Board may order Comerica to divest any subsidiary bank or cease to engage in any activities permissible for financial holding companies that are not permissible for bank holding companies. Alternatively, Comerica may elect to conform its non-banking activities to those permissible for a bank holding company that is not also a financial holding company. If any subsidiary bank of Comerica receives a rating under the Community Reinvestment Act of 1977 of less than satisfactory, Comerica will be prohibited from engaging in new activities not permissible for non-financial holding companies/bank holding companies or acquiring companies other than bank holding companies or banks.

Various governmental requirements, including Sections 23A and 23B of the Federal Reserve Act and Regulation W, limit borrowings by Comerica and its nonbank subsidiaries from its affiliate insured depository institutions, and also limit various other transactions between Comerica and its nonbank subsidiaries, on the one hand, and its affiliate insured depository institutions, on the other. For example, Section 23A of the Federal Reserve Act limits to no more than 10% of its total capital, the aggregate outstanding amount of any insured depository institution’s loans and other “covered transactions” with any particular nonbank affiliate, and limits to no more than 20% of its total capital, the aggregate outstanding amount of any insured depository institution’s covered transactions with all of its nonbank affiliates. Section 23A of the Federal Reserve Act also generally requires that an insured depository institution’s loans to its nonbank affiliates be secured, and Section 23B of the Federal Reserve Act generally requires that an insured depository institution’s transactions with its nonbank affiliates be on arms-length terms.

Set forth below are summaries of selected laws and regulations applicable to Comerica and its subsidiaries. The summaries are not complete and are qualified in their entirety by references to the particular statutes and regulations, and are not intended as legal advise that should be relied upon for any reason. A change in applicable law or regulation could have a material effect on the business of Comerica.

Interstate Banking and Branching

Pursuant to the Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994 (the “Interstate Act”), a bank holding company may acquire banks in states other than its home state, without regard to the permissibility of such acquisition under state law, but subject to any state requirement that the bank has been organized and operating for a minimum period of time, not to exceed five years, and the requirement that the bank holding company, prior to and following the proposed acquisition, control no more than ten percent of the total amount of deposits of insured depository institutions in the United States and no more than thirty percent of such deposits in that state (or such amount as established by state law if such amount is lower than thirty percent).

The Interstate Act also authorizes banks to acquire branch offices outside their home states by merging with out-of-state banks, purchasing branches in other states and establishing de novo branches in other states, thereby creating interstate branching; provided that in the case of purchasing branches and establishing new branches in a state in which it does not already have banking operations in such state, such state must have “opted-in” to the Act by enacting a law permitting such de novo branching and, in the case of mergers, such state must not have “opted- out” of that portion of the Act.

Since the provision permitting interstate bank acquisitions became effective, Comerica has had enhanced opportunities to acquire banks in any state, subject to approval by the appropriate federal and state regulatory agencies. Under the Interstate Act, Comerica has the opportunity to consolidate its affiliate banks to create one bank with branches in more than one state, or to establish branches in different states, subject to any state “opt-in” and “opt-out” provisions.

Dividends

Comerica is a legal entity separate and distinct from its banking and other subsidiaries. Most of Comerica’s revenues result from dividends its bank subsidiaries pay it. There are statutory and regulatory requirements applicable to the payment of dividends by subsidiary banks to Comerica as well as by Comerica to its shareholders. Certain, but not all, of these requirements are discussed below.

Each state bank subsidiary that is a member of the FRS and each national banking association is required by federal law to obtain the prior approval of the FRB or the OCC, as the case may be, for the declaration and payment of dividends, if the total of all dividends declared by the board of directors of such bank in any calendar year will exceed the total of (i) such bank’s retained net income (as

defined and interpreted by regulation) for that year plus (ii) the retained net income (as defined and interpreted by regulation) for the preceding two years, less any required transfers to surplus or to fund the retirement of preferred stock. Further, federal regulatory agencies can prohibit a banking institution or bank holding company from engaging in unsafe and unsound business practices and could prohibit the payment of dividends if such payment could be deemed an unsafe and unsound banking practice. In addition, Comerica’s state bank subsidiaries are also subject to limitations under state law regarding the amount of earnings that may be paid out as dividends, and require prior approval for payments of dividends that exceed certain levels.

At January 1, 2003, Comerica’s subsidiary banks, without obtaining prior governmental approvals, could declare aggregate dividends of approximately $101 million from retained net profits of the preceding two years, plus an amount approximately equal to the net profits (as measured under current regulations), if any, earned for the period from January 1, 2003 through the date of declaration. Comerica’s subsidiary banks paid dividends of $647 million in 2002, $578 million in 2001, and $339 million in 2000.

Source of Strength

According to Federal Reserve Board policy, bank holding companies are expected to act as a source of strength to each subsidiary bank and to commit resources to support each subsidiary bank. This support may be required at times when a bank holding company may not be able to provide such support. Similarly, under the cross-guarantee provisions of the Federal Deposit Insurance Act, in the event of a loss suffered or anticipated by the FDIC (either as a result of the default of a banking or thrift subsidiary or related to FDIC assistance provided to a subsidiary in danger of default) the other banking subsidiaries may be assessed for the FDIC’s loss, subject to certain exceptions.

FDICIA

The Federal Deposit Insurance Corporation Improvement Act (“FDICIA”) requires, among other things, the federal banking agencies to take “prompt corrective action” in respect of depository institutions that do not meet minimum capital requirements. FDICIA establishes five capital tiers: “well capitalized,” “adequately capitalized,” “undercapitalized,” “significantly undercapitalized” and “critically undercapitalized.” A depository institution’s capital tier will depend upon where its capital levels are in relation to various relevant capital measures, which, among others, include a Tier 1 and total risk-based capital measure and a leverage ratio capital measure, and certain other factors.

Regulations establishing the specific capital tiers provide that, for a depository institution to be well capitalized it must have a total risk-based capital ratio of at least 10 percent, a Tier 1 risk-based capital ratio of at least 6 percent, a Tier 1 leverage ratio of at least 5 percent and not be subject to any specific capital order or directive. For an institution to be adequately capitalized it must have a total risk-based capital ratio of at least 8 percent, a Tier 1 risk-based capital ratio of at least 4 percent and a Tier 1

leverage ratio of at least 4 percent (and in some cases 3 percent). Under certain circumstances, the appropriate banking agency may treat a well capitalized, adequately capitalized or undercapitalized institution as if the institution were in the next lower capital category. As of December 31, 2002, each of the banking subsidiaries of Comerica were well capitalized under these regulations.

FDICIA generally prohibits a depository institution from making any capital distribution (including payment of a dividend) or paying any management fee to its holding company if the depository institution would thereafter be undercapitalized. Undercapitalized depository institutions are subject to limitations on growth and certain activities and are required to submit an acceptable capital restoration plan. The federal banking agencies may not accept a capital plan without determining, among other things, that the plan is based on realistic assumptions and is likely to succeed in restoring the depository institution’s capital. In addition, for a capital restoration plan to be acceptable, the depository institution’s parent holding company must guarantee for a specific time period that the institution will comply with such capital restoration plan. The aggregate liability of the parent holding company under the guaranty is limited to the lesser of (i) an amount equal to 5 percent of the depository institution’s total assets at the time it became undercapitalized, or (ii) the amount that is necessary (or would have been necessary) to bring the institution into compliance with all capital standards applicable with respect to such institution as of the time it fails to comply with the plan. If a depository institution fails to submit or implement an acceptable plan, it is treated as if it is significantly undercapitalized.

Significantly undercapitalized depository institutions are subject to a number of requirements and restrictions. Specifically, such a depository institution may be required to do one or more of the following, among other things: sell sufficient voting stock to become adequately capitalized, reduce the interest rates it pays on deposits, reduce its rate of asset growth, dismiss certain senior executive officers or directors, and stop accepting deposits from correspondent banks. Critically undercapitalized institutions are subject to the appointment of a receiver or conservator or such other action as the FDIC and the applicable federal banking agency shall determine appropriate.

FDICIA also contains a variety of other provisions that may affect the operations of depository institutions including reporting requirements, regulatory standards for real estate lending, “truth in savings” provisions, the requirement that a depository institution give 90 days prior notice to customers and regulatory authorities before closing any branch and a prohibition on the acceptance or renewal of brokered deposits by depository institutions that are not well capitalized or are adequately capitalized and have not received a waiver from the FDIC. Comerica’s United States subsidiary banks are all well-capitalized and may accept brokered deposits.

Capital Requirements

The FRB imposes, on Comerica, risk-based capital requirements and guidelines, which are substantially similar to the capital requirements and guidelines imposed by the OCC and the FDIC on depository institutions under their jurisdictions.

For this purpose, a depository institution’s or holding company’s assets and certain specified off- balance sheet commitments are assigned to four risk categories, each weighted differently based on the level of credit risk that is ascribed to such assets or commitments. A depository institution’s or holding company’s capital, in turn, is divided into two tiers: core (“Tier 1”) capital, which includes common equity, non-cumulative perpetual preferred stock and a limited amount of cumulative perpetual preferred stock and related surplus (excluding auction rate issues) and a limited amount of cumulative perpetual stock and minority interests in equity accounts of consolidated subsidiaries, less goodwill, certain identifiable intangible assets and certain other assets; and supplementary (“Tier 2”) capital, which includes, among other items, perpetual preferred stock not meeting the Tier 1 definition, mandatory convertible securities, subordinated debt and allowances for loan and lease losses, subject to certain limitations, less certain required deductions.

The Corporation, like other bank holding companies, currently is required to maintain Tier 1 and “total capital” (the sum of Tier 1 and Tier 2 capital) equal to at least 4% and 8% of its total risk- weighted assets (including certain off-balance-sheet items, such as standby letters of credit), respectively. At December 31, 2002, the Corporation met both requirements, with Tier 1 and total capital equal to 8.05% and 11.72% of its total risk-weighted assets.

The FRB, FDIC and OCC rules require Comerica to incorporate market and interest rate risk components into their risk-based capital standards. Under the market risk requirements, capital is allocated to support the amount of market risk related to a financial institution’s ongoing trading activities. The FRB also requires bank holding companies to maintain a minimum “leverage ratio” (Tier 1 capital to adjusted total assets) of 3% if the holding company has the highest regulatory rating and meets certain other requirements, or of 3% plus an additional cushion of at least 100 to 200 basis points if the holding company does not meet these requirements. At December 31, 2002, the Corporation’s leverage ratio was 9.29%.

As an additional means to identify problems in the financial management of depository institutions, FDICIA requires federal bank regulatory agencies to establish certain non-capital safety and soundness standards for institutions they supervise. The standards relate generally to, among others, earnings, liquidity, operations and management, asset quality, various risk and management exposures (e.g. credit, operational, market, interest rate, etc.) and executive compensation. The agencies are authorized to take action against institutions that fail to meet such standards.

FDIC Insurance Assessments

Comerica’s subsidiary banks are subject to FDIC deposit insurance assessments to maintain the Bank

Insurance Fund (the “BIF”) and the Savings Insurance Fund (the “SAIF”). As of December 31, 2002, the Corporation’s banking subsidiaries held approximately $39.7 billion and $1.1 billion, respectively, of BIF- and SAIF- assessable deposits. The Corporation currently pays no deposit insurance assessments on these deposits under the FDIC’s risk related assessment system, but could be required to pay insurance assessments in 2003.

Enforcement Powers of Federal Banking Agencies

The FRB and other federal banking agencies have broad enforcement powers, including the power to terminate deposit insurance, impose substantial fines and other civil and criminal penalties and appoint a conservator or receiver. Failure to comply with applicable laws, regulations and supervisory agreements could subject Comerica or its banking subsidiaries, as well as officers and directors of these organizations, to administrative sanctions and potentially substantial civil penalties.

Future Legislation

Changes to the laws of the states and countries in which the Corporation and its subsidiaries do business can affect the operating environment of bank holding companies and their subsidiaries in substantial and unpredictable ways. Comerica cannot accurately predict whether such changes will occur or, if they occur, the ultimate effect they would have upon the financial condition or results of operations of the Corporation.

COMPETITION

Financial service provision is a highly competitive business. The Michigan banking subsidiary of the Corporation competes primarily with banks based in the Midwest region of the United States for loans, deposits and trust accounts. Through its offices in Arizona, Colorado, Georgia, Illinois, Indiana, Louisiana, Massachusetts, Minnesota, North Carolina, New Jersey, Nevada, New York, Ohio, Oregon, Pennsylvania, Tennessee, Virginia and Washington, Comerica competes with other financial institutions for various deposits, loans and other products and services.

At year-end 2002, Comerica was the largest financial holding company headquartered in Michigan in terms of total assets and deposits. Based on the Interstate Act as described above and the Gramm-Leach Bliley Act, Comerica believes that the level of competition in all geographic markets will increase in the future. Comerica’s banking subsidiaries also face competition from other financial intermediaries, including savings and loan associations, consumer finance companies, leasing companies, credit unions, banks, insurance companies and securities firms.

EMPLOYEES

As of December 31, 2002, Comerica and its subsidiaries had 10,368 full-time and 1,440 part-time employees.

AVAILABLE INFORMATION

We maintain an Internet website at www.comerica.com where our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and all amendments to those reports are available without charge, as soon as reasonably practicable after we file those Reports with the U.S. Securities and Exchange Commission.

Item 2. Properties

The executive offices of the Corporation are located in the Comerica Tower at Detroit Center, 500 Woodward Avenue, Detroit, Michigan 48226. Comerica and its subsidiaries occupy 14 floors of the building, which is leased through Comerica Bank from an unaffiliated third party. This lease extends through January 2007. As of December 31, 2002, Comerica, through its banking affiliates, operates a total of 511 banking branches, trust services locations, and loan production or other financial services offices, in the States of Michigan, California, Texas and Florida. Of these, 226 were owned and 285 were leased. Affiliates also operate from leased spaces in Phoenix, Arizona; Denver Colorado; Atlanta, Georgia; Barrington, Chicago and Oakbrook Terrace, Illinois; Indianapolis, Indiana; New Orleans, Louisiana; Boston, Massachusetts; Minneapolis, Minnesota; Durham and Charlotte, North Carolina; Princeton and Red Bank, New Jersey; Las Vegas, Nevada; New York, New York; Beachwood, West Chester, Westlake and Cincinnati, Ohio; Portland, Oregon; King of Prussia, Pennsylvania; Knoxville and Memphis, Tennessee; Reston, Virginia; Kirkland and Olympia, Washington; Sao Paulo, Brazil; Guadalajara, Mexico; Mexico City, Mexico; Queretaro, Mexico; Monterey, Mexico; Wanchai, Hong Kong; and Toronto, Ontario, Canada.

The Corporation owns a check processing center in Livonia, Michigan; a ten-story building in the central business district of Detroit that houses certain departments of the Corporation and Comerica Bank; and a building in Auburn Hills, Michigan, used mainly for lending functions and operations.

In 1983, Comerica entered into a sale/leaseback agreement with an unaffiliated party covering an operations center which was built in Auburn Hills, Michigan, and now is occupied by various departments of the Corporation and Comerica Bank.

Item 3. Legal Proceedings

The Corporation and certain of its subsidiaries are subject to various pending and threatened legal proceedings, including certain purported class actions, arising out of the normal course of business or operations. In view of the inherent difficulty of predicting the outcome of such matters, the Corporation cannot state what the eventual outcome of any such matters will be; however, based on current knowledge and after consultation with legal counsel, management does not believe that the amount of any resulting liability arising from these matters will have a material adverse effect on the Corporation’s consolidated financial position or results from operations.

Item 4. Submission of Matters to a Vote of Security Holders

The Corporation did not submit any matters for a shareholders’ vote in the fourth quarter of 2002.

PART II

Item 5. Market for Registrant’s Common Equity and Related Stockholder Matters

Market Information

The common stock of Comerica Incorporated is traded on the New York Stock Exchange (NYSE Trading Symbol: CMA). At March 26, 2003, there were approximately 16,534 record holders of the Corporation’s common stock.

Quarterly cash dividends were declared during 2002 and 2001, totaling $1.92 and $1.76 per common share per year, respectively. The following table sets forth, for the periods indicated, the high and low sale prices per share of the Corporation’s common stock as reported on the NYSE Composite Transactions Tape for all quarters of 2002 and 2001.


					Dividends		Dividend*
Quarter	High		Low		Per Share		Yield

2002
Fourth	$	50.30	$	35.20	$	0.48		4.5	%
Third		63.80		47.00		0.48		3.5
Second		66.09		59.70		0.48		3.1
First		64.85		52.75		0.48		3.3
2001
Fourth	$	58.40	$	44.02	$	0.44		3.4	%
Third		63.88		50.27		0.44		3.1
Second		62.75		50.73		0.44		3.1
First		65.15		53.00		0.44		3.0

* Dividend yield is calculated by annualizing the quarterly dividend per share and dividing by an average of the high and low price in the quarter.

Equity Compensation Plan Information


Plan Category			Number of securities to be issued upon exercise of outstanding options, warrants and rights			Weighted- average exercise price of outstanding options, warrants and rights		Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a))

			(a)			(b)		(c)

	Equity compensation plans ⁽¹⁾			14,563,903	⁽²⁾	$	51.36		12,928,480	⁽²⁾⁽³⁾
	approved by security holders
	Equity compensation plans not			310,286		$	51.84		91,000
	approved by security holders ⁽⁴⁾
		Total		14,874,189		$	51.37		13,019,480

⁽¹⁾ Consists of options to acquire shares of Common Stock, par value $5.00 per share, issued under the Corporation’s Amended and Restated 1997 Long-Term Incentive Plan, the 1991 Long-Term Incentive Plan, the Amended and Restated Comerica Incorporated Stock Option Plan for Non-employee Directors, the Imperial Bank Stock Option Plan (assumed by the Corporation in connection with its acquisition of Imperial Bank), and the Metrobank 1988 Stock Option Plan (assumed by the Corporation in connection with its acquisition of Metrobank). Does not include 376,833 shares of restricted stock, outstanding as of December 31, 2002. There are no shares available for future issuances under any of these plans other than the Corporation’s Amended and Restated 1997 Long-Term Incentive Plan. The Amended and Restated 1997 Long-Term Incentive Plan was initially approved by the shareholders on May 16, 1997, with the most recent amendments to the plan, which required shareholder approval, approved on May 22, 2001.

⁽²⁾ Does not include shares of Common Stock purchased by employees under the Corporation Employee Stock Purchase Plan, or contributed by the Corporation on behalf of the employees.

⁽³⁾ These shares are available for future issuance under the Corporation’s Amended and Restated 1997 Long-Term Incentive Plan in the form of options, restricted stock, and other performance or non-performance related awards. Not more than a total of 2.4 million shares may be used for restricted stock awards and not more than 2 million are available for issuance pursuant to the exercise of incentive stock options. No eligible individual during any calendar year may receive more than the lesser of (i) 15% of the Shares available for Awards during such calendar year, or (ii) 350,000 Shares. As of December 31, 2002, the Corporation had granted 376,833 shares of restricted stock to its employees.

⁽⁴⁾ Consists of options to acquire shares of Common Stock, par value $5.00 per share, issued under the Amended and Restated Comerica Incorporated Stock Option Plan for Non-employee Directors of Comerica Bank and Affiliated Banks.

Most of the equity awards made by the Corporation are granted under the shareholder approved Amended and Restated 1997 Long-Term Incentive Plan. Plans not approved by Comerica’s shareholders include:

Amended and Restated Comerica Incorporated Stock Option Plan for Non-employee Directors of Comerica Bank and Affiliated Banks — Under this Plan, the Corporation may grant options to acquire up to 450,000 shares of Common Stock, subject to equitable adjustment upon the occurrence of events such as stock splits, stock dividends or recapitalizations. After each annual meeting of shareholders, each member of the Board of Directors of a subsidiary bank of the Corporation who is not an employee of the Corporation or of any of its subsidiaries will be automatically granted an option to purchase 2,000 shares of the common stock of the Corporation. Option grants under the Plan are in addition to annual retainers, meeting fees and other compensation payable to non-employee directors in connection with their services as directors. The Plan is administered by a committee of the Board of Directors. With respect to the automatic grants, the Committee does not have discretion with respect to matters such as the selection of directors to whom options will be granted, the timing of grants, the number of shares to become subject to each option grant, the exercise price of options, or the periods of time during which any option may be exercised. In addition to the automatic grants, the Committee may grant options to the non-employee directors in its discretion. The exercise price of each option granted is the fair market value of each share of common stock subject to the option on the date the option is granted. The exercise price is payable in full upon exercise of the option and may be paid in cash or by delivery of previously owned shares. The Committee may change the option price per share following a corporate reorganization or recapitalization so that the aggregate option price for all shares subject to each outstanding option prior to the change is equivalent to the aggregate option price for all shares or other securities into which option shares have been converted or which have been substituted for option shares. The term of each option cannot be more than ten years.

Three-Year Incentive Plan — The Corporation grants cash awards to its eligible employees in accordance with the terms of its incentive plans based on performance of the Corporation over specified three year periods. The Corporation pays the award to each of the executive officers in cash and fifty percent of the award automatically is invested in shares of non-transferable common stock. If

the participant defers the award, one hundred percent of deferred awards are deemed invested in Comerica common stock and are paid out in common stock. Executives may not transfer stock awarded through this program until the executive’s employment with Comerica terminates.

Employee Service Award Program — This program provides a method to recognize and reward employees for attaining specified years of service. From 1993 to December 31, 2002, the Corporation issued 49,509 shares of Common Stock under this program. Each year, the Corporation authorizes the awards of shares to employees who attain the requisite years of service. Currently under the program employees receive 4, 5, 7 and 10 shares of common stock for attaining ten, fifteen, twenty and twenty-five years of service, respectively. The number of shares awarded each year depends on the employees who attain the requisite years of service. For the year to date 2003, the Corporation has issued 695 shares of Common Stock under this program.

Employee Stock Purchase Plan — Under the Corporation’s Employee Stock Purchase Plan (the “ESPP”), a total of 1.4 million shares of the Corporation’s common stock have been registered for sale to eligible Corporation employees. Under the ESPP, participating employees have a convenient and affordable way to purchase shares of Comerica Incorporated common stock, through after-tax payroll deductions without being charged a brokerage fee. The Corporation provides a 15 percent quarterly match and a 5 percent retention match on shares of Common Stock held by the participants in the plan for two years. Matches are not made on employee contributions over $25,000 per year. Under the ESPP, the Corporation common stock is generally purchased in the open market by the ESPP plan administrator as soon as practicable under the plan.

Directors Deferred Compensation Plans — The Corporation maintains two deferred compensation plans for non-employee directors of the Corporation and its subsidiaries, the Common Stock Deferral Plan and the Director Fee Deferral Plan. The Common Stock Deferral Plan provides for the mandatory deferral of 50% of the annual retainer of each director of the Corporation into shares of common stock of the Corporation. Such directors voluntarily may defer the remaining 50% of their director fees and all other non-employee directors of the Corporation’s subsidiaries may choose to defer up to 100% of their director fees into the Common Stock Deferral Plan or into the Director Fee Deferral Plan which permits non- corporation stock investments, or a combination of the two plans. The directors’ accounts under the plans are increased in connection with the payment of dividends or other distributions paid on the Corporation common stock to reflect the number of additional shares of Corporation common stock that could have been purchased had the dividends or other distributions been paid on each share of common stock underlying then outstanding stock units in the directors’ accounts. Common Stock units are payable following termination of service as a director out of shares of the Corporation’s common stock held in the plan.

1999 Deferred Compensation Plan — The Corporation maintains a Deferred Compensation Plan for its eligible employees of the Corporation and its subsidiaries. The employees may voluntarily defer specified portions of their salary and bonus into shares of common stock of the Corporation. The employees’ accounts under the plan are increased in connection with the payment of dividends or other distributions paid on the Corporation’s common stock to reflect the number of additional shares of the Corporation’s common stock that could have been purchased had the dividends or other distributions been paid on each share of common stock underlying then outstanding stock units in the employees’ accounts. The deferred compensation is payable following termination of service as an employee out of shares of the Corporation’s common stock held in the plan.

For additional information regarding the Corporation’s equity compensation plans, please refer to Note 16 on page 59 of the Consolidated Financial Statements contained in the Corporation’s Annual Report to Shareholders for the year ended December 31, 2002.

Item 6. Selected Financial Data

The response to this item is included on page 23 of the Corporation’s Annual Report to Shareholders for the year ended December 31, 2002, which page is hereby incorporated by reference.

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The response to this item is included under the caption “Financial Review and Reports” on pages 24 through 45 of the Corporation’s Annual Report to Shareholders for the year ended December 31, 2002, which pages are hereby incorporated by reference.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

The response to this item is included on pages 38 through 42 of the Corporation’s Annual Report to Shareholders for the year ended December 31, 2002, which pages are hereby incorporated by reference.

Item 8. Financial Statements and Supplementary Data

The response to this item is included on pages 46 through 79 of the Corporation’s Annual Report to Shareholders for the year ended December 31, 2002, and in the Statistical Disclosure by Bank Holding Companies on pages 25 thorough 39, which pages are hereby incorporated by reference.

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

None.

PART III

Item 10. Directors and Executive Officers of the Registrant

The response to this item will be included under the sections captioned “Information About Nominees and Incumbent Directors,” “Executive Officers” and “Section 16(a) Beneficial Ownership Reporting Compliance” of the Corporation’s definitive Proxy Statement relating to the Annual Meeting of Shareholders to be held on May 20, 2003, which sections are hereby incorporated by reference.

Item 11. Executive Compensation

The response to this item will be included under the sections captioned “Compensation of Directors” and “Compensation of Executive Officers” of the Corporation’s definitive Proxy Statement relating to the Annual Meeting of Shareholders to be held on May 20, 2003, which sections are hereby incorporated by reference.

Item 12. Security Ownership of Certain Beneficial Owners and Management

The response to this item will be included under the sections captioned “Security Ownership of Certain Beneficial Owners” and “Security Ownership of Management” of the Corporation’s definitive Proxy Statement relating to the Annual Meeting of Shareholders to be held on May 20, 2003, which sections are hereby incorporated by reference.

Item 13. Certain Relationships and Related Transactions

The response to this item will be included under the sections captioned “Transactions of Directors and Executive Officers with Comerica” and “Information about Nominees and Incumbent Directors” of the Corporation’s definitive Proxy Statement relating to the Annual Meeting of Shareholders to be held on May 20, 2003, which sections are hereby incorporated by reference.

Item 14. Controls and Procedures

(A) Evaluation of Disclosure Controls and Procedures.

The Corporation’s Chief Executive Officer and Chief Financial Officer have evaluated the effectiveness of the Corporation’s disclosure controls and procedures (as such term is defined in Rules 13a-14(c) and 15d-14(c) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) as of a

date within 90 days prior to the filing date of this annual report (the “Evaluation Date”). Based on the evaluation, such officers have concluded that, as of the Evaluation Date, the Corporation’s disclosure controls and procedures are effective in alerting them on a timely basis to material information relating to the Corporation (including its consolidated subsidiaries) required to be included in the Corporation’s periodic filings under the Exchange Act.

(B) Changes in Internal Controls.

Since the Evaluation Date, there have not been any significant changes in the Corporation’s internal controls or in other factors that could significantly affect such controls.

FORWARD-LOOKING STATEMENTS

This Report contains statements that are considered “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. Forward- looking statements, including statements as to industry trends, future expectations of the Corporation and other matters that do not relate strictly to historical facts, are based on certain assumptions by management. Forward-looking statements are often identified by words or phrases such as “anticipate,” “believe,” “expect,” “intend,” “seek,” “plan,” “objective,” “seek,” “trend” and “goal.” Forward-looking statements are subject to various assumptions, risks and uncertainties, which change over time. Forward-looking statements speak only as of the date they are made, and the Corporation undertakes no obligation to update any forward-looking statements. Actual results could differ materially from those anticipated in forward-looking statements and future results could differ materially from historical performance.

In addition to factors mentioned elsewhere in this report or previously disclosed in the Corporation’s SEC reports (accessible on the SEC’s website at www.sec.gov or on the Corporation’s website at www.comerica.com), the following factors, among others, could cause actual results to differ materially from forward-looking statements and future results could differ materially form historical performance:

• general political and economic conditions, either domestically or internationally, may be less favorable that expected;

• Latin America may continue to experience economic, political and social uncertainties;

• developments concerning credit quality in various industry sectors may result in an increase in the level of the Corporation’s provision for credit losses, nonperforming assets, net charge-offs and reserve for credit losses;

• domestic demand for commercial loan and investment advisory products may continue to be weak;

• customer borrowing, repayment, investment and deposit practices generally may be less favorable than anticipated;

• interest rate and currency fluctuations, equity and bond market fluctuations, and inflation may be greater than expected;

• the mix of interest rates and maturities of the Corporation’s interest earning assets and interest bearing liabilities (primarily loans and deposits) may be less favorable than expected;

• global capital markets in general, and the technology industry in particular, may continue to exhibit weakness, adversely affecting the Corporation’s investment advisory business line, as well as the Corporation’s private banking and brokerage business lines, and the availability and terms of funding necessary to meet the Corporation’s liquidity needs;

• the introductions, withdrawal, success and timing of business initiatives and strategies;

• competitive product and pricing pressures among financial institutions within the Corporation’s markets may increase;

• legislative or regulatory developments, including changes in laws or regulations concerning taxes, banking, securities, capital requirements and risk-based capital guidelines, reserve methodologies, deposit insurance and other aspects of the financial services industry, may adversely affect the business in which the Corporation is engaged or the Corporation’s financial results;

• legal and regulatory proceedings and related matters with respect to the financial services industry, including those directly involving the Corporation and its subsidiaries, could adversely affect the Corporation or the financial services industry generally;

• pending and proposed changes in accounting rules, policies, practices and procedures could adversely affect the Corporation’s financial results;

• instruments and strategies used to hedge or otherwise manage exposure to various types of market and credit risk could be less effective than anticipated, and the Corporation may not be able to effectively mitigate its risk exposures in particular market environments or against

particular types of risk;

• terrorist activities or other hostilities, which may adversely affect the general economy, financial and capital markets, specific industries, and the Corporation; and

• technological changes, including the impact of the internet on the Corporation’s businesses, may be more difficult or expensive than anticipated.

Comerica Incorporated and Subsidiaries
FORM 10-K CROSS-REFERENCE INDEX


Certain information required to be included in this Form 10-K is included in the 2002 Annual Report to Shareholders or in the 2003 Proxy Statement used in connection with the 2003 Annual Meeting of Shareholders to be held on May 20, 2003.		The following cross-reference index shows the page location in the 2002 Annual Report or the section of the 2003 Proxy Statement of only that information which is to be incorporated by reference into this Form 10-K.		All other sections of the 2002 Annual Report or the 2003 Proxy Statement are not required in this Form 10-K and are not to be considered a part of this Form 10-K.

Page Number of 2002
Annual Report or Section
of 2003 Proxy Statement


	PART I

ITEM 1. ITEM 2. ITEM 3.	Business Properties Legal Proceedings	Included herein Included herein Included herein
ITEM 4.	Submission of Matters to a Vote of Security Holders — The Corporation did not submit any matters for the shareholders’ vote in the fourth quarter of 2002.

	PART II

ITEM 5.	Market for Registrant’s Common Equity and Related Security Holder Matters	Included herein
ITEM 6.	Selected Financial Data	23
ITEM 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	24-45
ITEM 7A.	Quantitative and Qualitative Disclosures About Market Risk	38-42
ITEM 8.	Financial Statements and Supplementary Data:
	Comerica Incorporated and Subsidiaries
	Consolidated Balance Sheets Consolidated Statements of Income Consolidated Statements of Changes in Shareholders’ Equity Consolidated Statements of Cash Flows Notes to Consolidated Financial Statements Report of Management Report of Independent Auditors	46 47 48 49 50-75 76 76

	Statistical Disclosure by Bank Holding Companies:
	Analysis of Net Interest Income — Fully Taxable Equivalent Rate-Volume Analysis — Fully Taxable Equivalent Analysis of the Allowance for Loan Losses Analysis of Investment Securities and Loans Loan Maturities and Interest Rate Sensitivity Allocation of the Allowance for Loan Losses International Cross-Border Outstandings	25 26 28 33 34 34 34


	Analysis of Investment Securities Portfolio — Fully Taxable Equivalent	35
	Summary of Nonperforming Assets and Past Due Loans	37
	Remaining Expected Maturity of Risk Management Interest Rate Swaps	39
	Deposits — Maturity Distribution of Domestic Certificates of Deposit of $100,000 and Over	56

ITEM 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure — None.



	PART III

ITEM 10.	Directors and Executive Officers of the Registrant	Information About Nominees and Incumbent Directors, Executive Officers of the Corporation and Section 16(a) Beneficial Ownership Reporting Compliance

ITEM 11.	Executive Compensation	Compensation of Directors and Compensation of Executive Officers

ITEM 12.	Security Ownership of Certain Beneficial Owners and Management	Security Ownership of Certain Beneficial Owners and Security Ownership of Management

ITEM 13.	Certain Relationships and Related Transactions	Transactions of Directors and Executive Officers with Comerica and Information about Nominees and Incumbent Directors

ITEM 14.	Controls and Procedures	Included herein

PART IV

Item 15. Exhibits, Financial Statement Schedules and Reports on Form 8-K

(a) The following documents are filed as a part of this report:

1. Financial Statements: The financial statements that are filed as part of this report are listed under Item 8 in the Form 10-K Cross-Reference Index on page 17.

2. All of the schedules for which provision is made in the applicable accounting regulations of the Securities and Exchange Commission are either not required under the related instruction, the required information is contained elsewhere in the Form 10-K, or the schedules are inapplicable and therefore have been omitted.

Exhibits:

Exhibit Document Number*


3.1(a)		Restated Certificate of Incorporation of Comerica Incorporated, as amended ⁽¹⁾
3.1(b)		Certificate of Amendment to Restated Certificate of Incorporation of Comerica Incorporated ⁽²⁾
3.2		Amended and restated bylaws of Comerica Incorporated ⁽³⁾
4		Rights Agreement between Comerica Incorporated and Comerica Bank ⁽⁴⁾
10.1†		Comerica Incorporated Amended and Restated 1997 Long-Term Incentive Plan (restated 2001) ⁽⁵⁾
10.2†		Comerica Incorporated Amended and Restated Management Incentive Plan (restated 2001) ⁽⁵⁾
10.3†		Comerica Incorporated Director Fee Deferral Plan ⁽⁶⁾
10.4†		Benefit Equalization Plan for Employees of Comerica Incorporated ⁽⁶⁾
10.5†		Form of Employment Agreement (Exec. Off.)
10.6†		Form of Director Indemnification Agreement between Comerica Incorporated and its directors
10.7†		Supplemental Benefit Agreement with Eugene A. Miller ⁽⁷⁾
10.8†		Employment Agreement with Ralph W. Babb, Jr. ⁽⁸⁾
10.9†		Supplemental Pension and Retiree Medical Agreement with Ralph W. Babb Jr. ⁽⁹⁾


10.10†		1999 Comerica Incorporated Deferred Compensation Plan, January 1, 1999 (10)
10.11†		1999 Comerica Incorporated Deferred Incentive Award Plan, January 1, 1999
10.12†		Amended and Restated Comerica Incorporated Stock Option Plan For Non-Employee Directors (Amended and Restated May 22, 2001)
10.13†		Amended and Restated Comerica Incorporated Stock Option Plan For Non-Employee Directors of Comerica Bank and Affiliated Banks (Amended and Restated May 22, 2001)
10.14†		Comerica Incorporated Director Fee Deferral Plan, (Amended and Restated November 22, 2002)
10.15†		Comerica Incorporated Common Stock Director Fee Deferral Plan, (Amended and Restated November 22, 2002)
10.16†		Imperial Bancorp 1986 Stock Option Plan (as amended)(11)
11		Statement regarding Computation of Per Share Earnings(12)
13		Incorporated Sections of Registrant’s 2002 Annual Report to Shareholders
21		Subsidiaries of Registrant
23(a)		Consent of Ernst & Young LLP
23(b)		Consent of KPMG LLP
99.1		Independent Auditors’ Report of KPMG LLP
99.2		Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
99.3		Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002


⁽¹⁾	Filed as Exhibit 3.1 to Registrant’s Annual Report on Form 10-K for the year ended December 31, 1996, and incorporated herein by reference
⁽²⁾	Filed as Exhibit 3.1 to Registrant’s Registrant Statement on Form S-4, No. 333-51042, and incorporated herein by reference
⁽³⁾	Filed as Exhibit 3.1 to Registrant’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2002, and incorporated herein by reference
⁽⁴⁾	Filed as Exhibit 4 to Registrant’s Current Report on Form 8-K dated June 18, 1996, regarding the Registrant’s Rights Agreement with Comerica Bank, and incorporated herein by reference
⁽⁵⁾	Filed as the same exhibit number to Registrant’s Annual Report on Form 10-K for the year ended December 31, 2001.


⁽⁶⁾	Filed as the same exhibit number to Registrant’s Annual Report on Form 10-K for the year ended December 31, 1996, and incorporated herein by reference
⁽⁷⁾	Filed as Exhibit 10.1 to Registrant’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2002, and incorporated herein by reference
⁽⁸⁾	Filed as Exhibit 10.1 to Registrant’s Form 10-Q for the quarter ended June 30, 1998 and incorporated herein by reference
⁽⁹⁾	Filed as Exhibit 10.2 to Registrant’s Form 10-Q for the quarter ended June 30, 1998 and incorporated herein by reference
⁽¹⁰⁾	Filed as Exhibit 10.18 to the Registrant’s Annual Report on Form 10-K for the year ended December 31, 1999, and incorporated herein by reference
⁽¹¹⁾	Filed as Exhibit 10.23 to Registrant’s Annual Report on Form 10-K for the year ended December 31, 2001, and incorporated herein by reference
⁽¹²⁾	Incorporated by reference from Note 15 on page 59 of Registrant’s 2002 Annual Report to Shareholders attached hereto as Exhibit 13.
† Management compensation plan

(b) Reports on Form 8-K

A report on Form 8-K, dated October 2, 2002, was filed under item 9, following the press release announcing the Corporation’s $213 million after-tax charge related to incremental provision for credit losses, goodwill impairment.

SIGNATURES

Pursuant to the requirements of Section 13 and 15(d) 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 in the City of Detroit, State of Michigan on the 25th day of March, 2003.

COMERICA INCORPORATED

Ralph W. Babb, Jr.

Chairman, President and Chief Executive Officer

Elizabeth S. Acton

Executive Vice President and

Chief Financial Officer

Marvin J. Elenbaas

Senior Vice President and Controller

(Chief Accounting Officer)

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed by the following persons in the capacities indicated on the 25th day of March, 2003.

By Directors

Ralph W. Babb, Jr.

Lillian Bauder

Joseph J. Buttigieg, III

James F. Cordes

Peter D. Cummings

J. Philip DiNapoli

Anthony F. Earley, Jr.

Max M. Fisher

Roger Fridholm

Todd W. Herrick

David Baker Lewis

John D. Lewis

Wayne B. Lyon

Alfred A. Piergallini

Howard F. Sims

Robert S. Taubman

William P. Vititoe

Martin D. Walker

Patricia M. Wallington

Gail L. Warden

Kenneth L. Way

CERTIFICATION

PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Ralph W. Babb, Jr., Chairman, President and Chief Executive Officer of Comerica Incorporated (the “Registrant”), certify that:

1. I have reviewed this annual report on Form 10-K of the Registrant for the year ended December 31, 2002 (the “Annual Report”);

2. Based on my knowledge, this Annual 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 Annual Report;

3. Based on my knowledge, the financial statements, and other financial information included in this Annual 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 Annual Report;

4. The Registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the Registrant and we have:

a) designed such disclosure controls and procedures 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 Annual Report is being prepared;

b) evaluated the effectiveness of the Registrant’s disclosure controls and procedures as of a date within 90 days prior to the filing date of this Annual Report (the “Evaluation Date”); and

c) presented in this Annual Report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;

5. The Registrant’s other certifying officers and I have disclosed, based on our most recent evaluation, to the Registrant’s auditors and the audit committee of Registrant’s board of directors (or persons performing the equivalent function):

a) all significant deficiencies in the design or operation of internal controls which could adversely affect the Registrant’s ability to record, process, summarize and report financial data and have identified for the Registrant’s auditors any material weaknesses in internal controls; and

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant’s internal controls; and

6. The Registrant’s other certifying officers and I have indicated in this Annual Report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

Date: March 25, 2003

Ralph W. Babb, Jr
Ralph W. Babb, Jr.
Chairman, President and Chief Executive Officer

CERTIFICATION

PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Elizabeth S. Acton, Executive Vice President and Chief Financial Officer of Comerica Incorporated (the “Registrant”), certify that:

1. I have reviewed this annual report on Form 10-K of the Registrant for the year ended December 31, 2002 (the “Annual Report”);

2. Based on my knowledge, this Annual 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 Annual Report;

3. Based on my knowledge, the financial statements, and other financial information included in this Annual 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 Annual Report; 4. The Registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the Registrant and we have:

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant’s internal controls; and

Date: March 25, 2003

Elizabeth S. Acton
Elizabeth S. Acton
Executive Vice President and Chief Financial Officer


EXHIBIT INDEX

	Exhibit Document Number*

	3.1(a)	Restated Certificate of Incorporation of Comerica Incorporated, as amended ⁽¹⁾
	3.1(b)	Certificate of Amendment to Restated Certificate of Incorporation of Comerica Incorporated ⁽²⁾
	3.2	Amended and restated bylaws of Comerica Incorporated ⁽³⁾
	4	Rights Agreement between Comerica Incorporated and Comerica Bank ⁽⁴⁾
	10.1†	Comerica Incorporated Amended and Restated 1997 Long-Term Incentive Plan (restated 2001) ⁽⁵⁾
	10.2†	Comerica Incorporated Amended and Restated Management Incentive Plan (restated 2001) ⁽⁵⁾
	10.3†	Comerica Incorporated Director Fee Deferral Plan ⁽⁶⁾
	10.4†	Benefit Equalization Plan for Employees of Comerica Incorporated ⁽⁶⁾
	10.5†	Form of Employment Agreement (Exec. Off.)
	10.6†	Form of Director Indemnification Agreement between Comerica Incorporated and its directors
	10.7†	Supplemental Benefit Agreement with Eugene A. Miller ⁽⁷⁾
	10.8†	Employment Agreement with Ralph W. Babb, Jr. ⁽⁸⁾
	10.9†	Supplemental Pension and Retiree Medical Agreement with Ralph W. Babb Jr. ⁽⁹⁾


		10.10†		1999 Comerica Incorporated Deferred Compensation Plan, January 1, 1999 ⁽¹⁰⁾
		10.11†		1999 Comerica Incorporated Deferred Incentive Award Plan, January 1, 1999
		10.12†		Amended and Restated Comerica Incorporated Stock Option Plan For Non-Employee Directors (Amended and Restated May 22, 2001)
		10.13†		Amended and Restated Comerica Incorporated Stock Option Plan For Non-Employee Directors of Comerica Bank and Affiliated Banks (Amended and Restated May 22, 2001)
		10.14†		Comerica Incorporated Director Fee Deferral Plan, (Amended and Restated November 22, 2002)
		10.15†		Comerica Incorporated Common Stock Director Fee Deferral Plan, (Amended and Restated November 22, 2002)
		10.16†		Imperial Bancorp 1986 Stock Option Plan (as amended) ⁽¹¹⁾
		11		Statement regarding Computation of Per Share Earnings ⁽¹²⁾
		13		Incorporated Sections of Registrant’s 2002 Annual Report to Shareholders
		21		Subsidiaries of Registrant
		23(a)		Consent of Ernst & Young LLP
		23(b)		Consent of KPMG LLP
		99.1		Independent Auditors’ Report of KPMG LLP
		99.2		Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
		99.3		Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002


⁽¹⁾	Filed as Exhibit 3.1 to Registrant’s Annual Report on Form 10-K for the year ended December 31, 1996, and incorporated herein by reference
⁽²⁾	Filed as Exhibit 3.1 to Registrant’s Registrant Statement on Form S-4, No. 333-51042, and incorporated herein by reference
⁽³⁾	Filed as Exhibit 3.1 to Registrant’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2002, and incorporated herein by reference
⁽⁴⁾	Filed as Exhibit 4 to Registrant’s Current Report on Form 8-K dated June 18, 1996, regarding the Registrant’s Rights Agreement with Comerica Bank, and incorporated herein by reference
⁽⁵⁾	Filed as the same exhibit number to Registrant’s Annual Report on Form 10-K for the year ended December 31, 2001.


⁽⁶⁾	Filed as the same exhibit number to Registrant’s Annual Report on Form 10-K for the year ended December 31, 1996, and incorporated herein by reference
⁽⁷⁾	Filed as Exhibit 10.1 to Registrant’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2002, and incorporated herein by reference
⁽⁸⁾	Filed as Exhibit 10.1 to Registrant’s Form 10-Q for the quarter ended June 30, 1998 and incorporated herein by reference
⁽⁹⁾	Filed as Exhibit 10.2 to Registrant’s Form 10-Q for the quarter ended June 30, 1998 and incorporated herein by reference
⁽¹⁰⁾	Filed as Exhibit 10.18 to the Registrant’s Annual Report on Form 10-K for the year ended December 31, 1999, and incorporated herein by reference
⁽¹¹⁾	Filed as Exhibit 10.23 to Registrant’s Annual Report on Form 10-K for the year ended December 31, 2001, and incorporated herein by reference
⁽¹²⁾	Incorporated by reference from Note 15 on page 59 of Registrant’s 2002 Annual Report to Shareholders attached hereto as Exhibit 13.
† Management compensation plan

EXHIBIT 10.5

EMPLOYMENT AGREEMENT (EXEC. OFF.)

AGREEMENT, dated as of the ______ day of _____________, 2003, by and between COMERICA INCORPORATED, a Delaware corporation (the "Company") and name (the "Executive") who resides at,.

The Board of Directors of the Company (the "Board"), has determined that it is in the best interests of the Company and its shareholders to assure that the Company will have the continued dedication of the Executive, notwithstanding the possibility, threat or occurrence of a Change of Control (as defined below) of the Company. The Board believes it is imperative to diminish the inevitable distraction of the Executive by virtue of the personal uncertainties and risks created by a pending or threatened Change of Control and to encourage the Executive's full attention and dedication to the Company currently and in the event of any threatened or pending Change of Control, and to provide the Executive with compensation and benefits arrangements upon a Change of Control which ensure that the compensation and benefits expectations of the Executive will be satisfied and which are competitive with those of other corporations. Therefore, in order to accomplish these objectives, the Board has caused the Company to enter into this Agreement.

NOW, THEREFORE, IT IS HEREBY AGREED AS FOLLOWS:

1. Certain Definitions. (a) The "Effective Date" shall mean the first date during the Agreement Period (as defined in Section 1(b)) on which a Change of Control (as defined in Section 2) occurs. Anything in this Agreement to the contrary notwithstanding, if a Change of Control occurs and if the Executive's employment with the Company is terminated prior to the date on which the Change of Control occurs, and if it is reasonably demonstrated by the Executive that such termination of employment (i) was at the request of a third party who has taken steps reasonably calculated to effect a Change of Control or (ii) otherwise arose in connection with or anticipation of a Change of Control, then for all purposes of this Agreement the "Effective Date" shall mean the date immediately prior to the date of such termination of employment.

(b) The "Agreement Period" shall mean the period commencing on the date hereof and ending on the third anniversary of the date hereof; provided, however, that commencing on the date one year after the date hereof, and on each annual anniversary of such date (such date and each annual anniversary thereof shall be hereinafter referred to as the "Renewal Date"), unless previously terminated, the Agreement Period shall be automatically extended so as to terminate three years from such Renewal Date, unless at least 60 days prior to the Renewal Date the Company shall give notice to the Executive that the Agreement Period shall not be so extended.

2. Change of Control. For the purpose of this Agreement, a "Change of Control" shall mean:

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(a) The acquisition by any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended (the "Exchange Act")) (a "Person") of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 20% or more of either (i) the then outstanding shares of common stock of the Company (the "Outstanding Company Common Stock") or (ii) the combined voting power of the then outstanding voting securities of the Company entitled to vote generally in the election of directors (the "Outstanding Company Voting Securities"); provided, however, that for purposes of this subsection (a), the following acquisitions shall not constitute a Change of Control: (i) any acquisition directly from the Company, (ii) any acquisition by the Company, (iii) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or any corporation controlled by the Company or (iv) any acquisition by any corporation pursuant to a transaction which complies with clauses (i), (ii) and (iii) of subsection (c) of this Section 2; or

(b) Individuals who, as of the date hereof, constitute the Board (the "Incumbent Board") cease for any reason to constitute at least a majority of the Board; provided, however, that any individual becoming a director subsequent to the date hereof whose election, or nomination for election by the Company's shareholders, was approved by a vote of at least a majority of the directors then comprising the Incumbent Board shall be considered as though such individual were a member of the Incumbent Board, but excluding, for this purpose, any such individual whose initial assumption of office occurs as a result of an actual or threatened election contest with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board; or

(c) Consummation of a reorganization, merger or consolidation or sale or other disposition of all or substantially all of the assets of the Company (a "Business Combination"), in each case, unless, following such Business Combination, (i) all or substantially all of the individuals and entities who were the beneficial owners, respectively, of the Outstanding Company Common Stock and Outstanding Company Voting Securities immediately prior to such Business Combination beneficially own, directly or indirectly, more than 50% of, respectively, the then outstanding shares of common stock and the combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors, as the case may be, of the corporation resulting from such Business Combination (including, without limitation, a corporation which as a result of such transaction owns the Company or all or substantially all of the Company's assets either directly or through one or more subsidiaries) in substantially the same proportions as their ownership, immediately prior to such Business Combination of the Outstanding Company Common Stock and Outstanding Company Voting Securities, as the case may be, (ii) no Person (excluding any corporation resulting from such Business Combination or any employee benefit plan (or related trust) of the Company or such corporation resulting from such Business Combination) beneficially owns, directly or indirectly, 20% or more of, respectively, the then outstanding shares of common stock of the corporation resulting from such Business Combination or the combined voting power of the then outstanding voting securities of such corporation except to the extent that such ownership existed prior to the Business Combination, and (iii) at least a majority of the members of the board of directors of the corporation resulting from such Business Combination were members of the Incumbent Board at the time of the execution of the initial agreement, or of the action of the Board, providing for such Business Combination; or

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(d) Approval by the shareholders of the Company of a complete liquidation or dissolution of the Company.

3. Employment Period. The Company hereby agrees to continue the Executive in its employ, and the Executive hereby agrees to remain in the employ of the Company subject to the terms and conditions of this Agreement, for the period commencing on the Effective Date and ending on the last day of the thirtieth consecutive month following such date (the "Employment Period").

4. Terms of Employment. (a) Position and Duties. (i) During the Employment Period, (A) the Executive's position (including status, offices, titles and reporting requirements), authority, duties and responsibilities shall be at least commensurate in all material respects with the most significant of those held, exercised and assigned at any time during the 120-day period immediately preceding the Effective Date and (B) the Executive's services shall be performed at the location where the Executive was employed immediately preceding the Effective Date or any office or location less than 60 miles from such location.

(ii) During the Employment Period, and excluding any periods of vacation and sick leave to which the Executive is entitled, the Executive agrees to devote reasonable attention and time during normal business hours to the business and affairs of the Company and, to the extent necessary to discharge the responsibilities assigned to the Executive hereunder, to use the Executive's reasonable best efforts to perform faithfully and efficiently such responsibilities. During the Employment Period it shall not be a violation of this Agreement for the Executive to (A) serve on corporate, civic or charitable boards or committees, (B) deliver lectures, fulfill speaking engagements or teach at educational institutions and (C) manage personal investments, so long as such activities do not significantly interfere with the performance of the Executive's responsibilities as an employee of the Company in accordance with this Agreement. It is expressly understood and agreed that to the extent that any such activities have been conducted by the Executive prior to the Effective Date, the continued conduct of such activities (or the conduct of activities similar in nature and scope thereto) subsequent to the Effective Date shall not thereafter be deemed to interfere with the performance of the Executive's responsibilities to the Company.

(b) Compensation. (i) Base Salary. During the Employment Period, the Executive shall receive an annual base salary ("Annual Base Salary"), which shall be paid at a monthly rate, at least equal to twelve times the highest monthly base salary paid or payable, including any base salary which has been earned but deferred, to the Executive by the Company and its affiliated companies in respect of the twelve-month period immediately preceding the month in which the Effective Date occurs. During the Employment Period, the Annual Base Salary shall be reviewed no more than 12 months after the last salary increase awarded to the Executive prior to the Effective Date and thereafter at least annually. Any increase in Annual Base Salary shall not serve to limit or reduce any other obligation to the Executive under this Agreement. Annual Base Salary shall not be reduced after any such increase and the term Annual Base Salary as utilized in this Agreement shall refer to Annual Base Salary as so increased. As used in this Agreement, the term "affiliated companies" shall include any company controlled by, controlling or under common control with the Company.

(ii) Annual Bonus. In addition to Annual Base Salary, the Executive shall be awarded, for each fiscal year ending during the Employment Period, an annual bonus (the "Annual

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Bonus") in cash at least equal to the Executive's highest bonus under the Company's Management Incentive Plan, Long-Term Incentive Plan and/or business unit incentive plan (or any predecessor or successor plan to any thereof) as applicable, for the last three full fiscal years prior to the Effective Date (annualized in the event that the Executive was not employed by the Company for the whole of such fiscal year) (the "Recent Annual Bonus"). Each such Annual Bonus shall be paid no later than the end of the third month of the fiscal year next following the fiscal year for which the Annual Bonus is awarded, unless the Executive shall elect to defer the receipt of such Annual Bonus.

(iii) Incentive, Savings and Retirement Plans. During the Employment Period, the Executive shall be entitled to participate in all incentive, savings and retirement plans, practices, policies and programs applicable generally to other peer executives of the Company and its affiliated companies, but in no event shall such plans, practices, policies and programs provide the Executive with incentive opportunities (measured with respect to both regular and special incentive opportunities, to the extent, if any, that such distinction is applicable), savings opportunities and retirement benefit opportunities, in each case, less favorable, in the aggregate, than the most favorable of those provided by the Company and its affiliated companies for the Executive under such plans, practices, policies and programs as in effect at any time during the 120-day period immediately preceding the Effective Date or if more favorable to the Executive, those provided generally at any time after the Effective Date to other peer executives of the Company and its affiliated companies.

(iv) Welfare Benefit Plans. During the Employment Period, the Executive and/or the Executive's family, as the case may be, shall be eligible for participation in and shall receive all benefits under welfare benefit plans, practices, policies and programs provided by the Company and its affiliated companies (including, without limitation, medical, prescription, dental, disability, employee life, group life, accidental death and travel accident insurance plans and programs) to the extent applicable generally to other peer executives of the Company and its affiliated companies, but in no event shall such plans, practices, policies and programs provide the Executive with benefits which are less favorable, in the aggregate, than the most favorable of such plans, practices, policies and programs in effect for the Executive at any time during the 120-day period immediately preceding the Effective Date or, if more favorable to the Executive, those provided generally at any time after the Effective Date to other peer executives of the Company and its affiliated companies.

(v) Expenses. During the Employment Period, the Executive shall be entitled to receive prompt reimbursement for all reasonable expenses incurred by the Executive in accordance with the most favorable policies, practices and procedures of the Company and its affiliated companies in effect for the Executive at any time during the 120-day period immediately preceding the Effective Date or, if more favorable to the Executive, as in effect generally at any time thereafter with respect to other peer executives of the Company and its affiliated companies.

(vi) Fringe Benefits. During the Employment Period, the Executive shall be entitled to fringe benefits, including, without limitation, tax and financial planning services, payment of club dues, and, if applicable, use of an automobile and payment of related expenses, in accordance with the most favorable plans, practices, programs and policies of the Company and its affiliated companies in effect for the Executive at any time during the 120-day period immediately preceding the Effective Date or, if more favorable to the Executive, as in effect generally at any time thereafter

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with respect to other peer executives of the Company and its affiliated companies.

(vii) Office and Support Staff. During the Employment Period, the Executive shall be entitled to an office or offices of a size and with furnishings and other appointments, and to exclusive personal secretarial and other assistance, at least equal to the most favorable of the foregoing provided to the Executive by the Company and its affiliated companies at any time during the 120- day period immediately preceding the Effective Date or, if more favorable to the Executive, as provided generally at any time thereafter with respect to other peer executives of the Company and its affiliated companies.

(viii) Vacation. During the Employment Period, the Executive shall be entitled to paid vacation in accordance with the most favorable plans, policies, programs and practices of the Company and its affiliated companies as in effect for the Executive at any time during the 120-day period immediately preceding the Effective Date or, if more favorable to the Executive, as in effect generally at any time thereafter with respect to other peer executives of the Company and its affiliated companies.

5. Termination of Employment. (a) Death or Disability. The Executive's employment shall terminate automatically upon the Executive's death during the Employment Period. If the Company determines in good faith that the Disability of the Executive has occurred during the Employment Period (pursuant to the definition of Disability set forth below), it may give to the Executive written notice in accordance with Section 12(b) of this Agreement of its intention to terminate the Executive's employment. In such event, the Executive's employment with the Company shall terminate effective on the 30th day after receipt of such notice by the Executive (the "Disability Effective Date"), provided that, within the 30 days after such receipt, the Executive shall not have returned to full-time performance of the Executive's duties. For purposes of this Agreement, "Disability" shall mean the absence of the Executive from the Executive's duties with the Company on a full-time basis for 180 consecutive business days as a result of incapacity due to mental or physical illness which is determined to be total and permanent by a physician selected by the Company or its insurers and acceptable to the Executive or the Executive's legal representative.

(b) Cause. The Company may terminate the Executive's employment during the Employment Period for Cause. For purposes of this Agreement, "Cause" shall mean:

(i) the willful and continued failure of the Executive to perform substantially the Executive's duties with the Company or one of its affiliated companies (other than any such failure resulting from incapacity due to physical or mental illness), after a written demand for substantial performance is delivered to the Executive by the Board or the Chief Executive Officer of the Company which specifically identifies the manner in which the Board or Chief Executive Officer believes that the Executive has not substantially performed the Executive's duties, or

(ii) the willful engaging by the Executive in illegal conduct or gross misconduct which is materially and demonstrably injurious to the Company.

For purposes of this provision, no act or failure to act, on the part of the Executive, shall be considered "willful" unless it is done, or omitted to be done, by the Executive in bad faith or without

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reasonable belief that the Executive's action or omission was in the best interests of the Company. Any act, or failure to act, based upon authority given pursuant to a resolution duly adopted by the Board or upon the instructions of the Chief Executive Officer or a senior officer of the Company or based upon the advice of counsel for the Company shall be conclusively presumed to be done, or omitted to be done, by the Executive in good faith and in the best interests of the Company. The cessation of employment of the Executive shall not be deemed to be for Cause unless and until there shall have been delivered to the Executive a copy of a resolution duly adopted by the affirmative vote of not less than three-quarters of the entire membership of the Board at a meeting of the Board called and held for such purpose (after reasonable notice is provided to the Executive and the Executive is given an opportunity, together with counsel, to be heard before the Board), finding that, in the good faith opinion of the Board, the Executive is guilty of the conduct described in clauses (i) or (ii) above, and specifying the particulars thereof in detail.

(c) Good Reason. The Executive's employment may be terminated by the Executive for Good Reason. For purposes of this Agreement, "Good Reason" shall mean:

(i) the assignment to the Executive of any duties inconsistent in any respect with the Executive's position (including status, offices, titles and reporting requirements), authority, duties or responsibilities as contemplated by Section 4(a) of this Agreement, or any other action by the Company which results in a diminution in such position, authority, duties or responsibilities, excluding for this purpose an isolated, insubstantial and inadvertent action not taken in bad faith and which is remedied by the Company promptly after receipt of notice thereof given by the Executive;

(ii) any failure by the Company to comply with any of the provisions of Section 4(b) of this Agreement, other than an isolated, insubstantial and inadvertent failure not occurring in bad faith and which is remedied by the Company promptly after receipt of notice thereof given by the Executive;

(iii) the Company's requiring the Executive to be based at any office or location other than as provided in Section 4(a)(i)(B) hereof or the Company's requiring the Executive to travel on Company business to a substantially greater extent than required immediately prior to the Effective Date;

(iv) any purported termination by the Company of the Executive's employment otherwise than as expressly permitted by this Agreement; or

(v) any failure by the Company to comply with and satisfy
Section 11(c) of this Agreement.

For purposes of this Section 5(c), any good faith determination of "Good Reason" made by the Executive shall be conclusive. Anything in this Agreement to the contrary notwithstanding, a termination by the Executive for any reason during the 30-day period immediately following the first anniversary of the Effective Date shall be deemed to be a termination for Good Reason for all purposes of this Agreement.

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(d) Notice of Termination. Any termination by the Company for Cause, or by the Executive for Good Reason, shall be communicated by Notice of Termination to the other party hereto given in accordance with Section 12(b) of this Agreement. For purposes of this Agreement, a "Notice of Termination" means a written notice which (i) indicates the specific termination provision in this Agreement relied upon, (ii) to the extent applicable, sets forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of the Executive's employment under the provision so indicated and (iii) if the Date of Termination (as defined below) is other than the date of receipt of such notice, specifies the termination date (which date shall be not more than thirty days after the giving of such notice). The failure by the Executive or the Company to set forth in the Notice of Termination any fact or circumstance which contributes to a showing of Good Reason or Cause shall not waive any right of the Executive or the Company, respectively, hereunder or preclude the Executive or the Company, respectively, from asserting such fact or circumstance in enforcing the Executive's or the Company's rights hereunder.

(e) Date of Termination. "Date of Termination" means (i) if the Executive's employment is terminated by the Company for Cause, or by the Executive for Good Reason, the date of receipt of the Notice of Termination or any later date specified therein, as the case may be, (ii) if the Executive's employment is terminated by the Company other than for Cause or Disability, the Date of Termination shall be the date on which the Company notifies the Executive of such termination and (iii) if the Executive's employment is terminated by reason of death or Disability, the Date of Termination shall be the date of death of the Executive or the Disability Effective Date, as the case may be.

6. Obligations of the Company upon Termination. (a) Good Reason; Other Than for Cause, Death or Disability. If, during the Employment Period, the Company shall terminate the Executive's employment other than for Cause or Disability or the Executive shall terminate employment for Good Reason:

(i) the Company shall pay to the Executive in a lump sum in cash within 30 days after the Date of Termination the aggregate of the following amounts:

A. the sum of (1) the Executive's Annual Base Salary through the Date of Termination to the extent not theretofore paid, (2) the product of (x) the higher of (I) the Recent Annual Bonus and (II) the Annual Bonus paid or payable, including any bonus or portion thereof which has been earned but deferred (and annualized for any fiscal year consisting of less than twelve full months or during which the Executive was employed for less than twelve full months), for the most recently completed fiscal year during the Employment Period, if any (such higher amount being referred to as the "Highest Annual Bonus") and (y) a fraction, the numerator of which is the number of days in the current fiscal year through the Date of Termination, and the denominator of which is 365 and (3) any compensation previously deferred by the Executive (together with any accrued interest or earnings thereon) and any accrued vacation pay, in each case to the extent not theretofore paid (the sum of the amounts described in clauses (1), (2), and (3) shall be hereinafter referred to as the "Accrued Obligations"); and

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B. the amount equal to the product of (1) three and (2) the sum of (x) the Executive's Annual Base Salary and (y) the Highest Annual Bonus; and

C. an amount equal to the excess of (a) the actuarial equivalent of the benefit under the Company's qualified defined benefit retirement plan (the "Retirement Plan") (utilizing actuarial assumptions no less favorable to the Executive than those in effect under the Company's Retirement Plan immediately prior to the Effective Date), and any excess or supplemental retirement plan in which the Executive participates (together, the "SERP") which the Executive would receive if the Executive's employment continued for three years after the Date of Termination assuming for this purpose that (x) all accrued benefits are fully vested, (y) the Executive is three years older and (z) the Executive is credited with three more years of service, and, assuming that the Executive's compensation in each of the three years is that required by Section 4(b)(i) and
Section 4(b)(ii), over (b) the actuarial equivalent of the Executive's actual benefit (paid or payable), if any, under the Retirement Plan and the SERP as of the Date of Termination;

(ii) for three years after the Executive's Date of Termination, or such longer period as may be provided by the terms of the appropriate plan, program, practice or policy, the Company shall continue benefits to the Executive and/or the Executive's family at least equal to those which would have been provided to them in accordance with the plans, programs, practices and policies described in Section 4(b)(iv) of this Agreement if the Executive's employment had not been terminated or, if more favorable to the Executive, as in effect generally at any time thereafter with respect to other peer executives of the Company and its affiliated companies and their families, provided, however, that if the Executive becomes reemployed with another employer and is eligible to receive medical or other welfare benefits under another employer provided plan, the medical and other welfare benefits described herein shall be secondary to those provided under such other plan during such applicable period of eligibility. For purposes of determining eligibility (but not the time of commencement of benefits) of the Executive for retiree benefits pursuant to such plans, practices, programs and policies, the Executive shall be considered to have remained employed until three years after the Date of Termination and to have retired on the last day of such period;

(iii) the Company shall, at its sole expense as incurred, provide the Executive with outplacement services the scope and provider of which shall be selected by the Executive in his sole discretion; and

(iv) to the extent not theretofore paid or provided, the Company shall timely pay or provide to the Executive any other amounts or benefits required to be paid or provided or which the Executive is eligible to receive under any plan, program, policy or practice or contract or agreement of the Company and its affiliated companies (such other amounts and benefits shall be hereinafter referred to as the "Other Benefits").

(b) Death. If the Executive's employment is terminated by reason of the Executive's death during the Employment Period, this Agreement shall terminate without further obligations to the Executive's legal representatives under this Agreement, other than for payment of Accrued

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Obligations and the timely payment or provision of Other Benefits. Accrued Obligations shall be paid to the Executive's estate or beneficiary, as applicable, in a lump sum in cash within 30 days of the Date of Termination. With respect to the provision of Other Benefits, the term Other Benefits as utilized in this Section 6(b) shall include, without limitation, and the Executive's estate and/or beneficiaries shall be entitled to receive, benefits at least equal to the most favorable benefits provided by the Company and affiliated companies to the estates and beneficiaries of peer executives of the Company and such affiliated companies under such plans, programs, practices and policies relating to death benefits, if any, as in effect with respect to other peer executives and their beneficiaries at any time during the 120-day period immediately preceding the Effective Date or, if more favorable to the Executive's estate and/or the Executive's beneficiaries, as in effect on the date of the Executive's death with respect to other peer executives of the Company and its affiliated companies and their beneficiaries.

(c) Disability. If the Executive's employment is terminated by reason of the Executive's Disability during the Employment Period, this Agreement shall terminate without further obligations to the Executive, other than for payment of Accrued Obligations and the timely payment or provision of Other Benefits. Accrued Obligations shall be paid to the Executive in a lump sum in cash within 30 days of the Date of Termination. With respect to the provision of Other Benefits, the term Other Benefits as utilized in this Section 6(c) shall include, and the Executive shall be entitled after the Disability Effective Date to receive, disability and other benefits at least equal to the most favorable of those generally provided by the Company and its affiliated companies to disabled executives and/or their families in accordance with such plans, programs, practices and policies relating to disability, if any, as in effect generally with respect to other peer executives and their families at any time during the 120-day period immediately preceding the Effective Date or, if more favorable to the Executive and/or the Executive's family, as in effect at any time thereafter generally with respect to other peer executives of the Company and its affiliated companies and their families.

(d) Cause, Etc.; Other than for Good Reason. If the Executive's employment shall be terminated for Cause during the Employment Period, this Agreement shall terminate without further obligations to the Executive other than the obligation to pay to the Executive (x) his Annual Base Salary through the Date of Termination, (y) the amount of any compensation previously deferred by the Executive, and (z) Other Benefits, in each case to the extent theretofore unpaid. If the Executive voluntarily terminates employment during the Employment Period, excluding a termination for Good Reason, this Agreement shall terminate without further obligations to the Executive, other than for Accrued Obligations and the timely payment or provision of Other Benefits. In such case, all Accrued Obligations shall be paid to the Executive in a lump sum in cash within 30 days of the Date of Termination.

7. Non-exclusivity of Rights. Nothing in this Agreement shall prevent or limit the Executive's continuing or future participation in any plan, program, policy or practice provided by the Company or any of its affiliated companies and for which the Executive may qualify, nor, subject to Section
12(f), shall anything herein limit or otherwise affect such rights as the Executive may have under any contract or agreement with the Company or any of its affiliated companies. Amounts which are vested benefits or which the Executive is otherwise entitled to receive under any plan, policy, practice or program of or any contract or agreement with the Company or any of its affiliated companies at or subsequent to the Date of Termination shall be payable in accordance with such

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plan, policy, practice or program or contract or agreement except as explicitly modified by this Agreement.

8. Full Settlement. The Company's obligation to make the payments provided for in this Agreement and otherwise to perform its obligations hereunder shall not be affected by any set-off, counterclaim, recoupment, defense or other claim, right or action which the Company may have against the Executive or others. In no event shall the Executive be obligated to seek other employment or take any other action by way of mitigation of the amounts payable to the Executive under any of the provisions of this Agreement and such amounts shall not be reduced whether or not the Executive obtains other employment. The Company agrees to pay as incurred, to the full extent permitted by law, all legal fees and expenses which the Executive may reasonably incur as a result of any contest (regardless of the outcome thereof) by the Company, the Executive or others of the validity or enforceability of, or liability under, any provision of this Agreement or any guarantee of performance thereof (including as a result of any contest by the Executive about the amount of any payment pursuant to this Agreement), plus, in each case, interest on any delayed payment at the applicable Federal rate provided for in Section 7872(f)(2)(A) of the Internal Revenue Code of 1986, as amended (the "Code").

9. Certain Additional Payments by the Company.

(a) Anything in this Agreement to the contrary notwithstanding and except as set forth below, in the event it shall be determined that any payment or distribution by the Company to or for the benefit of the Executive (whether paid or payable or distributed or distributable pursuant to the terms of this Agreement or otherwise, but determined without regard to any additional payments required under this Section 9) (a "Payment") would be subject to the excise tax imposed by Section 4999 of the Code or any interest or penalties are incurred by the Executive with respect to such excise tax (such excise tax, together with any such interest and penalties, are hereinafter collectively referred to as the "Excise Tax"), then the Executive shall be entitled to receive an additional payment (a "Gross-Up Payment") in an amount such that after payment by the Executive of all taxes (including any interest or penalties imposed with respect to such taxes), including, without limitation, any income taxes (and any interest and penalties imposed with respect thereto) and Excise Tax imposed upon the Gross-Up Payment, the Executive retains an amount of the Gross-Up Payment equal to the Excise Tax imposed upon the Payments. Notwithstanding the foregoing provisions of this Section 9(a), if it shall be determined that the Executive is entitled to a Gross-Up Payment, but that the Payments do not exceed 110% of the greatest amount (the "Reduced Amount") that could be paid to the Executive such that the receipt of Payments would not give rise to any Excise Tax, then no Gross-Up Payment shall be made to the Executive and the Payments, in the aggregate, shall be reduced to the Reduced Amount.

(b) Subject to the provisions of Section 9(c), all determinations required to be made under this Section 9, including whether and when a Gross-Up Payment is required and the amount of such Gross-Up Payment and the assumptions to be utilized in arriving at such determination, shall be made by Ernst & Young LLP or such other certified public accounting firm as may be designated by the Executive (the "Accounting Firm") which shall provide detailed supporting calculations both to the Company and the Executive within 15 business days of the receipt of notice from the Executive that there has been a Payment, or such earlier time as is requested by the Company. In the event that the Accounting Firm is serving as accountant or auditor for the individual, entity or group effecting

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the Change of Control, the Executive shall appoint another nationally recognized accounting firm to make the determinations required hereunder (which accounting firm shall then be referred to as the Accounting Firm hereunder). All fees and expenses of the Accounting Firm shall be borne solely by the Company. Any Gross-Up Payment, as determined pursuant to this Section 9, shall be paid by the Company to the Executive within five days of the receipt of the Accounting Firm's determination. Any determination by the Accounting Firm shall be binding upon the Company and the Executive. As a result of the uncertainty in the application of Section 4999 of the Code at the time of the initial determination by the Accounting Firm hereunder, it is possible that Gross-Up Payments which will not have been made by the Company should have been made ("Underpayment"), consistent with the calculations required to be made hereunder. In the event that the Company exhausts its remedies pursuant to Section 9(c) and the Executive thereafter is required to make a payment of any Excise Tax, the Accounting Firm shall determine the amount of the Underpayment that has occurred and any such Underpayment shall be promptly paid by the Company to or for the benefit of the Executive.

(c) The Executive shall notify the Company in writing of any claim by the Internal Revenue Service that, if successful, would require the payment by the Company of the Gross-Up Payment. Such notification shall be given as soon as practicable but no later than ten business days after the Executive is informed in writing of such claim and shall apprise the Company of the nature of such claim and the date on which such claim is requested to be paid. The Executive shall not pay such claim prior to the expiration of the 30-day period following the date on which it gives such notice to the Company (or such shorter period ending on the date that any payment of taxes with respect to such claim is due). If the Company notifies the Executive in writing prior to the expiration of such period that it desires to contest such claim, the Executive shall:

(i) give the Company any information reasonably requested by the Company relating to such claim,

(ii) take such action in connection with contesting such claim as the Company shall reasonably request in writing from time to time, including, without limitation, accepting legal representation with respect to such claim by an attorney reasonably selected by the Company,

(iii) cooperate with the Company in good faith in order effectively to contest such claim, and

(iv) permit the Company to participate in any proceedings relating to such claim;

provided, however, that the Company shall bear and pay directly all costs and expenses (including additional interest and penalties) incurred in connection with such contest and shall indemnify and hold the Executive harmless, on an after-tax basis, for any Excise Tax or income tax (including interest and penalties with respect thereto) imposed as a result of such representation and payment of costs and expenses. Without limitation on the foregoing provisions of this Section 9(c), the Company shall control all proceedings taken in connection with such contest and, at its sole option, may pursue or forgo any and all administrative appeals, proceedings, hearings and conferences with the taxing authority in respect of such claim and may, at its sole option, either direct the Executive to pay the tax claimed and sue for a refund or contest the claim in any permissible manner, and the Executive agrees to prosecute such contest to a determination before any administrative tribunal, in a

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court of initial jurisdiction and in one or more appellate courts, as the Company shall determine; provided, however, that if the Company directs the Executive to pay such claim and sue for a refund, the Company shall advance the amount of such payment to the Executive, on an interest-free basis and shall indemnify and hold the Executive harmless, on an after-tax basis, from any Excise Tax or income tax (including interest or penalties with respect thereto) imposed with respect to such advance or with respect to any imputed income with respect to such advance; and further provided that any extension of the statute of limitations relating to payment of taxes for the taxable year of the Executive with respect to which such contested amount is claimed to be due is limited solely to such contested amount. Furthermore, the Company's control of the contest shall be limited to issues with respect to which a Gross-Up Payment would be payable hereunder and the Executive shall be entitled to settle or contest, as the case may be, any other issue raised by the Internal Revenue Service or any other taxing authority.

(d) If, after the receipt by the Executive of an amount advanced by the Company pursuant to Section 9(c), the Executive becomes entitled to receive any refund with respect to such claim, the Executive shall (subject to the Company's complying with the requirements of Section 9(c)) promptly pay to the Company the amount of such refund (together with any interest paid or credited thereon after taxes applicable thereto). If, after the receipt by the Executive of an amount advanced by the Company pursuant to Section 9(c), a determination is made that the Executive shall not be entitled to any refund with respect to such claim and the Company does not notify the Executive in writing of its intent to contest such denial of refund prior to the expiration of 30 days after such determination, then such advance shall be forgiven and shall not be required to be repaid and the amount of such advance shall offset, to the extent thereof, the amount of Gross-Up Payment required to be paid.

10. Confidential Information. The Executive shall hold in a fiduciary capacity for the benefit of the Company all secret or confidential information, knowledge or data relating to the Company or any of its affiliated companies, and their respective businesses, which shall have been obtained by the Executive during the Executive's employment by the Company or any of its affiliated companies and which shall not be or become public knowledge (other than by acts by the Executive or representatives of the Executive in violation of this Agreement). After termination of the Executive's employment with the Company, the Executive shall not, without the prior written consent of the Company or as may otherwise be required by law or legal process, communicate or divulge any such information, knowledge or data to anyone other than the Company and those designated by it. In no event shall an asserted violation of the provisions of this Section 10 constitute a basis for deferring or withholding any amounts otherwise payable to the Executive under this Agreement.

11. Successors. (a) This Agreement is personal to the Executive and without the prior written consent of the Company shall not be assignable by the Executive otherwise than by will or the laws of descent and distribution. This Agreement shall inure to the benefit of and be enforceable by the Executive's legal representatives.

(b) This Agreement shall inure to the benefit of and be binding upon the Company and its successors and assigns.

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(c) The Company will require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of the Company to assume expressly and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform it if no such succession had taken place. As used in this Agreement, "Company" shall mean the Company as hereinbefore defined and any successor to its business and/or assets as aforesaid which assumes and agrees to perform this Agreement by operation of law, or otherwise.

12. Miscellaneous. (a) This Agreement shall be governed by and construed in accordance with the laws of the State of Delaware, without reference to principles of conflict of laws. The captions of this Agreement are not part of the provisions hereof and shall have no force or effect. This Agreement may not be amended or modified otherwise than by a written agreement executed by the parties hereto or their respective successors and legal representatives.

(b) All notices and other communications hereunder shall be in writing and shall be given by hand delivery to the other party or by registered or certified mail, return receipt requested, postage prepaid, addressed as follows:

If to the Executive:

If to the Company:

Comerica Incorporated

Comerica Tower at Detroit Center 500 Woodward Avenue, 33rd Floor Detroit, Michigan 48226
Attention: Executive Vice President and General Counsel

or to such other address as either party shall have furnished to the other in writing in accordance herewith. Notice and communications shall be effective when actually received by the addressee.

(c) The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement.

(d) The Company may withhold from any amounts payable under this Agreement such Federal, state, local or foreign taxes as shall be required to be withheld pursuant to any applicable law or regulation.

(e) The Executive's or the Company's failure to insist upon strict compliance with any provision of this Agreement or the failure to assert any right the Executive or the Company may have hereunder, including, without limitation, the right of the Executive to terminate employment for

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Good Reason pursuant to Section 5(c)(i)-(v) of this Agreement, shall not be deemed to be a waiver of such provision or right or any other provision or right of this Agreement.

(f) The Executive and the Company acknowledge that, except as may otherwise be provided under any other written agreement between the Executive and the Company, the employment of the Executive by the Company is "at will" and, subject to Section 1(a) hereof, prior to the Effective Date, the Executive's employment and/or this Agreement may be terminated by either the Executive or the Company at any time prior to the Effective Date, in which case the Executive shall have no further rights under this Agreement. From and after the Effective Date this Agreement shall supersede any other agreement between the parties with respect to the subject matter hereof.

IN WITNESS WHEREOF, the Executive has hereunto set the Executive's hand and, pursuant to the authorization from its Board of Directors, the Company has caused these presents to be executed in its name on its behalf, all as of the day and year first above written.

COMERICA INCORPORATED

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EXHIBIT 10.6
COMERICA INCORPORATED
Comerica Tower at Detroit Center
500 Woodward, 33rd Floor
Detroit, Michigan 48226-3391

____________, 2002

Dear Mr./Ms.____________

If you have any agreement currently in effect (the "Prior Agreement") with Comerica Incorporated (the "Corporation") concerning indemnification of you by the Corporation in connection with your acting or having acted at any time as a director or officer of the Corporation, this agreement (the "Agreement") hereby amends and restates the Prior Agreement in its entirety. If you do not have a Prior Agreement with the Corporation concerning such indemnification, this Agreement shall serve as your initial Agreement with the Corporation concerning the indemnification of you by the Corporation with respect to expenses, liabilities and losses, including attorneys' fees, judgments, fines and amounts paid or to be paid in settlement actually and reasonably incurred by you ("Indemnified Costs") in connection with any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (whether or not by or in the right of the Corporation) (collectively, a "Proceeding") in which you are involved, as a party, a threatened party or otherwise, by reason of your acting or having acted at any time as a director or officer of the Corporation.

The Corporation is entering into this Agreement pursuant to the authority contained in its Bylaws and the provisions of the General Corporation Law of Delaware (8 Del. C.ss.101 et seq.) ("Delaware Law"), including the provision of 8 Del. C.ss.145 to the effect that the indemnification authorized thereby is not exclusive. That provision of the Delaware Law suggests that contracts may be entered into between a corporation organized under the Delaware Law and its directors and officers with respect to indemnification of those persons.

To induce you to act and continue to act as a director or officer of the Corporation, the Corporation desires to provide you with the broadest indemnity which it is permitted by law to extend.

In consideration of the foregoing and of your service as a director or officer after the date of this Agreement, the Corporation agrees to the terms and conditions set forth below.

I. BASIC INDEMNIFICATION ARRANGEMENT

To the fullest extent authorized or permitted by applicable law and regulation, as currently in effect or hereafter amended, and subject to the limitations on indemnification set forth in this Agreement, the Corporation will:

1. Indemnify you and hold you harmless from and against and, if paid by you, reimburse you for, any Indemnified Costs incurred by you in connection with any Proceedings arising by reason of the fact that you are or at any time in the past

were a director or officer of the Corporation, or are or were serving or at any time will serve at the request of the Corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise including service with respect to employee benefit plans, to the extent of the highest and most advantageous to you of any combination of:

(a) the benefits provided by the indemnification provisions of the Corporation's Bylaws as in effect on the date of this Agreement;

(b) the benefits provided by the indemnification provisions of the Corporation's Bylaws in effect at the time the Indemnified Costs are incurred by you;

(c) the benefits allowable under the Delaware Law in effect as of the date of this Agreement or as the same may hereafter be amended;

(d) the benefits allowable under the law of the jurisdiction under which the Corporation is organized at the time the Indemnified Costs are incurred by you;

(e) the benefits available under any director's and officer's insurance ("D&O Insurance") or other liability insurance obtained by the Corporation; and

(f) the benefits available to the fullest extent authorized to be provided to you by the Corporation under the non-exclusivity provisions of the Bylaws of the Corporation and the Delaware Law.

2. Pay any and all expenses in connection with a Proceeding arising by reason of the fact that you are or at any time in the past were a director or officer of the Corporation, as those expenses are incurred and in advance of the final disposition of the Proceeding, regardless of whether the directors of the Corporation previously authorized those payments, upon receipt from you of an undertaking by or on your behalf to repay such amount if it ultimately is determined that you are not entitled to be indemnified by the Corporation for those expenses under applicable law, the Corporation's Bylaws, this Agreement or otherwise.

II. DETERMINATION OF STANDARD OF CONDUCT

To the extent the Corporation's Bylaws, Delaware Law or the law of the jurisdiction under which the Corporation is organized at the time the Indemnified Costs are incurred by you, as the case may be, requires that you or your spouse (a "D&O Claimant"), meet a standard of conduct in order to be entitled to indemnification, such determination, unless prohibited by applicable law or regulation, or otherwise required by Section 18(k) of the Federal Deposit Insurance Act, as amended, shall be made by Independent Legal Counsel, as follows:

1. the Disinterested Directors (as defined below) shall select Independent Legal Counsel by majority vote, even if such Disinterested Directors constitute less than a quorum, and direct that the determination be made by such counsel (or, if there are no Disinterested Directors, the full Board of Directors shall select Independent Legal Counsel by majority vote and shall direct that the determination be made by such counsel); unless there shall have occurred within two years prior to the date of the commencement of the Proceeding for which indemnification is claimed a "Change of Control" as defined in the

Amended and Restated Comerica Incorporated 1997 Long-Term Incentive Plan as in effect on the date of this Agreement, in which case the Independent Legal Counsel shall be selected by the D&O Claimant unless the D&O Claimant shall request that such selection be made by the Board of Directors. If it is so determined that the D&O Claimant is entitled to indemnification, payment to the D&O Claimant shall be made within 10 days after such determination.

2. the term "Disinterested Directors" shall mean directors that are not and were not parties, and who are not and were not threatened to be made parties, to such Proceeding;

3. "Independent Legal Counsel" shall mean a law firm, a member of a law firm, or an independent practitioner, that is experienced in matters of corporation law and that, under the applicable standards of professional conduct then prevailing, would not have a conflict of interest in representing either the Corporation or the D&O Claimant in an action to determine the D&O Claimant's rights under this Section.

III. SPOUSAL INDEMNIFICATION

The Corporation will indemnify your spouse to whom you are legally married at any time you are covered under the indemnification provided in this Agreement (even if you do not remain married to him or her during the entire period of coverage) against third party Proceedings or direct or derivative actions or suits for the same period, to the same extent and subject to the same standards, limitations, obligations and conditions under which you are provided indemnification herein, if your spouse (or former spouse) becomes involved in a Proceeding solely by reason of his or her status as your spouse, including, without limitation, any Proceeding that seeks damages recoverable from marital community property, jointly-owned property or property purported to have been transferred from you to your spouse (or former spouse). Your spouse or former spouse also may be entitled to advancement of expenses to the same extent that you are entitled to advancement of expenses herein. The Corporation may maintain insurance to cover its obligation hereunder with respect to your spouse (or former spouse) or set aside assets in a trust or escrow fund for that purpose.

IV. ENFORCEMENT COSTS

The Corporation will pay any and all reasonable costs and expenses (including, without limitation, reasonable attorneys' fees) incurred by you to enforce your rights under this Agreement.

V. INSURANCE

The Corporation will purchase and maintain in effect for your benefit one or more valid, binding and enforceable policy or policies of D&O Insurance, provided that the Corporation will not be required to purchase and maintain the same if the insurance is not reasonably available or if, in the reasonable business judgment of the then directors of the Corporation (or a committee thereof), the cost for the insurance is substantially disproportionate to the

coverage provided or the coverage provided is so limited by exclusions that the benefits provided by the insurance are insufficient.

The Corporation agrees that the provisions hereof shall remain in effect regardless of whether D&O Insurance or other liability insurance coverage is obtained or retained at any time by the Corporation, and that any benefits granted to you hereunder will be in addition to any indemnification benefits provided to you by any entity other than the Corporation; except that any payments made under an insurance policy or from any other source will reduce the obligations of the Corporation hereunder.

VI. PARTIAL INDEMNIFICATION

If you are entitled under any provision of this Agreement to indemnification for some claims but not for others, or for some portion of expenses but not for the total amount thereof, the Corporation will indemnify you for that portion of the claims and expenses for which you are entitled to indemnification.

VII. LIMITATIONS ON INDEMNIFICATION

No indemnification, reimbursement or payment shall be required of the Corporation under this Agreement with respect to any of the items set forth below, except to the extent it is provided from policies of insurance carried by the Corporation:

1. Any claim as to which you shall have been finally adjudged by a court of competent jurisdiction to:

(a) have breached a director's duty of loyalty to the Corporation or its shareholders;

(b) have committed acts or omissions not in good faith or involving intentional misconduct or a knowing violation of law;

(c) have effected any transaction from which you have derived an improper personal benefit within the meaning of the Delaware Law (8 Del.C.ss.102(b)(7)); or

(d) have authorized any unlawful payment of dividend or unlawful stock purchase or redemption on the Corporation's stock prohibited by the Delaware Law (8 Del. C.ss.174); except to the extent that such court, or another court having jurisdiction, shall determine upon application that, despite the adjudication of liability, but in view of all the circumstances of the case, you are fairly and reasonably entitled to indemnity for such Indemnified Costs as the court deems proper.

2. Any payment determined to be unlawful by final judgment of a court or other tribunal having jurisdiction over the question.

3. Any obligation of yours under Section 16(b) of the Securities Exchange Act of 1934, as amended.

4. Any liability or expense (including any penalty, judgment or legal expense) sustained in connection with an administrative or civil enforcement action which is initiated by a federal banking agency and results in a final adjudication or finding against you; if such indemnification, reimbursement or payment, on the date thereof, is a prohibited indemnification payment under Regulations and Statements of General Policy of the Federal Deposit Insurance Corporation (including, without limitation, 12 CFR 359.0 et seq.) or federal banking law (including, without limitation, 12 USC 1828(k)), as both are amended and in effect on the date of such payment.

You hereby agree to reimburse the Corporation, to the extent not covered by payments from insurance or bonds purchased pursuant to 12 CFR 359.1(1)(2), as amended for that portion of the advanced indemnification payments that subsequently become prohibited indemnification payments, as defined in 12 CFR 359.1(1), as amended.

VIII. ESTABLISHMENT OF TRUST

The Corporation may (but is not obligated to) dedicate assets of the Corporation as collateral security for the funding of its obligations under this Agreement and under similar agreements with other directors, officers, employees and agents, by depositing assets or bank letters of credit in trust or escrow, establishing reserve accounts, funding self- insurance arrangements or otherwise, on terms determined by the Corporation.

IX. LEGAL DEFENSE

You will provide to the Corporation prompt written notice of any Proceeding brought, threatened, asserted or commenced against you with respect to which you may assert a right to indemnification under this Agreement. You will not make any admission or effect any settlement without the Corporation's written consent unless you have undertaken your own defense in the matter and have waived the benefits of this Agreement. The Corporation will not settle any Proceeding to which you are a party in any manner which would impose any penalty on you without your written consent. Neither you nor the Corporation will unreasonably withhold consent to any proposed settlement. Except as otherwise provided below, to the extent that it wishes to do so, the Corporation jointly with any other indemnifying party similarly notified (or its or their insurer), will be entitled to assume your defense in any Proceeding, with counsel mutually satisfactory to you and the Corporation. After notice from the Corporation to you of the Corporation's election so to assume such defense, the Corporation will not be liable to you under this Agreement for any legal or other expenses subsequently incurred by you in connection with the defense of the matter other than reasonable costs of investigation or as otherwise provided below. You will have the right to employ counsel in such Proceeding, but the fees and expenses of such counsel incurred after notice from the Corporation (or its insurer), of its assumption of the defense of the Proceeding will be at your expense unless:

(a) the employment of counsel by you was authorized by the Corporation;

(b) you reasonably concluded that there may be a conflict of interest between you and the Corporation in the conduct of the defense of the action; or

in each of these cases the fees and expenses of counsel will be at the expense of the Corporation. The Corporation will not be entitled to assume your defense in any Proceeding brought by or on behalf of the Corporation or as to which you will have made the conclusion provided for in clause (b) above.

X. INDEMNIFICATION - SECURITIES ACT LIABILITIES

If a claim is asserted for indemnification against liabilities under the Securities Act of 1933 or the Securities Exchange Act of 1934 (Acts) in connection with the registration for sale of any securities of the Corporation (other than a claim for the payment of expenses incurred in the successful defense of any such Proceeding), you agree that it will not be a breach of this Agreement for the Corporation to agree with the Securities and Exchange Commission that, unless in the opinion of the Corporation's counsel the matter has been settled by controlling precedent, the Corporation will submit to a court of competent jurisdiction the question of whether or not such indemnification by the Corporation is against public policy as expressed in the Acts, and the Corporation will be governed by the final adjudication of the issue.

XI. NO PERSONAL LIABILITY

You agree that neither the shareholders nor the directors nor any officer, employee, representative or agent of the Corporation will be personally liable for the satisfaction of the Corporation's obligations under this Agreement, and you will look solely to the assets of the Corporation for satisfaction of any claims hereunder.

XII. CONTINUING RIGHTS

Your rights and the obligations of the Corporation under this Agreement will continue in full force and effect despite any subsequent amendment or modification of the Corporation's Bylaws as in effect on the date hereof, or any subsequent action by the directors or shareholders of the Corporation.

XIII. DURATION OF AGREEMENT

This Agreement will continue until and terminate upon the later of:

(a) 10 years after the date that you cease to serve as a director, officer, employee, agent or fiduciary of the Corporation or of any other corporation, partnership, joint venture, trust, employee benefit plan or other enterprise for which you served as a director, officer, employee, agent or fiduciary at the request of the Corporation; or

(b) the final termination of all pending Proceedings for which rights of indemnification or advancement of expenses are granted under this Agreement.

XIV. GOVERNING LAW

This Agreement will be construed and interpreted and the rights of the Parties hereunder will be determined in accordance with the laws of the State of Delaware without giving

effect to principles of conflicts of law. The rights provided to you under this Agreement will not be deemed exclusive of any other rights to indemnity to which you may be or become entitled in connection with your service as a director or officer of the Corporation.

XV. SEVERABILITY

The provisions of this Agreement are severable and if for any reason any provision or portion hereof is held illegal, invalid or unenforceable, such determination will not affect any other provision or portion of this Agreement or any rights existing otherwise than under this Agreement.

XVI. SUCCESSORS AND ASSIGNS

This Agreement is binding upon and will inure to the benefit of the Parties hereto and their respective heirs, executors, personal representatives, successors and assigns.

COMERICA INCORPORATED

By:
Name:      George W. Madison
Its:       Executive Vice President, General Counsel and
           Corporate Secretary

Accepted by:

[DIRECTOR OR OFFICER]

EXHIBIT 10.11

Final 09/30/01

1999 COMERICA INCORPORATED

AMENDED AND RESTATED

DEFERRED INCENTIVE AWARD PLAN

1999 COMERICA INCORPORATED
AMENDED AND RESTATED
DEFERRED INCENTIVE AWARD PLAN

TABLE OF CONTENTS

ARTICLE I.        PURPOSE AND INTENT..........................................................................  I-2

ARTICLE II.       DEFINITIONS
         A.       Definitions................................................................................. II-1
                  (1)      Account............................................................................ II-1
                  (2)      Irrevocable Election Form.......................................................... II-1
                  (3)      Beneficiary(ies)................................................................... II-1
                  (4)      Board.............................................................................. II-1
                  (5)      Code     .......................................................................... II-1
                  (6)      Comerica Stock Fund................................................................ II-1
                  (7)      Comerica Stock..................................................................... II-1
                  (8)      Committee.......................................................................... II-1
                  (9)      [Intentionally left blank]......................................................... II-1
                  (10)     Deferral Period.................................................................... II-1
                  (11)     Disabled and Disability............................................................ II-2
                  (12)     [Intentionally left blank]......................................................... II-2
                  (13)     Employer .......................................................................... II-2
                  (14)     ERISA.............................................................................. II-2
                  (15)     Exchange Act....................................................................... II-2
                  (16)     Participant........................................................................ II-2
                  (17)     Plan............................................................................... II-2
                  (18)     Plan Administrator(s).............................................................. II-2
                  (19)     Retirement......................................................................... II-2
                  (20)     Incentive Award ................................................................... II-2
                  (21)     Incentive Award Deferral........................................................... II-3
                  (22)     Trust.............................................................................. II-3
                  (23)     Trustee............................................................................ II-3
                  (24)     Unforeseeable Emergency............................................................ II-3

ARTICLE III.      ELECTION TO PARTICIPATE IN THE PLAN
         A.       Completion of Irrevocable Election Form..................................................... III-1
         B.       Contents of Irrevocable Election Form....................................................... III-1
         C.       Effect of Entering Into Irrevocable Election Form........................................... III-1
         D.       Special Rules Applicable to Irrevocable Election Form
                  and Deferral of Incentive Award ............................................................ III-2
                  (1)      Deferral Election to be Made Before
                           Compensation is Earned............................................................. III-2
                  (2)      Irrevocability of Deferral Election................................................ III-2
                  (3)      Cancellation of Deferral Election.................................................. III-3
         E.       Deferrals By Committee...................................................................... III-4

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ARTICLE IV.         DEFERRED INCENTIVE AWARD COMPENSATION ACCOUNTS
                    AND INVESTMENT OF DEFERRED INCENTIVE AWARD
                    COMPENSATION
         A.         Deferred Incentive Award Accounts......................................................... IV-1
         B.         Earnings on Incentive Award Deferrals..................................................... IV-1
         C.         Contribution of Incentive Award Deferrals to Trust........................................ IV-2
         D.         Insulation from Liability................................................................. IV-2
         E.         Ownership of Incentive Award Deferrals.................................................... IV-2
         F.         [Intentionally left blank]................................................................ IV-3
         G.         Adjustment of Accounts Upon Changes in Capitalization..................................... IV-3

ARTICLE V.          DISTRIBUTION OF INCENTIVE AWARD DEFERRALS
         A.         In General................................................................................ V-1
                    (1)    Employment Through Deferral Period................................................. V-1
                    (2)    Termination Prior to End of Deferral Period ....................................... V-1
                    (3)    Death of Participant Prior to End of
                             Installment Distribution Period.................................................. V-2
                    (4)    Hardship Distributions ............................................................ V-2
                    (5)    Stock Distributions ............................................................... V-3
         B.         Designation of Beneficiary................................................................ V-3
                    (1)    Beneficiary Designation Must be Filed Prior to Participant's
                           Death.............................................................................. V-3
                    (2)    Absence of Beneficiary............................................................. V-3

ARTICLE VI.         AMENDMENT OR TERMINATION
         A.         Amendment and Termination of Plan......................................................... VI-1

ARTICLE VII.        AUDITING OF ACCOUNTS AND STATEMENTS
                    TO PARTICIPANTS
         A.         Auditing of Accounts...................................................................... VII-1
         B.         Statements to Participants................................................................ VII-1
         C.         Fees and Expenses of Administration....................................................... VII-1

ARTICLE VIII.       MISCELLANEOUS PROVISIONS
         A.         Nonforfeitability of Participant Accounts................................................. VIII-1
         B.         Prohibition Against Assignment............................................................ VIII-1
         C.         No Employment Contract.................................................................... VIII-1
         D.         Successors Bound.......................................................................... VIII-1
         E.         Prohibition Against Loans................................................................. VIII-1
         F.         Administration By Committee............................................................... VIII-1
         G.         Governing Law and Rules of Construction................................................... VIII-2
         H.         Power to Interpret........................................................................ VIII-2
         I.         Effective Date............................................................................ VIII-3

I-1

RECITALS

WHEREAS, Comerica Incorporated has deemed it in the best interests of the participants in the Corporation's Deferred 3 Year ROE Award Plan to amend and restate the plan to provide for deferrals of all incentive awards made under the Management Incentive Plan.

ARTICLE I.

PURPOSE AND INTENT.

The Plan enables Participants to defer receipt of all or a portion of their Incentive Award to provide additional income for them subsequent to retirement, disability or termination of employment. It is the intention of Comerica Incorporated that the Plan cover only employees who are management or highly-compensated employees within the meaning of sections 201(2), 301(a)(3), and 401(a)(1) of ERISA.

I-2

ARTICLE II.
DEFINITIONS.

A. Definitions. The following words and phrases, wherever capitalized, shall have the following meanings respectively:

(1) "Account(s)" means the account established for each Participant under Article IV(A) hereof.

(2) "Irrevocable Election Form" means the Irrevocable Election Form in the form attached hereto as Attachment A, as it may be revised from time to time.

(3) "Beneficiary(ies)" means the person(s), natural or corporate, in whatever capacity, designated by a Participant pursuant to this Plan, or the person otherwise deemed to constitute the Participant's beneficiary under Article V(B)(2) hereof.

(4) "Board" means the Board of Directors of Comerica Incorporated.

(5) "Code" means the Internal Revenue Code of 1986, as amended.

(6) "Comerica Stock Fund" means the investment established under the Plan pursuant to which a Participant may request investment of sums deferred under the Plan in units whose value is tied to the market value of shares of Comerica Stock.

(7) "Comerica Stock" means shares of common stock of Comerica Incorporated, $5.00 par value.

(8) "Committee" means the Compensation Committee of the Board, or such other committee appointed by the Board to administer the Plan.

(9) [Intentionally left blank]

(10) "Deferral Period" means the period during which a Participant elects to defer receipt of the Incentive Award under the Plan, which period shall end coincident with the Participant's Retirement.

II-1

(11) "Disabled" or "Disability" means "disabled" under the Comerica Incorporated Long-Term Disability Plan or under the Comerica Incorporated Executive Long-Term Disability Plan, whichever such plan covers the individual.

(12) [Intentionally left blank]

(13) "Employer" means Comerica Incorporated, a Delaware corporation, and its subsidiary corporations, and any successor entity which may succeed the Employer and its subsidiary corporations.

(14) "ERISA" means the Employee Retirement Income Security Act of 1974, as amended.

(15) "Exchange Act" means the Securities Exchange Act of 1934, as amended.

(16) "Participant" means an employee whose Irrevocable Election Form has been accepted by the Committee pursuant to Article III(A) hereof, and who either has a deferral election currently in effect or an Account balance under the Plan.

(17) "Plan" means the unfunded, nonqualified elective Deferred Incentive Award plan, the provisions of which are set forth herein, as they may be amended from time to time.

(18) "Plan Administrator(s)" means the individual(s) appointed by the Committee to handle the day-to-day administration of the Plan.

(19) "Retirement" means retirement under the Comerica Incorporated Retirement Plan.

(20) "Incentive Award" means the incentive award granted to Participants pursuant to the Management Incentive Plan that is related to Comerica Incorporated's performance, including, but not limited to 3 year return on equity performance.

II-2

(21) "Incentive Award Deferral(s)" means the amount of an incentive award a Participant has elected to defer, pursuant to an Irrevocable Election Form and, where the context requires, shall also include earnings on such amounts.

(22) "Trust" means such trust as may be established by Comerica Incorporated in connection with this Plan.

(23) "Trustee" means the entity selected by Comerica Incorporated as trustee of the Trust.

(24) "Unforeseeable Emergency" means a severe financial hardship to the Participant resulting from a sudden and unexpected illness or accident of the Participant or of a dependent (within the meaning of Code Section 152(a)) of the Participant, loss of the Participant's property due to casualty, or other similar extraordinary and unforeseeable circumstances arising as a result of events beyond the control of the Participant.

II-3

ARTICLE III.
ELECTION TO PARTICIPATE IN THE PLAN.

A. Completion of Irrevocable Election Form. An individual who wishes to become a Participant in the Plan must complete and sign an Irrevocable Election Form. Any Irrevocable Election Form received by the Committee or its delegate shall become binding upon the Committee's acceptance thereof. In the Irrevocable Election Form, the employee shall indicate the Incentive Award the Participant wishes to defer. A Participant must file a separate Irrevocable Election Form with respect to each year's Incentive Award he or she wishes to defer.

B. Contents of Irrevocable Election Form. Each Irrevocable Election Form shall: (i) designate the amount of the Incentive Award to be deferred in whole percentages or in whole dollars; (ii) request that the Employer defer payment of the Incentive Award to the Participant until the year the Participant retires; (iii) state how the Participant wishes to receive payment of the Incentive Award Deferrals at retirement; and (iv) contain other provisions the Committee deems appropriate.

C. Effect of Entering Into Irrevocable Election Form. Upon the Committee's acceptance of a Participant's Irrevocable Election Form, the Participant shall be (i) bound by the provisions of the Plan and by the provisions of any agreement governing the Trust; (ii) bound by the provisions of the Irrevocable Election Form; and (iii) deemed to have assumed the risks of deferral, including, without limitation, the risk of poor investment performance and the risk that Comerica Incorporated may become insolvent.

III-1

D. Special Rules Applicable to Irrevocable Election Forms and Deferral of The Incentive Award.

(1) Deferral Election to be Made Before The Incentive Award is Earned. In no event shall any of the Incentive Award which has been earned by a Participant prior to the date such Participant's Irrevocable Election Form has been accepted by the Committee be deferred under the Plan. Further, the effective date of any Irrevocable Election Form shall not be earlier than the first day of the calendar year which begins after the Irrevocable Election Form is signed by the Participant and accepted by the Committee. Notwithstanding the preceding sentence, an Irrevocable Election Form delivered to the Committee within 60 days of the effective date of the Plan may defer the Incentive Award to be earned in the remaining portion of the year in which it is delivered; and, provided further, an Irrevocable Election Form delivered to the Committee within 30 days of the date an individual first becomes eligible to participate in the Plan may defer the Incentive Award to be earned in the remaining portion of the year in which it is delivered. Notwithstanding anything in this Article III to the contrary, the Committee, in its sole discretion, may impose limitations on the percentage or dollar amount of any Participant election to defer the Incentive Award and may impose rules prohibiting the deferral of less than 100% of any award under any other incentive plan of the Employer that permits deferral of awards thereunder.

(2) Irrevocability of Deferral Election. Except as provided in Article III(D)(3) and V(A)(4) below, the provisions of the Irrevocable Election Form relating to a Participant's election to defer the Incentive Award and the Participant's selection of the time and manner of payment of the Incentive Award Deferrals shall be irrevocable.

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(3) Cancellation of Deferral Election. In the event of an Unforeseeable Emergency, the Committee may, in its sole discretion, permit the Participant to cancel an election to defer the Incentive Award, in whole or in part, and permit the Participant to receive at the otherwise scheduled payment date whatever portion of the amount subject to the deferral election is necessary, in the judgment of the Committee, to alleviate the financial hardship occasioned by the Unforeseeable Emergency.

Any Participant who seeks to cancel a deferral election on account of an Unforeseeable Emergency shall submit to the Committee a written request which sets forth in reasonable detail the Unforeseeable Emergency, and the amount of the Incentive Award Deferral which the Participant believes to be necessary to remedy it. In determining whether to grant any Participant's request to cancel a deferral election on the basis of an Unforeseeable Emergency, the Committee shall adhere to the requirements of Section 1.457-2(h)(4) of the Income Tax Regulations, the provisions of which are incorporated herein by reference. Any Participant who is permitted to cancel a deferral election shall not again be eligible to submit a deferral election until the calendar year following the calendar year in which such cancellation is permitted.

If a Participant receives a hardship distribution under the Comerica Incorporated Preferred Savings Plan, the Participant's deferral election hereunder shall be automatically canceled to the extent it would defer the Participant's receipt of any Incentive Award the Participant would earn during a twelve-month period beginning on the date of the Participant's receipt of such hardship distribution. Any Participant whose deferral election is automatically canceled in accordance with the provisions hereof shall not again be eligible to submit a deferral election until the next enrollment period after the elapse of at least 12 months following the Participant's receipt of a hardship distribution.

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E. Deferrals By Committee. At its discretion, the Committee may defer any of the Incentive Award payable to a Participant pursuant to a notice to the Participant. Any of the Incentive Award payable to a Participant which is deferred by the Committee shall be distributed to the Participant in shares of Comerica Stock by either a lump sum distribution of Comerica Stock or installments of Comerica Stock, upon his or her termination of employment. Any Incentive Award deferred under the Plan by the Committee shall be invested in the Comerica Stock Fund. Also, upon the death of the Participant on behalf of whom the Incentive Award is deferred prior to distribution of all of the Incentive Award deferred by the Committee and the earnings thereon, unless the Participant has delivered a beneficiary designation form to the Committee with respect to the sums deferred by the Committee, the balance will be distributed to the Beneficiary(ies) listed on the most recent beneficiary designation form delivered to the Committee with respect to any other Incentive Award deferred by the Participant under the Plan. If the Participant has not designated a Beneficiary(ies) with respect to sums deferred by the Committee and has not deferred any other Incentive Award under the Plan (or submitted a beneficiary designation form with respect to any such deferrals), the Incentive Award deferred by the Committee and any earnings thereon shall be payable in the form of Comerica Stock to the Participant's estate upon his or her death.

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ARTICLE IV.
DEFERRED INCENTIVE AWARD ACCOUNTS
AND INVESTMENT OF DEFERRED INCENTIVE AWARD.

A. Deferred Incentive Award Accounts. The Plan Administrator shall establish a book reserve account in the name of each Participant. As soon as is administratively feasible following the date the Incentive Award subject to a Participant's deferral election would otherwise be paid to the Participant, the Plan Administrator shall credit the Incentive Award being deferred to the Participant's Account. Each Participant's Account shall further be credited with earnings or charged with losses resulting from the deemed investment of the Incentive Award Deferrals credited to the Account as though the Incentive Award Deferrals had been invested in Comerica Stock, and shall be charged with any distributions, any federal and state income tax withholdings, any social security tax as may be required by law and by any further amounts, including administrative fees and expenses, the Employer is either required to withhold or determines are appropriate charges to such Participant's Account.

B. Earnings on Incentive Award Deferrals. At the time a Participant submits an Irrevocable Election Form, and from time to time thereafter at intervals to be determined by the Committee, each Participant shall invest the balance of his Account, any earnings and dividends thereon in Comerica Stock.

Comerica Incorporated shall be under no obligation to acquire any Comerica Stock to fund this Plan, and any investment actually made by the Corporation with Incentive Award Deferrals will be acquired solely in the name of Comerica Incorporated, and will remain the sole property of Comerica Incorporated.

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C. Contribution of Incentive Award Deferrals to Trust. In the sole discretion of Comerica Incorporated, all or any portion of the Incentive Award Deferrals credited to any Participant's Account may be contributed to a Trust established by Comerica Incorporated in connection with the Plan. No Participant or Beneficiary shall have the right to direct or require that Comerica Incorporated contribute the Participant's Incentive Award Deferrals to the Trust. Any Incentive Award Deferrals so contributed shall be held, invested and administered to provide benefits under the Plan except as otherwise required in the agreement governing the Trust.

D. Insulation from Liability. No member of the Committee or officer, employee or director of any Employer shall be liable to any person for any action taken or omitted in connection with the administration of this Plan or Trust unless attributable to such individual's own fraud or willful misconduct.

E. Ownership of Incentive Award Deferrals. Title to and beneficial ownership of any assets, of whatever nature, which may be allocated by Comerica Incorporated to any Account in the name of any Participant shall at all times remain with Comerica Incorporated, and no Participant or Beneficiary shall have any property interest whatsoever in any specific assets of Comerica Incorporated by reason of the establishment of the Plan nor shall the rights of any Participant or Beneficiary to payments under the Plan be increased by reason of Comerica Incorporated's contribution of Incentive Award Deferrals to the Trust. The rights of each Participant and Beneficiary hereunder shall be limited to enforcing the unfunded, unsecured promise of the Participant's Employer to pay benefits under the Plan, and the status of any Participant or Beneficiary shall be that of an unsecured general creditor of Comerica Incorporated. Participants and Beneficiaries shall

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not be deemed to be parties to any trust agreement Comerica Incorporated enters into with the Trustee.

F. [Intentionally left blank]

G. Adjustment of Accounts Upon Changes In Capitalization. In the event the number of outstanding shares of Comerica Stock changes as a result of any stock split, stock dividend, recapitalization, merger, consolidation, reorganization, combination, or exchange of shares, split-up, spin-off, liquidation or other similar change in capitalization, or any distribution made to common stockholders other than cash dividends, the number or kind of shares of Comerica Stock in which such Accounts are deemed to be invested shall be automatically adjusted, and the Committee shall be authorized to make such other equitable adjustment of any Account, so that the value of the Account shall not be decreased by reason of the occurrence of such event. Any such adjustment shall be conclusive and binding.

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ARTICLE V.
DISTRIBUTION OF INCENTIVE AWARD DEFERRALS.

A. In General. The benefits payable hereunder as Deferred Incentive Award shall be paid to the Participant or to the Participant's Beneficiary as follows:

(1) Employment Through Deferral Period. If the Participant's employment with an Employer continues until the last day of the Deferral Period, Comerica Incorporated shall, as soon as administratively feasible following the end of the Deferral Period, distribute, or commence to distribute, the balance of the Account in the name of the Participant in Comerica Stock, in any manner described below which is selected by the Participant in the Participant's Irrevocable Election Form: (i) a single sum; (ii) annual installments over 5 years, (iii) annual installments over 10 years; or (iv) annual installments over 15 years.

(2) Termination Prior to End of Deferral Period. If the Participant's employment with the Employer terminates prior to the last day of the Deferral Period (unless such termination is due to the Participant's Disability), then notwithstanding the manner of distribution selected by the Participant, Comerica Incorporated shall distribute or direct the Trustee to distribute Comerica Stock to the Participant as of the earliest convenient date, as determined by the Committee, which occurs subsequent to the date the Participant's employment terminates. Such shares shall be distributed to the Participant or to the Participant's Beneficiary in a single distribution as soon as is administratively feasible following the Participant's termination date.

If the Participant's employment terminates prior to the last day of the Deferral Period because the Participant has become Disabled, then notwithstanding the distribution date

V-1

selected by the Participant in the Participant's Irrevocable Election Form, certificates evidencing the Comerica Stock Fund investment, shall be distributed, or commence to be distributed, as soon as administratively feasible following his or her termination date, such distribution to be made in the manner specified in the Participant's Irrevocable Election Form.

(3) Death of Participant Prior to End of Installment Distribution Period. If the Participant dies before a distribution of all the Comerica Stock is made, then the remaining Comerica Stock certificates shall be distributed to the Participant's Beneficiary, such distribution to be made as soon as is administratively feasible following the date of the Participant's death.

(4) Hardship Distributions. In the event of an Unforeseeable Emergency involving a Participant which occurs prior to distribution of the entire balance of the Account in the name of the Participant, the Committee may, in its sole discretion, make a single distribution of Comerica Stock, to the Participant in an amount equal to such portion of the Account in the Participant's name as shall be necessary in the judgment of the Committee to alleviate the financial hardship occasioned by the Unforeseeable Emergency. 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 number of Comerica Stock certificates, which the Participant believes to be necessary to alleviate the financial hardship. In determining whether to grant any requested hardship distribution, the Committee shall adhere to the requirements of the Income Tax Regulations referred to in Article III(D)(3) hereof.

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(5) Stock Certificate Distributions. If, at the time an installment distribution of an Account in the name of any Participant is scheduled to commence, the fair market value of such Account does not exceed $5,000 then, notwithstanding an election by the Participant that such Account be distributed in installments, the balance of Comerica Stock in such Account shall be distributed to the Participant in a single distribution on or about the date the first installment is scheduled to be made.

B. Designation of Beneficiary. A Participant shall deliver to the Committee a written designation of Beneficiary(ies) under the Plan, which designation may from time to time be amended or revoked without notice to, or consent of, any previously designated Beneficiary.

(1) Beneficiary Designation Must be Filed Prior to Participant's Death. No designation of Beneficiary, and no amendment or revocation thereof, shall become effective if delivered to the Committee after such Participant's death, unless the Committee shall determine such designation, amendment or revocation to be valid.

(2) Absence of Beneficiary. In the absence of an effective designation of Beneficiary, or if no Beneficiary designated shall survive the Participant, then the balance of the Account in the name of the Participant shall be paid to the Participant's estate.

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ARTICLE VI.
AMENDMENT OR TERMINATION.

A. Amendment and Termination of Plan. This Plan may be amended or terminated at any time in the sole discretion of the Committee by a written instrument executed by the Committee. No such amendment shall affect the time of distribution of any of the Incentive Award earned prior to the time of such amendment or termination except as the Committee may determine to be necessary to carry out the purpose of the Plan.

Written notice of any such amendment or termination shall be given to each Participant. Upon termination of the Plan, Comerica Incorporated shall distribute to each Participant or Beneficiary, or direct that the Trustee so distribute, the amounts which would have been distributed to such Participant or Beneficiary under the Plan had the Participant's employment with an Employer terminated at the time of termination of the Plan. In addition, no such amendment shall make the Trust revocable.

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ARTICLE VII.
AUDITING OF ACCOUNTS AND STATEMENTS
TO PARTICIPANTS.

A. Auditing of Accounts. The Plan shall be audited from time to time as directed by the Committee by auditors selected by the Committee.

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

C. Fees and Expenses of Administration. Fees of the Trustee and expenses of administration of the Plan shall be deducted from Accounts.

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ARTICLE VIII.
MISCELLANEOUS PROVISIONS.

A. Nonforfeitability of Participant Accounts. Each Participant shall be fully vested in his or her Account.

B. Prohibition Against Assignment. Benefits payable to Participants and their Beneficiaries under the Plan may not be anticipated, assigned (either at law or in equity), alienated, sold, transferred, pledged or encumbered in any manner, nor may they be subjected to attachment, garnishment, levy, execution or other legal or equitable process for the debts, contracts, liabilities, engagements or acts of any Participant or Beneficiary.

C. No Employment Contract. Nothing in the Plan is intended to be construed, or shall be construed, as constituting an employment contract between the Employer and any Participant nor shall any Plan provision affect the Employer's right to discharge any Participant for any reason or for no reason.

D. Successors Bound. The contractual agreement between Comerica Incorporated and each Participant resulting from the execution of an Irrevocable Election Form shall be binding upon and inure to the benefit of Comerica Incorporated, its successors and assigns, and to the Participant and to the Participant's heirs, executors, administrators and other legal representatives.

E. Prohibition Against Loans. The Participant may not borrow any Incentive Award Deferrals from Comerica Incorporated nor utilize his or her Account as security for any loan from the Employer.

F. Administration By Committee. Responsibility for administration of 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(s). To the extent the

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Committee has delegated authority concerning a matter to the Plan Administrator(s), any reference in the Plan to the "Committee" insofar as it pertains to such matter, shall refer likewise to the Plan Administrator(s).

G. Governing Law and Rules of Construction. This Plan shall be governed in all respects, whether as to construction, validity or otherwise, by applicable federal law and, to the extent that federal law is inapplicable, by the laws of the State of Michigan. 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 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 Comerica Incorporated that the Plan established hereunder be "unfunded" for income tax purposes and for purposes of Title I of ERISA, and the provisions hereof shall be construed in a manner to carry out that intention.

H. Power to Interpret. This Plan shall be interpreted and effectuated to comply with the applicable requirements of ERISA, the Code and other applicable tax law principles; and all such applicable requirements are hereby incorporated herein by reference. Subject to the above, the Committee shall have power to construe and interpret this Plan, including but not limited to all provisions of this Plan relating to eligibility for benefits and the amount, manner and time of payment of benefits, any such construction and interpretation by the Committee and any action taken thereon in good faith by the Plan Administrator(s) to be final and conclusive upon any affected party. The Committee shall also have power to correct any defect, supply any omission, or reconcile any inconsistency in such manner and to such extent as the Committee shall deem proper to carry out and put into effect this Plan; and any construction made or other action taken by the Committee

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pursuant to this Article VIII(H) shall be binding upon such other party and may be relied upon by such other party.

I. Effective Date. The effective date of this amendment and restatement shall be September 2001, except as otherwise expressly stated herein.

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EXHIBIT 10.12

Effective, as amended and
restated, on May 22, 2001

AMENDED AND RESTATED

COMERICA INCORPORATED

STOCK OPTION PLAN FOR NON-EMPLOYEE DIRECTORS

SECTION 1. PURPOSE.

The purposes of this Stock Option Plan for Non-Employee Directors are to promote the continued prosperity of Comerica Incorporated by aligning the long-term financial interests of the recipients of options hereunder with those of the shareholders of the Corporation, to provide an additional incentive for such individuals to remain as directors, and to provide a means through which the Corporation and its affiliates may attract well-qualified individuals to serve as directors.

SECTION 2. DEFINITIONS.

The following words and phrases, wherever capitalized, shall have the following meanings respectively, unless the context otherwise requires:

A. "Affiliated Bank" means Comerica Bank-Illinois, Comerica Bank-California, Comerica Bank & Trust, F.S.B., Comerica Bank-Texas or any other financial institution which is or becomes a member of the controlled group of corporations within the meaning of Section 1563(a)(1) of the Code (or other successor provision of the Code defining the term "controlled group of corporations") of which Comerica Incorporated is the common parent corporation.

B. "Agreement" means a written agreement which sets forth the terms and conditions of an option grant under the Plan, including any amendment to such written agreement. Agreements shall be subject to the express terms and conditions set forth herein.

C. "Board" means the Board of Directors of Comerica Incorporated.

D. "Cause" means any act of (a) fraud or intentional misrepresentation, or (b) embezzlement, misappropriation or conversion of assets or opportunities of the Corporation or any Subsidiary.

E. "Change in Control of the Corporation" shall be deemed to have occurred if (A) any "person" (as such term is used in Sections 13(d) and 14(d) of the Exchange Act), other

Effective, as amended and restated, on May 22, 2001

than a trustee or other fiduciary holding securities under an employee benefit plan of the Corporation, is or becomes the "beneficial owner" (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Corporation representing 26% or more of the combined voting power of the Corporation's then outstanding securities; or (B) during any period of two consecutive years, individuals who at the beginning of such period constitute the Board and any new director (other than a director designated by a person who has entered into an agreement with the Corporation to effect a transaction described in clauses (A) or (C) of this subsection) whose election by the Board or nomination for election by the stockholders of the Corporation was approved by a vote of at least two- thirds (2/3) of the directors then still in office who either were directors at the beginning of the period or whose election or nomination for election was previously so approved, cease for any reason to constitute a majority thereof; or (C) the shareholders of the Corporation approve a merger or consolidation of the Corporation with any other corporation, other than a merger or consolidation which would result in the voting securities of the Corporation outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity) at least 75% of the combined voting power of the voting securities of the Corporation or such surviving entity outstanding immediately after such merger or consolidation, or the shareholders of the Corporation approve a plan of complete liquidation of the Corporation or an agreement for the sale or disposition of all or substantially all of its assets.

F. "Code" means the Internal Revenue Code of 1986, as amended.

G. "Comerica Bank" means Comerica Bank, a Michigan banking corporation.

H. "Committee" means the Directors Committee. No member of the Committee shall be eligible to receive discretionary Option grants under Section 5.B. of the Plan.

I. "Common Stock" means shares of $5.00 par value common stock of Comerica Incorporated, subject to adjustment pursuant to Section 7.

J. "Corporation" means Comerica Incorporated, a Delaware corporation.

K. "Disabled" or "Disability" means unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or to be of long-continued and indefinite duration. An individual shall not be considered to be disabled unless he furnishes proof of the existence thereof in such form as the Committee may require.

L. "ERISA" means the Employee Retirement Income Security Act of 1974, as from time to time amended.

M. "Exchange Act" means the Securities Exchange Act of 1934, as amended.

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Effective, as amended and restated, on May 22, 2001

N. "Exercise Price" means, with respect to each share of Common Stock subject to an Option, the price at which such share may be purchased from the Corporation pursuant to the exercise of such Option.

O. "Fair Market Value" means the closing price of the Common Stock on the New York Stock Exchange as reported on the Composite Tape, or if it is not listed on the New York Stock Exchange, the closing price on the exchange on which the Common Stock is then listed, or if not listed on any exchange, then the closing price reported on the NASDAQ National Market System over-the-counter market; if, however, there is no trading of the Common Stock on the date in question, then the closing price of the Common Stock, as so reported, on the last preceding date on which there was trading shall instead be used to determine Fair Market Value; if Fair Market Value for any date in question cannot be determined as hereinabove provided, Fair Market Value shall be determined by the Committee by whatever method or means the members, in the good faith exercise of their discretion, at that time shall deem appropriate.

P. "Legal Representative" means the "guardian or legal representative" of the optionholder as those terms are construed under the Exchange Act who, upon the Disability or incapacity of an optionholder, shall have acquired on behalf of the optionholder, by legal proceeding or otherwise, the right to exercise the optionholder's rights and receive his or her benefits under the Plan.

Q. "Non-Employee Director" means (i) with respect to Section 5.A. of the Plan, a member of the Board in his capacity as a director of the Corporation, provided such individual is not an employee of the Corporation or of any Subsidiary of the Corporation; and (ii) with respect to Section 5.B. of the Plan, a member of the board of directors of Comerica Bank or any Affiliated Bank in such individual's capacity as a director of Comerica Bank or any Affiliated Bank, provided such individual also is a director of the Corporation and is not an employee of the Corporation or of any Subsidiary of the Corporation.

R. "Option" means the right, granted pursuant to this Plan, of a holder to purchase shares of Common Stock at the Exercise Price. All options granted under the Plan shall be "nonstatutory stock options," i.e., options which do not qualify under Sections 422 or 423 of the Code.

S. "Personal Representative" means the executor, administrator or personal representative appointed to administer the optionholder's probate estate, or if the individual has no probate estate, then the successor trustee(s) of any revocable living trust the individual established during his or her lifetime.

T. "Plan" means the plan set forth herein which shall be known as the "Amended and Restated Comerica Incorporated Stock Option Plan For Non-Employee Directors."

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Effective, as amended and restated, on May 22, 2001

U. "Qualified Domestic Relations Order" means a "qualified domestic relations order" as defined in the Code or in Title I of ERISA, or in rules promulgated thereunder.

V. "Subsidiary" means any corporation of which a majority of the outstanding voting capital stock is owned, directly or indirectly, by the Corporation. With respect to non-corporate entities, it means any entity in which the Corporation owns, directly or indirectly, a majority of the equity interest.

SECTION 3. SHARES AVAILABLE UNDER THE PLAN.

The aggregate number of shares which may be issued and as to which grants of Options may be made under the Plan is 375,000 shares(1) of the Common Stock, subject to adjustment as set forth in Section 7. If any Option granted under the Plan is canceled by mutual consent or terminates or expires for any reason without having been exercised in full, the number of shares subject thereto shall again be available for purposes of the Plan. The shares which may be issued under the Plan may be either authorized but unissued shares or treasury shares or partly each.

SECTION 4. ADMINISTRATION OF THE PLAN.

The Plan shall be administered by the Directors Committee (the "Committee"). The Committee may delegate the day-to-day administration of the Plan to any individual or individuals it deems appropriate. The Committee shall keep records of action taken at its meetings or by unanimous written consent. A majority of the Committee shall constitute a quorum at any meeting, and the acts of a majority of the members present at any meeting at which a quorum is present, or acts approved in writing by all the members of the Committee, shall constitute acts of the Committee.

Subject to the remaining provisions of this Section, the Committee shall have full authority to carry out the provisions of the Plan, including authority to interpret the Plan and prescribe such rules, regulations and procedures in connection with the operation of the Plan as it shall deem to be necessary and advisable for the administration of the Plan consistent with the purposes of the Plan. All questions of interpretation and application of the Plan, or as to Options granted under the Plan, shall be subject to the determination of the Committee, which shall be final and binding.

(1) This number of shares reflects the 1998 "3 for 2" stock split.

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Effective, as amended and restated, on May 22, 2001

With respect to Section 5.A. of the Plan, the selection of the Non-Employee Directors to whom Options are to be granted, the timing of such grants, the number of shares subject to any Option, the exercise price of any Option, the periods during which any Option may be exercised and the term of any Option shall be as set forth in those provisions hereof which relate to Section 5.A. of the Plan, and the Committee shall have no discretion as to such matters.

With respect to Section 5.B. of the Plan, the Committee shall have exclusive authority to grant Options under the Plan, to select the Non-Employee Directors who will receive Options, to determine the number of Options to be granted to any Non-Employee Director and the terms of any Option grant, and to determine the time when any Options will be granted.

SECTION 5. GRANT OF STOCK OPTIONS.

A. Automatic Annual Grants. On the day each annual meeting of the shareholders of the Corporation is held, each Non-Employee Director shall automatically and without further action by the Board or the Committee be granted an Option to purchase 2,500 shares of Common Stock, subject to adjustment and substitution as set forth in Section 7. If the number of shares then remaining available for the grant of Options under the Plan is not sufficient for each Non-Employee Director to be granted an Option for 2,500 shares (or the number of adjusted or substituted shares pursuant to Section 7), then each Non-Employee Director shall be granted an Option for a number of whole shares equal to the number of shares then remaining available divided by the number of Non-Employee Directors, disregarding any fractions of a share.

B. Discretionary Grants. Any Non-Employee Director shall be eligible to receive whatever number of Options the Committee, in its sole discretion, chooses to grant to him or her from time to time, but shall not have a right to receive any such grants.

SECTION 6. TERMS AND CONDITIONS APPLICABLE TO OPTION GRANTS.

Options granted under the Plan shall be subject to the following terms and conditions:

A. Exercise Price. The Exercise Price with respect to each share of Common Stock covered by the Option shall be 100% of the Fair Market Value of such share on the date the Option is granted.

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Effective, as amended and restated, on May 22, 2001

Exercise Price of the shares being purchased: except that (i) any portion of the Exercise Price representing a fraction of a share shall in any event be paid in cash, and (ii) no shares of Common Stock which have been held for less than six months may be delivered in payment of the Exercise Price of an Option. Delivery of shares may also be accomplished through the effective transfer to the Corporation of shares held by a broker or other agent. The Corporation will also cooperate with any individual exercising an Option who participates in a cashless exercise program of a broker or other agent under which all or part of the shares received upon exercise of the Option are sold through the broker or other agent or under which the broker or other agent makes a loan to such individual. Notwithstanding the foregoing, the exercise of the Option shall not be deemed to occur and no shares of Common Stock will be issued by the Corporation upon exercise of the Option until the Corporation has received payment of the Exercise Price in full. The date of exercise of an Option shall be determined under procedures established by the Committee, and as of the date of exercise the individual exercising the Option shall be considered for all purposes to be the owner of the shares with respect to which the Option has been exercised. Payment of the Exercise Price with shares shall not increase the number of shares of Common Stock which may be issued under the Plan as provided in Section 3.

C. Term of Options and Vesting. No Option shall be exercisable during the first year of its term except as provided in Section 6.E., upon the occurrence of a Change in Control of the Corporation, or as the Committee otherwise determines. Each Option shall be exercisable with respect to all of the shares subject thereto from and after the first anniversary of the date of its grant. Subject to Section 6.E. which provides for earlier termination of an Option under certain circumstances, each Option shall expire ten years after the date of grant. An Option, to the extent exercisable at any time, may be exercised in whole or in part.

Notwithstanding any other provision contained in the Plan, in case any Change in Control of the Corporation occurs, all outstanding Options shall become immediately and fully exercisable whether or not otherwise exercisable by their terms.

D. Restrictions on Transferability. No Option shall be transferable by the grantee otherwise than by will, or if the grantee dies intestate, by the laws of descent and distribution of the state of domicile of the grantee at the time of death or pursuant to a Qualified Domestic Relations Order. All Options shall be exercisable during the lifetime of the grantee only by the grantee or by the grantee's Legal Representative. These restrictions on transferability shall not apply to the extent such restrictions are not at the time required for the Plan to continue to meet the requirements of Rule 16b-3 under the Exchange Act, or any successor Rule.

E. Separation From Board Service. If a grantee ceases to be a director of the Corporation, Comerica Bank or any Affiliated Bank, any outstanding Options the grantee then holds shall be exercisable in accordance with the following provisions:

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Effective, as amended and restated, on May 22, 2001

1.(a) Retirement, Disability, or Other Separation. If the grantee's separation is due to his or her retirement, Disability, or any other circumstance not covered in Sections 6.E.1.(b) or 6.E.2. below, any outstanding Option held by such grantee shall be exercisable by the grantee, or by his or her Legal Representative or Personal Representative, as the case may be (but only if exercisable by the grantee immediately prior to ceasing to be a director), at any time prior to the expiration date of such Option; and

1.(b) Death. If the grantee's separation is due to his or her death, any outstanding Option held by such grantee shall be exercisable by the grantee, or by his or her Legal Representative or Personal Representative, as the case may be, at any time prior to the expiration date of such Option or within one year after the date the grantee ceases to be a director, whichever period is shorter; and

2. Resignation or Removal for Cause. If the grantee's separation is due to his or her resignation or removal from office for Cause, any outstanding Option held by the grantee which is exercisable by the grantee immediately prior to his or her resignation or removal shall be exercisable by the grantee for 90 days following such resignation or removal (or by his Personal Representative or Legal Representative during the remainder of such 90-day period if he or she dies or becomes Disabled during such period), but not beyond the original term of such Option.

An Option held by a grantee who has ceased to be a director of the Corporation, Comerica Bank or any Affiliated Bank shall expire at the end of the applicable exercise period, if any, specified in this Section 6.E.

F. Option Agreements. All grants of Options shall be evidenced by an Agreement which shall be executed on behalf of the Corporation by a representative of the Committee.

G. Conditions Applicable to Grants of Options. The obligation of the Corporation to issue shares of Common Stock under the Plan shall be subject to (i) the effectiveness of a registration statement under the Securities Act of 1933, as amended, with respect to such shares, if deemed necessary or appropriate by counsel for the Corporation; (ii) the condition that any shares to be issued shall have been listed (or authorized for listing upon official notice of issuance) upon each stock exchange, if any, on which the Common Stock may then be listed; and (iii) all other applicable laws, regulations, rules and orders which may then be in effect.

Subject to the foregoing provisions of this Section 6 and the other provisions of the Plan, any Option granted under the Plan shall be subject to such restrictions and other terms and conditions, if any, as shall be determined by the Committee in its discretion and set forth in an Agreement; except that (i) with respect to automatic grants under Section 5.A. hereof, in no event shall the Committee or the Board have any power or authority which would cause the Plan to fail to be a plan described in Rule 16b-3(c)(2) (ii) (or old Rule 16b-
3(b)(1)(iii) so

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Effective, as amended and restated, on May 22, 2001

long as such rule remains effective), or any successor Rule; and (ii) with respect to discretionary grants under Section 5.B. hereof, in no event shall any member of the Committee be other than a "disinterested person" under Rule 16b-3(c)(2)(i) (or Rule 16b-3(b)(1)(ii) so long as such rule remains effective). Furthermore, transactions under this Plan are intended to comply with all applicable conditions of Rule 16b-3 or its successors under the 1934 Act. To the extent any provision of the Plan or action by the Committee fails to so comply, it shall be deemed null and void, to the extent permitted by law and deemed advisable by the Committee.

SECTION 7. ADJUSTMENT AND SUBSTITUTION OF SHARES.

In the event any change occurs in the number of shares of Common Stock outstanding as a result of any stock split, stock dividend, recapitalization, merger, consolidation, reorganization, combination or exchange of shares, split-up, split-off, spin off, liquidation or other similar change in capitalization, or any distribution to common shareholders other than cash dividends, the number or kind of shares that may be issued under the Plan pursuant to Section 3, including shares covered by existing Options, shall be automatically adjusted to preserve the proportionate interests of the grantees in the Corporation as represented by their outstanding Options, and the proportionality of the share pool under the Plan in relation to the total number of shares outstanding.

If the outstanding shares of the Common Stock shall be changed into or become exchangeable for a different number or kind of shares of stock or other securities of the Corporation or another corporation, whether through reorganization, reclassification, recapitalization, stock split-up, combination of shares, merger or consolidation, then there shall be substituted for each share of the Common Stock set forth in Section 3, including shares covered by existing Options, the number and kind of shares of stock or other securities into which each outstanding share of Common Stock shall be so changed or for which each such share shall become exchangeable.

In case of any adjustment or substitution as provided for in the first two paragraphs of this Section 7, the aggregate Exercise Price for all shares subject to each then outstanding Option prior to such adjustment or substitution shall be the aggregate Exercise Price for all shares of stock or other securities (including any fraction) into which such shares shall have been converted or which shall have been substituted for such shares. Any new Exercise Price per share shall be carried to at least three decimal places with the last decimal place rounded upwards to the nearest whole number.

If the outstanding shares of Common Stock shall be changed in value by reason of any spin-off, split-off or split-up, or dividend in partial liquidation, dividend in property other than cash or extraordinary distribution to holders of Common Stock, the Committee shall make any adjustments to any then outstanding Option which it determines are equitably required to prevent dilution or enlargement of the rights of grantees which would otherwise result from any such transaction.

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Effective, as amended and restated, on May 22, 2001

No adjustment or substitution provided for in this Section 7 shall require the Corporation to issue or sell a fraction of a share or other security. Accordingly, all fractional shares or other securities which result from any such adjustment or substitution shall be eliminated and not carried forward to any subsequent adjustment or substitution.

Except as provided in this Section 7, a grantee shall have no rights by reason of the issuance by the Corporation of stock of any class or securities convertible into stock of any class, any subdivision or consolidation of shares of stock of any class, the payment of any stock dividend or any other increase or decrease in the number of shares of stock of any class.

SECTION 8. EFFECT OF THE PLAN ON THE RIGHTS OF THE CORPORATION, ITS AFFILIATES AND SHAREHOLDERS.

Nothing in the Plan, in any Option granted under the Plan, or in any Agreement shall confer any right to any person to continue as a director of the Corporation, Comerica Bank or any Affiliated Bank, or interfere in any way with the rights of the shareholders of the Corporation, the Board or the board of directors of Comerica Bank or any Affiliated Bank to elect and remove directors.

SECTION 9. AMENDMENT AND TERMINATION.

The right to amend the Plan at any time and from time to time and the right to terminate the Plan at any time are hereby specifically reserved to the Board; provided, however, that no such termination shall result in the cancellation of any outstanding Options theretofore granted under the Plan; and provided further that no amendment of the Plan shall: (i) be made without shareholder approval if shareholder approval of the amendment is at the time required for Options granted under the Plan to directors of the Corporation, Comerica Bank or any Affiliated Bank to qualify for the exemption from Section 16(b) of the Exchange Act provided by Rule 16b-3, or by any successor Rule, or by the rules of any stock exchange on which the Common Stock may then be listed; (ii) amend more than once every six months the provisions of the Plan relating to grants under
Section 5.A. of the Plan including the selection of the directors to whom Options are to be granted under Section 5.A., the timing of such grants, the number of shares which will become subject to any Option granted under Section
5.A., the Exercise Price of any Option granted under Section 5.A., the periods during which any Option granted under Section 5.A. may be exercised and the term of any such Option other than to comport with changes in the Code or ERISA, or the rules and regulations thereunder; or (iii) otherwise amend the Plan in any manner that would cause Options granted under the Plan to directors of the Corporation, Comerica Bank or any Affiliated Bank not to qualify for the exemption provided by Rule 16b-3, or any successor Rule. No amendment or termination of the Plan shall, without the written

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Effective, as amended and restated, on May 22, 2001

consent of the holder of an Option theretofore granted under the Plan, adversely affect the rights of such holder with respect thereto.

Notwithstanding anything contained in the preceding paragraph or in any other provision of the Plan or in any Agreement, the Board shall have the power to amend the Plan in any manner deemed necessary or advisable so that Options granted under the Plan qualify for the exemption provided by Rule 16b-3 (or any successor rule relating to exemption from Section 16(b) of the 1934 Act), and any such amendment shall, to the extent deemed necessary or advisable by the Board, be applicable to any outstanding Options theretofore granted under the Plan notwithstanding any contrary provisions in any Agreement. In the event of any such amendment to the Plan, the holder of any Option outstanding under the Plan shall, upon request of the Committee and as a condition to the exercisability of such Option, execute a conforming amendment in the form prescribed by the Committee to the Agreement referred to in Section 6.F. within such reasonable time as the Committee shall specify in such request.

SECTION 10. EFFECTIVE DATE AND DURATION OF PLAN.

The Plan shall become effective upon approval by the affirmative votes of the holders of a majority of the shares of Common Stock present, or represented, and entitled to vote at a duly called and convened meeting of shareholders. If approval is obtained at the Annual Meeting of Shareholders in 1995, the Plan shall be effective on the date of the meeting and the first Options shall be granted on that date following the meeting. The last Options to be granted under the Plan shall be granted on the day of the Annual Meeting of Shareholders of the Corporation in the year 2004.

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EXHIBIT 10.13

AMENDED AND RESTATED MAY 22, 2001

AMENDED AND RESTATED

COMERICA INCORPORATED

STOCK OPTION PLAN FOR NON-EMPLOYEE DIRECTORS

OF COMERICA BANK AND AFFILIATED BANKS

SECTION 1. PURPOSE.

The purposes of this Stock Option Plan for Non-Employee Directors of Comerica Bank and Affiliated Banks are to promote the continued prosperity of Comerica Bank and other banks affiliated with Comerica Incorporated by aligning the long-term financial interests of the recipients of options hereunder with those of the shareholders of Comerica Incorporated, to provide an additional incentive for such individuals to remain as directors, and to provide a means through which Comerica Bank and other banks affiliated with Comerica Incorporated may attract well-qualified individuals to serve as directors.

SECTION 2. DEFINITIONS.

The following words and phrases, wherever capitalized, shall have the following meanings respectively, unless the context otherwise requires:

defining the term "controlled group of corporations") of which Comerica Incorporated is the common parent corporation.

C. "Board" means the Board of Directors of Comerica Incorporated.

D. "Cause" means any act of (a) fraud or intentional misrepresentation, or (b) embezzlement, misappropriation or conversion of assets or opportunities of the Corporation or any Subsidiary.

E. "Change in Control of the Corporation" shall be deemed to have occurred if (A) any "person" (as such term is used in Sections 13(d) and 14(d) of the Exchange Act), other than a trustee or other fiduciary holding securities under an employee benefit plan of the Corporation, is or becomes the "beneficial owner" (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Corporation representing 26% or more of the combined voting power of the Corporation's then outstanding securities; or (B) during any period of two consecutive years, individuals who at the beginning of such period constitute the Board and any new director (other than a director designated by a person who has entered into an agreement with the Corporation to effect a transaction described in clauses (A) or (C) of this subsection) whose election by the Board or nomination for election by the stockholders of the Corporation was approved by a vote of at least two-thirds (2/3) of the directors then still in office who either were directors at the beginning of the period or whose election or

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nomination for election was previously so approved, cease for any reason to constitute a majority thereof; or (C) the shareholders of the Corporation approve a merger or consolidation of the Corporation with any other corporation, other than a merger or consolidation which would result in the voting securities of the Corporation outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity) at least 75% of the combined voting power of the voting securities of the Corporation or such surviving entity outstanding immediately after such merger or consolidation, or the shareholders of the Corporation approve a plan of complete liquidation of the Corporation or an agreement for the sale or disposition of all or substantially all of its assets.

F. "Code" means the Internal Revenue Code of 1986, as amended.

G. "Comerica Bank" means Comerica Bank, a Michigan banking corporation.

H. "Committee" means the Directors Committee of the Corporation.

I. "Common Stock" means shares of $5.00 par value common stock of Comerica Incorporated, subject to adjustment pursuant to Section 7.

J. "Corporation" means Comerica Incorporated, a Delaware corporation.

L. "ERISA" means the Employee Retirement Income Security Act of 1974, as from time to time amended.

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M. "Exchange Act" means the Securities Exchange Act of 1934, as amended.

Q. "Non-Employee Director" means an individual who is a member of the board of directors of Comerica Bank or any Affiliated Bank provided such individual (i) is

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not an employee of the Corporation or of any Subsidiary of the Corporation, and
(ii) is not a director of the Corporation.

T. "Plan" means the plan set forth herein which shall be known as the "Amended and Restated Comerica Incorporated Stock Option Plan For Non-Employee Directors of Comerica Bank and Affiliated Banks."

U. "Qualified Domestic Relations Order" means a "qualified domestic relations order" as defined in the Code or in Title I of ERISA, or in rules promulgated thereunder.

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SECTION 3. SHARES AVAILABLE UNDER THE PLAN.

The aggregate number of shares which may be issued and as to which grants of Options may be made under the Plan is 450,000 shares(1) of the Common Stock, subject to adjustment as set forth in Section 7. If any Option granted under the Plan is canceled by mutual consent or terminates or expires for any reason without having been exercised in full, the number of shares subject thereto shall again be available for purposes of the Plan. The shares which may be issued under the Plan may be either authorized but unissued shares or treasury shares or partly each.

SECTION 4. ADMINISTRATION OF THE PLAN.

(1) This number of shares reflects the 1998 "3 for 2" stock split.

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Plan consistent with the purposes of the Plan. All questions of interpretation and application of the Plan, or as to Options granted under the Plan, shall be subject to the determination of the Committee, which shall be final and binding.

SECTION 5. GRANT OF STOCK OPTIONS.

A. Automatic Annual Grants. On the day each annual meeting of the shareholders of the Corporation is held, each Non-Employee Director shall automatically and without further action by the Board or the Committee be granted an Option to purchase 2,500 shares(2) of Common Stock, subject to adjustment and substitution as set forth in Section 7. If the number of shares then remaining available for the grant of Options under the Plan is not sufficient for each Non-Employee Director to be granted an Option for 2,500 shares (or the number of adjusted or substituted shares pursuant to Section 7), then each Non-Employee Director shall be granted an Option for a number of whole shares equal to the number of shares then remaining available divided by the number of Non-Employee Directors, disregarding any fractions of a share.

SECTION 6. TERMS AND CONDITIONS APPLICABLE TO OPTION GRANTS.

(2) This number of shares reflects the 1998 "3 for 2" stock split.

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Options granted under the Plan shall be subject to the following terms and conditions:

A. Exercise Price. The Exercise Price with respect to each share of Common Stock covered by the Option shall be 100% of the Fair Market Value of such share on the date the Option is granted.

B. Payment of Exercise Price. The Exercise Price for each Option shall be paid in full upon exercise and shall be payable in cash (including check, bank draft or money order); provided, however, that in lieu of cash, the individual exercising the Option may pay the Exercise Price, in whole or in part, by delivering to the Corporation shares of Common Stock having a Fair Market Value on the date of exercise of the Option equal to the Exercise Price of the shares being purchased except that any portion of the Exercise Price representing a fraction of a share shall in any event be paid in cash. Delivery of shares may also be accomplished through the effective transfer to the Corporation of shares held by a broker or other agent. The Corporation will also cooperate with any individual exercising an Option who participates in a cashless exercise program of a broker or other agent under which all or part of the shares received upon exercise of the Option are sold through the broker or other agent or under which the broker or other agent makes a loan to such individual. Notwithstanding the foregoing, the exercise of the Option shall not be deemed to occur and no shares of Common Stock will be issued by the Corporation upon exercise of the Option until the Corporation has received payment of the Exercise Price in full. The date of exercise of an Option shall be determined under procedures established by the Committee, and as of the date of exercise the individual exercising the Option shall be

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considered for all purposes to be the owner of the shares with respect to which the Option has been exercised. Payment of the Exercise Price with shares shall not increase the number of shares of Common Stock which may be issued under the Plan as provided in Section 3.

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E. Separation From Board Service. If a grantee ceases to be a director of Comerica Bank or any Affiliated Bank, any outstanding Options the grantee then holds shall be exercisable in accordance with the following provisions:

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An Option held by a grantee who has ceased to be a director of Comerica Bank or any Affiliated Bank shall expire at the end of the applicable exercise period, if any, specified in this Section 6.E.

F. Option Agreements. All grants of Options shall be evidenced by an Agreement which shall be executed on behalf of the Corporation by a representative of the Committee.

G. Conditions Applicable to Grants of Options. The obligation of the Corporation to issue shares of Common Stock under the Plan shall be subject to
(i) the effectiveness of a registration statement under the Securities Act of 1933, as amended, with respect to such shares, if deemed necessary or appropriate by counsel for the Corporation; (ii) the condition that any shares to be issued shall have been listed (or authorized for listing upon official notice of issuance) upon each stock exchange, if any, on which the Common Stock may then be listed; and (iii) all other applicable laws, regulations, rules and orders which may then be in effect.

Subject to the foregoing provisions of this Section 6 and the other provisions of the Plan, any Option granted under the Plan shall be subject to such restrictions and other terms and conditions, if any, as shall be determined by the Committee in its discretion and set forth in an Agreement; provided, however, that under no circumstances shall any individual who is subject to the provisions of Section 16 of the Exchange Act by reason of his relationship to the Corporation be eligible for grants of Options under this Plan. In the event any such grant is made due to mistake or otherwise, it shall be null and void.

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SECTION 7. ADJUSTMENT AND SUBSTITUTION OF SHARES.

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which such shares shall have been converted or which shall have been substituted for such shares. Any new Exercise Price per share shall be carried to at least three decimal places with the last decimal place rounded upwards to the nearest whole number.

SECTION 8. EFFECT OF THE PLAN ON THE RIGHTS OF THE CORPORATION, ITS AFFILIATES AND SHAREHOLDERS.

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Nothing in the Plan, in any Option granted under the Plan, or in any Agreement shall confer any right to any person to continue as a director of Comerica Bank or any Affiliated Bank, or interfere in any way with the rights of the shareholders of Comerica Bank or any Affiliated Bank to elect and remove directors.

SECTION 9. AMENDMENT AND TERMINATION.

SECTION 10. EFFECTIVE DATE AND DURATION OF PLAN.

The Plan shall become effective on the date of the 1995 Annual Meeting of Shareholders of the Corporation unless the Board defers such effective date.

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EXHIBIT 10.14

Amended and Restated
As of November 26, 2002
Board Approval: November 26, 2002

COMERICA INCORPORATED
DIRECTOR FEE DEFERRAL PLAN

Amended and Restated As of November 26, 2002

COMERICA INCORPORATED
DIRECTOR FEE DEFERRAL PLAN

TABLE OF CONTENTS

                                                                 PAGE NO.
SECTION I - PURPOSE................................................1

SECTION II - DEFINITIONS...........................................1

SECTION III - ELIGIBILITY..........................................2

SECTION IV - PROCEDURES RELATING TO DEFERRALS......................2

SECTION V - CREDITING OF EARNINGS TO ACCOUNTS......................4

SECTION VI - DISTRIBUTION OF DEFERRED FEES.........................5

SECTION VII - DESIGNATION OF BENEFICIARY...........................6

SECTION VIII - MISCELLANEOUS PROVISIONS............................6

Amended and Restated As of November 26, 2002

COMERICA INCORPORATED
DIRECTOR FEE DEFERRAL PLAN

SECTION I-- PURPOSE

The purpose of this Plan is to allow an eligible director to defer Director Fees, under the conditions provided herein, into a Mutual Fund Unit Account. Each eligible director of the Corporation may not defer more than one-half of his or her Director Fees into a Mutual Fund Unit Account. Eligible directors of any Subsidiary of the Corporation or an Advisory Board may defer all or any portion of their Director Fees into a Mutual Fund Unit Account.

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 of the Corporation.

B. "Beneficiary(ies)" means such individual(s) or entity(ies) designated on the most recent Beneficiary Designation the director has properly submitted to the Corporation in accordance with Section VII of the Plan or by the Corporation in accordance with Section VII of the Plan if there is no valid Beneficiary Designation.

C. "Beneficiary Designation" means the written notice designating the director's Beneficiary(ies), on such form as may be modified by the Plan Administrator from time to time.

D. "Cancellation of Deferral Election" means a written notice of cancellation of election to defer unearned Director Fees made by the Participant, on such form as may be modified by the Plan Administrator from time to time.

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

F. "Committee" means the Corporate Governance 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. "Corporate Secretary" means the Secretary of Comerica Incorporated, and its successors and assigns.

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

Amended and Restated As of November 26, 2002

I. "Deferral Election" means a written notice to defer the payment of unearned Director Fees made by the Participant on the applicable form, as such form may be modified by the Plan Administrator from time to time.

J. "Director Fees" means a director's annual retainer and any fees earned by the director for performing his or her director duties, including fees for attending board meetings, fees for attending meetings of any committee of the board of the Corporation or its Subsidiaries or an Advisory Board, if any, and fees for serving as chairman of any committee of the board of the Corporation or its Subsidiaries or an Advisory Board.

K. "Mutual Fund Unit Account" means an account established under Section V of this Plan, solely for book-keeping purposes, in the name of each director to record those Director Fees that have been deferred to such account and earnings thereon.

L. "Participant" means an eligible director for whom a Mutual Fund Unit Account is maintained under the Plan.

M. "Plan" means the Comerica Incorporated 1999 Director Fee Deferral Plan, the provisions of which are set forth herein, as it may be amended and restated from time to time.

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

O. "Reallocation Form" means a written notice to reallocate previously deferred Director Fees and Directors Fees to be earned in the future on the applicable form, as such form may be modified by the Plan Administrator from time to time.

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

Q. "Unforeseeable Emergency" means a severe financial hardship to the Participant resulting from a sudden and unexpected illness or accident of the Participant or of a dependent (within the meaning of Code Section
152(a)) of the Participant, loss of the Participant's property due to casualty, or other similar extraordinary and unforeseeable circumstances arising as a result of events beyond the control of the Participant.

SECTION III - ELIGIBILITY

Each director of the Corporation, each director of any Subsidiary of the Corporation and each director of an Advisory Board of a Subsidiary of the Corporation shall be eligible to participate in the Plan provided any such director is not an employee of the Corporation or an employee of any Subsidiary of the Corporation.

SECTION IV - PROCEDURES RELATING TO DEFERRALS

Amended and Restated As of November 26, 2002

A. Deferral of Director Fees.

1. Deferral for Directors of the Corporation. No more than one-half of the Director Fees of each of the Corporation's directors shall be subject to a Deferral Election (other than length of deferral and schedule of pay-out) under this Plan. The remainder of the Director Fees of each Corporation director shall be deferred automatically as provided in the Comerica Incorporated Common Stock Director Fee Deferral Plan.

2. Deferral for Directors of any Subsidiary. Directors of any Subsidiary of the Corporation may defer any portion of their Director Fees under this Plan.

3. Deferral for Directors of any Advisory Board. Directors of an Advisory Board of any Subsidiary of the Corporation may defer any portion of their compensation under this Plan.

4. Minimum Deferral Period. The minimum period of deferral for Director Fees deferred pursuant to this Section IV shall be the lesser of the number of years remaining before regular retirement or five years from the date of payment of the Director Fees. In the event a director of an Advisory Board of any Subsidiary of the Corporation does not indicate the period of deferral, such Director Fees shall be deferred for a period of five years from the date of payment of such Director Fees and paid out in a single lump sum upon the fifth anniversary of the date of payment of such Director Fees.

B. Deferred Director Fees. Once deferred under this Plan, a director may not withdraw Director Fees or receive any distributions thereof, except in accordance with Section VI of this Plan.

C. Deferral Procedures. Any eligible director wishing to defer Director Fees must submit a Deferral Election to the Corporate Secretary at 500 Woodward, MC 3391, Detroit, Michigan 48226-3391 or such other person, who may be the Plan Administrator, as designated by the Committee from time to time, prior to the beginning of 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 with respect to unearned Director Fees within sixty days of his or her appointment or election. A Deferral Election pursuant to this Plan may cover all or a portion of the Director Fees which may be deferred pursuant to this Plan, but shall not cover amounts subject to an automatic deferral pursuant to the Comerica Incorporated Common Stock Director Fee Deferral Plan, and shall designate into which mutual fund and in what proportions the Director Fees deferred under this Plan will be recorded.

D. Irrevocability. A director may not modify or revoke a Deferral Election (except to the extent he or she is permitted to reallocate among investment options), once the director has performed the services that entitle the director to the Director Fees or

Amended and Restated As of November 26, 2002

has been paid the Director Fees, whichever occurs earlier. If a director has submitted a Deferral Election relating to Director Fees to be earned in the future, he or she may modify such election by submitting a new Deferral Election prior to the beginning of the calendar year in which the Director Fees will be earned. Any such Deferral Election will supersede any previous Deferral Election as it relates to Director Fees to be earned in future years.

E. Cancellation. A Deferral Election may be canceled by submitting a Cancellation of Deferral Election. A director who cancels a Deferral Election may not submit a new Deferral Election before at least twelve months have elapsed from the effective date of the cancellation. A Cancellation of Deferral Election shall be effective as to Director Fees to be earned after the date of delivery of the Cancellation of Deferral Election.

SECTION V - CREDITING OF EARNINGS/LOSSES TO ACCOUNTS

A. Value of Mutual Fund Unit Account. Director Fees which have been deferred under this Plan shall be credited to Mutual Fund Unit Accounts created by and recorded on the books of the Corporation from time to time, solely for book-keeping purposes. As of the last day of each month or on a more frequent basis if practicable, each Mutual Fund Unit Account shall be adjusted as follows:

1. A Participant's Mutual Fund Unit Account shall be "hypothetically invested" in one or more of the mutual funds offered for investment by the Committee and designated by each Participant for his or her account. In the event the Corporation has established a rabbi trust for its own benefit to fund the Corporation's obligations under this Plan, the purchase price for the mutual fund shares shall be the actual price of the shares the Corporation on the open market on the day of actual purchase of the shares by the Corporation. In the event that the Corporation has not established a rabbi trust, the purchase price for the mutual fund shares deemed to be invested under this Plan shall be based upon the closing price for the mutual fund shares on the exchange of which the mutual fund is listed on the day that the Director Fees would have otherwise been paid to the director had they not been deferred. No director shall have any right to vote any shares of the mutual funds held in the rabbi trust, except to the extent otherwise permitted by the terms of the rabbi trust.

2. A Participant's Mutual Fund Unit Account shall be charged with any distributions made during the month or on a more frequent basis if practicable;

3. A Participant's Mutual Fund Unit Account shall then be credited with earnings, gains and losses for the month or on a more frequent basis if practicable, based upon the closing price for the designated mutual fund on the exchange of which said fund is listed as of the last day of such month plus any dividends paid with respect to the designated mutual fund during such period.

Amended and Restated As of November 26, 2002

4. A Participant's Mutual Fund Unit Account shall then be credited with the amount, if any, of Director Fees deferred and designated to be credited to such account during such month or on a more frequent basis if practicable.

B. Reallocation of Investment Options. Each director may reallocate all or a portion of his or her Mutual Fund Unit Account to change prospectively the percentage(s) of an investment and/or designate an alternate mutual fund as an investment option with respect to future deferred Director Fees by properly submitting a Reallocation Form to 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. No transfers between investment options will be allowed if prohibited by the rules applicable to the particular mutual fund from or to which a transfer is to be made or by rules adopted by the Plan Administrator and communicated to the directors.

SECTION VI - DISTRIBUTION OF DEFERRED FEES

A. Time and Manner. Distribution of each Participant's Mutual 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(s) submitted to the Corporate Secretary or as otherwise required by Section IV.A.

B. Installment Payments. Installment payments under an installment payment option may not exceed ten years from the date of distribution of the first installment. A Participant may choose an applicable installment period from the options designated by the Corporation on the Deferral Form. The amount of each installment payment shall be determined by multiplying the balance of the Mutual Fund Unit Account 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. If a Participant who is receiving installment payments dies prior to receiving the balance of his or her Mutual Fund Unit Account, the unpaid balance shall be paid in one lump sum to the Participant's Beneficiary(ies) as soon as practicable after the date the Corporation receives notice of the Participant's death.

C. Hardship Distributions. In the event of an Unforeseeable Emergency involving a Participant which occurs prior to distribution of the entire balance of the Participant's Mutual Fund Unit Account, the Committee may, in its sole discretion, distribute to the Participant in a single sum an amount equal to such portion of such account as shall be necessary, in the judgment of the Committee, to alleviate the financial hardship occasioned by the Unforeseeable Emergency. 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. In determining whether to grant any requested hardship distribution, the Committee shall adhere to the requirements of Section 1.457--2(h) (4) of the Regulations under the Code (or to any successor

Amended and Restated As of November 26, 2002

regulations dealing with the same subject matter), the provisions of which are incorporated herein by reference.

D. Single Distributions. If, at the time an installment distribution of a Mutual Fund Unit Account in the name of any Participant is scheduled to commence, the fair market value of such account (based on the closing price of the designated mutual funds on the day prior to commencement of the first installment) does not exceed $10,000, then, notwithstanding an election by the Participant that such account be distributed in installments, the balance of such account shall be distributed to the Participant in a single sum.

SECTION VII - DESIGNATION OF BENEFICIARY

Upon becoming a Participant of the Plan, each director shall submit to the Corporate Secretary or such other person, including the Plan Administrator, designated by the Committee, from time to time a Beneficiary Designation designating one or more Beneficiaries to whom payments otherwise due the Participant shall be made in the event of the Participant's death before distribution of the Participant's Mutual Fund Unit Account has been completed. A Beneficiary Designation will be effective only if it is signed by the Participant and properly submitted before the Participant's death.

Any subsequent Beneficiary Designation submitted to the Corporate Secretary, or such other person designated by the Committee, will supersede any previous Beneficiary Designation so submitted. 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, amounts remaining unpaid at the time of the Participant's death shall be paid to the alternate Beneficiary(ies) who survive the Participant. 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 to the Corporation, the balance of the account shall be paid in a lump sum distribution to the legal representative for the benefit of the Participant's estate.

SECTION VIII - MISCELLANEOUS PROVISIONS

A. Nonalienation of Benefits. Neither the Participant nor any Beneficiary designated by him or her shall have any right to alienate, assign, or encumber any amount that is or may be payable 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.

B. 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 the extent the Committee has delegated authority concerning a matter to the Plan Administrator, any reference in the Plan to the "Committee"

Amended and Restated As of November 26, 2002

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.

C. Amendment or Termination. The Board of Directors of the Corporation may amend or terminate this Plan at any time, provided, however, that the Committee may make such amendments to the Plan, which provide for the administration of the Plan. Any amendment or termination of this Plan shall not affect the rights of Participants or Beneficiaries to the amounts in the Mutual Fund Unit Account on the date of such amendment or termination. The Corporation reserves the right to accelerate distribution of Director Fees deferred hereunder in the event the Plan is terminated.

D. Effective Date. This Plan is intended to constitute an amendment and restatement of a prior the Plan maintained by the Corporation captioned "Comerica Incorporated 1999 Director Fee Deferral Plan" and was approved by the Board of Directors. The Plan, as amended and restated, was approved by the Board of Directors of the Corporation on May 21, 1999. The version of the Plan contained in the May 21, 1999, document shall be effective to defer monies to be earned from and after January 1, 1997 and the earnings rate contained in this version of the Plan shall apply to existing accounts under the Plan beginning January 1, 1997. The amendment and restatement contained in this document shall be effective as of November 26, 2002.

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

F. Nonforfeitability of Participant Accounts. Each Participant shall be fully vested in his or her Mutual Fund Unit Account created by the Corporation from time to time.

G. Successors Bound. The contractual agreement between the Corporation and each Participant resulting from the execution of a Deferral Election 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 heirs, executors, administrators and other legal representatives.

H. Governing Law and Rules of Construction. This Plan shall be governed in all respects, whether as to construction, validity or otherwise, by applicable federal law and, to the extent that federal law is inapplicable, by the laws of the State of Delaware. 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 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.

I. 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

Amended and Restated As of November 26, 2002

the Corporation to any Mutual 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 and 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 or payment 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.

EXHIBIT 10.15

Amended and Restated
As of November 26, 2002
Board Approval: November 26, 2002

COMERICA INCORPORATED
COMMON STOCK DIRECTOR FEE DEFERRAL PLAN

TABLE OF CONTENTS

                                                                                                 Page No.
SECTION I - PURPOSE..................................................................................1

SECTION II - DEFINITIONS.............................................................................1

SECTION III - ELIGIBILITY............................................................................3

SECTION IV - PROCEDURES RELATING TO DEFERRALS........................................................3

SECTION V - CREDITING OF EARNINGS TO ACCOUNTS........................................................4

SECTION VI - DISTRIBUTION OF DEFERRED FEES...........................................................5

SECTION VII - DESIGNATION OF BENEFICIARY.............................................................6

SECTION VIII - MISCELLANEOUS PROVISIONS..............................................................6

Amended and Restated As of November 26, 2002 Board Approval: November 26, 2002

COMERICA INCORPORATED
COMMON STOCK DIRECTOR FEE DEFERRAL PLAN

SECTION I - PURPOSE

The purpose of this Common Stock Plan is to allow eligible directors to defer their Director Fees, under the conditions provided herein, into the Corporation Stock Unit Account. All funds in a Participant's Corporation Stock Unit Account are hypothetically invested in the Common Stock of the Corporation. Each eligible director of the Corporation must defer that percentage of the Director Fees determined by the Committee into the Corporation Stock Unit Account. The remaining Director Fees of an eligible director of the Corporation may be deferred in any portion as requested by each director. Eligible directors of any Subsidiary of the Corporation or Advisory Board may defer all or any portion of their Director Fees under this Common Stock Plan as requested by such director.

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 of the Corporation.

B. "Beneficiary(ies)" means such individual(s) or entity(ies) designated on the most recent Beneficiary Designation the director has properly submitted to the Corporation in accordance with Section IV of the Common Stock Plan or by the Corporation in accordance with Section VII of the Common Stock Plan if there is no valid Beneficiary Designation.

C. "Beneficiary Designation" means the written notice designating the director's Beneficiary(ies), on such form as may be modified by the Plan Administrator from time to time.

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

G. "Common Stock" means the common stock of the Corporation, par value $5.00.

Amended and Restated As of November 26, 2002 Board Approval: November 26, 2002

H. "Common Stock Plan" means the Comerica Incorporated Common Stock Director Fee Deferral Plan, the provisions of which are set forth herein, as the Common Stock Plan may be amended and restated from time to time.

I. "Corporate Secretary" means the Secretary of Comerica Incorporated.

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

K. "Corporation Stock Unit Account" means an account established under Section V of this Common Stock Plan, solely for book-keeping purposes, in the name of each director to record those Director Fees that are deferred under this Common Stock Plan on the director's behalf and earnings and dividends thereon.

L. "Deferral Election" means a written notice to defer the payment of unearned Director Fees submitted by an eligible director on the applicable form, as such form may be modified by the Plan Administrator from time to time.

M. "Director Fees" means a director's annual retainer and any fees earned by the director for performing director duties, including fees for attending board meetings, fees for attending meetings of any committee of the board of the Corporation or its Subsidiary or an Advisory Board, if any, and fees for serving as chairman of any committee of the board of the Corporation or its Subsidiary or an Advisory Board.

N. "Participant" means an eligible director meeting the requirements of Section III below 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. "Subsidiary" means any corporation, partnership or other entity, a majority of whose stock or interests is owned by the Corporation.

Q. "Unforeseeable Emergency" means a severe financial hardship to the Participant resulting from a sudden and unexpected illness or accident of the Participant or of a dependent (within the meaning of Code Section 152(a)) of the Participant, loss of the Participant's property due to casualty, or other similar extraordinary and unforeseeable circumstances arising as a result of events beyond the control of the Participant.

Amended and Restated As of November 26, 2002 Board Approval: November 26, 2002

SECTION III - ELIGIBILITY

Each director of the Corporation, each director of any Subsidiary of the Corporation, and each director of any Advisory Board of a Subsidiary of the Corporation shall be eligible to participate in the Common Stock Plan, provided any such director is not an employee of the Corporation or an employee of any Subsidiary of the Corporation.

SECTION IV - PROCEDURES RELATING TO DEFERRALS

A. Deferral of Director Compensation.

1. Deferrals for Directors of the Corporation. (a) One-half of the Director Fees of each of the Corporation's directors shall be automatically deferred to and recorded in each individual director's Corporation Stock Unit Account and shall not otherwise be subject to any other Deferral Election (other than length of deferral and schedule of pay-out).

(a) A Corporation director may, at his or her election, defer any portion of the remainder of his or her Director Fees under this Common Stock Plan.

2. Deferral for Directors of any Subsidiary. Directors of any Subsidiary of the Corporation may defer any portion of their Director Fees under this Common Stock Plan.

3. Deferral for Directors of any Advisory Board. Directors of an Advisory Board of any Subsidiary of the Corporation may defer any portion of their Director Fees under this Common Stock Plan.

4. Minimum Deferral Period. The minimum period of deferral for Director Fees deferred pursuant to this Section IV.A. shall be the lesser of the number of years remaining before regular retirement or five years from the date of payment of the Director Fees. In the event a director of an Advisory Board of any Subsidiary of the Corporation does not indicate the period of deferral, such Director Fees shall be deferred for a period of five years from the date of payment of such Director Fees and paid out in a single lump sum upon the fifth anniversary of the date of payment of such Director Fees.

5. Deferred Director Fees. Once deferred under this Common Stock Plan, a director may not withdraw Director Fees or receive any distributions thereof, except in accordance with Section VI of the Common Stock Plan

B. Deferral Procedures. Any eligible director wishing to defer Director Fees must submit a Deferral Election to the Corporate Secretary at 500 Woodward, MC 3391, Detroit, Michigan 48226-3391 or such other person, who may be the Plan Administrator, designated by the Committee from time to time, prior to the beginning of the calendar year during which the Director Fees are to be earned. However, any

Amended and Restated As of November 26, 2002 Board Approval: November 26, 2002

newly-appointed or newly-elected director may submit a Deferral Election, with respect to unearned Director Fees, within sixty days of his or her appointment or election.

C. Irrevocability. A director may not modify or revoke a Deferral Election once the director has performed the services that entitle the director to the Director Fees or has been paid the Director Fees, whichever occurs earlier. If a director has submitted a Deferral Election relating to Director Fees to be earned in the future, he or she may modify such election by submitting a new Deferral Election prior to the beginning of the calendar year in which the Director Fees will be earned. Any such Deferral Election will supersede any previous Deferral Election as it relates to Director Fees to be earned in future years.

D. Cancellation. A Deferral Election may be canceled by submitting a Cancellation of Deferral Election, provided however, that a Corporation director may only submit a Cancellation of Deferral Election with respect to Director Fees deferred pursuant to Section IV.A.(1)(b). A director who cancels a Deferral Election may not submit a new Deferral Election before at least twelve months have elapsed from the effective date of the cancellation. A Cancellation of Deferral Election shall be effective as to Director Fees to be earned after the date of delivery of the Cancellation of Deferral Election.

SECTION V - CREDITING OF EARNINGS TO ACCOUNTS

Director Fees, which have been deferred under the Common Stock Plan, shall be credited to a Corporation Stock Unit Account. As of the last day of each month or on a more frequent basis if practicable, the Corporation Stock Unit Account shall be adjusted as follows:

A. A Participant's Corporation Stock Unit Accounts shall be "hypothetically invested" in Common Stock. In the event the Corporation has established a rabbi trust for its own benefit to fund the Corporation's obligations under this Common Stock Plan, the purchase price for Common Stock deemed to be invested under this Common Stock Plan shall be the actual price of the shares of Common Stock that the Corporation purchases on the open market on the day of actual purchase of the shares by the Corporation. In the event that the Corporation has not established a rabbi trust, the purchase price of hypothetically invested Common Stock 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. No director shall have any right to vote any shares of Common Stock held in the rabbi trust, except to the extent otherwise permitted by the terms of the rabbi trust.

B. A Participant's Corporation Stock Unit Account shall first be charged with any distributions made during the month or on a more frequent basis if practicable.

Amended and Restated As of November 26, 2002 Board Approval: November 26, 2002

C. A Participant's Corporation Stock Unit Account shall then be credited with earnings, gains and losses for the month (or on a more frequent basis if practicable), based upon the closing price for Common Stock on the New York Stock Exchange as of the last day of such month, plus the amount of any dividends paid on the Common Stock during such period.

D. A Participant's Corporation Stock Unit Account shall then be credited with the amount, if any, of Director Fees deferred and designated to be credited to such account during such month.

SECTION VI - DISTRIBUTION OF DEFERRED FEES

A. Time and Manner. 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 single distribution or installments, as the Participant has specified in the Deferral Election.

B. Installment Payments. Installment distributions under an installment distribution option shall not exceed ten years from the date of the distribution of the first installment. A Participant may choose an applicable installment period from the options designated by the Corporation on the Deferral Form. The number of shares of Common Stock distributable in each installment shall be determined by multiplying the number of shares of Common Stock deemed invested in the Corporation Stock Unit Account 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. Fractional shares of Common Stock shall be paid in cash. If a Participant who is receiving installment distributions dies prior to receiving full distribution of his or her Corporation Stock Unit Account, the undistributed portion of the Corporation Stock Unit Account shall be distributed in one installment to the Participant's Beneficiary(ies) as soon as practicable after the date the Corporation receives notice of the Participant's death.

C. Hardship Distributions. In the event of an Unforeseeable Emergency involving a Participant which occurs prior to distribution of the entire balance of the Participant's Corporation Stock Unit Account, the Committee may, in its sole discretion, distribute to the Participant in a single installment the number of shares of Common Stock equal to the portion of such account as shall be necessary, in the judgment of the Committee, to alleviate the financial hardship occasioned by the Unforeseeable Emergency. 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. In determining whether to grant any requested hardship distribution, the Committee shall adhere to the requirements of Section 1.457-2(h)(4) of the Regulations under the Code (or to any successor regulations dealing with the same subject matter), the provisions of which are incorporated herein by reference.

Amended and Restated As of November 26, 2002 Board Approval: November 26, 2002

D. Single Distribution. If, at the time an installment distribution of a Corporation Stock Unit Account in the name of any Participant is scheduled to commence, the fair market value of such account (based on the closing price of the Common Stock on the New York Stock Exchange on the day prior to the commencement of the first installment) does not exceed $10,000, then, notwithstanding an election by the Participant that such account be distributed in installments, the shares of Common Stock in such account shall be distributed to the Participant in a single distribution.

SECTION VII - DESIGNATION OF BENEFICIARY

Upon becoming a Participant of the Common Stock Plan, each director shall submit to the Corporate Secretary or such other person designated by the Committee from time to time a Beneficiary Designation, designating one or more Beneficiaries to whom distributions otherwise due the Participant shall be made in the event of the Participant's death before distribution of the Participant's Corporation Stock Unit Account has been completed. A Beneficiary Designation will be effective only if it is signed by the Participant and submitted before the Participant's death. Any subsequent Beneficiary Designation properly submitted will supersede any previous Beneficiary Designation so submitted. 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 shares of Common Stock in the Participant's Corporation Stock Unit Account remaining at the time of the Participant's death shall be distributed to the alternate Beneficiary(ies) who survive the Participant. 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 to the Corporation, the undistributed shares of Common Stock in the Participant's Corporation Stock Unit Account shall be distributed in a single distribution to the legal representative for the benefit of the Participant's estate.

SECTION VIII - MISCELLANEOUS PROVISIONS

A. 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 distributable hereunder, nor may any such benefits 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.

B. 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.

Amended and Restated As of November 26, 2002 Board Approval: November 26, 2002

C. Amendment or Termination. The Board of Directors of the Corporation may amend or terminate this Common Stock Plan at any time, provided, however, that the Committee may make such amendments to the Common Stock Plan, which provide for the administration of the Common Stock Plan. Any amendment or termination of this Common Stock Plan shall not affect the rights of Participants or Beneficiaries to distribution of the shares of Common Stock in the Corporation Stock Unit Account at the time of such amendment or termination. The Corporation reserves the right to accelerate distribution of Director Fees deferred hereunder in the event the Common Stock Plan is terminated.

D. Effective Date. This Common Stock Plan is intended to constitute an amendment and restatement of a prior Common Stock Plan maintained by the Corporation captioned "Comerica Incorporated Director Fee Deferral Plan". The Common Stock Plan, as amended and restated, was approved by the Board of Directors of Corporation on May 21, 1999. The version of the Common Stock Plan contained in the May 21, 1999, document shall be effective to defer Director Fees to be earned from and after January 1, 1997 and the earnings rate contained in that version of the Common Stock Plan shall apply to existing accounts under the Common Stock Plan beginning January 1, 1997. The amendment and restatement contained in this document shall be effective as of November 26, 2002.

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

F. Nonforfeitability of Participant Accounts. Each Participant shall be fully vested in his or her Corporation Stock Unit Account.

H. Governing Law and Rules of Construction. This Common Stock Plan shall be governed in all respects, whether as to construction, validity or otherwise, by applicable federal law and, to the extent that federal law is inapplicable, by the laws of the State of Delaware. 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.

I. Ownership of Fee Deferrals and Continued Director Status. Title to and beneficial ownership of any assets, of whatever nature, which may be allocated by

Amended and Restated As of November 26, 2002 Board Approval: November 26, 2002

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 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.

J. 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.

EXHIBIT 13

FINANCIAL HIGHLIGHTS

(dollar amounts in millions, except per share data)


							Change

Years Ended December 31	2002			2001			Amount			Percent


INCOME STATEMENT
Net interest income	$	2,132		$	2,102		$	30			1	%
Net income		601			710			(109	)		(15	)
Basic net income per common share		3.43			3.93			(0.50	)		(13	)
Diluted net income per common share		3.40			3.88			(0.48	)		(12	)
Cash dividends per common share		1.92			1.76			0.16			9
Book value per common share		28.31			27.17			1.14			4
Market value per common share		43.24			57.30			(14.06	)		(25	)

RATIOS
Return on average assets		1.18	%		1.43	%
Return on average common shareholders’ equity		12.31			15.16
Average common shareholders’ equity as a percentage of average assets		9.55			9.27
Tier 1 common capital as a percentage of risk-weighted assets		7.39			7.30

BALANCE SHEET (AT DECEMBER 31)
Total assets	$	53,301		$	50,750		$	2,551			5	%
Total earning assets		47,780			46,566			1,214			3
Loans		42,281			41,196			1,085			3
Business loans		39,954			38,933			1,021			3
Deposits		41,775			37,570			4,205			11
Common shareholders’ equity		4,947			4,807			140			3

Net Income

(in millions)


2002	$	601
2001	$	710
2000	$	791
1999	$	759
1998	$	651

Diluted Net Income per Common Share

(in dollars)


2002	$	3.40
2001	$	3.88
2000	$	4.31
1999	$	4.13
1998	$	3.51

Return on Average Common
Shareholder’s Equity

(in percentages)


2002	12.31	%
2001	15.16	%
2000	19.52	%
1999	21.78	%
1998	21.16	%

TABLE 1: SELECTED FINANCIAL DATA

(dollar amounts in millions, except per share data)


Years Ended December 31	2002			2001			2000			1999			1998

EARNING SUMMARY
Total interest income	$	2,797		$	3,393		$	3,716		$	3,097		$	3,004
Net interest income		2,132			2,102			2,004			1,817			1,720
Provision for loan losses		635			241			251			144			145
Securities gains		41			20			16			9			7
Noninterest income (excluding securities gains)		859			817			964			884			685
Noninterest expenses		1,515			1,587			1,511			1,387			1,263
Net income		601			710			791			759			651

PER SHARE OF COMMON STOCK
Basic net income	$	3.43		$	3.93		$	4.38		$	4.20		$	3.58
Diluted net income		3.40			3.88			4.31			4.13			3.51
Cash dividends declared		1.92			1.76			1.60			1.44			1.28
Common shareholders’ equity		28.31			27.17			23.98			20.87			17.99
Market value		43.24			57.30			59.38			46.69			68.19

YEAR - END BALANCES
Total assets	$	53,301		$	50,750		$	49,557		$	45,529		$	42,802
Total earning assets		47,780			46,566			45,791			42,426			39,090
Total loans		42,281			41,196			40,170			36,305			34,053
Total deposits		41,775			37,570			33,854			29,196			29,883
Total borrowings		5,756			7,489			10,353			11,682			8,999
Medium- and long-term debt		5,216			5,503			8,259			8,757			5,358
Common shareholders’ equity		4,947			4,807			4,250			3,698			3,178

DAILY AVERAGE BALANCES
Total assets	$	51,130		$	49,688		$	46,877		$	42,662		$	39,969
Total earning assets		47,053			45,722			43,364			39,247			36,599
Total loans		42,091			41,371			38,698			35,490			31,916
Total deposits		37,712			35,312			30,340			27,478			26,604
Total borrowings		7,725			8,782			11,621			11,003			9,626
Medium- and long-term debt		5,763			6,198			8,298			7,441			6,109
Common shareholders’ equity		4,884			4,605			3,963			3,409			2,995

RATIOS
Return on average assets		1.18	%		1.43	%		1.69	%		1.78	%		1.63	%
Return on average common shareholders’ equity		12.31			15.16			19.52			21.78			21.16
Efficiency ratio		50.59			54.30			50.88			51.26			52.38
Dividend payout ratio		56.47			45.36			37.12			34.87			36.47
Average common shareholders’ equity as a percentage of average assets		9.55			9.27			8.45			7.99			7.49
Tier 1 common capital as a percentage of risk-weighted assets		7.39			7.30			6.80			6.70			5.90

2002 FINANCIAL RESULTS AND KEY CORPORATE INITIATIVES

CENTERED ON PERFORMANCE

• Increased allowance for loan losses as a percentage of total loans to 1.87 percent at December 31, 2002.

• Returned 12.31 percent on average common shareholders’ equity.

• Returned 1.18 percent on average assets.

• Maintained a lean organization, as shown by the efficiency ratio of 50.59 percent.

• Added $154 million to the allowance for loan losses and $140 million to shareholders’ equity to solidify our financial risk profile in this uncertain economy.

REPORTED EARNINGS

• Reported net income of $601 million, or $3.40 per diluted share, compared to $710 million, or $3.88 per diluted share, for 2001.

SUSTAINED GROWTH

• Experienced two percent growth in average loans in 2002 despite the continued uncertainty in the economy and a strategy to reduce large corporate non-relationship loans and loans in certain Latin American countries experiencing difficulties.

• Averaged $38 billion in total deposits, a seven percent increase from 2001.

• Increased average common shareholders’ equity to $4.9 billion, a six percent increase from 2001.

ENHANCED SHAREHOLDERS' RETURN

• Raised the quarterly cash dividend nine percent, to $0.48 per share, an annual rate of $1.92 per share.

• Improved core capital ratios, as evidenced by an increase in the Tier 1 common capital ratio to 7.39%, after repurchasing 3.5 million shares for $210 million in 2002.

IMPLEMENTED KEY INITIATIVES

• Maintained our focus on Connectivity, a national Comerica initiative to increase fee income and our share of new and current customers’ business through cross-selling.

• Merged and/or streamlined several business units: collateralized lending, technology and life sciences lending and asset management.

• Continued to expand our delivery network, including opening 9 new branches and 2 ComeriMarts in 2002.

• Initiated enterprise-wide risk management programs to invest in people and systems to enhance operational and credit risk management.

• Invested in governance and regulatory affairs to monitor and coordinate corporate-wide activities.

EARNINGS PERFORMANCE

The accounting and reporting policies of Comerica Incorporated (the “Corporation”) and its subsidiaries conform to accounting principles generally accepted in the United States and prevailing practices within the banking industry. 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 on page 50 to the consolidated financial statements. The most critical of these significant accounting policies are discussed in the “Critical Accounting Policies” section on page 42 of this financial review.

NET INTEREST INCOME

Net interest income is the difference between interest and yield-related fees earned on assets, and interest paid on liabilities. Adjustments are made to the yields on tax-exempt assets in order to present tax-exempt income and fully taxable income on a comparable basis. Gains and losses related to the effective portion of risk management interest rate swaps that qualify as hedges are included with the interest income or expense of the hedged asset when classified in earnings. Net interest income on a fully taxable equivalent basis (FTE) comprised 70 percent of net revenues in 2002, compared to 72 percent in 2001 and 67 percent in 2000.

Net interest income (FTE) was $2.1 billion in 2002, an increase of one percent over 2001. This increase was primarily due to a three percent increase in average earning assets, to $47.1 billion, and a 13 percent increase in average interest-free sources of funds. The Corporation continued to generate growth in loans in 2002, despite the continued uncertainty in the economy. Total loans averaged $42.1 billion in 2002, an increase of two percent from 2001. The increase in average interest-free sources of funds resulted from a $1.6 billion increase in average noninterest-bearing deposits, primarily attributed to the strong growth of title and escrow deposits in the Corporation’s Financial Services Group business.

Net interest income (FTE) expressed as a percentage of average earning assets is referred to as the net interest margin. Net interest margin decreased to 4.55 percent in 2002 from 4.61 percent in 2001. The net interest margin was negatively impacted, in part,

Net Interest Income

Net interest income (fully taxable equivalent)

(in millions)


2002	$	2,136
2001	$	2,106
2000	$	2,008
1999	$	1,822
1998	$	1,727

Net interest margin (fully taxable equivalent)


2002	4.55	%
2001	4.61	%
2000	4.63	%
1999	4.64	%
1998	4.72	%

TABLE 2: ANALYSIS OF NET INTEREST INCOME — FULLY TAXABLE EQUIVALENT (FTE)

(dollar amounts in millions)


Years Ended December 31		2002								2001								2000

		Average					Average			Average					Average			Average						Average
		Balance			Interest		Rate			Balance			Interest		Rate			Balance			Interest			Rate

Commercial loans		$	25,460		$	1,198		4.70	%	$	26,401		$	1,807		6.85	%	$	25,313		$	2,244			8.87	%
International loans			2,988			140		4.70			2,800			207		7.38			2,552			235			9.21
Real estate construction loans			3,353			193		5.74			3,090			246		7.95			2,554			257			10.09
Commercial mortgage loans			6,786			416		6.12			5,695			435		7.65			5,142			453			8.80
Residential mortgage loans			758			54		7.15			795			60		7.59			833			64			7.64
Consumer loans			1,504			98		6.55			1,479			124		8.39			1,434			131			9.09
Lease financing			1,242			67		5.37			1,111			69		6.25			870			54			6.24
Business loan swap income (expense) (4)			—			361		—			—			175		—			—			(57	)		—

	Total loans (1)		42,091			2,527		6.00			41,371			3,123		7.55			38,698			3,381			8.74
Investment securities (2)			4,360			247		5.74			3,909			247		6.37			3,688			261			6.99
Short-term investments			602			27		4.45			442			27		6.02			978			78			7.97

	Total earning assets		47,053			2,801		5.96			45,722			3,397		7.44			43,364			3,720			8.57
Cash and due from banks			1,800								1,835								1,842
Allowance for loan losses			(739	)							(654	)							(595	)
Accrued income and other assets			3,016								2,785								2,266

	Total assets	$	51,130							$	49,688							$	46,877

Money market and NOW deposits		$	13,081			192		1.47		$	9,902			249		2.51		$	9,188			295			3.21
Savings deposits			1,643			16		1.01			1,380			19		1.36			1,403			23			1.65
Certificates of deposit (3) (4)			10,376			245		2.36			13,149			583		4.44			9,867			570			5.78
Foreign office time deposits (5)			771			26		3.36			628			37		5.97			814			63			7.75

	Total interest-bearing deposits		25,871			479		1.85			25,059			888		3.54			21,272			951			4.47
Short-term borrowings			1,962			37		1.85			2,584			105		4.08			3,323			215			6.48
Medium- and long-term debt (3) (4)			5,763			149		2.58			6,198			298		4.80			8,298			546			6.57

	Total interest-bearing sources		33,596			665		1.98			33,841			1,291		3.82			32,893			1,712			5.20
Noninterest-bearing deposits			11,841								10,253								9,068
Accrued expenses and other liabilities			809								823								703
Preferred stock			—								166								250
Common shareholders’ equity			4,884								4,605								3,963

	Total liabilities and shareholders’ equity	$	51,130							$	49,688							$	46,877

Net interest income/rate spread (FTE)					$	2,136		3.98					$	2,106		3.62					$	2,008			3.37

FTE adjustment (6)					$	4							$	4							$	4

Impact of net noninterest-bearing sources of funds								0.57								0.99									1.26

Net interest margin (as a percentage of average earning assets) (FTE)								4.55	%							4.61	%								4.63	%

(1)		Nonaccrual loans are included in average balances reported and are used to calculate rates.

(2)		Average rate based on average historical cost.

(3)		Certificates of deposit and medium- and long-term debt average balances have been adjusted to reflect the gain or loss attributable to the risk hedged by risk management swaps that qualify as a fair value hedge.

(4)		The gain or loss attributable to the effective portion of cash flow hedges of loans is shown in “Business loan swap income (expense)”. The gain or loss attributable to the effective portion of fair value hedges of deposits and medium- and long-term debt, which totaled $99 million in 2002, is included in the related interest expense line items.

(5)		Includes substantially all deposits by foreign domiciled depositors; deposits are primarily in excess of $100,000.

(6)		The FTE adjustment is computed using a federal income tax rate of 35%.

TABLE 3: RATE-VOLUME ANALYSIS — FULLY TAXABLE EQUIVALENT (FTE)

(in millions)


			2002 / 2001									2001 / 2000

			Increase			Increase			Net			Increase			Increase			Net
			(Decrease)			(Decrease)			Increase			(Decrease)			(Decrease)			Increase
			Due to Rate			Due to Volume*			(Decrease)			Due to Rate			Due to Volume*			(Decrease)

Interest income (FTE):
Loans:
	Commercial loans		$	(565	)	$	(44	)	$	(609	)	$	(511	)	$	74		$	(437	)
	International loans			(75	)		8			(67	)		(47	)		19			(28	)
	Real estate construction loans			(68	)		15			(53	)		(54	)		43			(11	)
	Commercial mortgage loans			(86	)		67			(19	)		(60	)		42			(18	)
	Residential mortgage loans			(4	)		(2	)		(6	)		(1	)		(3	)		(4	)
	Consumer loans			(27	)		1			(26	)		(10	)		3			(7	)
	Lease financing			(9	)		7			(2	)		—			15			15
	Business loan swap income (expense)			186			—			186			232			—			232

		Total loans		(648	)		52			(596	)		(451	)		193			(258	)
Investment securities				(25	)		25			—			(27	)		13			(14	)
Short-term investments				(7	)		7			—			(19	)		(32	)		(51	)

		Total interest income (FTE)		(680	)		84			(596	)		(497	)		174			(323	)
Interest expense:
	Money market and NOW deposits			(104	)		47			(57	)		(64	)		18			(46	)
	Savings deposits			(5	)		2			(3	)		(4	)		—			(4	)
	Certificates of deposit			(273	)		(65	)		(338	)		(132	)		145			13
	Foreign office time deposits			(16	)		5			(11	)		(15	)		(11	)		(26	)

		Total interest-bearing deposits		(398	)		(11	)		(409	)		(215	)		152			(63	)
	Short-term borrowings			(57	)		(11	)		(68	)		(80	)		(30	)		(110	)
	Medium- and long-term debt			(138	)		(11	)		(149	)		(147	)		(101	)		(248	)

		Total interest expense		(593	)		(33	)		(626	)		(442	)		21			(421	)

		Net interest income (FTE)	$	(87	)	$	117		$	30		$	(55)		$	153		$	98

* Rate/volume variances are allocated to variances due to volume.

by compressed spreads between loans and interest-free sources of funds. As loan yields declined in the lower interest rate environment, interest-free sources could not, by definition, be lowered commensurately. In addition, as market rates declined to the lowest point in decades, the spreads between loan yields and deposit pay rates compressed as a result of a competitive deposit rate environment. Finally, the increased movement of loans to nonaccrual status as the economy slowed also contributed to compression in the rate spread.

The Corporation implements various asset and liability management tactics to minimize exposure to net interest income risk. This risk represents the potential reduction in net interest income that may result from a fluctuating economic environment, including changes to interest rates and loan and deposit portfolio growth rates. Such actions include the management of earning assets, funding and capital and the utilization of interest rate swap contracts. Interest rate swap contracts are employed to effectively fix the yields on certain variable rate loans and to alter the interest rate characteristics of deposits and debt issued throughout the year. Refer to the “Interest Rate Risk” section on page 38 of this financial review for additional information regarding the Corporation’s asset and liability management policies.

In 2001, net interest income (FTE) was $2.1 billion, an increase of five percent over 2000. Contributing to the increase was a five percent increase in average earning assets and a 13 percent increase in average interest-free sources of funds. The Corporation generated a two percent increase in business loans in 2001, with total business loans averaging $39.1 billion in 2001. The increase in average interest-free sources of funds was primarily due to a $1.2 billion increase in average noninterest-bearing deposits and a $558 million increase in average shareholders’ equity. The net interest margin decreased two basis points to 4.61 percent in 2001 from 4.63 percent in 2000. The net interest margin in 2001 was negatively impacted by slower growth in lower cost core deposit balances than that of earning assets, resulting in a greater reliance on higher cost certificates of deposits in the mix of interest-bearing liabilities. Core deposits are defined as total deposits excluding brokered and institutional

certificates of deposit and foreign office time deposits. Also contributing to the decline was a decrease in the benefit to the net interest margin provided by interest-free sources of funds.

PROVISION AND ALLOWANCE FOR LOAN LOSSES

The provision for loan losses reflects management’s evaluation of the adequacy of the allowance for loan losses. The allowance for loan losses represents management’s assessment of probable losses inherent in the Corporation’s loan portfolio. The allowance provides for probable losses that have been identified with specific customer relationships and for probable losses believed to be inherent, but that have not been specifically identified. Internal risk ratings are assigned to each business loan at the time of approval and are subject to subsequent periodic reviews by the senior management of the Corporation’s Credit Policy Group. The Corporation performs a detailed credit quality review quarterly on large business loans that have deteriorated below certain levels of credit risk, and allocates a specific portion of the allowance to such loans based upon this review. The Corporation defines business loans as those belonging to the commercial, international, real estate construction, commercial mortgage and lease financing categories. A portion of the allowance is allocated to the remaining business loans by applying projected loss ratios, based on numerous factors identified below, to the loans within each risk rating. In addition, a portion of the allowance is allocated to these remaining loans based on industry specific and geographic risks inherent in certain portfolios, including portfolio exposures to the developing high technology and entertainment industries, regional economic risks and Latin American transfer risks. The portion of the allowance allocated to consumer loans is determined by applying projected loss ratios to various segments of the loan portfolio. Projected loss ratios incorporate factors such as recent charge-off experience, current economic conditions and trends, and trends with respect to past due and nonaccrual amounts. The total allowance for loan losses was $791 million at December 31, 2002, compared to $637 million at December 31, 2001. The allocated portion of the allowance was $753 million at December 31, 2002, an increase of $153 million from year-end 2001. As shown in Table 7 on page 34, the increase was primarily due to higher allocations to commercial loans, commercial mortgage loans and international loans at December 31, 2002, as compared to year-end 2001. The increase in the allocated allowance for commercial and commercial mortgage loans resulted primarily from the impact of the continued uncertainty in the economy on our customers, as well as growth in the commercial mortgage loan portfolio. The increase in the allocated allowance for international loans resulted primarily from an increase in reserves related to Argentine and non-trade Brazilian exposure as a result of political and economic events in those countries.

Actual loss ratios experienced in the future will likely vary from those projected. The uncertainty occurs because factors affecting the determination of probable losses inherent in the loan portfolio may exist which are not captured by the application of projected loss ratios or identified industry specific and geographic risks. An unallocated portion of the allowance is maintained to capture these probable losses. The unallocated allowance reflects management’s view that the allowance should recognize the margin for error inherent in the process of estimating expected loan losses. Determination of the probable losses inherent in the portfolio involves the exercise of judgment. Factors that were considered in the evaluation of the adequacy of the Corporation’s unallocated allowance include the imprecision in the risk rating system and the risk associated with new customer relationships. The unallocated allowance was $38 million at December 31, 2002, an increase of $1 million from 2001.

In the fourth quarter 2002, the Corporation reclassified the portion of the allowance allocated to loans based on industry specific and geographic risks inherent in certain portfolios from the unallocated to the allocated portion of the allowance. The reclassification represents management’s decision to assign these amounts to specific loan categories. Prior periods have been reclassified to reflect the results of this change.

Management also considers industry norms and the expectations of rating agencies and banking regulators in determining the adequacy of the allowance. The total allowance, including the unallocated amount, is available to absorb losses from any segment within the portfolio. Unanticipated economic events, including political, economic and regulatory stability in countries where the Corporation has a concentration of loans, could cause changes in the credit characteristics of the portfolio and result in an unanticipated increase in the allocated allowance. Inclusion of other industry specific and geographic portfolio exposures in the allocated allowance, as well as significant increases in the current portfolio exposures, could also increase the amount of the allocated allowance. Any of these events, or some combination, may result in the need for additional provision for loan losses in order to maintain an adequate allowance.

Net Loans Charged Off
to Average Loans


2002	1.14	%
2001	0.46	%
2000	0.50	%
1999	0.31	%
1998	0.34	%

Allowance for Loan Losses
to Total Loans


2002	1.87	%
2001	1.55	%
2000	1.46	%
1999	1.46	%
1998	1.46	%

TABLE 4: ANALYSIS OF THE ALLOWANCE FOR LOAN LOSSES

(dollar amounts in millions)


Years Ended December 31			2002			2001			2000			1999			1998

Balance at beginning of year			$	637		$	585		$	529		$	498		$	459
Transfer to loans held for sale				—			—			—			(4	)		—
Loans charged off:
	Domestic
		Commercial		425			200			200			101			70
		Real estate construction		1			2			—			—			2
		Commercial mortgage		10			3			1			2			1
		Residential mortgage		—			—			—			—			—
		Consumer		9			5			11			31			65
		Lease financing		9			7			1			—			4
	International			63			15			11			10			7

		Total loans charged off		517			232			224			144			149
Recoveries:
	Domestic
		Commercial		27			35			21			21			21
		Real estate construction		—			—			—			—			—
		Commercial mortgage		2			1			1			3			9
		Residential mortgage		—			1			—			—			—
		Consumer		3			5			7			10			13
		Lease financing		3			1			—			1			—
	International			1			—			—			—			—

		Total recoveries		36			43			29			35			43

	Net loans charged off			481			189			195			109			106
Provision for loan losses				635			241			251			144			145

Balance at end of year			$	791		$	637		$	585		$	529		$	498

Ratio of allowance for loan losses to total loans at end of year				1.87	%		1.55	%		1.46	%		1.46	%		1.46	%
Ratio of net loans charged off during the year to average loans outstanding during the year				1.14	%		0.46	%		0.50	%		0.31	%		0.34	%

Allowance for credit losses on lending-related commitments*			$	35		$	18		$	23		$	19		$	17

* Included in accrued expenses and other liabilities on the consolidated balance sheets.

The provision for loan losses was $635 million in 2002, compared to $241 million and $251 million in 2001 and 2000, respectively. The significant increase in the provision for loan losses in 2002 resulted primarily from the impact of the continued uncertainty in the economy on our customers as evidenced by the level of charge-offs, a decision to sell certain loans and an increase in reserves related to Argentine and non-trade Brazilian exposure. Business bankruptcy rates both nationally and in the Michigan market, where the Corporation has a geographic concentration of credit, increased significantly in 2002. The Michigan regional Purchasing Management Index has been relatively neutral, suggesting a much slower than normal recovery for the manufacturing and auto supplier sectors of the regional economy, where the Corporation has an industry concentration of credit. This economic uncertainty has directly impacted the Corporation’s customers, and has led to a higher provision for loan losses in 2002.

Also contributing to the increase in the 2002 provision was $104 million recorded in the third quarter to cover charge-offs related to certain loans that were subsequently sold in the fourth quarter. In addition, political and economic events in Argentina and Brazil led to an increase in the 2002 provision to increase reserves related to the Corporation’s exposure in those countries. Refer to the “Earning Assets” section on page 33 of this Financial Review for further discussion of the Corporation’s Argentine and Brazilian exposure. Included in the provision for loan losses in 2001 was a $25 million merger-related charge to conform the credit policies of Imperial Bancorp (Imperial), a $7 billion banking company acquired in 2001, with those of the Corporation. Net charge-offs in 2002 were $481 million, or 1.14 percent of average total loans, compared to $189 million, or 0.46 percent, in 2001 and $195 million, or 0.50 percent, in 2000. Also, 2000 was affected by additional charge-offs taken by Imperial, to align

charge-off policies with the Corporation. An analysis of the changes in the allowance for loan losses, including charge-offs and recoveries by loan category, is presented in Table 4 on page 28.

The significant increase in the provision for loan losses in 2002 over 2001 occurred despite a decrease in nonperforming assets. Nonperforming assets at December 31, 2002 were $579 million, as compared to $627 million at December 31, 2001. The charge-offs during the year both reduced the amount of nonperforming assets and reduced the carrying value of nonaccrual loans as a percent of contractual value from 75 percent at December 31, 2001, to 60 percent at December 31, 2002. The economic and country risk factors previously mentioned and the impact of the significant increase in net charge-offs also increased the required levels of provision for loan losses. For further information on changes in nonperforming assets, see the “Nonperforming Assets” section of this financial review on page 36.

The allowance as a percentage of total loans, nonperforming assets and annual net charge-offs is provided in the following table.


Years Ended December 31	2002			2001			2000

Allowance for loan losses as a percentage of total loans at end of year		1.87	%		1.55	%		1.46	%
Allowance for loan losses as a percentage of nonperforming assets at end of year		136			102			172
Allowance for loan losses at end of year as a percentage of total net charge-offs for the year		164			337			300

The allowance for loan losses as a percentage of total period-end loans increased to 1.87 percent at December 31, 2002, from 1.55 percent at December 31, 2001. The allowance for loan losses as a percent of nonperforming assets increased to 136 percent at December 31, 2002, from 102 percent at December 31, 2001. This increased allowance coverage of loans and nonperforming assets resulted primarily from economic and country risk factors previously noted. As reflected in the table above, the allowance as a percentage of nonperforming assets at year-end 2001 declined from 2000 levels. Nonperforming assets increased in 2001. However, a stabilization of the loan watch list during the fourth quarter 2001 and projected improvement in economic indicators at the end of 2001 impacted the year-end 2001 allowance for loan losses. The decline in the allowance for loan losses at end of year as a percentage of net charge-offs for the year resulted from the high level of net charge-offs in 2002. Coverage of loans and nonperforming assets is expected to remain similar to year-end 2002 levels until an improvement in the domestic business climate occurs and/or the Argentine and Brazilian environments improve.

The Corporation maintains an allowance to cover probable credit losses inherent in lending-related commitments, including letters of credit and financial guarantees. This allowance was previously included with the allowance for loan losses in the financial statements. In 2002, the Corporation reclassified the allowance to cover probable credit losses inherent in lending-related commitments to “accrued expenses and other liabilities” on the consolidated balance sheets. Prior periods have been reclassified to reflect this change. At December 31, 2002 and 2001, the allowance for credit losses on lending-related commitments was $35 million and $18 million, respectively.

NONINTEREST INCOME
(in millions)


Years Ended December 31		2002		2001			2000

Service charges on deposit accounts		$	227	$	211		$	189
Fiduciary income			171		180			181
Commercial lending fees			69		67			61
Letter of credit fees			60		58			52
Foreign exchange income			40		35			27
Brokerage fees			38		44			44
Investment advisory revenue, net			27		12			119
Bank-owned life insurance			53		33			23
Equity in earnings of unconsolidated subsidiaries			8		(43	)		14
Warrant income			5		5			30
Securities gains			41		20			16
Net gain on sales of businesses			12		31			50
Other noninterest income			149		184			174

	Total noninterest income	$	900	$	837		$	980

Noninterest income increased $63 million, or eight percent, to $900 million in 2002, compared to $837 million in 2001 and decreased $143 million, or 15 percent, in 2001, compared to $980 million in 2000. An analysis of increases and decreases by individual line item is presented below.

Service charges on deposit accounts increased $16 million, or eight percent, in 2002 compared to an increase of $22 million, or 12 percent, in 2001. The increases in both 2002 and 2001 were due to continued growth in deposits, the sale of new and existing cash management services to business customers and the benefit of lower earnings credit allowances provided to business customers.

Fiduciary income decreased $9 million, or five percent, in 2002, after remaining relatively flat in 2001 as compared to 2000. Personal and institutional trust fees are the two major components of this category. These fees are based on services provided and assets managed. Fluctuations in the market values of the underlying assets managed, particularly equity securities, impact fiduciary income. The income decline in 2002 reflects the effect that equity market conditions had on assets under management.

Commercial lending fees increased $2 million, or four percent, in 2002 compared to an increase of $6 million, or 10 percent, in 2001. The rate of growth declined due to the slower economy and its impact on activity/deal-based fees.

Letter of credit fees increased $2 million, or five percent, in 2002 compared to an increase of $6 million, or 11 percent, in 2001. These increases were primarily related to increased demand for international trade services from new and existing customers. As with commercial lending fees, the rate of growth declined due to the slower economy.

Foreign exchange income increased $5 million, or 13 percent, to $40 million in 2002 compared to an increase of $8 million, or 30 percent, in 2001. The increase in 2002 was primarily due to an increase in income from trade-related services provided to new and existing customers. The increase in 2001 was primarily due to an increase in revenues generated by the Corporation’s Mexico subsidiary.

Brokerage fees decreased $6 million, or 14 percent, to $38 million, in 2002, compared to $44 million in 2001 and 2000. Brokerage fees include commissions from retail broker transactions and

Noninterest Income

(in millions)


2002	$	900
2001	$	837
2000	$	980
1999	$	893
1998	$	692

mutual fund sales and are subject to changes in the level of market activity. Reduced transaction volumes due to market conditions contributed to the 2002 declines.

Investment advisory revenue, which includes revenue generated by the Corporation’s asset management reporting unit (Munder), increased $15 million, or 132 percent, in 2002, compared to a decrease of $107 million, or 90 percent, in 2001. The increase in 2002 was due primarily to a $35 million reduction in impairment charges on deferred distribution costs, discussed more fully below, partially offset by a $20 million reduction in investment advisory revenue as general market conditions continued to weaken in 2002. Declining stock market performance resulted in the continued decrease in assets under management at Munder to $32 billion at December 31, 2002, from $35 billion at December 31, 2001, and $40 billion at year-end 2000.

The Corporation recorded impairment charges on deferred distribution costs of $5 million in 2002, $40 million in 2001 and $7 million in 2000. These charges resulted from a continued reassessment of the recoverability of unamortized commission costs paid to brokers for selling Class B mutual fund shares. Net asset values in these funds have declined as market conditions weakened. These declines prompted the Corporation’s revaluation of expected future cash flows from the funds, which are based on a percentage of assets under management and early redemption fees over a prescribed number of years. Net remaining deferred distribution costs at December 31, 2002 were $19 million. The changes in deferred distribution costs are reflected in the following table. Given net asset values at December 31, 2002, it would take a decline in total Class B mutual fund shares under management at Munder of approximately 20 percent to trigger further impairment, which at that level would be approximately $2 million. Each additional five percentage point decline results in a further impairment of approximately $1 million.

Inherent in the model used to estimate future cash flows are an assumed growth rate in assets under management of 8% during the recoupment period, an assumed early redemption rate of 20%, and a discount rate based on the libor curve plus 275 basis points. Changes that fall within a reasonably possible range in either the redemption rate or discount rate used do not have a significant impact on impairment. At December 31, 2002, reducing the assumed growth rate to 0% would not trigger impairment.

DEFERRED DISTRIBUTION COSTS
(in millions)


	2002			2001			2000

Balance at January 1	$	33		$	86		$	21
Commissions paid to brokers		3			11			118
Redemption fees received		(5	)		(10	)		(12	)
Amortization of costs		(7	)		(14	)		(34	)
Impairment charge		(5	)		(40	)		(7	)

Balance at December 31	$	19		$	33		$	86

Bank-owned life insurance income increased $20 million to $53 million in 2002, compared to an increase of $10 million to $33 million in 2001. The increase in 2002 was due primarily to non-taxable proceeds on bank-owned life insurance policies due to death benefits received, including $9 million of proceeds from the death of an executive in the second quarter 2002, and an increase in policies held.

Equity in earnings of unconsolidated subsidiaries increased $51 million in 2002, compared to a decrease of $57 million in 2001. Included in equity in earnings of unconsolidated subsidiaries in 2001 was a one-time $57 million charge related to long-term incentive plans at a United Kingdom subsidiary, Framlington (a London, England based investment manager), of which Munder is a minority owner. In 2000, equity in earnings of unconsolidated subsidiaries included a $7 million write-down of low-income housing investments accounted for under the equity method.

Warrant income was $5 million in both 2002 and 2001, and $30 million in 2000. The Corporation recognizes warrant income when the warrant positions become marketable as a result of a public equity offering. The decrease in warrant income in 2001 resulted from a decrease in public equity offerings.

The Corporation recognized net gains related to its investment securities portfolio of $41 million, $20 million, and $16 million in 2002, 2001 and 2000, respectively. The 2002 gain was net of $14 million in write-downs of Argentine securities recorded in 2002 and included a net gain of $57 million from the sale of securities in the fourth quarter 2002.

The net gain on the sales of businesses in 2002 included a gain of $12 million related to the sale of Official Payments Corporation (“OPAY”) (a 55 percent owned consolidated subsidiary). In 2001, net gain on the sales of businesses included a $21 million gain on the sale of the Corporation’s ownership in an automated teller machine (ATM) network provider and an $8 million gain from the sale of substantially all of the assets of a deposit-servicing subsidiary. In 2000, the sale of consumer loans resulted in a gain of $48 million.

Other noninterest income decreased $35 million, or 19 percent, in 2002 compared to an increase of $10 million, or six percent, in 2001. Other noninterest income in 2002 included $5 million of net losses on the sale of commercial loans held for sale. In 2001, other noninterest income included $11 million in net gains resulting from the purchase and subsequent sale of interest rate derivative contracts which failed to meet the Corporation’s risk-reduction criteria and a $5 million gain from the demutualization of an insurance carrier. In 2000, other noninterest income included a $6 million gain from the demutualization of an insurance carrier, offset by a $6 million write-down of low-income housing investments accounted for under the cost method. Comparisons of other noninterest income were impacted by the divestiture of OPAY in the third quarter of 2002 and Imperial’s merchant bankcard business in the second quarter of 2001. Combined, these divestitures resulted in a reduction of other noninterest income of $9 million in 2002, when compared to 2001.

NONINTEREST EXPENSES
(in millions)


Years Ended December 31	2002		2001		2000

Salaries	$	699	$	707	$	748
Employee benefits		145		135		126

Total salaries and employee benefits		844		842		874
Net occupancy expense		122		115		110
Equipment expense		62		70		76
Outside processing fee expense		65		61		59
Customer services		26		41		37
Goodwill impairment		86		—		—
Restructuring charges		—		152		—
Other noninterest expenses		310		306		355

Total noninterest expenses	$	1,515	$	1,587	$	1,511

Noninterest expenses decreased $72 million, or five percent, to $1,515 million in 2002, compared to $1,587 million in 2001 and increased $76 million, or five percent, in 2001, compared to $1,511 million in 2000. A detailed analysis of increases and decreases by individual line item is presented below.

Total salaries expense decreased $8 million, or one percent, in 2002 versus a decrease of $41 million, or five percent, in 2001. The decrease in 2002 was primarily due to a $40 million decline in business unit and executive incentives, net of a $17 million compensation charge related to the adoption of the fair value method of accounting for stock options and approximately $17 million in merit increases. The decrease in 2001 compared to 2000 was attributable to lower levels of business unit incentives. Business unit incentives are tied to revenue growth, while executive incentives are tied to peer-based comparisons of corporate results. For further information on the adoption of the fair value method of accounting for stock options, refer to Notes 1 and 16 to the consolidated financial statements on pages 50 and 59, respectively.

Employee benefits expense increased $10 million, or seven percent in 2002 compared to an increase of $9 million, or seven percent, in 2001. The increase in 2002 was primarily due to an increase in pension expense and employee healthcare costs. The increase in 2001 compared to 2000 was primarily due to an increase in employee healthcare costs. For a further discussion of pension expense, refer to Note 17 to the consolidated financial statements on page 60. Employee healthcare costs, net of the portion borne by employees, are expected to continue to increase at a pace greater than the overall rate of inflation.

Net occupancy and equipment expenses, on a combined basis, decreased $1 million, or less than one percent, to $184 million in 2002, compared to a decrease of $1 million, or less than one percent, in 2001. The 2002 decline resulted from the previously mentioned divestiture of OPAY in the third quarter of 2002.

Outside processing fees increased $4 million, or six percent, to $65 million in 2002, from $61 million in 2001 and increased $2 million, or four percent, in 2001, compared to $59 million in 2000. The impact of the divestiture of Imperial’s merchant bankcard business in the second quarter of 2001 impacted the percentage growth in this expense in both 2002 and 2001.

Customer service fees decreased $15 million, or 35 percent, to $26 million in 2002, from $41 million in 2001 and increased $4 million, or 11 percent, in 2001, from $37 million in 2000. Customer service fees represent expenses paid on behalf of customers, and are one method to attract and retain certain noninterest-bearing deposit balances. As a result of a lower interest rate environment, fewer credits were provided to these customers in 2002.

A goodwill impairment charge of $86 million was recorded as a result of the Corporation’s annual evaluation of goodwill. This charge resulted from the continued decline in equity markets, and its related impact on the valuation of the Corporation’s Munder subsidiary. Further declines in equity markets could trigger additional goodwill impairment charges in future periods. Additional information on the goodwill impairment charge can be found in the “Critical Accounting Policies” section on page 42 of this financial review and Note 8 to the consolidated financial statements on page 55.

The Corporation recorded restructuring charges of $152 million in 2001. The restructuring charges included $148 million related to the first quarter 2001 acquisition of Imperial and $4 million at the Corporation’s OPAY subsidiary. The OPAY restructuring charge is shown net of the portion of the charge attributable to the minority shareholders in OPAY. The Corporation sold its OPAY subsidiary in 2002. In addition, the Corporation recorded a $25 million merger-related charge in 2001 that is included in the provision for loan losses to conform the credit policies of Imperial with those of the Corporation. The integration with Imperial was completed in fourth quarter 2001 and all merger-related and restructuring charges have been expensed. As a result of the Imperial restructuring, the Corporation’s 2002 annual savings was estimated at $60 million. For additional information on both restructuring charges, including their components, refer to Note 19 to the consolidated financial statements on page 63.

Other noninterest expenses increased $4 million, or one percent, in 2002 compared to a $49 million decrease, or 14 percent, in 2001. In accordance with new accounting rules, goodwill amortization was discontinued January 1, 2002. Other noninterest expenses declined $31 million in 2002 as a result of this change in accounting for goodwill. Partially offsetting this decline was the provision for probable credit losses on lending-related commitments, which was $17 million in 2002, compared to a credit of ($5) million in 2001. For additional information on the provision for probable credit losses on lending-related commitments refer to Notes 1 and 22 to the consolidated financial statements on

Noninterest Expenses

(in millions)


2002	$	1,515
2001	$	1,587
2000	$	1,511
1999	$	1,387
1998	$	1,263

pages 50 and 65, respectively. Other noninterest expenses in 2001 included $5 million in minority interest income to record Munder’s minority interest holders’ share of the Framlington long-term incentive plans charge discussed in noninterest income. In 2000, other noninterest expenses included $12 million of interest associated with a preliminary settlement of Federal tax years prior to 1993, a $6 million contribution to the Corporation’s charitable foundation and $6 million in marketing costs to launch a new closed-end fund.

The Corporation’s efficiency ratio is defined as total noninterest expenses divided by the sum of net interest revenue (FTE) and noninterest income, excluding securities gains. The ratio decreased to 50.59 percent in 2002, compared to 54.30 percent in 2001 and 50.88 percent in 2000. The efficiency ratio in 2001 was impacted by $152 million in merger-related and restructuring charges recorded during the year.

INCOME TAXES

The provision for income taxes was $281 million in 2002, compared to $401 million in 2001 and $431 million in 2000. The effective tax rate, computed by dividing the provision for income taxes by income before taxes, was 31.8 percent in 2002, 36.1 percent in 2001 and 35.3 percent in 2000. The lower effective tax rate in 2002 resulted, in part, from the reduction in income before income taxes, which increased the proportion of permanent tax differences to pre-tax income. The tax rate in 2002 was also impacted by increased non-taxable revenue on bank-owned life insurance policies. The Corporation’s $169 million deferred income tax liability at December 31, 2002 was net of a deferred tax asset of $471 million, which the Corporation’s management believes will be realized in future periods. Management based this conclusion on the expectation that taxable income in future years will equal or exceed taxable income in 2002, both in the aggregate and in those state(s) where the incidence of taxable income is necessary to assure realization of deferred tax assets. In the event that the future taxable income does not occur in the manner anticipated, other strategies could be employed to preclude the need to recognize a valuation allowance against the deferred tax asset.

STRATEGIC LINES OF BUSINESS

The Corporation’s operations are strategically aligned into three major lines of business: the Business Bank, the Individual Bank and the Investment Bank. These lines of business are differentiated based upon the products and services provided. In addition to the three major lines of business, the Finance Division is also reported as a segment. The Other category includes items not directly associated with these lines of business or the Finance Division. Note 26 to the consolidated financial statements on page 70 describes how these segments were identified and presents financial results of these businesses for the years ended December 31, 2002, 2001 and 2000.

The Business Bank’s net income decreased $19 million, or four percent, to $508 million in 2002, compared to an increase of $88 million, or 20 percent, to $527 million in 2001. Net interest income increased $227 million and noninterest expenses decreased $6 million, offset by an increase of $233 million in the provision for loan losses and a decrease in noninterest income of $12 million. The increase in net interest income was primarily due to strong growth in deposits, particularly in the Corporation’s Financial Services Group business. Average loans outstanding were virtually unchanged from 2001, as decreases in loans to large business customers were offset by increases in other loan portfolios, particularly commercial real estate. The increase in provision for loan losses resulted from the impact of the continued uncertainty in the economy on the Business Bank’s customers and from the sale of certain nonperforming loans in 2002.

Individual Bank net income decreased $13 million, or five percent, to $272 million in 2002, compared to a decrease of $40 million, or 12 percent, to $285 million in 2001. Net interest income increased $35 million, or five percent, principally from an increase in loan and deposit balances. The provision for loan losses was $53 million in 2002, compared to $22 million in 2001, as the continued uncertainty in the economy had a negative impact on the loan quality of small business customers. The decrease in noninterest income of $26 million, or eight percent, included lower personal trust fees of $10 million, and a reduction of $10 million in merchant interchange income as a result of the sale of Imperial’s merchant processing business in 2001.

The net loss for the Investment Bank was $65 million in 2002, compared to a net loss of $68 million in 2001. Net income in 2002 was reduced by an $86 million pre-tax goodwill impairment charge at the asset management reporting unit (Munder) and a $5 million deferred distribution cost impairment charge. The net loss in 2001 included deferred distribution cost impairment charges totaling $40 million and a $57 million charge related to long-term incentive plans at Framlington. Noninterest expenses, excluding the goodwill and deferred distribution cost impairment charges cited above, decreased $17 million in 2002 due to the effect of the discontinuance of goodwill amortization as a result of the adoption of SFAS No. 142, lower revenue-related incentives and lower advertising costs.

The net loss for the Finance Division was $56 million in 2002, compared to net income of $57 million in 2001. The year-over-year change primarily resulted from a $217 million decrease in net interest income, partially offset by a $20 million increase in noninterest income. Net interest income in the Finance Division decreased primarily due to high funding credits paid to the Business and Individual Bank units related to indeterminate life deposit accounts (principally noninterest-bearing demand accounts). The increase in noninterest income in 2002 was primarily caused by increased gains on the sale of securities of $37 million, partially offset by a decrease in securities trading income of $19 million, from unusually high levels in 2001.

The net loss for the Other category was $58 million in 2002, compared to a net loss of $91 million in 2001. The smaller loss in 2002 was primarily the result of $148 million of Imperial merger-related restructuring charges included in 2001 noninterest expenses, and a $25 million merger-related charge included in the 2001 provision for loan losses to conform the credit policies of Imperial with the Corporation. Partially offsetting this reduction was a significant increase in the provision for loan losses not assigned to other lending units in 2002. Noninterest income in 2002 included a $12 million gain on the sale of OPAY and $9 million in income from bank-owned life insurance. Noninterest income for the Other category in 2001 included a $21 million gain from the sale of the Corporation’s ownership in an ATM network provider. The decrease in the net interest margin in 2002 was due to an increase in net corporate overhead assets.

TABLE 5: ANALYSIS OF INVESTMENT SECURITIES AND LOANS

(in millions)


December 31			2002		2001		2000		1999		1998

Investment securities available for sale
	U.S. Treasury and other Government agency securities		$	2,748	$	3,920	$	3,135	$	2,950	$	2,882
	State and municipal securities			23		32		46		73		115
	Other securities			282		339		710		760		410

		Total investment securities available for sale	$	3,053	$	4,291	$	3,891	$	3,783	$	3,407

Commercial loans			$	25,242	$	25,176	$	26,009	$	23,629	$	22,097
International loans
	Government and official institutions			9		9		2		10		12
	Banks and other financial institutions			199		427		402		391		433
	Commercial and industrial			2,557		2,579		2,167		2,172		2,268

		Total international loans		2,765		3,015		2,571		2,573		2,713
Real estate construction loans				3,457		3,258		2,915		2,167		1,339
Commercial mortgage loans				7,194		6,267		5,361		4,873		4,322
Residential mortgage loans				789		779		808		871		1,038
Consumer loans				1,538		1,484		1,477		1,389		1,897
Lease financing				1,296		1,217		1,029		803		647

		Total loans	$	42,281	$	41,196	$	40,170	$	36,305	$	34,053

BALANCE SHEET AND CAPITAL FUNDS ANALYSIS

Total assets were $53.3 billion at year-end 2002, an increase of $2.5 billion from $50.8 billion at December 31, 2001. On an average basis, total assets increased to $51.1 billion in 2002 from $49.7 billion in 2001, an increase of $1.4 billion. This increase was funded primarily by deposits, which rose on average $2.4 billion, partially offset by a reduction in short-term borrowings which declined on average $622 million and in medium- and long-term debt, which declined on average $435 million.

EARNING ASSETS

The Corporation’s average earning assets balances are reflected in Table 2 on page 25. Total earning assets were $47.8 billion at December 31, 2002, an increase of $1.2 billion from $46.6 billion at year-end 2001. On an average basis, total earning assets were $47.1 billion in 2002, compared to $45.7 billion in 2001. Average total loans in 2002 increased $720 million, or two percent, from 2001 levels. Although certain business loan categories continued to show significant growth in 2002, total business loan growth slowed in 2002 due to the continued uncertainty in the economy and management’s strategy to reduce large corporate non-relationship loans and loans in certain Latin American countries experiencing difficulties. Average commercial mortgage loans increased $1.1 billion, or 19 percent, real estate construction increased $263 million, or nine percent, and average international loans increased $188 million, or seven percent. These increases were partially offset by a decline of $941 million, or four percent, in average commercial loans in 2002. The decline in average commercial loans was primarily in loans to large non-relationship corporate customers.

International loans averaged $3.0 billion in 2002, an increase of $188 million, or seven percent, from 2001. However, period-end international loans decreased eight percent, to $2.8 billion at December 31, 2002, compared to $3.0 billion at December 31, 2001. International loans declined primarily in Argentina and Brazil. The Corporation has operating platforms in all three North American countries. Active risk management practices minimize risk inherent in international lending arrangements. These practices include structuring bilateral agreements or participating in bank facilities, which secure repayment from sources external to the borrower’s country. Accordingly, such international outstandings are excluded from cross-border risk of that country. Mexican cross-border outstandings of $1,190 million, or 2.23 percent of total assets, was the only country with outstandings exceeding 1.00 percent of total assets at December 31, 2002. Brazil was the only country with cross-border outstandings between 0.75 and 1.00 percent of total assets at year end 2002, with outstandings totaling $463 million, or 0.87 percent of total assets, at December 31, 2002. Additional information on the Corporation’s International cross-border risk in countries where the Corporation’s outstandings exceeded 1.00 percent of total assets at the end of one or more of the three years in the period ended December 31, 2002 is provided in Table 8 on page 34. As a result of political and economic events in Argentina and Brazil, the Corporation is closely monitoring its Argentine and Brazilian exposures. Total Argentine exposure at December 31, 2002, was $85 million and consisted of $70 million of loans, $6 million of securities and $9 million of unfunded commitments. This represents a decrease of $134 million from total Argentine exposure of $219 million at December 31, 2001. Total Brazilian exposure at December 31, 2002, was $511 million and consisted of $412 million of loans, $51 million of securities and $48 million of unfunded commitments. This represents a decrease of $205 million from total Brazilian exposure of $712 million at December 31, 2001.

Average commercial real estate loans, consisting of real estate construction and commercial mortgage loans, increased $1.4 billion, or 15 percent, from 2001 to 2002. Average loans to borrowers not primarily engaged in the business of commercial real estate represented $5.7 billion, or 56 percent, of the 2002 $10.1 billion

TABLE 6: LOAN MATURITIES AND INTEREST RATE SENSITIVITY

(in millions)

After One

Within

But Within

After

December 31, 2002

One Year*

Five Years

Total

Commercial loans

19,348

4,644

1,250

25,242

International loans

2,413

339

2,765

Real estate construction loans

2,537

729

191

3,457

Commercial mortgage loans

2,713

3,113

1,368

7,194

Total

27,011

8,825

2,822

38,658

Loans maturing after one year

Predetermined (fixed) interest rates

3,628

2,565

Floating interest rates

5,197

257

Total

8,825

2,822

*Includes demand loans, loans having no stated repayment schedule or maturity and overdrafts.

TABLE 7: ALLOCATION OF THE ALLOWANCE FOR LOAN LOSSES

(dollar amounts in millions)


December 31			2002					2001					2000					1999					1998

			Amount		%			Amount		%			Amount		%			Amount		%			Amount		%

Domestic
	Commercial		$	485		60	%	$	414		61	%	$	353		65	%	$	309		65	%	$	281		65	%
	Real estate construction			26		8			17		8			11		7			12		6			9		4
	Commercial mortgage			86		17			61		15			59		13			35		14			21		13
	Residential mortgage			—		2			—		2			—		2			—		2			—		3
	Consumer			18		4			11		4			8		4			18		4			48		5
	Lease financing			8		3			9		3			5		3			8		2			6		2
International				130		6			88		7			105		6			95		7			84		8
Unallocated				38					37					44					52					49

		Total	$	791		100	%	$	637		100	%	$	585		100	%	$	529		100	%	$	498		100	%

Amount — allocated allowance
% — loans outstanding as a percentage of total loans

TABLE 8: INTERNATIONAL CROSS-BORDER OUTSTANDINGS
(year-end outstandings exceeding 1% of total assets)

(in millions)


		Governments		Banks and
		and Official		Other Financial		Commercial
December 31		Institutions		Institutions		and Industrial		Total

Mexico	2002	$	15	$	7	$	1,168	$	1,190
	2001		17		25		1,207		1,249
	2000		11		40		1,032		1,083

Brazil	2001	$	31	$	322	$	236	$	589

TABLE 9: ANALYSIS OF INVESTMENT SECURITIES PORTFOLIO — FULLY TAXABLE EQUIVALENT

(dollar amounts in millions)



		Maturity†

																												Weighted
December 31, 2002			Within 1 Year					1 - 5 Years					5 - 10 Years					After 10 Years					Total					Average
																												Maturity
			Amount		Yield			Amount		Yield			Amount		Yield			Amount		Yield			Amount		Yield			Yrs./Mos.

Available for sale
	U.S. Treasury and other Government agency securities		$	86		4.22	%	$	805		4.81	%	$	33		6.53	%	$	1,824		5.06	%	$	2,748		4.98	%		13/9
	State and municipal securities			7		6.60			10		6.02			5		6.33			1		6.40			23		6.27			2/10
	Other securities
	Other bonds, notes and debentures			96		4.39			88		5.82			18		3.05			11		9.71			213		5.14			2/10
	Other investments*			—		—			—		—			—		—			69		—			69		—			—

Total investment securities available for sale			$	189		4.40	%	$	903		4.92	%	$	56		5.38	%	$	1,905		5.09	%	$	3,053		5.00	%		12/10

* Balances are excluded from the calculation of total yield.

† Based on final contractual maturity.

average commercial real estate loans, as compared to $5.2 billion, or 60 percent, of the 2001 $8.8 billion average commercial real estate loans.

Average residential mortgage loans decreased $37 million, or five percent, from 2001, reflecting management’s decision to sell the majority of its mortgage originations. Growth in home equity lending generated a $25 million, or two percent, increase in consumer loans.

Average investment securities rose to $4.4 billion in 2002, compared to $3.9 billion in 2001. Average U.S. government and agency securities increased $550 million, while average state and municipal securities decreased $13 million. Increases in U.S. government and agency securities resulted from interest rate risk and balance sheet management decisions while the tax-exempt portfolio of state and municipal securities continued to decrease as reduced tax advantages for these types of securities discouraged additional investment. Average other securities decreased $86 million in 2002. Other securities at December 31, 2002 consisted primarily of collateralized mortgage obligations (CMOs), Brady bonds and Eurobonds. As a result of securities sales in the fourth quarter 2002, investment securities available for sale declined $1.2 billion, or 29 percent, from December 31, 2001 to December 31, 2002, as reflected in Table 5 on page 33. The Corporation had commitments to purchase U.S. government and agency securities for its available-for-sale portfolio of $575 million at December 31, 2002 and committed to purchase an additional $900 million in the first half of January 2003.

OTHER EARNING ASSETS

Short-term investments include interest-bearing deposits with banks, federal funds sold, securities purchased under agreements to resell, trading securities and loans held for sale. These investments provide a range of maturities under one year to manage short-term investment requirements of the Corporation. Interest-bearing deposits with banks are investments with banks in developed countries or foreign banks’ international banking facilities located in the United States. Average short-term investments increased to $602 million during 2002, from $442 million in 2001, due primarily to an increase in loans held for sale and federal funds sold. Federal funds sold offer supplemental earning opportunities and serve correspondent banks. Loans held for sale typically represent residential mortgage loans and Small Business Administration loans that have been originated and which management decided to sell. In addition, other loans or loan portfolios to be sold are included in loans held for sale.

DEPOSITS AND BORROWED FUNDS

Average deposits were $37.7 billion during 2002, an increase of $2.4 billion, or seven percent, from 2001. Average noninterest-bearing deposits grew $1.6 billion, or 15 percent, from 2001, as a result of increased title and escrow deposits in the Corporation’s Financial Services Group business, which benefit from high home mortgage financing and refinancing activity. Future events, such as an increase in interest rates from current levels, could cause a decline in home mortgage financing and refinancing activity, which may result in lower levels of these deposits in the future. Average interest-bearing transaction, savings and money market deposits increased 31 percent during 2002, to $14.7 billion. Average certificates of deposit decreased $2.8 billion, or 21 percent, from 2001. This decrease was primarily from certificates of deposits issued in denominations in excess of $100,000 through brokers or to institutional investors. The absence of significant loan growth in 2002 and the robust increases in transaction, savings and money market deposits contributed to the reduced level of these deposits. Average foreign office time deposits increased $143 million, or 23 percent, over the 2001 level, due to increased deposits at Mexican and Canadian subsidiaries.

Average short-term borrowings decreased $622 million, or 24 percent, as deposit growth reduced the need for these funding sources. Short-term borrowings include federal funds purchased, securities sold under agreements to repurchase, commercial paper and treasury tax and loan notes.

The Corporation uses medium-term debt (both domestic and European) and long-term debt to provide funding to support expanding earning assets while providing liquidity which mirrors the estimated duration of deposits. Long-term subordinated notes further help maintain the Corporation’s and subsidiary banks’ total capital ratio at a level that qualifies for the lowest FDIC risk-based insurance premium. Medium- and long-term debt decreased on an average basis by $435 million as deposit growth and slowing loan growth reduced the need for these funding sources. Further information on medium- and long-term debt is provided in Note 12 to the consolidated financial statements on page 57.

CAPITAL

Shareholders’ equity was $4.9 billion at December 31, 2002, up $140 million, from December 31, 2001. This increase was primarily due to $266 million of retained earnings (net income less cash dividends declared), $50 million of common stock issued for employee stock plans and $12 million in other comprehensive income, offset by a reduction in equity of $210 million from repurchasing 3.5 million shares of common stock in open market purchases. The Corporation has approximately 5 million additional shares authorized for repurchase by the Board of Directors’ current resolutions. Further information on the change in other comprehensive income is provided in Note 14 to the consolidated financial statements on page 58.

The Corporation declared common dividends totaling $335 million, or $1.92 per share, on net income applicable to common stock of $601 million. The dividend payout ratio calculated on a per share basis, was 56 percent in 2002 versus 45 percent in 2001 and 37 percent in 2000.

At December 31, 2002, the Corporation and all of its banking subsidiaries exceeded the capital ratios required for an institution to be considered “well capitalized” by the standards developed under the Federal Deposit Insurance Corporation Improvement Act of 1991. Refer to Note 21 to the consolidated financial statements on page 64 for the capital ratios.

RISK MANAGEMENT

The Corporation assumes various types of risk in the normal course of business. Management believes that the most significant risk exposures are from credit, interest rate, liquidity, market and operations. Comerica employs risk management processes to identify, measure, monitor and control these risks.

In 2002, Comerica launched a program to enhance the Corporation’s risk management capabilities. As part of this program, the Corporation plans to introduce additional and new processes, tools and systems that are designed to provide management with deeper insight into the Corporation’s risks and will enhance the Corporation’s ability to control risks and ensure that appropriate compensation is received for risks taken. The program will also prepare the Corporation to report risk exposures and the overall risk profile in new ways that are useful to investors and regulators. The Corporation has established an Enterprise-wide Risk Management Steering Committee, which includes members of executive management, to oversee this program.

CREDIT RISK

Credit risk represents the risk that a customer or counterparty may not perform in accordance to contractual terms. Credit risk is inherent in the financial services business and results from extending credit to customers, purchasing securities and entering into financial derivative instruments. Policies and procedures for measuring and managing this risk are formulated, approved and communicated throughout the Corporation. Credit executives, independent from lending officers, are involved in the origination and underwriting process to ensure adherence to risk policies and underwriting standards. The Corporation also manages credit risk through diversification, limiting exposure to any single industry or customer, selling participations to third parties, syndicating loans and requiring collateral.

NONPERFORMING ASSETS

Nonperforming assets include loans and loans held for sale on nonaccrual status, loans which have been renegotiated to less than market rates due to a serious weakening of the borrower’s financial condition, real estate which has been acquired primarily through foreclosure and is awaiting disposition (“Other Real Estate” or “ORE”) and debt securities on nonaccrual status. The Corporation’s policies regarding nonaccrual loans reflect the importance of timely identification of troubled loans.

Consumer loans are charged off no later than 180 days past due, and earlier, if deemed uncollectible. Loans, other than consumer loans, and debt securities are generally placed on nonaccrual status when management determines that principal or interest may not be fully collectible, but no later than 90 days past due on principal or interest, unless the loan or debt security is fully collateralized and in the process of collection. Loan amounts in excess of probable future cash collections are charged off to an amount that management ultimately expects to collect. Interest previously accrued but not collected on nonaccrual loans is charged against current income at the time the loan is placed on nonaccrual. Income on such loans is then recognized only to the extent that cash is received and where the future collection of principal is probable. Loans which have been restructured to yield a rate that was equal to or greater than the rate charged for new loans with comparable risk and have met the requirements for a return to accrual status are not included in nonperforming assets. However, such loans may be required to be evaluated for impairment. Refer to Note 4 of the consolidated financial statements on page 54 for a further discussion of impaired loans.

Nonperforming assets decreased $48 million, or eight percent, to $579 million at December 31, 2002 from $627 million at December 31, 2001. Nonaccrual loans decreased $52 million, or eight percent, to $565 million at December 31, 2002, from $617 million at December 31, 2001. ORE remained unchanged at $10 million for both year-end 2002 and 2001, while nonaccrual debt securities increased to $4 million at December 31, 2002. As shown in the Table 10 on page 37, nonaccrual commercial loans decreased $95 million due to high levels of charge-offs and the sale of commercial nonaccrual loans in 2002. This reduction

Nonperforming Assets to Loans,
Other Real Estate and Nonaccrual Debt Securities


2002	1.37	%
2001	1.52	%
2000	0.84	%
1999	0.59	%
1998	0.48	%

TABLE 10: SUMMARY OF NONPERFORMING ASSETS AND PAST DUE LOANS

(dollar amounts in millions)


December 31				2002			2001			2000			1999			1998

Nonperforming assets
	Nonaccrual loans
		Commercial loans		$	372		$	467		$	233		$	116		$	97
		International loans			114			109			69			55			20
		Real estate construction loans			19			10			5			—			2
		Commercial mortgage loans			53			18			17			10			7
		Residential mortgage loans			—			—			—			1			3
		Consumer loans			2			5			3			5			3
		Lease financing			5			8			4			6			7

			Total nonaccrual loans		565			617			331			193			139
	Reduced-rate loans				—			—			2			9			18

			Total nonperforming loans		565			617			333			202			157
	Other real estate				10			10			6			11			7
	Nonaccrual debt securities				4			—			—			—			—

			Total nonperforming assets	$	579		$	627		$	339		$	213		$	164

Nonperforming loans as a percentage of total loans					1.34	%		1.50	%		0.83	%		0.56	%		0.46	%
Nonperforming assets as a percentage of total loans, other real estate and nonaccrual debt securities					1.37			1.52			0.84			0.59			0.48
Allowance for loan losses as a percentage of total nonperforming assets					136			102			172			249			305
Loans past due 90 days or more and still accruing				$	43		$	44		$	36		$	48		$	44

was partially offset by a $35 million increase in nonaccrual commercial mortgage loans. A substantial part of this increase in nonaccrual commercial mortgage loans involves owner-occupied properties in which the borrower is involved in business activities other than real estate, and the sources of repayment are not dependent on the performance of the real estate market. Loans are classified as commercial mortgage loans if the primary collateral is a lien on any real property. The term “primary collateral” means more than 50% of the facility at loan approval is predicated on the value of real property. Loans to such borrowers comprised $45 million of the $53 million in commercial real estate nonaccrual loans at year-end 2002. Latin American debt securities comprised the entire $4 million of nonaccrual debt securities at December 31, 2002. Loans past due 90 days or more and still on accrual status decreased $1 million to $43 million in 2002, from $44 million in 2001. Nonperforming assets as a percent of total loans, other real estate and nonaccrual debt securities were 1.37 percent and 1.52 percent at year-end 2002 and 2001, respectively.

The following table presents a summary of changes in nonaccrual loans based on an analysis of nonaccrual loans with book balances greater than $2 million.


(in millions)	2002			2001

Balance at January 1	$	617		$	331
Loans transferred to nonaccrual		733			702
Business loan gross charge-offs		(508	)		(227	)
Loans transferred to accrual status		(43	)		(107	)
Loans sold		(134	)		(92	)
Payments/Other		(100	)*		10	*

Balance at December 31	$	565		$	617

* Net change related to nonaccrual loans with balances less than $2 million, other than business loan charge-offs, are included in Payments/Other.

Of the loans with balances greater than $2 million transferred to nonaccrual status in 2002, $350 million were loans to customers in the manufacturing sector, $128 million were loans to customers in the services sector, with the remainder primarily loans to customers in the retail trade, finance and energy sectors. Customers related to the automotive industry comprised $154 million of the $350 million loans to manufacturers transferred to nonaccrual.

Of the charge-offs taken on nonaccrual loans with balances greater then $2 million in 2002, $161 million were charge-offs on loans to customers in the manufacturing sector, $76 million were on loans to customers in the services sector and $42 million were on loans to customers in the retail trade sector. The remainder of the charge-offs on loans greater than $2 million were spread primarily across customers in the finance sector, contractors, and customers in the transportation and consumer goods sectors. Customers related to the automotive industry comprised $71 million of the manufacturing sector charge-offs cited above.

Shared National Credit Program (SNC) loans comprised approximately 25 and 38 percent of total nonperforming assets at December 31, 2002 and 2001, respectively. SNC loans are facilities greater than $20 million shared by three or more financial institutions and reviewed by regulatory authorities at the lead bank or agent bank level. These loans comprised approximately 18 and 21 percent of total loans at December 31, 2002 and 2001, respectively. Of the $733 million of loans greater than $2 million transferred to nonaccrual status in 2002, $313 million were SNC loans.

The following nonaccrual loans table indicates the percentage of nonaccrual loan value to original contract value, which exhibits the degree to which loans reported as nonaccrual have been partially charged-off.

NONACCRUAL LOANS
(dollar amounts in millions)


December 31	2002			2001

Carrying value	$	565		$	617
Contractual value		938			826
Carrying value as a percentage of contractual value		60	%		75	%

Without an improvement in the economy, management expects nonperforming assets and net charge-offs, in the near term, to remain similar to 2002 year-end and fourth quarter levels, respectively. Nonperforming assets were $579 million at December 31, 2002 and net charge-offs were $82 million in the fourth quarter 2002.

CONCENTRATION OF CREDIT

Loans to companies and individuals involved with the automotive industry represented the largest significant industry concentration at December 31, 2002. These loans totaled $7.0 billion, or 17 percent, of total loans at December 31, 2002, compared to $6.1 billion, or 15 percent, at December 31, 2001. Included in these totals are floor plan loans to automotive dealers of $2.6 billion and $1.9 billion at December 31, 2002 and 2001, respectively. All other industry concentrations individually represented less than 10 percent of total loans at year-end 2002.

Nonperforming assets to companies and individuals involved with the automotive industry comprised approximately 16 percent of total nonperforming assets at December 31, 2002. The largest automotive industry loan on nonaccrual status at December 31, 2002, was $19 million. Total automotive industry-related net charge-offs were approximately $68 million in 2002. The largest automotive industry-related charge-off during the year was $20 million. The Corporation has successfully operated in the Michigan economy, despite a loan concentration and several downturns in the auto industry.

COMMERCIAL REAL ESTATE LENDING

The Corporation takes measures to limit risk inherent in its commercial real estate lending activities. These measures include limiting exposure to those borrowers directly involved in the commercial real estate markets and adherence to policies requiring conservative loan-to-value ratios for such loans. Commercial real estate loans, consisting of real estate construction and commercial mortgage loans, totaled $10.7 billion at December 31, 2002, of which $6.1 billion, or 58 percent, involved borrowers not primarily engaged in the business of commercial real estate and where the sources of repayment are not dependent on the performance of the real estate market.

The real estate construction loan portfolio contains loans primarily made to long-time customers with satisfactory completion experience. The portfolio totaled $3.5 billion and had approximately 1,700 loans, of which 56 percent had balances less than $1 million at December 31, 2002. The largest real estate construction loan had a balance of approximately $31 million at December 31, 2002. The commercial mortgage loan portfolio totaled $7.2 billion at December 31, 2002. The portfolio had approximately 8,100 loans, of which 79 percent had balances of less than $1 million, at December 31, 2002. The largest commercial mortgage loan had a balance of approximately $30 million at December 31, 2002.

The geographic distribution of real estate construction and commercial mortgage loan borrowers is an important factor in evaluating credit risk. The following table indicates, by address of borrower, the diversification of the Corporation’s real estate construction and commercial mortgage loan portfolio.

GEOGRAPHIC DISTRIBUTION OF BORROWERS
(in millions)


		Real Estate		Commercial
December 31, 2002		Construction		Mortgage

Michigan		$	1,606	$	4,300
California			1,081		1,311
Texas			478		638
Florida			145		281
Other			147		664

	Total	$	3,457	$	7,194

INTEREST RATE RISK

Interest rate risk arises primarily through the Corporation’s core business activities of extending loans and accepting deposits. The Corporation actively manages its material exposure to interest rate risk. The principal objective of asset and liability management is to maximize net interest income while operating within acceptable limits established for interest rate risk and maintaining adequate levels of funding and liquidity. The Corporation utilizes various types of financial instruments to manage the extent to which net interest income may be affected by fluctuations in interest rates. The Board of Directors, upon recommendations of the Risk Asset Quality Review Committee, establishes policies and risk limits pertaining to asset and liability management activities. The Board, with the assistance of the Risk Asset Quality Review Committee and the Asset and Liability Policy Committee (ALPC), monitors compliance with these policies. The ALPC meets regularly to discuss and review asset and liability management strategies and is comprised of executive and senior management from various areas of the Corporation, including finance, lending, investments and deposit gathering.

INTEREST RATE SENSITIVITY

Interest rate risk arises in the normal course of business due to differences in the repricing and maturity characteristics of assets and liabilities. Since no single measurement system satisfies all management objectives, a combination of techniques is used to manage interest rate risk, including simulation analysis, economic value of equity and asset and liability repricing schedules. The ALPC regularly reviews the results of these interest rate risk measurements.

The Corporation frequently evaluates net interest income under various balance sheet and interest rate scenarios, using simulation analysis as its principal risk management technique. The results of these analyses provide the information needed to assess the balance sheet structure. Changes in economic activity, different from those management included in its simulation analyses, whether domestically or internationally, could translate into a materially different interest rate environment than currently expected. Management evaluates “base” net interest income under what is believed to be the most likely balance sheet structure and interest rate environment. This “base” net interest income is then evaluated against interest rate scenarios that increase and decrease 200 basis points from the most likely rate environment. In addition, adjustments to asset prepayment levels, yield curves and overall balance sheet mix and growth assumptions are made to be consistent with each interest rate environment. These assumptions are inherently uncertain and, as a result, the model cannot precisely predict the impact of higher or lower interest rates on net interest income. Actual results may differ from simulated results due to timing, magnitude and frequency of interest rate changes and changes in market conditions and management strategies, among other factors. Derivative financial instruments entered into for risk management purposes are included in these analyses. The measurement of risk exposure,

TABLE 11: REMAINING EXPECTED MATURITY OF RISK MANAGEMENT INTEREST RATE SWAPS

(dollar amounts in millions)


																					Dec. 31,			Dec. 31,
																		2008-			2002			2001
			2003			2004			2005			2006			2007			2026			Total			Total

VARIABLE RATE ASSET DESIGNATION:
	Generic receive fixed swaps		$	4,816		$	3,500		$	1,800		$	500		$	—		$	—		$	10,616		$	11,069
	Weighted average: (1)
		Receive rate		8.23	%		6.59	%		7.43	%		5.83	%		—	%		—	%		7.44	%		7.68	%
		Pay rate		3.32			4.25			4.26			1.84			—			—			3.71			4.07

FIXED RATE ASSET DESIGNATION:
	Pay fixed swaps
		Generic	$	14		$	—		$	—		$	—		$	—		$	—		$	14		$	34
		Amortizing		1			4			—			—			—			—			5			1
	Weighted average: (2)
		Receive rate		3.05	%		5.97	%		—	%		—	%		—	%		—	%		3.72	%		2.22	%
		Pay rate		3.11			6.70			—			—			—			—			3.96			2.56

FIXED RATE DEPOSIT DESIGNATION:
	Generic receive fixed swaps		$	1,467		$	—		$	—		$	—		$	—		$	—		$	1,467		$	1,743
	Weighted average: (1)
		Receive rate		4.22	%		—	%		—	%		—	%		—	%		—	%		4.22	%		4.87	%
		Pay rate		3.12			—			—			—			—			—			3.12			2.00

MEDIUM- AND LONG-TERM DEBT DESIGNATION:
	Generic receive fixed swaps		$	—		$	—		$	250		$	—		$	350		$	900		$	1,500		$	1,650
	Weighted average: (1)
		Receive rate		—	%		—	%		7.04	%		—	%		6.67	%		6.75	%		6.78	%		6.82	%
		Pay rate		—			—			1.40			—			1.61			1.76			1.67			2.66

Total notional amount			$	6,298		$	3,504		$	2,050		$	500		$	350		$	900		$	13,602		$	14,497

(1) Variable rates paid on receive fixed swaps are based on one-month and three-month LIBOR or one-month Canadian Deposit Offered Rate (CDOR) effective December 31, 2002. Variable rates received on pay fixed swaps are based on prime at December 31, 2002.

(2) Variable rates received are based on three-month and six-month LIBOR or one-month and three-month CDOR rates in effect at December 31, 2002.

at year-end 2002, for a decline in short-term interest rates to zero percent identified approximately $91 million, or four percent, of net interest income at risk during 2003. If short-term interest rates rise 200 basis points, net interest income would be enhanced during 2003 by approximately $104 million, or five percent. Corresponding measures of risk exposure for year end 2001 were $80 million of net interest income at risk for a 200 basis-point decline in rates and a $39 million enhancement of net interest income for a 200 basis-point rise in rates. Corporate policy limits adverse change to no more than five percent of management’s most likely net interest income forecast and the Corporation is operating within this policy guideline.

In addition to the simulation analysis, an economic value of equity calculation is performed. This measure of risk begins with an estimate of the mark-to-market valuation of the Corporation’s balance sheet and then applies the estimated market value impact of rate movements upon the assets and liabilities. The economic value of equity is then calculated as the residual necessary to re-balance the resulting assets and liabilities. The market value change in the economic value of equity is then compared to the corporate policy guideline limiting such change to 10 percent of book equity as a result of a non-parallel 200-basis point increase or decrease in short-term rates. The Corporation is operating within this policy parameter.

The Corporation also performs a traditional interest rate gap analysis. This additional interest rate risk measurement tool provides a rudimentary directional outlook on the impact of changes in interest rates. Management recognizes the limited ability of a traditional gap schedule to accurately portray interest rate risk and therefore makes adjustments to provide a more accurate picture of the Corporation’s interest rate risk profile. Most assets and liabilities reprice either at maturity or in accordance with their contractual terms. However, the Corporation adjusts its balance sheet components to more accurately reflect repricing and cash flow behavior. Assumptions based on historical pricing relationships and anticipated market reactions are made to certain core deposit categories to reflect the elasticity of the changes in the related interest rates relative to changes in market interest rates. In addition, estimates are made concerning early loan and security repayments. Prepayment assumptions are based on the expertise of portfolio managers along with input from financial markets. Consideration is given to current and future interest rate levels.

Interest rate sensitivity is measured as a percentage of earning assets. The operating range for interest rate sensitivity, on an elasticity-adjusted basis, is between an asset sensitive position of 10 percent of earning assets and a liability sensitive position of 10 percent of earning assets.

At December 31, 2002, the one-year interest sensitivity gap, reflecting contractual repricing and payment schedules of assets and liabilities as well as adjustments for core deposit elasticities and early loan and security repayments, was in an asset sensitive position of $3.5 billion, or seven percent of earning assets. Management has taken steps to reduce this position, including outstanding commitments to purchase investment securities for the available for sale portfolio of $575 million at December 31, 2002 and additional commitments to purchase $900 million in the first half of January 2003. The one-year interest sensitivity gap at December 31, 2001 was $1.5 billion liability sensitive, or three percent of earning assets.

Management anticipates balance sheet growth in 2003 to continue to add asset sensitivity, and will analyze both on- and off-balance sheet alternatives to achieve the desired interest rate risk profile for the Corporation.

The Corporation utilizes investment securities and derivative instruments, predominantly interest rate swaps, as asset and liability management tools with the overall objective of mitigating the adverse impact to net interest income from changes in interest rates. These swaps primarily modify the interest rate characteristics of certain assets and liabilities (e.g., from a floating rate to a fixed rate, from a fixed rate to a floating rate, or from one floating rate index to another). This strategy assists management in achieving interest rate objectives.

RISK MANAGEMENT DERIVATIVE FINANCIAL INSTRUMENTS AND FOREIGN EXCHANGE CONTRACTS

RISK MANAGEMENT NOTIONAL ACTIVITY
(in millions)


	Interest			Foreign
	Rate			Exchange
	Contracts			Contracts			Totals

Balance at January 1, 2001	$	18,652		$	608		$	19,260
Additions		8,255			13,797			22,052
Maturities/amortizations		(6,330	)		(13,585	)		(19,915	)
Terminations		(6,080	)		—			(6,080	)

Balance at December 31, 2001	$	14,497		$	820		$	15,317
Additions		4,014			16,433			20,447
Maturities/amortizations		(4,909	)		(16,515	)		(21,424	)

Balance at December 31, 2002	$	13,602		$	738		$	14,340

The notional amount of risk management interest rate swaps totaled $13.6 billion at December 31, 2002, and $14.5 billion at December 31, 2001. The fair value of risk management interest rate swaps was an asset of $740 million at December 31, 2002, compared to an asset of $571 million at December 31, 2001.

For the year ended December 31, 2002, risk management interest rate swaps generated $460 million of net interest income, compared to $238 million of net interest income for the year ended December 31, 2001. The higher swap income for 2002 over 2001 was primarily due to significantly lower pay rates on swaps with fixed receivables.

Table 11 on page 39 summarizes the expected maturity distribution of the notional amount of risk management interest rate swaps and provides the weighted average interest rates associated with amounts to be received or paid as of December 31, 2002. Swaps have been grouped by the asset and liability designation.

In addition to interest rate swaps, the Corporation employs various other types of derivatives and foreign exchange contracts to mitigate exposures to interest rate and foreign currency risks associated with specific assets and liabilities (e.g., loans or deposits denominated in foreign currencies). Such instruments include interest rate caps and floors, purchased put options, foreign exchange forward contracts and foreign exchange swap agreements. The aggregate notional amounts of these risk management derivatives and foreign exchange contracts at December 31, 2002 and 2001, were $738 million and $820 million, respectively.

Further information regarding risk management financial instruments and foreign currency exchange contracts is provided in Notes 1, 12, and 22 to the consolidated financial statements on pages 50, 57 and 65, respectively.

CUSTOMER — INITIATED AND OTHER DERIVATIVE FINANCIAL INSTRUMENTS AND FOREIGN EXCHANGE CONTRACTS

CUSTOMER — INITIATED AND OTHER NOTIONAL ACTIVITY
(in millions)


	Interest			Foreign
	Rate			Exchange
	Contracts			Contracts			Totals

Balance at January 1, 2001	$	870		$	1,877		$	2,747
Additions		1,485			48,426			49,911
Maturities/amortizations		(471	)		(47,614	)		(48,085	)
Terminations		(186	)		—			(186	)

Balance at December 31, 2001	$	1,698		$	2,689		$	4,387
Additions		771			46,725			47,496
Maturities/amortizations		(725	)		(47,643	)		(48,368	)

Balance at December 31, 2002	$	1,744		$	1,771		$	3,515

The Corporation writes interest rate caps and enters into foreign exchange contracts and interest rate swaps to accommodate the needs of customers requesting such services. Customer-initiated activity represented 19 percent at December 31, 2002, and 22 percent at December 31, 2001, of total derivative and foreign exchange contracts, including commitments to purchase and sell securities. Refer to Notes 1 and 22 of the consolidated financial statements on pages 50 and 65, respectively, for further information regarding customer-initiated and other derivative financial instruments and foreign exchange contracts.

CONTRACTUAL OBLIGATIONS
(in millions)

Minimum Payments Due by Period

Less than

1-3

3-5

More than

December 31, 2002

Total

1 year

years

5 years

Deposits without a stated maturity

32,485

—

Certificates of deposits and other deposits with a stated maturity

9,290

8,208

771

181

130

Short-term borrowings

540

—

Medium- and long-term debt

4,949

1,090

935

1,274

1,650

Operating leases

284

Other long-term obligations

230

171

Total contractual obligations

47,778

42,402

1,833

1,530

2,013

COMMERCIAL COMMITMENTS
(in millions)


		Expected Expiration Dates by Period

				Less than		1-3		3-5		More than
December 31, 2002		Total		1 year		years		years		5 years

Commitments to purchase investment securities		$	581	$	581	$	—	$	—	$	—
Commitments to sell investment securities			4		4		—		—		—
Commitments to fund private equity and venture capital investments			82		—		—		1		81
Unused commitments to extend credit			27,377		14,244		8,568		2,730		1,835
Standby letters of credit and financial guarantees			5,545		3,877		1,070		501		97
Commercial letters of credit			241		229		9		3		—
Credit default swaps			11		11		—		—		—

	Total commercial commitments	$	33,841	$	18,946	$	9,647	$	3,235	$	2,013

LIQUIDITY RISK

Liquidity is the ability to meet financial obligations through the maturity or sale of existing assets or acquisition of additional funds. The Corporation has various financial obligations, including contractual obligations and commercial commitments, that require future cash payments. The contractual obligations table above summarizes the Corporation’s noncancelable contractual obligations and future required minimum payments. Refer to Notes 7 and 12 of the financial statements on pages 55 and 57, respectively, for a further discussion of these contractual obligations.

The Corporation also has other commercial commitments that impact liquidity. These commitments include commitments to purchase and sell earning assets, commitments to fund venture capital investments, unused commitments to extend credit, standby letters of credit and financial guarantees, commercial letters of credit and credit default swaps. The commercial commitments table above summarizes the Corporation’s commercial commitments and expected expiration dates by period.

Since many of these commitments expire without being drawn upon, the total amount of these commercial commitments does not necessarily represent the future cash requirements of the Corporation. Refer to the “Market Risk” section of this financial review on page 42 and Note 22 of the consolidated financial statements on page 65 for a further discussion of these commercial commitments.

Liquidity requirements are satisfied with various funding sources. First, the Corporation accesses the purchased funds market each day to meet funding needs. Purchased funds at December 31, 2002, comprised of certificates of deposit of $100,000 and over that mature in less than one year, foreign office time deposits and short-term borrowings, approximated $6.0 billion. Second, a $15 billion medium-term note program allows the Michigan, California and Texas banks to issue debt with maturities between one month and 15 years. The Michigan bank has an additional $2 billion European note program. At year-end 2002, unissued debt relating to the two programs totaled $15.0 billion. A third source, if needed, would be liquid assets, cash and due from banks, short-term investments and investment securities available for sale, which totaled $7.4 billion at December 31, 2002. Additionally, the Corporation also had available $17 billion from a collateralized borrowing account with the Federal Reserve Bank at December 31, 2002.

The parent company had available a $250 million commercial paper facility at December 31, 2002, $120 million of which was unused. Another source of liquidity for the parent company is dividends from its subsidiaries. As discussed in Note 21 to the financial statements on page 64, subsidiary banks are subject to regulation and may be limited in their ability to pay dividends or transfer funds to the holding company. During 2003, the subsidiary banks can pay dividends up to $101 million plus current year net profits without prior regulatory approval. One measure of current parent company liquidity is investment in subsidiaries as a percentage of shareholders’ equity. An amount over 100 percent represents the reliance on subsidiary dividends to repay liabilities. As of December 31, 2002, the ratio was 110 percent.

The Corporation regularly evaluates its ability to meet funding needs in unanticipated, stress environments. In conjunction with the quarterly 200 basis point interest rate shock analysis, discussed in the Interest Rate Sensitivity section on page 38 of this financial review, liquidity ratios and potential funding availability are examined. Each quarter, the Corporation also evaluates liquidity needs assuming a significant immediate increase in loan commitment usage. The Corporation is within its established liquidity parameters under both of these measures. A contingent liquidity analysis is also performed quarterly, which evaluates the Corporation’s ability to meet liquidity needs under a series of severe events, such as rating downgrades. As part of the program to enhance the Corporation’s risk management capabilities, the Corporation plans to expand its liquidity analysis and reporting in 2003.

MARKET RISK

The Corporation’s market risk related to trading instruments is not significant, as trading activities are limited. Certain of the Corporation’s noninterest income, including fiduciary income, investment advisory revenue and brokerage fees are at risk to changes in equity markets and to fluctuations in the market value of assets managed.

The Corporation also has a portfolio of direct and indirect (through funds) private equity and venture capital investments, and has made commitments to fund additional investments in future periods. These investments are at risk to changes in equity markets, general economic conditions and many other factors. The majority of these investments are not marketable, and are included in other assets. The investments are individually reviewed for impairment on a quarterly basis, by comparing the carrying value to the estimated fair value. Fair value is generally estimated by reviewing information provided by the investee, and obtained through other public sources where available. The lack of an independent source to validate fair value estimates is an inherent limitation in the valuation process. The amount by which the carrying value exceeds the fair value, that is determined to be other than temporary impairment, is charged to current earnings and the carrying value of the investment is written down accordingly. The total write downs on direct and indirect private equity and venture capital investments in 2002 was $18 million, which was partially offset by $8 million of income recognized on such investments in 2002. For those investments deemed impaired, the exposure is limited to the amount of that investment. No generic assumption is applied to all investments when evaluating for impairment. The chart below provides information on the Corporation’s total portfolio.

DIRECT AND INDIRECT PRIVATE EQUITY AND VENTURE CAPITAL INVESTMENTS
(dollars in millions)

December 31, 2002

Direct

Indirect

Total

Balance

127

129

Number

110

113

Largest single investment

In 2002, the Corporation adopted the fair value recognition provisions of SFAS No. 123, “Accounting for Stock Based Compensation”, to be applied prospectively to all new stock-based compensation awards granted to employees after December 31, 2001. Under SFAS No. 123, the fair value of stock-based compensation as of the date of grant is recognized as compensation expense on a straight-line basis over the vesting period. The fair value of stock options is estimated on the date of grant using an option valuation model that requires several inputs. The option valuation model is sensitive to the market price of the Corporation’s stock at the grant date, which affects the fair value estimates and therefore the amount of expense recorded on future grants. Using the number of stock options granted in 2002, and the Corporation’s stock price at December 31, 2002, each $5.00 per share increase in stock price would result in an increase in pretax expense of approximately $4 million over the options’ vesting period. Refer to Notes 1 and 16 of the consolidated financial statements on pages 50 and 59, respectively, for further discussion of the adoption of SFAS No. 123.

OPERATIONAL RISK

The Corporation, in its capacity as financial intermediary, is subject to the risk of loss resulting from inadequate or failed internal processes, people and systems, including legal risks, or from external events. Many of these losses may manifest themselves as explicit charges, while others may be identified only through increased operational costs or foregone opportunities. Although operational losses are experienced by all companies and are routinely incurred in business operations, the Corporation recognizes that the identification and control of such operational losses is a paramount concern and seeks to limit their impact to a level deemed appropriate by management after considering the nature of the Corporation’s business and the environment in which it operates. Operational risk is mitigated through a system of internal controls that are designed to keep operating risks at appropriate levels. The Corporation has established an Operational Risk Management Committee, which includes members of executive management, to ensure appropriate risk management techniques and systems are maintained. In addition, the Corporation’s internal audit and financial staff monitors and assesses the overall effectiveness of the system of internal controls on an ongoing basis. Internal audit reports the results of reviews on the controls and systems to management and the Audit and Legal Committee of the Board of Directors.

The internal audit staff independently supports the Audit and Legal Committee oversight process. The Audit and Legal Committee serves as an independent extension of the Board of Directors. Routine and special meetings are scheduled periodically to provide more detail on relevant operations risks.

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 on page 50 in Note 1 to the consolidated financial statements. 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. The most critical of these significant accounting policies are reviewed with the Audit and Legal Committee of the Corporation’s Board of Directors and are discussed more fully below.

ALLOWANCE FOR LOAN LOSSES

The allowance for loan losses is calculated with the objective of maintaining a reserve sufficient to absorb estimated probable loan losses. Management’s determination of the adequacy of the allowance is based on periodic evaluations of the loan portfolio and other relevant factors. However, this evaluation is inherently subjective as it requires an estimate of the loss content for each risk rating and for each impaired loan, an estimate of the amounts and timing of expected future cash flows, and an estimate of the value of collateral, including the market value of thinly traded or nonmarketable equity securities.

Loans for which it is probable that payment of interest and principal will not be made in accordance with the contractual terms of the loan agreement are considered impaired. Consistent with this definition, all nonaccrual and reduced rate loans are impaired. The fair value of impaired loans is estimated using one of several methods, including collateral value, market value of similar debt, enterprise value, liquidation value and discounted cash flows. The valuation is reviewed and updated each quarter. While the determination of fair value may involve estimates, each estimate is unique to the individual loan, and none is individually significant.

The portion of the allowance allocated to the remaining loans is determined by applying projected loss ratios to loans in each risk category. Projected loss ratios incorporate factors such as recent charge-off experience, current economic conditions and trends, and trends with respect to past due and nonaccrual amounts. Since a loss ratio is applied to a large portfolio of loans, any variation between actual and assumed results could be significant. In addition, a portion of the allowance is allocated to these remaining loans based on industry specific and geographic risks inherent in certain portfolios, including portfolio exposures to the developing high technology and entertainment industries, regional economic risks and Latin American transfer risks.

An unallocated allowance is also maintained to cover factors affecting the determination of probable losses inherent in the loan portfolio that are not necessarily captured by projected loss ratios or identified industry specific and geographic risk. The unallocated allowance considers the imprecision in the risk rating system and the risk associated with new customer relationships.

The principal assumption used in deriving the allowance for loan losses is the estimate of loss content for each risk rating. To illustrate, if recent loss experience dictated that the projected loss ratios would be changed by five percent (of the estimate) across all risk ratings, the allocated allowance as of December 31, 2002 would change by approximately $15 million. For further discussion of the methodology used in the determination of the allowance for loan losses, refer to the discussion of “Provision and Allowance for Loan Losses” in the Financial Review section on page 27, and Note 1 to the consolidated financial statements on page 50. To the extent actual outcomes differ from management estimates, additional provision for loan losses may be required that would adversely impact earnings in future periods. A substantial majority of the allocated allowance is assigned to business segments. Any earnings impact resulting from actual outcomes differing from management estimates would primarily affect the Business Bank segment. The unallocated allowance for loan losses is not assigned to business segments, and any earnings impact resulting from actual outcomes differing from management estimates would primarily affect the Other category in segment reporting.

PENSION PLAN ACCOUNTING

The Corporation has defined benefit plans in effect for substantially all employees. Benefits under the plans are based on years of service, age and compensation. Assumptions are made concerning future events that will determine the amount and timing of required benefit payment and pension expense (income). The three major assumptions are the discount rate used in determining the current benefit obligation, the long-term rate of return expected on plan assets and the rate of compensation increase. The assumed discount rate is based on quoted rates for 10-year, Aa-rated (by Moody’s Investors Service) corporate debt instruments in December, the last month prior to the year of recording the expense. The second assumption, long-term rate of return expected on plan assets, is set after considering both long-term returns in the general market and long-term returns experienced by the assets in the plan. The current asset allocation model for the plans is 50-70 percent equity securities, 30-50 percent fixed income securities, 0-20 percent cash investments and 0-10 percent other assets. At year-end 2002, equity securities and fixed income securities were slightly below the model ranges due to a large cash contribution in late December 2002 that was placed in cash investments. The returns on these various asset categories are blended to derive one long-term return assumption. The assets are invested in certain collective investment funds and mutual investment funds administered by Munder Capital Management, equity securities, U.S. government and agency securities, corporate bonds and notes and a real estate investment trust. The third assumption, rate of compensation increase, is based on reviewing recent annual pension-eligible compensation increases as well as the expectation of the next year’s increase. The Corporation reviews its pension plan assumptions on an annual basis with its asset manager and actuaries to determine if the assumptions are reasonable and adjusts the assumptions to reflect changes in future expectations.

The key actuarial assumptions that will be used to calculate 2003 expense for the defined benefit pension plans are a discount rate of 6.75%, a long-term rate of return on assets of 8.75%, and a rate of compensation increase of 4.50%. As a result of changes in assumptions and other factors, pension expense in 2003 is expected to increase approximately $25 million from 2002 levels.

Changing the 2003 key assumptions in 25 basis point increments would have had the following impact on pension expense:

KEY ASSUMPTIONS
(in millions)



Discount rate	$	1.8
Long-term rate of return		2.0
Rate of compensation		0.2

If the assumed long-term return on assets differs from the actual return on assets, the difference is amortized on a straight-line basis over a period of five years to the extent the cumulative differences are less than ten percent of the greater of the projected benefit obligation or the market-related value of plan assets. Any differences greater than ten percent at the beginning of the year are recognized and included as a component of net pension cost for that year. The Employee Benefits Committee, which is comprised of executive and senior managers from various areas of the Corporation, provides broad asset allocation guidelines to the asset manager, who reports results and investment strategy quarterly to the Committee. Asset allocations for the investment returns are compared to expected results based on broad market indices for each class of investment.

Note 17 on page 60 to the consolidated financial statements contains a table showing funded status at year-end. As can be seen from that table, the actuarial loss in the qualified plan at December 31, 2002 increased to $294 million, compared to a loss of $103 million at December 31, 2001. As noted above, unless recovered in the market, this loss will be amortized to pension expense over five years. In 2002, the Corporation contributed $175 million to the qualified plan to mitigate the impact of these actuarial losses on future years. Additional contributions, to the extent allowable by law, may be made to further mitigate these losses. For the foreseeable future, the Corporation has sufficient liquidity to make such payments.

Pension expense is recorded in salaries and employee benefits in the consolidated statements of income, and is allocated to segments based on the segment’s share of salaries expense. Given the salaries expense included in segment results in 2002, pension expense was allocated approximately 42%, 38%, 19% and 1% to the Business Bank, Individual Bank, Investment Bank and Finance segments, respectively, in 2002.

Depending on the funded status of a pension plan, a significant increase in the underlying benefit obligation can result in the recognition of a minimum pension liability and a charge to other

comprehensive income. Due to the underfunded status of the nonqualified defined benefit pension plan at December 31, 2002, based on the accumulated benefit obligation, the Corporation recorded a $21 million minimum pension liability and a charge to other comprehensive income in 2002. An additional $4 million charge to other comprehensive income in 2002 resulted from the underfunded status in the plan of an unconsolidated subsidiary.

GOODWILL

Goodwill arising from business acquisitions represents the value attributable to unidentifiable intangible elements in the business acquired. The fair value of goodwill is dependent upon many factors, including the Corporation’s ability to provide quality, cost effective services in the face of competition from other market leaders on a national and global basis. A decline in earnings as a result of business or market conditions, a lack of growth or the Corporation’s inability to deliver cost effective services over sustained periods can lead to impairment of goodwill which could adversely impact earnings in future periods.

The majority of the Corporation’s goodwill relates to the acquisition premiums recorded when purchasing asset management and banking businesses. Goodwill is reviewed periodically for impairment by comparing the fair value of the reporting unit containing the goodwill to the book value of the reporting unit, including goodwill. If the book value is in excess of the fair value, impairment is indicated and the goodwill must be written down to its fair value.

The fair value of reporting units is derived through use of internal valuation models for all units except the asset management reporting unit, which is part of the Investment Bank segment. Inherent in these internal valuation models are assumptions related to the cash flows expected to be generated by reporting units, which are based on historical and projected growth expectations for reporting units, and on market multiples derived from sales of assets similar to those included in the reporting units. Cash flows are discounted using a risk-free rate plus a spread that incorporates long term equity risk. The valuation for the asset management reporting unit is based on an independent valuation prepared by an investment banker not affiliated with the Corporation.

In accordance with the Corporation’s adoption of the new goodwill accounting rules (SFAS No.142), the Corporation performed the first required impairment test of goodwill as of January 1, 2002. Based on this test, the Corporation was not required to record any impairment upon adoption. At July 1, 2002, the Corporation’s annual valuation date, goodwill was again tested for impairment and a third quarter 2002 impairment charge of $86 million was recorded at the Corporation’s asset management reporting unit (Munder). For a further discussion of the Corporation’s goodwill and the impairment charge, refer to Note 8 to the consolidated financial statements on page 55.

The valuation model for the asset management reporting unit includes, among others, estimates of a discount rate, market growth and new business growth assumptions. The following describes the estimated sensitivities to these assumptions, based on the most recent independent valuation.

The discount rate assumptions used in the valuation model were 14% for Munder and 10% for Framlington (Munder’s U.K. unconsolidated subsidiary). Increasing each of the discount rates by 200 basis points would result in a decrease in the valuation of approximately $10 million at the midpoint of the valuation range. The market growth rate assumptions used were approximately 8% for equity, 4% for fixed and 3% for cash investments. Decreasing the market growth rates by 50% would result in a decrease in the valuation of approximately $20 million at the midpoint of the valuation range. The new business growth assumption used was approximately 6% (compound annual growth rate) and the redemption (business attrition) rate used was approximately 1%. Decreasing the new business growth assumption and increasing the redemption rate by 10% would result in a combined decrease in the valuation of approximately $22 million.

In addition, the valuation model uses a market valuation for comparable companies (market multiples). While the market multiple is not an assumption, a presumption that it provides an indicator of the value of the asset management reporting unit is inherent in the valuation.

The fair value estimate is updated whenever there are indicators of impairment. At December 31, 2002, management estimates that it would take a decline in the fair value of the asset management reporting unit of $50 million to trigger impairment.

OTHER MATTERS

In the third quarter 2002, the Corporation restated second quarter 2002 earnings to reflect additional provision for loan losses and credit losses on lending-related commitments of $40 million ($26 million after-tax) and $22 million of additional net charge-offs. Including the related effect of lower incentive compensation of $5 million ($3 million after-tax), second quarter 2002 earnings, as adjusted for the third quarter 2002 retroactive adoption of SFAS No. 123, were reduced to $157 million, or $0.88 per diluted share, compared to $180 million, or $1.01 per diluted share, as adjusted for the adoption of SFAS No. 123. Refer to Notes 1 and 16 to the consolidated financial statements on pages 50 and 59, respectively, for further information on the adoption of SFAS No. 123. This additional provision followed a regularly scheduled examination by the Federal Reserve Bank of San Francisco and the California Department of Financial Institutions of the Comerica Bank-California subsidiary. After discussions with the regulators in late August through late September 2002, the Corporation determined that the California subsidiary’s second quarter 2002 credit loss reserves and net charge-offs should be increased. The additional net charge-offs relate to 11 loans in the Corporation’s entertainment division, 5 loans in the commercial middle market area and one overdraft relating to a commercial middle market loan.

The components of the additional provision were as follows:


(in millions)
Provision, net of specific reserves, to cover $22 million in additional charge-offs relating to 15 non-accruing loans,1 substandard accruing loan and 1 overdraft		$	6
Additional reserve amounts on loans in the California subsidiary’s portfolio with various risk ratings, but primarily watch list in nature			20
An increase of the unallocated reserve for performing loans			14

	Total additional provision	$	40

review in the course of the regulatory examination process, the Corporation subsequently concluded that the 16 loans and one over-draft referenced above should properly be reflected as second quarter (as opposed to third quarter) charge-offs. Similarly, loan classifications and the setting of specific reserves involve a degree of judgment. The Corporation has a comprehensive program for reviewing loans throughout its portfolio of approximately 11,000 commercial loans on a regular ongoing basis. The reclassification and resetting of reserves for a number of loans in the second quarter reflects the further review and adjustment of the credit risk associated with the Corporation’s California portfolio, which the Corporation implemented following the input it received in the course of the above-referenced regulatory examination. Similarly, the increase in the unallocated reserve for the second quarter reflects an additional weighting of risk based on the general characteristics of the California loan portfolio which stems in large part from the general migration of loans to higher risk categories and the corresponding impact on the assessment of the overall character of the California portfolio. The Corporation uses quantitative metrics and qualitative factors to validate its loan loss reserves and allowances for credit risks, including loan categories, industry, economic factors and trends, transfer risks, risks associated with new customers, historical loss ratios, industry norms and expectations from banking regulators. As part of its on-going evaluation of its allowance for loan loss methodology, including following the recent regulatory examination, the Corporation has refined the factors which comprise the allocated and unallocated portions of its allowances and examined its credit quality processes to help ensure timely and appropriate charge-offs and risk analyses, ratings and profiles. The Corporation has recently increased the amount of senior staff supporting its credit process, is improving the documentation and technology tools used as part of the credit process, has increased its focus on factors particular to the California market and included an assessment of these factors in the establishment of an allocated reserve. Refer to Note 30 to the consolidated financial statements on page 75 for additional information on the restatement of previously reported quarterly results of operations.

FORWARD-LOOKING STATEMENTS

This Report contains statements (including, without limitation, statements in “Financial Review,” included in this Report) that are considered “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. Forward-looking statements, including statements as to industry trends, future expectations of the Corporation and other matters that do not relate strictly to historical facts, are based on certain assumptions by management. Forward-looking statements are often identified by words or phrases such as “anticipate,” “believe,” “expect,” “intend,” “seek,” “plan,” “objective,” “trend” and “goal.” Forward-looking statements are subject to various assumptions, risks and uncertainties, which change over time. Forward-looking statements speak only as of the date they are made, and the Corporation undertakes no obligation to update any forward-looking statements. Actual results could differ materially from those anticipated in forward-looking statements and future results could differ materially from historical performance.

• general political and economic conditions, either domestically or internationally, may be less favorable than expected;

• Latin America may continue to experience economic, political and social uncertainties;

• developments concerning credit quality in various industry sectors may result in an increase in the level of the Corporation’s provision for credit losses, nonperforming assets, net charge-offs and reserve for credit losses;

• domestic demand for commercial loan and investment advisory products may continue to be weak;

• customer borrowing, repayment, investment and deposit practices generally may be less favorable than anticipated;

• interest rate and currency fluctuations, equity and bond market fluctuations, and inflation may be greater than expected;

• the mix of interest rates and maturities of the Corporation’s interest earning assets and interest bearing liabilities (primarily loans and deposits) may be less favorable than expected;

• global capital markets in general, and the technology industry in particular, may continue to exhibit weakness, adversely affecting the Corporation’s investment advisory business line, as well as the Corporation’s private banking and brokerage business lines, and the availability and terms of funding necessary to meet the Corporation’s liquidity needs;

• the introduction, withdrawal, success and timing of business initiatives and strategies;

• competitive product and pricing pressures among financial institutions within the Corporation’s markets may increase;

• legislative or regulatory developments, including changes in laws or regulations concerning taxes, banking, securities, capital requirements and risk-based capital guidelines, reserve methodologies, deposit insurance and other aspects of the financial services industry, may adversely affect the businesses in which the Corporation is engaged or the Corporation’s financial results;

• legal and regulatory proceedings and related matters with respect to the financial services industry, including those directly involving the Corporation and its subsidiaries, could adversely affect the Corporation or the financial services industry generally;

• pending and proposed changes in accounting rules, policies, practices and procedures could adversely affect the Corporation’s financial results;

• instruments and strategies used to hedge or otherwise manage exposure to various types of market and credit risk could be less effective than anticipated, and the Corporation may not be able to effectively mitigate its risk exposures in particular market environments or against particular types of risk;

• terrorist activities or other hostilities, which may adversely affect the general economy, financial and capital markets, specific industries, and the Corporation; and

• technological changes, including the impact of the internet on the Corporation’s businesses, may be more difficult or expensive than anticipated.

CONSOLIDATED BALANCE SHEETS

COMERICA INCORPORATED AND SUBSIDIARIES


(in millions, except share data)
December 31			2002			2001

ASSETS
Cash and due from banks			$	1,902		$	1,925
Short-term investments				2,446			1,079
Investment securities available for sale				3,053			4,291
Commercial loans				25,242			25,176
International loans				2,765			3,015
Real estate construction loans				3,457			3,258
Commercial mortgage loans				7,194			6,267
Residential mortgage loans				789			779
Consumer loans				1,538			1,484
Lease financing				1,296			1,217

		Total loans		42,281			41,196
Less allowance for loan losses				(791	)		(637	)

		Net loans		41,490			40,559
Premises and equipment				371			353
Customers’ liability on acceptances outstanding				33			29
Accrued income and other assets				4,006			2,514

		Total assets	$	53,301		$	50,750

LIABILITIES AND SHAREHOLDERS’ EQUITY
Noninterest-bearing deposits			$	16,335		$	12,596
Interest-bearing deposits				25,440			24,974

		Total deposits		41,775			37,570
Short-term borrowings				540			1,986
Acceptances outstanding				33			29
Accrued expenses and other liabilities				790			855
Medium- and long-term debt				5,216			5,503

		Total liabilities		48,354			45,943
Common stock – $5 par value:
	Authorized – 325,000,000 shares Issued – 178,735,252 shares at 12/31/02 and 178,749,198 shares at 12/31/01			894			894
Capital surplus				363			336
Unearned employee stock ownership plan stock – 131,954 shares at 12/31/01				—			(5	)
Accumulated other comprehensive income				237			225
Retained earnings				3,684			3,448
Less cost of common stock in treasury – 3,960,149 shares at 12/31/02 and 1,674,659 shares at 12/31/01				(231	)		(91	)

	Total shareholders’ equity			4,947			4,807

		Total liabilities and shareholders’ equity	$	53,301		$	50,750

See notes to consolidated financial statements.

CONSOLIDATED STATEMENTS OF INCOME

COMERICA INCORPORATED AND SUBSIDIARIES


(in millions, except per share data)
Years Ended December 31		2002		2001			2000

INTEREST INCOME
Interest and fees on loans		$	2,524	$	3,121		$	3,379
Interest on investment securities			246		246			259
Interest on short-term investments			27		26			78

	Total interest income		2,797		3,393			3,716

INTEREST EXPENSE
Interest on deposits			479		888			951
Interest on short-term borrowings			37		105			215
Interest on medium- and long-term debt			149		298			546

	Total interest expense		665		1,291			1,712

	Net interest income		2,132		2,102			2,004
Provision for loan losses			635		241			251

	Net interest income after provision for loan losses		1,497		1,861			1,753

NONINTEREST INCOME
Service charges on deposit accounts			227		211			189
Fiduciary income			171		180			181
Commercial lending fees			69		67			61
Letter of credit fees			60		58			52
Foreign exchange income			40		35			27
Brokerage fees			38		44			44
Investment advisory revenue, net			27		12			119
Bank-owned life insurance			53		33			23
Equity in earnings of unconsolidated subsidiaries			8		(43	)		14
Warrant income			5		5			30
Securities gains			41		20			16
Net gain on sales of businesses			12		31			50
Other noninterest income			149		184			174

	Total noninterest income		900		837			980

NONINTEREST EXPENSES
Salaries and employee benefits			844		842			874
Net occupancy expense			122		115			110
Equipment expense			62		70			76
Outside processing fee expense			65		61			59
Customer services			26		41			37
Goodwill impairment			86		—			—
Restructuring charges			—		152			—
Other noninterest expenses			310		306			355

	Total noninterest expenses		1,515		1,587			1,511

Income before income taxes			882		1,111			1,222
Provision for income taxes			281		401			431

NET INCOME		$	601	$	710		$	791

Net income applicable to common stock		$	601	$	698		$	774

Basic net income per common share		$	3.43	$	3.93		$	4.38
Diluted net income per common share			3.40		3.88			4.31

Cash dividends declared on common stock			335		313			250
Dividends per common share			1.92		1.76			1.60

See notes to consolidated financial statements.

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

COMERICA INCORPORATED AND SUBSIDIARIES


(in millions, except share data)
											Unearned
		Non-									Employee			Accumulated
		redeemable									Stock			Other									Total
		Preferred			Common			Capital			Ownership			Comprehensive			Retained			Treasury			Shareholders'
		Stock			Stock			Surplus			Plan Shares			Income			Earnings			Stock			Equity

BALANCE AT JANUARY 1, 2000		$	250		$	890		$	204		$	(4	)	$	(22	)	$	2,677		$	(47	)	$	3,948
Net income			—			—			—			—			—			791			—			791
Other comprehensive income, net of tax			—			—			—			—			34			—			—			34

Total comprehensive income			—			—			—			—			—			—			—			825
Cash dividends declared:
	Preferred stock		—			—			—			—			—			(17	)		—			(17	)
	Common stock		—			—			—			—			—			(250	)		—			(250	)
Purchase and retirement of 930,212 shares of common stock			—			(5	)		(32	)		—			—			—			—			(37	)
Purchase of 353,547 shares of common stock			—			—			—			—			—			—			(14	)		(14	)
Common stock dividend			—			—			85			—			—			(85	)		—			—
Net issuance of common stock under employee stock plans			—			3			19			(3	)		—			(30	)		45			34
Recognition of stock-based compensation expense			—			—			11			—			—			—			—			11

BALANCE AT DECEMBER 31, 2000		$	250		$	888		$	287		$	(7	)	$	12		$	3,086		$	(16	)	$	4,500
Net income			—			—			—			—			—			710			—			710
Other comprehensive income, net of tax			—			—			—			—			213			—			—			213

Total comprehensive income			—			—			—			—			—			—			—			923
Redemption of preferred stock			(250	)		—			—			—			—			—			—			(250	)
Cash dividends declared:
	Preferred stock		—			—			—			—			—			(12	)		—			(12	)

	Common stock		—			—			—			—			—			(313	)		—			(313	)
Purchase of 2,198,700 shares of common stock			—			—			—			—			—			—			(121	)		(121	)
Net issuance of common stock under employee stock plans			—			6			35			2			—			(23	)		46			66
Recognition of stock-based compensation expense			—			—			14			—			—			—			—			14

BALANCE AT DECEMBER 31, 2001		$	—		$	894		$	336		$	(5	)	$	225		$	3,448		$	(91	)	$	4,807
Net income			—			—			—			—			—			601			—			601
Other comprehensive income, net of tax			—			—			—			—			12			—			—			12

Total comprehensive income			—			—			—			—			—			—			—			613
Cash dividends declared on common stock			—			—			—			—			—			(335	)		—			(335	)
Purchase of 3,536,300 shares of common stock			—			—			—			—			—			—			(210	)		(210	)
Net issuance of common stock under employee stock plans			—			—			5			5			—			(30	)		70			50
Recognition of stock-based compensation expense			—			—			22			—			—			—			—			22

BALANCE AT DECEMBER 31, 2002		$	—		$	894		$	363		$	—		$	237		$	3,684		$	(231	)	$	4,947

See notes to consolidated financial statements.

CONSOLIDATED STATEMENTS OF CASH FLOWS

COMERICA INCORPORATED AND SUBSIDIARIES


(in millions)
Years Ended December 31			2002			2001			2000

OPERATING ACTIVITIES
Net income			$	601		$	710		$	791
Adjustments to reconcile net income to net cash provided by operating activities
	Provision for loan losses			635			241			251
	Depreciation			57			63			71
	Net amortization of intangibles			4			34			37
	Merger-related and restructuring charges			(8	)		55			—
	Gain on sales of investment securities available for sale			(41	)		(20	)		(16	)
	Net gain on sales of businesses			(12	)		(31	)		(50	)
	Contribution to pension plan fund			(175	)		(37	)		—
	Goodwill impairment			86			—			—
	Net decrease (increase) in trading securities			71			3			(13	)
	Net decrease (increase) in loans held for sale			118			(130	)		(33	)
	Net decrease (increase) in accrued income receivable			45			134			(81	)
	Net (decrease) increase in accrued expenses			(19	)		35			110
	Other, net			(134	)		(117	)		(156	)

		Total adjustments		627			230			120

		Net cash provided by operating activities		1,228			940			911

INVESTING ACTIVITIES
Net (increase) decrease in other short-term investments				(1,436	)		779			174
Proceeds from sales of investment securities available for sale				2,871			2,386			6,299
Proceeds from maturities of investment securities available for sale				2,042			1,304			827
Purchases of investment securities available for sale				(3,691	)		(4,189	)		(7,200	)
Increase in receivables for securities sold pending settlement				(1,110	)		—			—
Net increase in loans				(1,673	)		(1,222	)		(4,032	)
Fixed assets, net				(80	)		(68	)		(46	)
Purchase of bank-owned life insurance				(8	)		(107	)		—
Net (increase) decrease in customers’ liability on acceptances outstanding				(4	)		(2	)		17
Net cash provided by acquisition/sales of businesses				8			45			442

		Net cash used in investing activities		(3,081	)		(1,074	)		(3,519	)

FINANCING ACTIVITIES
Net increase in deposits				4,212			3,704			4,658
Net decrease in short-term borrowings				(1,446	)		(107	)		(831	)
Net increase (decrease) in acceptances outstanding				4			2			(17	)
Proceeds from issuance of medium- and long-term debt				1,106			2,081			6,104
Repayments of medium- and long-term debt				(1,555	)		(4,933	)		(6,605	)
Redemption of preferred stock				—			(250	)		—
Proceeds from issuance of common stock and other capital transactions				50			66			37
Purchase of common stock for treasury and retirement				(210	)		(121	)		(56	)
Dividends paid				(331	)		(314	)		(261	)

		Net cash provided by financing activities		1,830			128			3,029

Net (decrease) increase in cash and due from banks				(23	)		(6	)		421
Cash and due from banks at beginning of year				1,925			1,931			1,510

Cash and due from banks at end of year			$	1,902		$	1,925		$	1,931

Interest paid			$	693		$	1,420		$	1,718

Income taxes paid			$	244		$	344		$	379

Noncash investing and financing activities
		Loans transferred to other real estate	$	9		$	13		$	7
		Loans transferred to loans held for sale		120			—			—

See notes to consolidated financial statements.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

COMERICA INCORPORATED AND SUBSIDIARIES

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

ORGANIZATION

Comerica Incorporated is a registered financial holding company headquartered in Detroit, Michigan. The Corporation’s principal lines of business are the Business Bank, the Individual Bank and the Investment Bank. For further discussion of each line of business, refer to Note 26 on page 70. The core businesses are tailored to each of the Corporation’s four primary geographic markets: Michigan, Texas, California and Florida. The Corporation and its banking subsidiaries are regulated at both the state and federal levels.

The accounting and reporting policies of the Corporation conform to accounting principles generally accepted in the United States and prevailing practices within the banking industry. The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from these estimates.

The following summarizes the significant accounting policies of the Corporation applied in the preparation of the accompanying consolidated financial statements.

PRINCIPLES OF CONSOLIDATION

The consolidated financial statements include the accounts of the Corporation and its subsidiaries after elimination of all significant intercompany accounts and transactions. Prior years’ financial statements are reclassified to conform with current financial statement presentation. The Corporation consolidates all subsidiaries where it holds a majority (controlling) interest. The minority interest in less than 100% owned consolidated subsidiaries is not material, and is included in “accrued expenses and other liabilities” on the consolidated balance sheets. The related minority interest in earnings is also not material, and is included in “other noninterest expenses” on the consolidated statements of income.

Equity investments where the Corporation owns less than a majority (controlling) interest are not consolidated, and are accounted for using either the equity method or cost method. The equity method is used for investments in corporate joint venture and investments where the Corporation has the ability to exercise significant influence over the investee’s operation and financial policies, which is generally presumed to exist if the Corporation owns more than 20% of the voting stock of the investee. Equity method investments are included in “accrued income and other assets” on the consolidated balance sheets, with income and losses recorded in “equity in earnings of unconsolidated subsidiaries” on the consolidated statements of income. Equity investments that do not meet the criteria to be accounted for under the equity method are accounted for under the cost method. Cost method investments in publicly traded companies are included in “investment securities available for sale” on the consolidated balance sheets, with income and any required write downs recorded in “securities gains (losses)” on the consolidated statements of income. Cost method investments in non-publicly traded companies are included in “accrued income and other assets” on the consolidated balance sheets, with income and any required write-downs recorded in “other noninterest income” on the consolidated statements of income.

For acquisitions accounted for as pooling-of-interests combinations, the historical consolidated financial statements are restated to include the accounts and results of operations. Statement of Financial Accounting Standards (SFAS) No. 141, “Business Combinations” (issued June 2001), eliminated the pooling-of-interests method for acquisitions initiated after June 30, 2001. For acquisitions using the purchase method of accounting, the assets acquired and liabilities assumed are adjusted to fair market values at the date of acquisition, and the resulting net discount or premium is accreted or amortized into income over the remaining lives of the relevant assets and liabilities. Prior to 2002, goodwill representing the excess of cost over the net book value of identifiable assets acquired was amortized on a straight-line basis over periods ranging from 10 to 25 years (weighted average of 19 years). Beginning in 2002, as required by SFAS No. 142, “Goodwill and Other Intangible Assets” (issued June 2001), goodwill is no longer amortized, but is subject to annual impairment tests. Other intangible assets that do not have an indefinite life will continue to be amortized over its useful lives. Core deposit intangible assets are amortized on an accelerated method over 10 years. Refer to Note 8 on page 55 for further information on the adoption of SFAS No. 142.

IMPAIRMENT

The Corporation periodically evaluates long-lived assets, certain identifiable intangibles, deferred costs and goodwill for indication of impairment in value. When required, asset impairment is recorded.

SHORT-TERM INVESTMENTS

Short-term investments include interest-bearing deposits with banks, federal funds sold, securities purchased under agreements to resell, trading securities and loans held for sale.

Trading securities are carried at market value. Realized and unrealized gains or losses on trading securities are included in “other noninterest income” on the consolidated statements of income.

Loans held for sale, typically residential mortgages and Small Business Administration loans, are carried at the lower of cost or market. Market value is determined in the aggregate.

INVESTMENT SECURITIES

Investment securities held to maturity are those securities which the Corporation has the ability and management has the positive intent to hold to maturity. Investment securities held to maturity are stated at cost, adjusted for amortization of premium and accretion of discount.

Investment securities that fail to meet the ability and positive intent criteria are accounted for as securities available for sale, and stated at fair value, with unrealized gains and losses, net of income taxes, reported as a separate component of other comprehensive income.

Gains or losses on the sale of securities are computed based on the adjusted cost of the specific security sold.

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

PREMISES AND EQUIPMENT

Premises and equipment are stated at cost, less accumulated depreciation and amortization. Depreciation, computed on the straight-line method, is charged to operations over the estimated useful lives of the assets. The estimated useful lives are generally 10-33 years for premises that the company owns and 3-8 years for furniture and equipment. Leasehold improvements are amortized over the terms of their respective leases, or 10 years, whichever is shorter.

ALLOWANCE FOR LOAN LOSSES

The allowance for loan losses represents management’s assessment of probable losses inherent in the Corporation’s loan portfolio. The allowance provides for probable losses that have been identified with specific customer relationships and for probable losses believed to be inherent but that have not been specifically identified. Internal risk ratings are assigned to each business loan at the time of approval and are subject to subsequent periodic reviews by the senior management of the Corporation’s Credit Policy Group. The Corporation performs a detailed credit quality review quarterly on large business loans that have deteriorated below certain levels of credit risk, and allocates a specific portion of the allowance to such loans based upon this review. The Corporation defines business loans as those belonging to the commercial, international, real estate construction, commercial mortgage and lease financing categories. A portion of the allowance is allocated to the remaining business loans by applying projected loss ratios, based on numerous factors identified below, to the loans within each risk rating. In addition, a portion of the allowance is allocated to these remaining loans based on industry specific and geographic risks inherent in certain portfolios. The portion of the allowance allocated to consumer loans is determined by applying projected loss ratios to various segments of the loan portfolio. Projected loss ratios incorporate factors such as recent charge-off experience, current economic conditions and trends, and trends with respect to past due and nonaccrual amounts.

Management maintains an unallocated allowance to recognize the uncertainty and imprecision underlying the process of estimating expected loan losses. Determination of the probable losses inherent in the portfolio, which are not necessarily captured by the allocation methodology discussed above, involves the exercise of judgment. Factors that were considered in the evaluation of the adequacy of the Corporation’s unallocated allowance include the imprecision in the risk rating system and the risk associated with new customer relationships.

Management also considers industry norms and the expectations of rating agencies and banking regulators in determining the adequacy of the allowance. The total allowance, including the unallocated amount, is available to absorb losses from any segment within the portfolio. Unanticipated economic events, including political, economic and regulatory stability in countries where the Corporation has a concentration of loans, could cause changes in the credit characteristics of the portfolio and result in an unanticipated increase in the allocated allowance. Inclusion of other industry specific and geographic portfolio exposures in the allocated allowance, as well as significant increases in the current portfolio exposures could also increase the amount of the allocated allowance. Any of these events, or some combination, may result in the need for additional provision for loan losses in order to maintain an allowance that complies with credit risk and accounting policies.

Loans which are deemed uncollectible are charged off and deducted from the allowance. The provision for loan losses and recoveries on loans previously charged off are added to the allowance.

ALLOWANCE FOR CREDIT LOSSES ON LENDING-RELATED COMMITMENTS

The Corporation maintains an allowance to cover probable credit losses inherent in lending-related commitments, including commitments to extend credit, letters of credit and guarantees. This allowance is included in “accrued expenses and other liabilities” on the consolidated balance sheets, with the corresponding charge reflected in “other noninterest expense” on the consolidated statements of income. In 2002, the Corporation reclassified the allowance to cover probable credit losses inherent in lending-related commitments to “accrued expenses and other liabilities” on the consolidated balance sheets. Prior periods have been reclassified to reflect this change.

NONPERFORMING ASSETS

Nonperforming assets are comprised of loans and debt securities for which the accrual of interest has been discontinued, loans for which the terms have been renegotiated to less than market rates due to a serious weakening of the borrower’s financial condition and real estate which has been acquired primarily through foreclosure and is awaiting disposition.

Loans which were restructured, but yield a rate equal to or greater than the rate charged for new loans with comparable risk and have met the requirements for accrual status, are not reported as nonperforming assets. Such loans continue to be evaluated for impairment for the remainder of the calendar year of the modifications. These loans may be excluded from the impairment assessment in the calendar years subsequent to the restructuring if not impaired based on the modified terms. See Note 4 on page 54 for additional information on loan impairment.

Consumer loans are generally not placed on nonaccrual status and are charged off no later than 180 days past due, and earlier, if deemed uncollectible. Loans, other than consumer loans, and debt securities are generally placed on nonaccrual status when principal or interest is past due 90 days or more and/or when, in the opinion of management, full collection of principal or interest is unlikely. At the time a loan or debt security is placed on nonaccrual status, interest previously accrued but not collected is charged against current income. Income on such loans and debt securities is then recognized only to the extent that cash is received and where future collection of principal is probable. Generally, a loan or debt security may be returned to accrual status when all delinquent principal and interest have been received and the Corporation expects repayment of the remaining contractual principal and interest or when the loan or debt security is both well secured and in the process of collection.

A nonaccrual loan that is restructured will generally remain on nonaccrual after the restructuring, for a period of six months to demonstrate that the borrower can meet the restructured terms. However, sustained payment performance prior to the restructuring, or significant events that coincide with the restructuring, are included in assessing whether the borrower can meet the restructured terms. These factors may result in the loan being returned to an accrual basis at the time of restructuring or upon satisfaction of a shorter performance period. If management is uncertain

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

whether the borrower has the ability to meet the revised payment schedule, the loan remains classified as nonaccrual. Other real estate acquired is carried at the lower of cost or fair value, minus estimated costs to sell. When the property is acquired through foreclosure, any excess of the related loan balance over fair value is charged to the allowance for loan losses. Subsequent write-downs, operating expenses and losses upon sale, if any, are charged to noninterest expenses.

STOCK — BASED COMPENSATION

In 2002, the Corporation adopted the fair value recognition provisions of SFAS No. 123, “Accounting for Stock Based Compensation,” to be applied prospectively to all new stock-based compensation awards granted to employees after December 31, 2001. Prior to 2002, the Corporation had applied the intrinsic value method in accounting for stock-based compensation awards. Awards under the Corporation’s plans vest over periods ranging from one to four years. Therefore, the expense related to stock-based compensation included in the determination of net income for 2002 is less than that which would have been recognized if the fair value method had been applied to all awards since the original effective date of SFAS No. 123. The impact of the adoption of SFAS No. 123 on 2002 net income was a decrease of $11 million. The effect on net income and earnings per share, if the fair value method had been applied to all outstanding and unvested awards in each of the three years in the period ended December 31, 2002, is presented in the table below.


(in millions, except per share data)
Years Ended December 31		2002		2001		2000

Net income applicable to common stock, as reported		$	601	$	698	$	774
Add: Stock-based compensation expense included in reported net income, net of related tax effects			17		11		9
Deduct: Total stock-based compensation expense determined under fair value method for all awards, net of related tax effects			30		56		34

Pro forma net income applicable to common stock		$	588	$	653	$	749

Net income per common share:
	Basic – as reported	$	3.43	$	3.93	$	4.38
	Basic – pro forma		3.36		3.68		4.24
	Diluted – as reported		3.40		3.88		4.31
	Diluted – pro forma		3.32		3.63		4.18

Pro forma net income applicable to common stock and net income per common share in 2001 was affected by the accelerated vesting of former Imperial and OPAY stock options as a result of the Imperial acquisition. Further information on the Corporation’s stock-based compensation plans is included in Note 16 on page 59.

PENSION COSTS

Pension costs are charged to salaries and employee benefits expense and funded consistent with the requirements of federal law and regulations. Inherent in the determination of pension costs are assumptions concerning future events that will determine the amount and timing of required benefit payments under the plans. These include an assumed rate of compensation increase and an assumed discount rate used in determining the current benefit obligation. An assumption is also made related to the long-term rate of return expected on plan assets. To the extent actual outcomes differ from these assumptions, accounting standards generally require these “actuarial gains/losses” to be amortized to expense over a period of five years to the extent the cumulative differences are less than 10 percent of the greater of the projected benefit obligation or the market-related value of plan assets. Any differences greater than 10 percent at the beginning of the year are recognized and included as a component of net pension cost for that year.

POSTRETIREMENT BENEFITS

Postretirement benefits are recognized in “salaries and employee benefits” on the consolidated statements of income during the employee’s active service period.

DERIVATIVE FINANCIAL INSTRUMENTS AND FOREIGN EXCHANGE CONTRACTS

Derivative instruments are carried at fair value as either other assets or liabilities on the balance sheet. The accounting for changes in the fair value (i.e., gains or losses) of a derivative instrument is determined by whether it has been designated and qualifies as part of a hedging relationship and, further, on the type of hedging relationship. For those derivative instruments that are designated and qualify as hedging instruments, the Corporation designates the hedging instrument, based upon the exposure being hedged, as either a fair value hedge, cash flow hedge or a hedge of a net investment in a foreign operation. For derivative instruments designated and qualifying as a fair value hedge (i.e., hedging the exposure to changes in the fair value of an asset or a liability or an identified portion thereof that is attributable to a particular risk), the gain or loss on the derivative instrument, as well as the offsetting loss or gain on the hedged item attributable to the hedged risk, are recognized in current earnings during the period of the change in fair values. For derivative instruments that are designated and qualify as a cash flow hedge (i.e., hedging the exposure to variability in expected future cash flows that is attributable to a particular risk), the effective portion of the gain or loss on the derivative instrument is reported as a component of other comprehensive income and reclassified into earnings in the same period or periods during which the hedged transaction affects earnings. The remaining gain or loss on the derivative instrument in excess of the cumulative change in the present value of future cash flows of the hedged item (i.e. the ineffective portion), if any, is recognized in current earnings during the period of change. For derivative instruments that are designated and qualify as a hedge of a net investment in a foreign currency, the gain or loss is reported in other comprehensive income as part of the cumulative translation adjustment to the extent it is effective. For derivative instruments not designated as hedging instruments, the gain or loss is recognized in current earnings during the period of change.

Foreign exchange futures and forward contracts, foreign currency options, interest rate caps and interest rate swap agreements executed as a service to customers are not designated as hedging instruments and both the realized and unrealized gains and losses on these instruments are recognized currently in noninterest income.

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

INCOME TAXES

Provisions for income taxes are based on amounts reported in the statements of income (after exclusion of nontaxable income such as interest on state and municipal securities) and include deferred income taxes on temporary differences between the tax basis and financial reporting basis of assets and liabilities. Deferred tax assets are evaluated for realization based on available evidence and assumptions made regarding future events. In the event that the future taxable income does not occur in the manner anticipated, other strategies could be employed to preclude the need to recognize a valuation allowance against the deferred tax asset.

STATEMENTS OF CASH FLOWS

For the purpose of presentation in the consolidated statements of cash flows, cash and cash equivalents are defined as those amounts included in the consolidated balance sheets’ caption, “Cash and due from banks.”

DEFERRED DISTRIBUTION COSTS

Certain mutual fund distribution costs, principally commissions paid to brokers, are capitalized when paid and amortized over six years. Fees that contractually recoup the deferred costs, primarily 12b-1 fees, are received over a 6 - 8 year period. The net of these fees and amortization is recorded in “investment advisory revenue, net” on the consolidated statements of income. Early redemption fees collected are recorded as a reduction to the capitalized costs.

LOAN ORIGINATION FEES AND COSTS

Loan origination and commitment fees are deferred and recognized over the life of the related loan or over the commitment period as a yield adjustment. Loan fees on unused commitments and fees related to loans sold are recognized currently as noninterest income.

OTHER COMPREHENSIVE INCOME

The Corporation has elected to present information on comprehensive income in the Consolidated Statements of Changes in Shareholders’ Equity on page 48 and in Note 14 on page 58.

2. ACQUISITIONS

In January 2001, the Corporation merged with Imperial Bancorp (Imperial), a $7 billion (assets) bank holding company, through an exchange of 0.46 shares of Comerica common stock for each share of Imperial common stock. The Corporation issued 21 million shares of common stock as part of the transaction. The financial information presented in this annual report is restated to include the accounts and results of operations of Imperial, which was accounted for as a pooling-of-interests combination. The Corporation incurred a pre-tax, merger-related and restructuring charge of $173 million ($128 million after-tax) in 2001 in connection with the acquisition. As of December 31, 2001, all merger-related expenses had been incurred.

3. INVESTMENT SECURITIES

A summary of the Corporation’s investment securities available for sale follows:


(in millions)
					Gross		Gross
			Amortized		Unrealized		Unrealized
			Cost		Gains		Losses		Fair Value

December 31, 2002
	U.S. Treasury and other Government agency securities		$	2,714	$	34	$	—	$	2,748
	State and municipal securities			22		1		—		23
	Other securities			294		2		14		282

		Total securities available for sale	$	3,030	$	37	$	14	$	3,053

December 31, 2001
	U.S. Treasury and other Government agency securities		$	3,879	$	48	$	7	$	3,920
	State and municipal securities			31		1		—		32
	Other securities			355		1		17		339

		Total securities available for sale	$	4,265	$	50	$	24	$	4,291

The top table to the right 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)
			Amortized		Fair
December 31, 2002			Cost		Value

Contractual maturity
	Within one year		$	140	$	141
	After one year through five years			98		98
	After five years through ten years			32		23
	After ten years			14		11

		Subtotal securities		284		273
	Mortgage-backed securities			2,677		2,711
	Equity and other nondebt securities			69		69

		Total securities available for sale	$	3,030	$	3,053

Sales, calls and write-downs of investment securities available for sale resulted in realized gains and losses as follows:


(in millions)

Years Ended December 31		2002			2001			2000

Securities gains		$	78		$	29		$	20
Securities losses			(37	)		(9	)		(4	)

	Total	$	41		$	20		$	16

At December 31, 2002, assets, principally securities, with a carrying value of approximately $1.4 billion were pledged, primarily with the Federal Reserve Bank and state and local governments. Securities are pledged where permitted or required by law to secure liabilities and public and other deposits, including deposits of the State of Michigan of $120 million at December 31, 2002.

4. NONPERFORMING ASSETS

The following table summarizes nonperforming assets and loans which are contractually past due 90 days or more as to interest or principal payments. Nonperforming assets consist of nonaccrual loans and debt securities, reduced-rate loans and other real estate. Nonaccrual loans and debt securities are those on which interest is not being recognized. Reduced-rate loans are those on which interest has been renegotiated to lower than market rates because of the weakened financial condition of the borrower.

Nonaccrual and reduced-rate loans are included in loans on the consolidated balance sheets. Nonaccrual debt securities are included in “investment securities available for sale” and other real estate is included in “accrued income and other assets” on the consolidated balance sheets.


(in millions)
December 31			2002		2001

Nonaccrual loans
	Commercial loans		$	372	$	467
	International loans			114		109
	Real estate construction loans			19		10
	Commercial mortgage loans			53		18
	Residential mortgage loans			—		—
	Consumer loans			2		5
	Lease financing			5		8

		Total		565		617
Reduced-rate loans				—		—

		Total nonperforming loans		565		617
Other real estate				10		10
Nonaccrual debt securities				4		—

		Total nonperforming assets	$	579	$	627

Loans past due 90 days and still accruing			$	43	$	44

Gross interest income that would have been recorded had the nonaccrual and reduced-rate loans performed in accordance with original terms			$	67	$	61

Interest income recognized			$	17	$	17

A loan is impaired when it is probable that payment of interest and principal will not be made in accordance with the contractual terms of the loan agreement. Consistent with this definition, all nonaccrual and reduced-rate loans (with the exception of residential mortgage and consumer loans) are impaired.

Impaired loans at December 31, 2002 were $582 million, $19 million of which were formerly on nonaccrual status, but were restructured and met the requirements to be restored to an accrual basis. These restructured loans are performing in accordance with their modified terms, but, in accordance with impaired loan disclosures must continue to be disclosed as impaired for the remainder of the calendar year of the restructuring. Excluding these restructured loans, impaired business loans remaining on nonaccrual status totaled $563 million at December 31, 2002.


(in millions)
December 31	2002			2001			2000

Average impaired loans for the year	$	628		$	549		$	293

Total year-end impaired loans	$	582		$	674		$	365
Less: Loans returned to accrual status during the year		(19	)		(62	)		(37	)

Total year-end nonaccrual business loans	$	563		$	612		$	328

Year-end impaired loans requiring an allowance	$	530		$	562		$	277

Impairment allowance	$	197		$	228		$	104

Those impaired loans not requiring an allowance represent loans for which the fair value exceeded the recorded investment in the loan. At December 31, 2002, 32 percent of the total impaired loans were evaluated based on fair value of related collateral. Remaining loan impairment is based on the present value of expected future cash flows discounted at the loan’s effective interest rate.

5. ALLOWANCE FOR LOAN LOSSES

An analysis of changes in the allowance for loan losses follows:


(dollar amounts in millions)
		2002			2001			2000

Balance at January 1		$	637		$	585		$	529
Loans charged off			(517	)		(232	)		(224	)
Recoveries on loans previously charged off			36			43			29

	Net loans charged off		(481	)		(189	)		(195	)
Provision for loan losses			635			241			251

Balance at December 31		$	791		$	637		$	585

As a percentage of total loans			1.87	%		1.55	%		1.46	%

The provision for loan losses in 2001 included a $25 million merger-related charge to conform the credit policies of Imperial with Comerica.

6. SIGNIFICANT GROUP CONCENTRATIONS OF CREDIT RISK

Concentrations of both on-balance sheet and off-balance sheet credit risk are controlled and monitored as part of credit policies. The Corporation is a regional financial services holding company with a geographic concentration of its on-balance sheet and off-balance sheet activities in Michigan and California. In addition, the Corporation has an industry concentration with the automotive industry.

At December 31, 2002 and 2001, exposure from loans, unused commitments and standby letters of credit and financial guarantees to companies related to the automotive industry totaled $11.5 billion and $11.2 billion, respectively. Additionally, commercial real estate loans, including real estate construction and commercial mortgage loans, totaled $10.7 billion at December 31, 2002 and $9.5 billion at December 31, 2001. Of the commercial real estate loans at December 31, 2002, $6.1 billion involved borrowers not primarily engaged in the business of commercial real estate and where the sources of repayment are not dependent on the performance of the real estate market.

7. PREMISES & EQUIPMENT

A summary of premises and equipment by major category follows:


(in millions)
December 31		2002			2001

Land		$	56		$	56
Buildings and improvements			439			391
Furniture and equipment			376			383

	Total cost		871			830
Less accumulated depreciation and amortization			(500	)		(477	)

	Net book value	$	371		$	353

The Corporation conducts a portion of its business from leased facilities and, in addition, leases certain equipment. Rental expense for leased properties and equipment amounted to $59 million in 2002, $55 million in 2001 and $51 million in 2000. As of December 31, 2002, future minimum payments under operating leases and other noncancelable obligations are as follows:


(in millions)
Years Ending December 31

2003		$	79
2004			67
2005			60
2006			43
2007			32
Thereafter			233

	Total	$	514

8. GOODWILL AND OTHER INTANGIBLE ASSETS — ADOPTION OF SFAS NO. 142

In accordance with the Corporation’s adoption of SFAS No. 142, the Corporation performed the first required impairment test of goodwill and indefinite-lived intangible assets as of January 1, 2002. Based on this test, the Corporation was not required to record a transition adjustment upon adoption. Goodwill was again evaluated for impairment as of July 1, 2002. As a result of this test, the Corporation was required to record a goodwill impairment charge of $86 million in the third quarter of 2002. This charge resulted from the continued decline in equity markets, and its related impact on the valuation of the Corporation’s asset management reporting unit (Munder), which is a part of the Investment Bank for business segment reporting purposes. The fair value of Munder used in the determination of the impairment charge was based on a valuation prepared by an investment banker not affiliated with the Corporation. The valuation used a combination of valuation techniques, including discounted cash flows and the prices of external comparable businesses.


(in millions, except per share amounts)
Years ended December 31		2002		2001		2000

Reported net income applicable to common stock		$	601	$	698	$	774
Add back: Goodwill amortization, net of tax			—		28		29

Adjusted net income applicable to common stock		$	601	$	726	$	803

Basic net income per common share:
	Reported net income applicable to common stock	$	3.43	$	3.93	$	4.38
	Goodwill amortization, net of tax		—		0.16		0.16

	Adjusted net income applicable to common stock	$	3.43	$	4.09	$	4.54

Diluted net income per common share:
	Reported net income applicable to common stock	$	3.40	$	3.88	$	4.31
	Goodwill amortization, net of tax		—		0.16		0.16

	Adjusted net income applicable to common stock	$	3.40	$	4.04	$	4.47

The changes in the carrying amount of goodwill for the year ended December 31, 2002, are as follows:


(in millions)	Business		Individual		Investment
	Bank		Bank		Bank			Total

Balance at January 1, 2002	$	90	$	54	$	189		$	333
Goodwill impairment		—		—		(86	)		(86	)

Balance at December 31, 2002	$	90	$	54	$	103		$	247

9. ACQUIRED INTANGIBLE ASSETS

Amortized intangible assets consisted of the following:


(in millions)
December 31		2002				2001

		Gross				Gross
		Carrying		Accumulated		Carrying		Accumulated
Amortized Intangible Assets		Amount		Amortization		Amount		Amortization

Core deposit intangibles		$	28	$	26	$	27	$	22
Other			6		5		6		5

	Total	$	34	$	31	$	33	$	27

The amortization expense related to acquired intangible assets amounted to $4 million in 2002, $3 million in 2001 and $5 million in 2000. The remaining amortization expense related to acquired intangible assets is summarized as follows:


(in millions)
Years Ending December 31

2003		$	2
2004			1

	Total	$	3

10. DEPOSITS

A maturity distribution of domestic certificates of deposits of $100,000 and over follows:


(in millions)
December 31		2002		2001

Three months or less		$	2,435	$	4,387
Over three months to six months			1,194		1,513
Over six months to twelve months			1,104		1,946
Over twelve months			375		501

	Total	$	5,108	$	8,347

11. SHORT-TERM BORROWINGS

Federal funds purchased and securities sold under agreements to repurchase generally mature within one to four days from the transaction date. Other borrowed funds, consisting of commercial paper, borrowed securities, term federal funds purchased, short-term notes and treasury tax and loan deposits, generally mature within one to 120 days from the transaction date. The table to the right provides a summary of short-term borrowings.

At December 31, 2002, the Corporation had available a $250 million commercial paper facility of which $130 million was outstanding. This facility is supported by a $250 million line of credit agreement. Under the current agreement, the line will expire in May 2003.

At December 31, 2002, the Corporation’s subsidiary banks had pledged loans totaling $22 billion to secure a $17 billion collateralized borrowing account with the Federal Reserve Bank.


(in millions)
		Federal Funds Purchased and			Other
		Securities Sold Under			Borrowed
		Agreements to Repurchase			Funds

December 31, 2002
	Amount outstanding at year-end	$	344		$	196
	Weighted average interest rate at year-end		1.06	%		1.47	%

December 31, 2001
	Amount outstanding at year-end	$	1,693		$	293
	Weighted average interest rate at year-end		1.64	%		1.81	%

December 31, 2000
	Amount outstanding at year-end	$	1,640		$	453
	Weighted average interest rate at year-end		6.37	%		5.51	%

12. MEDIUM- & LONG-TERM DEBT

Medium- and long-term debt are summarized as follows:


(in millions)
December 31			2002		2001

Parent Company
	7.25% subordinated notes due 2007		$	175	$	157
Subsidiaries
Subordinated notes:
	7.25% subordinated note due 2002			—		155
	7.25% subordinated note due 2007			232		216
	6.00% subordinated note due 2008			284		256
	6.875% subordinated note due 2008			117		108
	8.50% subordinated note due 2009			113		102
	7.65% subordinated note due 2010			279		268
	7.125% subordinated note due 2013			179		168
	8.375% subordinated note due 2024			206		187
	7.875% subordinated note due 2026			205		179

		Total subordinated notes		1,615		1,639
Medium-term notes:
	Floating rate based on LIBOR indices			2,025		2,356

Variable rate secured debt financing due 2007				978		956
9.98% trust preferred securities due 2026				56		56
7.60% trust preferred securities due 2050				342		339
Variable rate note payable due 2009				25		—

		Total subsidiaries		5,041		5,346

		Total medium- and long-term debt	$	5,216	$	5,503

The carrying value of medium- and long-term debt has been adjusted to reflect the gain or loss attributable to the risk hedged. Concurrent with the issuance of certain of the medium- and long-term debt presented above, the Corporation entered into interest rate swap agreements to convert the stated rate of the debt to a rate based on the indices identified in the following table.

(dollar amounts in millions)

Principal Amount

Base

of Debt

Rate at

Converted

Base Rate

12/31/02

Parent company

7.25% subordinated notes

150

6-month LIBOR

1.39

Subsidiaries

Subordinated notes:

7.25% subordinated note

200

6-month LIBOR

1.39

6.00% subordinated note

250

6-month LIBOR

1.39

6.875% subordinated note

100

6-month LIBOR

1.39

8.50% subordinated note

100

3-month LIBOR

1.40

7.65% subordinated note

250

3-month LIBOR

1.40

7.125% subordinated note

150

6-month LIBOR

1.39

8.375% subordinated note

150

6-month LIBOR

1.39

7.875% subordinated note

150

6-month LIBOR

1.39

All subordinated notes with maturities greater than one year qualify as Tier 2 capital.

The Corporation currently has two medium-term note programs: a senior note program and a European note program. Under these programs, bank subsidiaries may offer an aggregate principal amount of up to $17 billion. The notes can be issued as fixed or floating rate notes and with terms from one month to 15 years. The interest rates on the floating rate medium-term notes based on LIBOR ranged from one-month LIBOR to three-month LIBOR plus 0.19%. The notes are due from 2003 to 2005. There are no floating rate notes outstanding based on Treasury or Prime indices at December 31, 2002. The medium-term notes do not qualify as Tier 2 capital and are not insured by the FDIC. In July 2001, the Corporation issued $350 million of 7.60% Trust Preferred Securities which are classified in medium- and long-term debt. The securities pay interest each quarter beginning October 1, 2001, and are callable any time after July 30, 2006. The Corporation used the proceeds from the issuance to redeem and retire the $250 million of preferred stock that was outstanding, and for other general corporate purposes. The Corporation also has $55 million of 9.98% Trust Preferred Securities classified in medium- and long-term debt at December 31, 2002. The securities pay interest semi-annually in June and December, and are callable anytime after June 30, 2007.

In December 2001, the Corporation privately placed approximately $1 billion of variable rate notes as part of a secured financing transaction. The Corporation utilized approximately $1.2 billion of dealer floor plan loans as collateral in conjunction with this transaction. The over-collateralization of the issuance provided for a preferred credit rating status. The secured financing includes $924 million of deferred payment notes bearing interest at the rate of 30 basis points plus a commercial paper reference rate, and $60 million of deferred payment notes based on one-month LIBOR. The interest rate on each of these note issuances is reset monthly. The $924 million deferred payment notes, which may be redeemed upon the occurrence of certain conditions, mature in December 2007. Interest will accrue on the $60 million deferred payment notes until January 2007, at which time the notes become redeemable by the holder. These notes do not qualify as Tier 2 capital and are not insured by the FDIC. The principal maturities of medium- and long-term debt are as follows:


(in millions)
Years Ending December 31

2003		$	1,090
2004			750
2005			185
2006			—
2007			1,274
Thereafter			1,650

	Total	$	4,949

13. SHAREHOLDERS’ EQUITY

In August 2001, the Board authorized the repurchase of up to ten million shares of Comerica Incorporated outstanding common stock. Repurchases under this program totaled 3.5 million and 1.2 million shares in the years ended December 31, 2002 and 2001, respectively. All share repurchases were accomplished through open market purchases.

At December 31, 2002, the Corporation had reserved 27.9 million shares of common stock for issuance to employees and directors under the long-term incentive plans.

In August 2001, the Corporation retired 5 million shares of Fixed/Adjustable Rate Noncumulative Preferred Stock, Series E, with a stated value of $50 per share.

14. OTHER COMPREHENSIVE INCOME

Other comprehensive income includes the change in unrealized gains and losses on investment securities available for sale, the change in accumulated net gains and losses on cash flow hedges, the change in the accumulated foreign currency translation adjustment and the change in accumulated minimum pension liability. The Consolidated Statements of Changes in Shareholders’ Equity includes only combined, net of tax, other comprehensive income. The following table presents reconciliations of the components of accumulated other comprehensive income for the years ended December 31, 2002, 2001 and 2000.

The adoption of SFAS No. 133 on January 1, 2001 resulted in a cumulative effect of an accounting change of $65 million, $42 million net of tax, included in other comprehensive income. For a further discussion of the effect of derivative instruments on other comprehensive income see Notes 1 and 22 on pages 50 and 65, respectively.


(in millions)
Years Ended December 31		2002			2001			2000

NET UNREALIZED GAINS (LOSSES) ON INVESTMENT SECURITIES AVAILABLE FOR SALE:
	Balance at beginning of year	$	16		$	8		$	(23	)
	Net unrealized holding gains (losses) arising during the year		39			32			62
	Less: Reclassification adjustment for gains (losses) included in net income		41			20			16

	Change in net unrealized gains (losses) before income taxes		(2	)		12			46
	Less: Provision for income taxes		(1	)		4			15

	Change in net unrealized gains (losses) on investment securities available for sale, net of tax		(1	)		8			31

	Balance at end of year	$	15		$	16		$	8

ACCUMULATED NET GAINS (LOSSES) ON CASH FLOW HEDGES:
	Balance at beginning of year	$	209		$	—		$	—
	Transition adjustment upon adoption of accounting standard		—			65			—
	Net cash flow hedge gains (losses) arising during the year		410			432			—
	Less: Reclassification adjustment for gains (losses) included in net income		361			175			—

	Change in cash flow hedges before income taxes		49			322			—
	Less: Provision for income taxes		17			113			—

	Change in cash flow hedges, net of tax		32			209			—

	Balance at end of year	$	241		$	209		$	—

ACCUMULATED FOREIGN CURRENCY TRANSLATION ADJUSTMENT:
	Balance at beginning of year	$	—		$	4		$	1
	Net translation gains (losses) arising during the year		(3	)		(5	)		3
	Less: Reclassification adjustment for gains (losses) included in net income		—			(1	)		—

	Change in translation adjustment before income taxes		(3	)		(4	)		3
	Less: Provision for income taxes		—			—			—

	Change in foreign currency translation adjustment, net of tax		(3	)		(4	)		3

	Balance at end of year	$	(3	)	$	—		$	4

ACCUMULATED MINIMUM PENSION LIABILITY ADJUSTMENT:
	Balance at beginning of year	$	—		$	—		$	—
	Minimum pension liability adjustment arising during the year		(25	)		—			—

	Minimum pension liability before income taxes		(25	)		—			—
	Less: Provision for income taxes		(9	)		—			—

	Change in minimum pension liability, net of tax		(16	)		—			—

	Balance at end of year	$	(16	)	$	—		$	—

Total accumulated other comprehensive income, net of taxes, at end of year		$	237		$	225		$	12

15. NET INCOME PER COMMON SHARE

Basic net income per common share is computed by dividing net income applicable to common stock by the weighted average number of shares of common stock outstanding during the period. Diluted net income per common share is computed by dividing net income applicable to common stock by the weighted average number of shares, nonvested stock and dilutive common stock equivalents outstanding during the period. Common stock equivalents consist of common stock issuable under the assumed exercise of stock options granted under the Corporation’s stock plans, using the treasury stock method. Unallocated employee stock ownership plan shares are not included in average common shares outstanding. A computation of basic and diluted net income per common share is presented in the table to the right.


(in millions, except per share data)
Years Ended December 31		2002		2001		2000

Basic
	Net income	$	601	$	710	$	791
	Less preferred stock dividends		—		12		17

	Net income applicable to common stock	$	601	$	698	$	774

	Average common shares outstanding		175		178		177

	Basic net income per common share	$	3.43	$	3.93	$	4.38

Diluted
	Net income	$	601	$	710	$	791
	Less preferred stock dividends		—		12		17

	Net income applicable to common stock	$	601	$	698	$	774

	Average common shares outstanding		175		178		177
	Common stock equivalents
	Net effect of the assumed exercise of stock options		2		2		2

	Diluted average common shares		177		180		179

	Diluted net income per common share	$	3.40	$	3.88	$	4.31

16. STOCK-BASED COMPENSATION

The Corporation has stock-based compensation plans under which it awarded both shares of restricted stock to key executive officers and stock options to executive officers, directors and key personnel of the Corporation and its subsidiaries. The maturity of each option is determined at the date of grant; however, no options may be exercised later than ten years from the date of grant. The options may have restrictions regarding exercisability. The plans provide for a grant of up to 16.8 million common shares.

In 2002, the Corporation adopted the fair value method of accounting for stock options, as outlined in SFAS No. 123. Transition rules require that all stock options granted in the year of adoption be accounted for under the fair value method, thus, the new method was applied prospectively to all grants made after December 31, 2001. Therefore, the expense related to stock-based compensation included in the determination of net income for 2002 is less than that which would have been recognized if the fair value method had been applied to all awards since the original effective date of SFAS No. 123. Under SFAS No. 123, compensation expense, equal to the fair value of stock-based compensation as of the date of grant, is recognized over the vesting period. Awards under the Corporation’s plans vest over periods ranging from one to four years. Options granted prior to January 1, 2002 continue to be accounted for under the intrinsic value method, as outlined in APB Opinion No. 25, “Accounting for Stock Issued to Employees”. The effect on net income and net income per common share if the fair value method had been applied to all outstanding and unvested awards is presented in Note 1 on page 50.

The fair value of stock options granted was estimated at the date of grant using the Black-Scholes option pricing model. The Black-Scholes model was developed for use in estimating the fair value of traded options which have no vesting restrictions and are fully transferable. In addition, option valuation models require several inputs, including the expected stock price volatility. The model may not necessarily provide a reliable single measure of the fair value of employee and director stock options. The Corporation’s employee and director stock options have characteristics significantly different from those of traded options and changes in input assumptions can materially affect the fair value estimates.

The fair value of the options granted was estimated using an option valuation model with the following weighted-average assumptions:


Years Ended December 31	2002			2001			2000

Risk-free interest rate		4.68	%		4.88	%		6.46	%
Expected dividend yield		2.65			2.66			2.84
Expected volatility factors of the market price of Comerica common stock		33			31			28
Expected option life (in years)		4.8			4.8			4.8

16. STOCK-BASED COMPENSATION (CONTINUED)

A summary of the Corporation’s stock option activity, and related information for each of the three years in the period ended December 31, 2002 follows:


					Weighted Average per Share
		Number of
		Options			Exercise		Market
		(in thousands)			Price		Price

Outstanding — January 1, 2000			11,563		$	40.32	$	46.69
	Granted (weighted-average grant date fair value of $11.18)		2,782			42.53		41.95
	Cancelled		(262	)		50.92		49.58
	Exercised		(1,523	)		17.16		17.31

Outstanding — December 31, 2000			12,560		$	43.38	$	59.38
	Granted (weighted-average grant date fair value of $14.02)		2,566			52.00		52.00
	Cancelled		(270	)		54.32		64.74
	Exercised		(1,757	)		28.71		59.70

Outstanding — December 31, 2001			13,099		$	46.81	$	57.30
	Granted (weighted-average grant date fair value of $17.64)		3,197			63.14		63.14
	Cancelled		(288	)		60.25		55.51
	Exercised		(1,134	)		29.63		59.49

Outstanding — December 31, 2002			14,874		$	51.37	$	43.13

Exercisable — December 31, 2001			8,159		$	43.13
Exercisable — December 31, 2002			9,154			47.57
Available for grant - December 31, 2002			13,019

The table below summarizes information about stock options outstanding at December 31, 2002:

Outstanding

Exercisable

Weighted

Range of

Number of

Weighted

Average

Number of

Average

Exercise

Options

Average

Exercise

Options

Exercise

Prices

(in thousands)

Life (a)

Price

(in thousands)

Price

$6.01 - $18.59

1,098

2.9

18.04

1,098

18.04

19.92 - 36.36

1,331

4.0

25.41

1,331

25.41

40.09 - 49.87

3,197

7.2

41.38

2,340

41.30

50.65 - 59.24

2,455

9.3

52.07

1,065

52.35

60.31 - 66.81

5,111

9.1

64.56

1,638

66.57

69.00 - 71.58

1,682

6.2

71.58

1,682

71.58

Total

14,874

7.5

51.37

9,154

47.57

(a) Weighted average contractual life remaining in years.

In addition, the Corporation awarded 123 thousand, 162 thousand and 66 thousand shares of restricted stock in 2002, 2001 and 2000, respectively. The fair value of these shares at grant date was $8 million in 2002, $9 million in 2001 and $3 million in 2000. Total compensation cost recognized for stock-based employee compensation was $25 million, $17 million and $13 million in 2002, 2001 and 2000, respectively.

17. EMPLOYEE BENEFIT PLANS

The Corporation has a qualified and a non-qualified defined benefit pension plan, which together, provide benefits for substantially all full-time employees. Staff expense includes pension expense of $5 million in 2002, and pension income of $1 million in 2001 and $8 million in 2000 for the plans. Benefits under the plans are based primarily on years of service, age and compensation during the five highest paid consecutive calendar years occurring during the last ten years before retirement. The plans’ assets primarily consist of units of certain collective investment funds and mutual investment funds administered by Munder Capital Management, equity securities, U.S. government and agency securities, corporate bonds and notes and a real estate investment trust. The predominance of these assets have publicly quoted prices, which is the basis for determining fair value of plan assets.

The Corporation’s postretirement benefits plan continues postretirement health care and life insurance benefits for retirees as of December 31, 1992, and life insurance only for retirees after that date. The Corporation has funded the plan with a bank-owned life insurance contract.

The table on top of page 61 sets forth reconciliations of the Corporation’s qualified pension plan, non-qualified pension plan and postretirement plan benefit obligations and plan assets.

17. EMPLOYEE BENEFIT PLANS (CONTINUED)


(in millions)	Qualified						Non-Qualified
	Defined Benefit						Defined Benefit						Postretirement
	Pension Plan						Pension Plan						Benefit Plan

	2002			2001			2002			2001			2002			2001

Change in projected benefit obligation:
Projected benefit obligation at January 1	$	620		$	537		$	73		$	54		$	77		$	76
Service cost		17			13			2			2			—			—
Interest cost		46			42			5			5			6			5
Amendments		2			—			—			—			—			—
Actuarial (gain) loss		66			52			4			13			7			2
Benefit paid		(25	)		(24	)		(1	)		(1	)		(6	)		(6	)

Projected benefit obligation at December 31	$	726		$	620		$	83		$	73		$	84		$	77


Change in plan assets:
Fair value of plan assets at January 1	$	607		$	629		$	1		$	2		$	83		$	86
Actual return on plan assets		(54	)		(35	)		—			1			(1	)		—
Employer contributions		175			37			—			—			3			3
Benefits paid		(25	)		(24	)		(1	)		(1	)		(6	)		(6	)

Fair value of plan assets at December 31	$	703		$	607		$	—		$	2		$	79		$	83

The following table sets forth the funded status of the qualified pension plan, non-qualified pension plan and postretirement plan and amounts recognized on the Corporation’s consolidated balance sheets:


(in millions)	Qualified						Non-Qualified
	Defined Benefit						Defined Benefit						Postretirement
	Pension Plan						Pension Plan						Benefit Plan

	2002			2001			2002			2001			2002			2001

Funded status at December 31*	$	(23	)	$	(13	)	$	(83	)	$	(72	)	$	(5	)	$	6
Unrecognized net (gain) loss		294			103			37			36			23			11
Unrecognized net transition (asset) obligation		—			—			—			—			43			47
Unrecognized prior service cost		19			19			—			1			—			—

Prepaid (accrued) benefit cost		290			109			(46	)		(35	)		61			64
Accrued minimum benefit liability		—			—			(21	)		—			—			—
Intangible asset		—			—			—			—			—			—
Accumulated other comprehensive income		—			—			21			—			—			—

Net amount recognized	$	290		$	109		$	(46	)	$	(35	)	$	61		$	64

* Based on projected benefit obligation.

Components of net periodic benefit cost (income) are as follows:

Qualified and Non-Qualified Defined Benefit Pension Plans
(in millions)



	Qualified Defined Benefit									Non-Qualified Defined Benefit
	Pension Plan									Pension Plan

Years Ended December 31	2002			2001			2000			2002		2001		2000

Service cost	$	17		$	13		$	12		$	2	$	2	$	2
Interest cost		46			42			39			5		5		4
Expected return on plan assets		(71	)		(67	)		(61	)		—		—		—
Amortization of unrecognized transition asset		—			(1	)		(5	)		—		—		—
Amortization of unrecognized prior service cost		2			2			2			1		1		—
Amortization of unrecognized net (gain) loss		—			(1	)		(3	)		3		3		2

Net periodic benefit cost (income)	$	(6	)	$	(12	)	$	(16	)	$	11	$	11	$	8

17. EMPLOYEE BENEFIT PLANS (CONTINUED)

Components of net periodic benefit cost (income) are as follows: (continued)

Postretirement Benefit Plan
(in millions)



Years Ended December 31	2002			2001			2000

Service cost	$	—		$	—		$	—
Interest cost		6			6			6
Expected return on plan assets		(5	)		(6	)		(6	)
Amortization of unrecognized transition obligation		4			4			4

Net periodic benefit cost	$	5		$	4		$	4

Actuarial assumptions used are reflected below. The discount rate and rate of compensation increase shown for each period is as of year-end measurement date. The long-term rate of return on assets shown is as of the beginning of the year measurement date.

Qualified and Non-Qualified Defined Benefit Pension Plans


Years Ended December 31	2002			2001			2000

Discount rate used in determining benefit obligation		6.8	%		7.4	%		7.9	%
Long-term rate of return on assets		10.0			10.0			10.0
Rate of compensation increase		4.5			5.0			5.0

Postretirement Benefit Plan


Years Ended December 31	2002			2001			2000

Discount rate used in determining benefit obligation		6.8	%		7.4	%		7.9	%
Long-term rate of return on assets		5.0			6.7			6.7

The healthcare and prescription drug cost trend rates projected for 2002 were seven percent and nine percent, respectively. Each healthcare cost trend rate is assumed to gradually decrease to five percent by the year 2007. Increasing each healthcare rate by one percentage point would increase the accumulated postretirement benefit obligation by $6 million at December 31, 2002, and the aggregate of the service and interest cost components by $479 thousand for the year ended December 31, 2002. Decreasing each healthcare rate by one percentage point would decrease the accumulated postretirement benefit obligation by $5 million at December 31, 2002, and the aggregate of the service and interest cost components by $364 thousand for the year ended December 31, 2002.

The Corporation also maintains defined contribution plans (including 401(k) plans) for various groups of its employees. All of the Corporation’s employees are eligible to participate in one or more of the plans. The Corporation makes matching contributions, most of which are based on a declining percentage of employee contributions (currently, maximum per employee is $1,000) as well as a performance-based matching contribution based on the Corporation’s financial performance. Staff expense includes expense of $11 million in 2002, $17 million in 2001 and $19 million in 2000 for the plans.

Prior to the merger, Imperial maintained an externally leveraged employee stock ownership plan (the “ESOP”) for certain employees. In 2001, the plan was converted to an internally leveraged plan and merged into the Corporation’s 401(k) plan. Shares are released to the ESOP as principal and interest payments are made on the loans. In 2002, a total of 131,954 shares of common stock, with a cost basis of $5 million, were released to the ESOP. In 2001, a total of 44,508 shares of common stock, with a cost basis of $2 million, were released to the ESOP and in 2000, a total of 70,183 shares, with a cost basis of $3 million, were released to the ESOP. There was no remaining unearned compensation and were no remaining unallocated ESOP shares at December 31, 2002. At December 31, 2001 and 2000, unearned compensation related to the ESOP of $5 million and $7 million, respectively, was reflected as a reduction of shareholders’ equity. The fair value of unallocated ESOP shares totaled $8 million and $11 million at December 31, 2001 and 2000, respectively.

Prior to the merger, Imperial also maintained a Deferred Compensation Plan (the “DC Plan”) to provide specified benefits to certain employees and directors. The DC Plan allowed participants to defer all or a portion of their salary and bonus. Imperial matched from 0% to 50% of certain participants’ deferrals under the plan. The match percentage was 25% for 2001 and 50% for 2000. The expense related to funding the deferred compensation match totaled $1 million and $5 million for the years ended December 31, 2001 and 2000, respectively. The plan was merged into the Corporation’s deferred compensation plan at June 30, 2001. No additional matching contributions are paid to participants under the terms of the merged plan.

18. INCOME TAXES

The current and deferred components of the provision for income taxes were as follows:


(in millions)
December 31			2002			2001		2000

Current
	Federal		$	270		$	305	$	361
	Foreign			8			17		16
	State and local			20			34		21

				298			356		398
Deferred federal, state and local				(17	)		45		33

		Total	$	281		$	401	$	431

There were $14 million, $7 million and $4 million of income tax provision on securities transactions in 2002, 2001 and 2000, respectively.

The principal components of deferred tax assets and liabilities are as follows:


(in millions)
December 31			2002		2001

Deferred tax assets:
Allowance for loan losses			$	247	$	204
Allowance for depreciation				6		10
Deferred loan origination fees and costs				44		33
Employee benefits				51		38
Other temporary differences, net				123		95

	Total deferred tax assets		$	471	$	380
Deferred tax liabilities:
Lease financing transactions			$	510	$	423
OPAY				—		12
Other comprehensive income				130		122

	Total deferred tax liabilities			640		557

		Net deferred tax liability	$	169	$	177

18. INCOME TAXES (CONTINUED)

A reconciliation of expected income tax expense at the federal statutory rate of 35 percent to the Corporation’s provision for income taxes and effective tax rate follows:


(in millions)
Years Ended December 31	2002						2001						2000

	Amount			Rate			Amount			Rate			Amount			Rate

Tax based on federal statutory rate	$	309			35.0	%	$	389			35.0	%	$	428			35.0	%
Effect of tax-exempt interest income		(2	)		(0.2	)		(2	)		(0.2	)		(2	)		(0.2	)
State income taxes		15			1.7			24			2.2			18			1.5
Bank-owned life insurance		(20	)		(2.3	)		(13	)		(1.2	)		(12	)		(0.9	)
Goodwill		—			—			7			0.6			8			0.6
Merger-related tax liability adjustment		—			—			(7	)		(0.6	)		—			—
Affordable housing credit		(15	)		(1.7	)		(11	)		(1.0	)		(6	)		(0.5	)
Other		(6	)		(0.7	)		14			1.3			(3	)		(0.2	)

Provision for income taxes	$	281			31.8	%	$	401			36.1	%	$	431			35.3	%

19. MERGER-RELATED AND RESTRUCTURING CHARGES

The Corporation recorded merger-related and restructuring charges of $173 million in 2001 related to the acquisition of Imperial, of which $25 million was recorded in the provision for loan losses. The remaining $148 million of charges were recorded in noninterest expenses. The Corporation also recorded a 2001 restructuring charge of $4 million related to its subsidiary, Official Payments Corporation (OPAY). The OPAY restructuring charge was recorded net of the portion of the charge attributable to the minority shareholders in OPAY. The Corporation sold its OPAY subsidiary in 2002, therefore, no liability remains for OPAY restructuring charges as of the sale date.

The 2001 Imperial restructuring charge included employee termination costs, other employee related costs, a charge related to conforming policies, facilities and operations and other charges. Employee termination costs included the cost of severance, outplacement and other benefits associated with the involuntary termination of employees, primarily senior management and employees in corporate support and data processing functions. A total of 352 employees were terminated in 2001 as part of the restructuring plan. Other employee-related costs included cash payments related to change in control provisions in employment contracts and retention bonuses. Charges related to conforming policies represented costs associated with conforming the credit and accounting policies of Imperial with those of the Corporation. The Corporation also incurred facilities and operations charges associated with closing excess facilities and replacing signage. Other merger-related restructuring costs were primarily comprised of investment banking, accounting, consulting and legal fees. As shown in the table below, there is no remaining liability related to the Imperial charge as of December 31, 2002. No additional Imperial-related restructuring charges are expected.

Restructuring Reserve Analysis
(in millions)



				Other						Facilities
	Employee			Employee-			Conforming			and						Imperial			OPAY			Combined
	Termination			Related			Policies			Operations			Other			Total			Total			Total

Balance at January 1, 2001	$	—		$	—		$	—		$	—		$	—		$	—		$	—		$	—
Provision expense charged to operating expense		35			49			36			24			29			173			4			177
Cash outlays		(30	)		(36	)		—			(3	)		(28	)		(97	)		—			(97	)
Noncash write-downs and other		—			(11	)		(36	)		(21	)		—			(68	)		(2	)		(70	)

Balance at December 31, 2001	$	5		$	2		$	—		$	—		$	1		$	8		$	2		$	10
Cash outlays		(5	)		(2	)		—			—			(1	)		(8	)		—			(8	)
Noncash write-downs and other		—			—			—			—			—			—			(2	)		(2	)

Balance at December 31, 2002	$	—		$	—		$	—		$	—		$	—		$	—		$	—		$	—

20. TRANSACTIONS WITH RELATED PARTIES

The bank subsidiaries have had, and expect to have in the future, transactions with the Corporation’s directors and their affiliates. Such transactions were made in the ordinary course of business and included extensions of credit, leases and professional services. With respect to the extensions of credit, all were made on substantially the same terms, including interest rates and collateral, as those prevailing at the same time for comparable transactions with other customers and did not, in management’s opinion, involve more than normal risk of collectibility or present other unfavorable features. The aggregate amount of loans attributable to persons who were related parties at December 31, 2002, totaled $354 million at the beginning and $347 million at the end of 2002. During 2002, new loans to related parties aggregated $314 million and repayments totaled $321 million.

21. REGULATORY CAPITAL & BANKING SUBSIDIARIES

Banking regulations limit the transfer of assets in the form of dividends, loans or advances from the bank subsidiaries to the Corporation. Under the most restrictive of these regulations, the aggregate amount of dividends which can be paid to the Corporation without obtaining prior approval from bank regulatory agencies approximated $101 million at January 1, 2003, plus current year’s earnings. Substantially all the assets of the Corporation’s subsidiaries are restricted from transfer to the Corporation in the form of loans or advances.

Dividends paid to the Corporation by its banking subsidiaries amounted to $647 million in 2002, $578 million in 2001 and $339 million in 2000.

The Corporation and its banking subsidiaries are subject to various regulatory capital requirements administered by federal and state banking agencies. Quantitative measures established by regulation to ensure capital adequacy require the maintenance of minimum amounts and ratios of Tier 1 and total capital (as defined in the regulations) to average and risk-weighted assets. Failure to meet minimum capital requirements can initiate certain mandatory and possibly additional discretionary actions by regulators that, if undertaken, could have a direct material effect on the Corporation’s financial statements. At December 31, 2002 and 2001, the Corporation and all of its banking subsidiaries exceeded the ratios required for an institution to be considered “well capitalized” (total capital ratio greater than 10 percent). The following is a summary of the capital position of the Corporation and its significant banking subsidiaries.


(in millions)
		Comerica Inc.			Comerica			Comerica Bank			Comerica Bank
		(Consolidated)			Bank			– Texas			– California

December 31, 2002
	Tier 1 common capital	$	4,459		$	3,067		$	449		$	1,053
	Tier 1 capital		4,857			3,287			449			1,153
	Total capital		7,073			5,018			588			1,557
	Risk-weighted assets		60,327			44,134			4,562			13,953
	Average assets (fourth quarter)		52,290			37,011			5,096			17,127
	Tier 1 common capital to risk-weighted assets		7.39	%		6.95	%		9.84	%		7.55	%
	Tier 1 capital to risk-weighted assets (minimum-4.0%)		8.05			7.45			9.84			8.26
	Total capital to risk-weighted assets (minimum-8.0%)		11.72			11.37			12.88			11.16
	Tier 1 capital to average assets (minimum-3.0%)		9.29			8.88			8.81			6.73

December 31, 2001
	Tier 1 common capital	$	4,283		$	2,947		$	402		$	1,175
	Tier 1 capital		4,678			3,167			402			1,175
	Total capital		6,861			4,881			549			1,571
	Risk-weighted assets		58,662			42,132			4,456			13,131
	Average assets (fourth quarter)		49,985			35,587			3,854			13,560
	Tier 1 common capital to risk-weighted assets		7.30	%		6.99	%		9.02	%		8.94	%
	Tier 1 capital to risk-weighted assets (minimum-4.0%)		7.98			7.52			9.02			8.94
	Total capital to risk-weighted assets (minimum-8.0%)		11.70			11.58			12.31			11.96
	Tier 1 capital to average assets (minimum-3.0%)		9.36			8.90			10.42			8.66

22. DERIVATIVE AND CREDIT-RELATED FINANCIAL INSTRUMENTS AND FOREIGN EXCHANGE CONTRACTS

In the normal course of business, the Corporation enters into various transactions involving derivative financial instruments, foreign exchange contracts 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. These financial instruments involve, to varying degrees, elements of credit and market risk.

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 financial instruments by evaluating the creditworthiness of each counterparty, adhering to the same credit approval process used for traditional lending activities. Counterparty risk limits and monitoring procedures have also been established to facilitate the management of credit risk. Collateral is obtained, if deemed necessary, based on the results of management’s credit evaluation. Collateral varies, but may include cash, investment securities, accounts receivable, inventory, property, plant and equipment or real estate.

Derivative financial instruments and foreign exchange contracts are traded over an organized exchange or negotiated over-the-counter. Credit risk associated with exchange-traded contracts is typically assumed by the organized exchange. 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 credit and liquidity risks from over-the-counter derivative and foreign exchange contracts by conducting such transactions with investment-grade domestic and foreign investment banks or commercial banks.

Market risk is the potential loss that may result from movements in interest or foreign currency rates which 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 arising from derivative and foreign exchange positions entered into on behalf of customers is reflected in the consolidated financial statements and may be mitigated by entering into offsetting transactions. Market risk inherent in derivative and foreign exchange contracts held or issued for risk management purposes is generally offset by changes in the value of rate sensitive assets or liabilities.

DERIVATIVE FINANCIAL INSTRUMENTS AND FOREIGN EXCHANGE CONTRACTS

The Corporation, as an end-user, employs a variety of financial instruments for risk management purposes. Activity related to these instruments is centered predominantly in the interest rate markets and mainly involves interest rate swaps. Various other types of instruments are also used to manage exposures to market risks, including interest rate caps and floors, total return swaps, foreign exchange forward contracts and foreign exchange swap agreements.

As part of a fair value hedging strategy, the Corporation has entered into interest rate swap agreements for interest rate risk management purposes. The interest rate swap agreements utilized, effectively modify the Corporation’s exposure to interest rate risk by converting fixed-rate deposits and debt to a floating rate. These agreements involve the receipt of fixed rate of interest amounts in exchange for floating rate interest payments over the life of the agreement, without an exchange of the underlying principal amount. No ineffectiveness was required to be recorded on these hedging instruments in the statement of income for the year ended December 31, 2002. As part of a cash flow hedging strategy, the Corporation entered into predominantly 3-year interest rate swap agreements that effectively convert a portion of its existing and forecasted floating-rate loans to a fixed-rate basis, thus reducing the impact of interest rate changes on future interest income over the next three years. Approximately 25% ($11 billion) of the Corporation’s outstanding loans were designated as the hedged items to interest rate swap agreements at December 31, 2002. For the year ended December 31, 2002, interest rate swap agreements designated as cash flow hedges increased interest and fees on loans by $361 million. Hedge ineffectiveness that resulted from cash flow hedges of variable rate loans was not material. If interest rates and interest curves remain at their current levels, the Corporation expects to reclassify $173 million of net gains on derivative instruments, that are designated as cash flow hedges, from accumulated other comprehensive income to earnings during the next twelve months due to receipt of variable interest associated with the existing and forecasted floating-rate loans. In addition, the Corporation uses forward foreign exchange contracts to protect the value of its foreign subsidiaries. Realized and unrealized gains and losses from these hedges are not included in the statement of income, but are shown in the accumulated foreign currency translation adjustment account included in other comprehensive income, with the related amounts due to or from counterparties included in other liabilities or other assets. During the years ended December 31, 2002 and 2001, the Corporation recognized immaterial amounts of net gains in accumulated foreign currency translation adjustment, related to the forward foreign exchange contracts.

The Corporation also uses various other types of financial instruments to mitigate interest rate and foreign currency risks associated with specific assets or liabilities. Such instruments include interest rate caps and floors, foreign exchange forward contracts, and foreign exchange cross-currency swaps.

22. DERIVATIVE AND CREDIT-RELATED FINANCIAL INSTRUMENTS AND FOREIGN EXCHANGE CONTRACTS (CONTINUED)

The following table presents the composition of derivative financial instruments and foreign exchange contracts, excluding commitments, held or issued for risk management purposes at December 31, 2002 and 2001. The fair values of all derivatives and foreign exchange contracts are reflected in the consolidated balance sheets.


(in millions)
			Notional/
			Contract		Unrealized		Unrealized			Fair
			Amount		Gains		Losses			Value

December 31, 2002
Risk management
	Interest rate contracts:
		Swaps	$	13,602	$	740	$	—		$	740
	Foreign exchange contracts:
		Spot and forwards		481		16		(1	)		15
		Swaps		257		2		—			2

		Total foreign exchange contracts		738		18		(1	)		17

		Total risk management	$	14,340	$	758	$	(1	)	$	757

December 31, 2001
Risk management
	Interest rate contracts:
		Swaps	$	14,497	$	573	$	(2	)	$	571
	Foreign exchange contracts:
		Spot and forwards		535		10		(4	)		6
		Swaps		285		2		(17	)		(15	)

		Total foreign exchange contracts		820		12		(21	)		(9	)

		Total risk management	$	15,317	$	585	$	(23	)	$	562

Notional amounts, which represent the extent of involvement in the derivatives market, are generally 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.

Credit risk, which excludes the effects of any collateral or netting arrangements, is measured as the cost to replace, at current market rates, contracts in a profitable position. The amount of this exposure is represented by the gross unrealized gains on derivative and foreign exchange contracts.

Bilateral collateral agreements with counterparties covered 91 percent and 92 percent of the notional amount of interest rate derivative contracts at December 31, 2002 and 2001, respectively. These agreements reduce credit risk by providing for the exchange of marketable investment securities to secure amounts due on contracts in an unrealized gain position. In addition, at December 31, 2002, master netting arrangements had been established with all interest rate swap counterparties and certain foreign exchange counterparties. These arrangements effectively reduce credit risk by permitting settlement, on a net basis, of contracts entered into with the same counterparty. The Corporation has not experienced any material credit losses associated with derivative or foreign exchange contracts.

On a limited scale, fee income is earned from entering into various transactions, principally foreign exchange contracts and interest rate contracts at the request of customers. Market risk inherent in customer contracts is often mitigated by taking offsetting positions. The Corporation generally does not speculate in derivative financial instruments for the purpose of profiting in the short-term from favorable movements in market rates.

Fair values for customer-initiated and other derivative and foreign exchange contracts 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 income statements. For the year ended December 31, 2002, unrealized gains and unrealized losses on customer-initiated and other foreign exchange contracts averaged $60 million and $59 million, respectively. For the year ended December 31, 2001, unrealized gains and unrealized losses averaged $43 million and $39 million, respectively. These contracts also generated noninterest income of $34 million in 2002 and $21 million in 2001. Average positive and negative fair values and income related to customer-initiated and other interest rate contracts were not material for 2001 and 2000.

The following table presents the composition of derivative financial instruments and foreign exchange contracts held or issued in connection with customer-initiated and other activities.


(in millions)
			Notional/
			Contract		Unrealized		Unrealized			Fair
			Amount		Gains		Losses			Value

December 31, 2002
Customer-initiated and other
	Interest rate contracts:
		Caps and floors written	$	342	$	—	$	(3	)	$	(3	)
		Caps and floors purchased		325		4		—			4
		Swaps		1,077		29		(28	)		1

		Total interest rate contracts		1,744		33		(31	)		2
	Foreign exchange contracts:
		Spot, forwards, futures and options		1,475		34		(36	)		(2	)
		Swaps		296		1		—			1

		Total foreign exchange contracts		1,771		35		(36	)		(1	)

		Total customer-initiated and other	$	3,515	$	68	$	(67	)	$	1

December 31, 2001
Customer-initiated and other
	Interest rate contracts:
		Caps and floors written	$	365	$	—	$	(4	)	$	(4	)
		Caps and floors purchased		352		4		—			4
		Swaps		981		14		(13	)		1

		Total interest rate contracts		1,698		18		(17	)		1
	Foreign exchange contracts:
		Spot, forwards, futures and options		2,323		35		(29	)		6
		Swaps		366		2		(1	)		1

		Total foreign exchange contracts		2,689		37		(30	)		7

		Total customer-initiated and other	$	4,387	$	55	$	(47	)	$	8

Detailed discussions of each class of derivative financial instruments and foreign exchange contracts held or issued by the Corporation for both risk management and customer-initiated and other activities are as follows.

22. DERIVATIVE AND CREDIT-RELATED FINANCIAL INSTRUMENTS AND FOREIGN EXCHANGE CONTRACTS (CONTINUED)

INTEREST RATE SWAPS

Interest rate swaps are agreements in which two parties periodically exchange fixed cash payments for variable payments based on a designated market rate or index (or variable payments based on two different rates or indices for basis swaps), applied to a specified notional amount until a stated maturity. The Corporation’s swap agreements are structured such that variable payments are primarily based on prime, one-month LIBOR or three-month LIBOR. These instruments are principally negotiated over-the-counter and are subject to credit risk, market risk and liquidity risk.

INTEREST RATE OPTIONS, INCLUDING CAPS AND FLOORS

Option contracts grant the option holder the right to buy or sell an underlying financial instrument for a predetermined price before the contract expires. Interest rate caps and floors are option-based contracts which entitle the buyer to receive cash payments based on the difference between a designated reference rate and the strike price, applied to a notional amount. Written options, primarily caps, expose the Corporation to market risk but not credit risk. A fee is received at inception for assuming the risk of unfavorable changes in interest rates. Purchased options contain both credit and market risk; however, market risk is limited to the fee paid. Options are either exchange-traded or negotiated over-the-counter. All interest rate caps and floors are over-the-counter agreements.

FOREIGN EXCHANGE CONTRACTS

The Corporation uses foreign exchange rate swaps, including generic receive variable swaps and cross-currency swaps, for risk management purposes. Generic receive variable swaps involve payment, in a foreign currency, of the difference between a contractually fixed exchange rate and an average exchange rate determined at settlement, applied to a notional amount. Cross-currency swaps involve the exchange of both interest and principal amounts in two different currencies. Other foreign exchange contracts such as futures, forwards and options are primarily entered into as a service to customers and to offset market risk arising from such positions. Futures and forward contracts require the delivery or receipt of foreign currency at a specified date and exchange rate. Foreign currency options allow the holder to purchase or sell a foreign currency at a specified date and price. Foreign exchange futures are exchange-traded, while forwards, swaps and most options are negotiated over-the-counter. Foreign exchange contracts expose the Corporation to both market risk and credit risk.

COMMITMENTS

The Corporation also enters into commitments to purchase or sell earning assets for risk management and trading purposes. These transactions are similar in nature to forward contracts. The Corporation had commitments to purchase investment securities for its trading account and available for sale portfolio totaling $581 million at December 31, 2002 and totaling $67 million at December 31, 2001. Commitments to sell investment securities related to the trading account totaled $4 million at December 31, 2002 and $10 million at December 31, 2001. Outstanding commitments expose the Corporation to both credit and market risk.

CREDIT-RELATED FINANCIAL INSTRUMENTS

The Corporation issues off-balance sheet financial instruments in connection with commercial and consumer lending activities. Credit risk associated with these instruments is represented by the contractual amounts indicated in the following table:

(in millions)

December 31

2002

2001

Unused commitments to extend credit

27,377

28,695

Standby letters of credit and financial guarantees

5,545

5,118

Commercial letters of credit

241

258

Credit default swaps

The Corporation maintains an allowance to cover probable credit losses inherent in lending-related commitments, including commitments to extend credit, letters of credit and guarantees. At December 31, 2002 and 2001, the allowance for credit losses on lending-related commitments, which is recorded in “accrued expenses and other liabilities”, was $35 million and $18 million, 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. Total unused commitments to extend credit included bankcard, revolving check credit and equity access loan commitments of $2 billion at December 31, 2002 and $1 billion at December 31, 2001. Other unused commitments, primarily variable rate, totaled $25 billion at December 31, 2002 and $28 billion at December 31, 2001.

STANDBY AND COMMERCIAL LETTERS OF CREDIT AND FINANCIAL GUARANTEES

Standby and commercial letters of credit and financial guarantees represent conditional obligations of the Corporation which guarantee the performance of a customer to a third party. Standby letters of credit and financial guarantees are primarily issued to support public and private borrowing arrangements, including commercial paper, bond financing and similar transactions. Long-term standby letters of credit and financial guarantees, defined as those maturing beyond one year, expire in decreasing amounts through the year 2012, and were $1,668 million and $1,562 million at December 31, 2002 and 2001, respectively. The remaining standby letters of credit and financial guarantees, which mature within one year, totaled $3,877 million and $3,556 million at December 31, 2002 and 2001, respectively. Commercial letters of credit are issued to finance foreign or domestic trade transactions. The Corporation enters into participation arrangements with third parties which effectively reduce the maximum amount of future payments which may be required under standby letters of credit. These risk participations covered $218 million of the $5,545 million standby letters of credit outstanding at December 31, 2002.

CREDIT DEFAULT SWAPS

Credit default swaps allow the Corporation to diversify its loan portfolio by assuming credit exposure from different borrowers or industries without actually extending credit in the form of a loan. Credit risk associated with credit default swaps was $11 million and $7 million at December 31, 2002 and 2001, respectively.

23. CONTINGENT LIABILITIES

24. RESERVE REQUIREMENTS

Cash and due from banks includes reserves required to be maintained and/or deposited with the Federal Reserve Bank. These reserve balances vary, depending on the level of customer deposits in the Corporation’s subsidiary banks. The average required reserve balances were $209 million and $212 million for the years ended December 31, 2002 and 2001, respectively.

25. ESTIMATED FAIR VALUE OF FINANCIAL INSTRUMENTS

Disclosure of the estimated fair values of financial instruments, which differ from carrying values, often requires the use of estimates. In cases where quoted market values 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. Accordingly, the estimates provided herein do not necessarily indicate amounts which could be realized in a current exchange. Furthermore, as the Corporation typically holds the majority of its financial instruments until maturity, it does not expect to realize many of the estimated amounts disclosed. The disclosures also do not include estimated fair value amounts for items which 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.

The Corporation used the following methods and assumptions:

Cash and short-term investments: The carrying amount approximates the estimated fair value of these instruments, which consists of cash and due from banks, interest-bearing deposits with banks and federal funds sold.

Trading securities: These securities are carried at quoted market value or the market value for comparable securities, which represents estimated fair value.

Loans held for sale: The market value of these loans represents estimated fair value or estimated net selling price. The market value is determined on the basis of existing forward commitments or the current market values of similar loans.

Investment securities: The market value of investment securities, which is based on quoted market values or the market values for comparable securities, represents estimated fair value.

Domestic business loans: These consist of commercial, real estate construction, commercial mortgage and equipment lease financing loans. The estimated fair value of the Corporation’s variable rate commercial loans is represented by their carrying value, adjusted by an amount which estimates the change in fair value caused by changes in the credit quality of borrowers since the loans were originated. The estimated fair value of fixed rate commercial loans is calculated by discounting the contractual cash flows of the loans using year-end origination rates derived from the Treasury yield curve or other representative bases. The resulting amounts are adjusted to estimate the effect of changes in the credit quality of borrowers since the loans were originated.

International loans: The estimated fair value of the Corporation’s short-term international loans, which consist of trade-related loans, or loans which have no cross-border risk due to the existence of domestic guarantors or liquid collateral, is represented by their carrying value, adjusted by an amount which estimates the effect on fair value of changes in the credit quality of borrowers or guarantors. The estimated fair value of long-term international loans is based on the quoted market values of these loans or on the current market values of international loans with similar characteristics.

Retail loans: This category consists of residential mortgage and consumer loans. The estimated fair value of residential mortgage loans is based on discounted contractual cash flows or market values of similar loans sold in conjunction with securitized transactions. For consumer loans, the estimated fair values are calculated by discounting the contractual cash flows of the loans using rates representative of year-end origination rates. The resulting amounts are adjusted to estimate the effect of changes in the credit quality of borrowers since the loans were originated.

Customers’ liability on acceptances outstanding and acceptances outstanding: The carrying amount approximates the estimated fair value.

25. ESTIMATED FAIR VALUE OF FINANCIAL INSTRUMENTS (CONTINUED)

Loan servicing rights: The estimated fair value is representative of a discounted cash flow analyses, using interest rates and prepayment speed assumptions currently quoted for comparable instruments.

Deposit liabilities: The estimated fair value of demand deposits, consisting of checking, savings and certain money market deposit accounts, is represented by the amounts payable on demand. The carrying amount of deposits in foreign offices approximates their estimated fair value, while the estimated fair value of term deposits is calculated by discounting the scheduled cash flows using the year-end rates offered on these instruments.

Short-term borrowings: The carrying amount of federal funds purchased, securities sold under agreements to repurchase and other borrowings approximates estimated fair value.

Medium- and long-term debt: The estimated fair value of the Corporation’s variable rate medium- and long-term debt is represented by its carrying value. The estimated fair value of the fixed rate medium- and long-term debt is based on quoted market values. If quoted market values are not available, the estimated fair value is based on the market values of debt with similar characteristics.

Derivative financial instruments and foreign exchange contracts: The estimated fair value of interest rate swaps represents the amount the Corporation would receive or pay to terminate or otherwise settle the contracts at the balance sheet date, taking into consideration current unrealized gains and losses on open contracts. The estimated fair value of foreign exchange futures and forward contracts and commitments to purchase or sell financial instruments is based on quoted market prices. The estimated fair value of interest rate and foreign currency options (including interest rate caps and floors) is determined using option pricing models. All derivative financial instruments and foreign exchange contracts are carried at fair value on the balance sheet.

Credit-related financial instruments: The estimated fair value of unused commitments to extend credit and standby and commercial letters of credit is represented by the estimated cost to terminate or otherwise settle the obligations with the counterparties. This amount is approximated by the fees currently charged to enter into similar arrangements, considering the remaining terms of the agreements and any changes in the credit quality of counterparties since the agreements were entered into. This estimate of fair value does not take into account the significant value of the customer relationships and the future earnings potential involved in such arrangements as the Corporation does not believe that it would be practicable to estimate a representational fair value for these items.

The estimated fair values of the Corporation’s financial instruments are as follows:


(in millions)
December 31		2002						2001

		Carrying			Estimated			Carrying			Estimated
		Amount			Fair Value			Amount			Fair Value

ASSETS
Cash and short-term investments		$	4,033		$	4,033		$	2,620		$	2,620
Trading securities			30			30			101			101
Loans held for sale			285			285			283			284
Investment securities available for sale			3,053			3,053			4,291			4,291

Commercial loans			25,242			24,872			25,176			24,897
International loans			2,765			2,635			3,015			2,952
Real estate construction loans			3,457			3,463			3,258			3,262
Commercial mortgage loans			7,194			7,353			6,267			6,285
Residential mortgage loans			789			801			779			785
Consumer loans			1,538			1,563			1,484			1,468
Lease financing			1,296			1,288			1,217			1,208

	Total loans		42,281			41,975			41,196			40,857
Less allowance for loan losses			(791	)		—			(637	)		—

	Net loans		41,490			41,975			40,559			40,857
Customers’ liability on acceptances outstanding			33			33			29			29
Loan servicing rights			11			11			9			9

LIABILITIES
Demand deposits (noninterest-bearing)			16,335			16,335			12,596			12,596
Interest-bearing deposits			25,440			25,543			24,974			25,070

	Total deposits		41,775			41,878			37,570			37,666
Short-term borrowings			540			540			1,986			1,986
Acceptances outstanding			33			33			29			29
Medium- and long-term debt			5,216			5,031			5,503			5,490

DERIVATIVE FINANCIAL
INSTRUMENTS AND
FOREIGN EXCHANGE
CONTRACTS
Risk management:
	Unrealized gains		758			758			585			585
	Unrealized losses		(1	)		(1	)		(23	)		(23	)
Customer-initiated and other:
	Unrealized gains		68			68			55			55
	Unrealized losses		(67	)		(67	)		(47	)		(47	)

CREDIT-RELATED
FINANCIAL
INSTRUMENTS			(56	)		(27	)		(38	)		(28	)

26. BUSINESS SEGMENT INFORMATION

The Corporation has strategically aligned its operations into three major lines of business: the Business Bank, the Individual Bank and the Investment Bank. These lines of business are differentiated based on the products and services provided. Line of business 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. Information presented is not necessarily comparable with similar information for any other financial institution. The management accounting system assigns balance sheet and income statement items to each line of business using certain methodologies which are constantly being refined. For comparability purposes, amounts in all periods are based on methodologies in effect at December 31, 2002. These methodologies, which are briefly summarized in the following paragraph, may be modified as management accounting systems are enhanced and changes occur in the organizational structure or product lines. In addition to the three major lines of business, the Finance Division is also reported as a segment.

The Corporation’s internal funds transfer pricing system records cost of funds or credit for funds using a combination of matched maturity funding for certain assets and liabilities and a blended rate based on various maturities for the remaining assets and liabilities. The allowance for loan losses is assigned in two ways. For commercial loans, it is recorded in business units based on the non-standard specifically calculated amount or the credit score of each loan outstanding. For consumer loans, general reserves are allocated based on historical loan loss experience, economic outlook and other factors. The related loan loss provision is assigned based on the amount necessary to maintain an allowance for loan losses adequate for that line of business. Noninterest income and expenses directly attributable to a line of business are assigned to that business. Direct expenses incurred by areas whose services support the overall Corporation are allocated to the business lines as follows: product processing expenditures are allocated based on standard unit costs applied to actual volume measurements; administrative expenses are allocated based on estimated time expended; and corporate overhead is assigned based on the ratio of a line of business’ noninterest expenses to total noninterest expenses incurred by all business lines. Equity (common equity plus Tier 1 qualifying trust preferred securities) is allocated based on credit, operational and interest rate risks. Most of the equity allocation relates to credit risk, which is determined based on the risk rating and expected life of each loan, letter of credit and unused commitment recorded in the business unit. Operational risk is allocated based on the nature and extent of expenses incurred by business units. Virtually all interest rate risk is assigned to Finance, and is calculated based on the extent of the Corporation’s hedging activities.

The following discussion provides information about the activities of each line of business. A discussion of the financial results and the factors impacting 2002 performance can be found in the section entitled “Strategic Lines of Business” in the financial review on page 32.

The Business Bank is comprised of middle market lending, asset-based lending, large corporate banking, international financial services and specialty businesses, including technology and life sciences, specialty deposit gathering and entertainment lending. This line of business meets the needs of medium-size 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 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 gap and earnings simulation analysis and executing various strategies to manage the Corporation’s exposure to liquidity and interest rate risk.

The Other category includes divested business lines, the income and expense impact of cash and loan loss reserves not assigned to specific business lines and miscellaneous other items of a corporate nature.

26. BUSINESS SEGMENT INFORMATION (CONTINUED)

Lines of business/segment financial results were as follows:


(dollar amounts in millions)
	Business Bank									Individual Bank**									Investment Bank*

Years Ended December 31	2002			2001			2000			2002			2001			2000			2002			2001			2000

EARNINGS SUMMARY
Net interest income (expense) (FTE)	$	1,592		$	1,365		$	1,319		$	789		$	754		$	761		$	1		$	(1	)	$	(11	)
Provision for loan losses		482			249			289			53			22			3			—			—			—
Noninterest income		258			270			300			309			335			369			177			106			267
Noninterest expenses		545			551			636			645			639			632			278			209			233
Provision (benefit) for income taxes (FTE)		315			308			255			128			143			170			(35	)		(36	)		11
Net income (loss)		508			527			439			272			285			325			(65	)		(68	)		12

SELECTED AVERAGE BALANCES
Assets	$	35,344		$	35,815		$	33,034		$	8,616		$	7,881		$	7,202		$	274		$	398		$	408
Loans		34,268			34,020			31,987			7,818			7,329			6,658			5			22			53
Deposits		14,723			11,171			9,629			18,744			18,405			17,959			46			72			37
Allocated equity		2,983			2,799			2,428			975			894			809			192			267			282

STATISTICAL DATA
Return on average assets		1.44	%		1.47	%		1.33	%		1.37	%		1.47	%		1.81	%		(23.10	)%		(16.81	)%		2.94	%
Return on average allocated equity		17.04			18.84			18.11			27.91			31.84			40.23			(33.76	)		(25.56	)		4.26
Efficiency ratio		29.16			33.61			39.34			58.77			58.69			55.89			155.99			199.64			90.95


(dollar amounts in millions)
	Finance**									Other									Total

Years Ended December 31	2002			2001			2000			2002			2001			2000			2002			2001			2000

EARNINGS SUMMARY
Net interest income (expense) (FTE)	$	(175	)	$	42		$	(13	)	$	(71	)	$	(54	)	$	(48	)	$	2,136		$	2,106		$	2,008
Provision for loan losses		—			—			—			100			(30	)		(41	)		635			241			251
Noninterest income		86			66			18			70			60			26			900			837			980
Noninterest expenses		9			8			4			38			180			6			1,515			1,587			1,511
Provision (benefit) for income taxes (FTE)		(42	)		43			2			(81	)		(53	)		(3	)		285			405			435
Net income (loss)		(56	)		57			(1	)		(58	)		(91	)		16			601			710			791

SELECTED AVERAGE BALANCES
Assets	$	4,998		$	4,063		$	4,312		$	1,898		$	1,531		$	1,921		$	51,130		$	49,688		$	46,877
Loans		—			—			—			—			—			—			42,091			41,371			38,698
Deposits		4,072			5,564			2,596			127			100			119			37,712			35,312			30,340
Allocated equity		920			752			399			(186	)		(107	)		45			4,884			4,605			3,963

STATISTICAL DATA
Return on average assets		(0.31	)%		0.32	%		(0.01	)%		n/m	%		n/m	%		n/m	%		1.18	%		1.43	%		1.69	%
Return on average allocated equity		(6.10	)		7.57			(0.21	)		n/m			n/m			n/m			12.31			15.16			19.52
Efficiency ratio		(5.77	)		9.38			707.84			n/m			n/m			n/m			50.59			54.30			50.88

* Included in noninterest expenses are fees internally transferred to other lines of business for referrals to the Investment Bank. If excluded, Investment Bank net income (loss) would have been $(45) million in 2002, $(53) million in 2001 and $25 million in 2000. Return on average allocated equity would have been (23.46)% in 2002, (19.82)% in 2001 and 8.92% in 2000.

** Return on average assets for the Individual Bank and Finance segments is calculated based on total average liabilities and allocated equity.

n/m — not meaningful

27. PARENT COMPANY FINANCIAL STATEMENTS

BALANCE SHEETS – COMERICA INCORPORATED


(in millions, except share data)
December 31		2002			2001

ASSETS
Cash and due from subsidiary bank		$	17		$	101
Short-term investments with subsidiary bank			28			12
Investment in subsidiaries, principally banks			5,506			5,371
Premises and equipment			3			3
Other assets			272			188

	Total assets	$	5,826		$	5,675

LIABILITIES AND SHAREHOLDERS’ EQUITY
Commercial paper		$	130		$	140
Long-term debt			176			156
Subordinated debt issued to and advances from subsidiaries			352			360
Other liabilities			221			212

	Total liabilities		879			868
Common stock – $5 par value
	Authorized – 325,000,000 shares
	Issued – 178,735,252 shares at 12/31/02 and 178,749,198 shares at 12/31/01		894			894
Capital surplus			363			336
Unearned employee stock ownership plan shares – 131,954 shares at 12/31/01			—			(5	)
Accumulated other comprehensive income			237			225
Retained earnings			3,684			3,448
Less cost of common stock in treasury – 3,960,149 shares at 12/31/02 and 1,674,659 shares at 12/31/01			(231	)		(91	)

	Total shareholders’ equity		4,947			4,807

	Total liabilities and shareholders’ equity	$	5,826		$	5,675

STATEMENTS OF INCOME – COMERICA INCORPORATED


(in millions)
Years ended December 31		2002			2001		2000

INCOME
Income from subsidiaries
	Dividends from subsidiaries	$	648		$	580	$	339
	Other interest income		1			2		6
	Intercompany management fees		149			132		98
Other noninterest income			12			23		2

	Total income		810			737		445

EXPENSES
Interest on commercial paper			3			4		6
Interest on long-term debt			6			8		10
Interest on subordinated debt issued to subsidiaries			27			13		—
Salaries and employee benefits			82			69		63
Occupancy expense			6			4		4
Equipment expense			1			1		2
Other noninterest expenses			34			22		35

	Total expenses		159			121		120

Income before provision (benefit) for income taxes and equity in undistributed net income of subsidiaries			651			616		325
Provision (benefit) for income taxes			(1	)		12		(5	)

Income before equity in undistributed earnings (losses) of subsidiaries			652			604		330
Equity in undistributed earnings (losses) of subsidiaries, principally banks			(51	)		106		461

NET INCOME		$	601		$	710	$	791

27. PARENT COMPANY FINANCIAL STATEMENTS (CONTINUED)

STATEMENTS OF CASH FLOWS — COMERICA INCORPORATED


(in millions)
Years ended December 31				2002			2001			2000

OPERATING ACTIVITIES
	Net income			$	601		$	710		$	791
	Adjustments to reconcile net income to net cash provided by operating activities
		Undistributed (earnings) losses of subsidiaries, principally banks			51			(106	)		(461	)
		Depreciation			1			1			1
		Net gain on the sales of businesses			(12	)		(21	)		—
		Increase in dividends receivable from subsidiary			(85	)		—			—
		Other, net			(70	)		18			5

			Total adjustments		(115	)		(108	)		(455	)

			Net cash provided by operating activities		486			602			336

INVESTING ACTIVITIES
	Purchases of investment securities available for sale				—			—			(24	)
	Proceeds from sales of investment securities available for sale				—			—			2
	Purchases of fixed assets				(1	)		(1	)		(1	)
	Net (increase) decrease in short-term investments with subsidiary bank				(16	)		100			(42	)
	Net increase in private equity and venture capital investments				(26	)		(23	)		—
	Net cash provided by sales of businesses				8			33			—
	Capital transactions with subsidiaries				(27	)		(421	)		(11	)

			Net cash used in investing activities		(62	)		(312	)		(76	)

FINANCING ACTIVITIES
	Net (decrease) increase in subordinated debt issued to and advances from subsidiaries				(7	)		360			1
	Net repayments and purchases of long-term debt				—			—			(1	)
	Net (decrease) increase in commercial paper				(10	)		60			5
	Redemption of preferred stock				—			(250	)		—
	Proceeds from issuance of common stock				50			66			20
	Purchase of common stock for treasury and retirement				(210	)		(121	)		(14	)
	Dividends paid				(331	)		(314	)		(261	)

			Net cash used in financing activities		(508	)		(199	)		(250	)

Net (decrease) increase in cash on deposit at bank subsidiary					(84	)		91			10
Cash on deposit at bank subsidiary at beginning of year					101			10			—

Cash on deposit at bank subsidiary at end of year				$	17		$	101		$	10

Interest paid				$	37		$	19		$	16

Income taxes paid (recovered)				$	12		$	17		$	(6	)

28. SUMMARY OF QUARTERLY FINANCIAL STATEMENTS

The following quarterly information is unaudited. However, in the opinion of management, the information reflects all adjustments which are necessary for the fair presentation of the results of operations for the periods presented.

(in millions, except per share data)

2002

Fourth

Third

Second

First

Quarter

Quarter (2)

Quarter

Interest income

686

694

705

712

Interest expense

153

166

174

172

Net interest income

533

528

531

540

Provision for loan losses

115

275

170

Securities gains (losses)

)

Noninterest income (excluding securities gains (losses))

197

222

231

209

Noninterest expenses

373

443

352

347

Net income

206

157

214

Basic net income per common share

1.18

0.14

0.89

1.22

Diluted net income per common share

1.18

0.14

0.88

1.20


	2001

	Fourth			Third		Second			First
	Quarter			Quarter		Quarter			Quarter (1)

Interest income	$	755		$	823	$	875		$	940
Interest expense		219			297		347			428
Net interest income		536			526		528			512
Provision for loan losses		69			58		37			77
Securities gains (losses)		(3	)		—		(1	)		24
Noninterest income (excluding securities gains (losses))		227			224		213			153
Merger-related and restructuring charges		25			18		15			94
Noninterest expenses, excluding merger-related and restructuring charges		355			355		367			358
Net income		199			209		208			94

Basic net income per common share	$	1.12		$	1.16	$	1.15		$	0.50
Diluted net income per common share		1.11			1.14		1.13			0.50

(1) First quarter 2001 provision for loan losses includes a $25 million merger-related charge to conform the credit policies of Imperial with the Corporation.

(2) Second quarter 2002 results are adjusted for the previous restatement of earnings to reflect additional provision for loan losses (see Note 30 on page 75) and to record the effect of the third quarter adoption of SFAS No. 123 (see Notes 1 and 16 on pages 50 and 59, respectively).

29. PENDING ACCOUNTING PRONOUNCEMENTS

In June 2001, the FASB issued SFAS No. 143, “Accounting for Asset Retirement Obligations”. The Statement covers legal obligations that are identifiable by the entity upon acquisition and construction, and during the operating life of a long-lived asset. Identified retirement obligations would be recorded as a liability with a corresponding amount capitalized as part of the asset’s carrying amount. The capitalized retirement cost asset would be amortized to expense over the asset’s useful life. The Statement is effective January 1, 2003, for calendar year companies. The adoption of SFAS No. 143 will not have a material impact on the Corporation’s financial position or results of operations.

In November 2002, the FASB issued Interpretation No. 45, “Guarantor’s Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others” (FIN 45). According to FIN 45, each guarantee meeting the characteristics described in the Interpretation is to be recognized and initially measured at fair value. In addition, significant new disclosures are required, even if the likelihood of the guarantor making payments under the guarantee is remote. The disclosure requirements are effective for financial statements of interim or annual periods ending after December 15, 2002, while the initial recognition and measurement provisions are applicable on a prospective basis to guarantees issued or modified after December 31, 2002. The requirements of FIN 45 will not have a material impact on the Corporation’s financial position or results of operations.

In January 2003, the FASB issued Interpretation No. 46, “Consolidation of Variable Interest Entities” (FIN 46). FIN 46 provides guidance on how to identify a variable interest entity (VIE), and when the assets, liabilities, noncontrolling interests and results of operations of a VIE need to be included in a company’s consolidated financial statements. A company that holds variable interests in an entity will need to consolidate the entity if the company’s interest in the VIE is such that the company will absorb a majority of the VIE’s expected losses and/or receive a majority of the entity’s residual returns, if the losses and/or returns occur. FIN 46 also requires additional disclosures by primary beneficiaries and other significant variable interest holders. The provisions of FIN 46 became effective upon issuance. The requirements of FIN 46 will not have a material impact on the Corporation’s financial position or results of operations.

30. RESTATEMENT OF PREVIOUSLY REPORTED QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)

In the third quarter 2002, the Corporation restated second quarter 2002 earnings to reflect additional provision for loan losses and credit losses on lending-related commitments of $40 million ($26 million after-tax) and $22 million of additional net charge-offs. Including the related effect of lower incentive compensation of $5 million ($3 million after-tax), second quarter 2002 earnings, as adjusted for the third quarter 2002 retroactive adoption of SFAS No. 123, were reduced to $157 million, or $0.88 per diluted share, compared to $180 million, or $1.01 per diluted share, as adjusted for the adoption of SFAS No. 123. Refer to Notes 1 and 16 on pages 50 and 59, respectively, for further information on the adoption of SFAS No. 123. This additional provision followed a regularly scheduled examination by the Federal Reserve Bank of San Francisco and the California Department of Financial Institutions of the Comerica Bank-California subsidiary. After discussions with the regulators in late August through late September 2002, the Corporation determined that the California subsidiary’s second quarter 2002 credit loss reserves and net charge-offs should be increased. The additional net charge-offs relate to 11 loans in the Corporation’s entertainment division, 5 loans in the commercial middle market area and one overdraft relating to a commercial middle market loan.

The components of the additional provision were as follows:


(in millions)
	Provision, net of specific reserves, to cover $22 million in additional charge-offs relating to 15 non-accruing loans,1 substandard accruing loan and 1 overdraft		$	6
	Additional reserve amounts on loans in the California subsidiary’s portfolio with various risk ratings, but primarily watch list in nature			20
	An increase of the unallocated reserve for performing loans			14

		Total additional provision	$	40

The Corporation has a longstanding policy of taking charge-offs as soon as a loan is considered partially or fully uncollectible based on careful evaluation of a number of risk factors. The Corporation applied this policy in good faith in its initial determination of the level of charge-offs it would take in the second quarter of 2002. The precise timing of when to take a charge-off, however, involves some element of judgment as to the potential collectibility of the loan in question. On further review in the course of the regulatory examination process, the Corporation subsequently concluded that the 16 loans and one overdraft referenced above should properly be reflected as second quarter (as opposed to third quarter) charge-offs. Similarly, loan classifications and the setting of specific reserves involve a degree of judgment. The Corporation has a comprehensive program for reviewing loans throughout its portfolio of approximately 11,000 commercial loans on a regular ongoing basis. The reclassification and resetting of reserves for a number of loans in the second quarter of 2002 reflects the further review and adjustment of the credit risk associated with the Corporation’s California portfolio which the Corporation implemented following the input it received in the course of the above-referenced regulatory examination. Similarly, the increase in the unallocated reserve for the second quarter reflects an additional weighting of risk based on the general characteristics of the California loan portfolio which stems in large part from the general migration of loans to higher risk categories and the corresponding impact on the assessment of the overall character of the California portfolio. The Corporation uses quantitative metrics and qualitative factors to validate its loan loss reserves and allowances for credit risks, including loan categories, industry, economic factors and trends, transfer risks, risks associated with new customers, historical loss ratios, industry norms and expectations from banking regulators. As part of its on-going evaluation of its allowance for credit loss methodology, including following the recent regulatory examination, the Corporation has refined the factors which comprise the allocated and unallocated portions of its allowances and examined its credit quality processes to help ensure timely and appropriate charge-offs and risk analyses, ratings and profiles. The Corporation has recently increased the amount of senior staff supporting its credit process, is improving the documentation and technology tools used as part of the credit process, has increased its focus on factors particular to the California market and included an assessment of these factors in the establishment of an allocated reserve.

The table below provides a reconcilement reflecting adjustments, net of tax, of net income and net income per common share for the three and six month periods ended June 30, 2002. Accordingly, capital has been adjusted for the adjustment to net income. The table also indicates the additional charge-offs during the period and selected pertinent balances, both as reported and as restated.


(in millions, except per share data)
		Three Months Ended			Six Months Ended
		June 30,			June 30,
		2002			2002

Net income, as reported*		$	180		$	394
Increase to the provision for credit losses, net of tax			(26	)		(26	)
Reduction in salaries and benefits, net of tax			3			3

Net income, as restated		$	157		$	371

Net income per common share — basic
	As reported*	$	1.03		$	2.24
	As restated	$	0.89		$	2.11
Net income per common share — diluted
	As reported*	$	1.01		$	2.21
	As restated	$	0.88		$	2.08
Loan charge-offs, net of recoveries
	As reported	$	59		$	119
	As restated	$	81		$	141

* Includes adjustment for compensation expense recorded as a result of the third quarter 2002 adoption of SFAS No. 123 of $6 million ($4 million after-tax, or $0.02 per diluted share).


(in millions)
		At June 30,
		2002
Total loans
	As reported	$	41,174
	As restated	$	41,152
Allowance for loan losses and credit losses on lending-related commitments
	As reported	$	744
	As restated	$	762
Net loans
	As reported	$	40,430
	As restated	$	40,390
Liabilities
	As reported	$	45,687
	As restated	$	45,670
Shareholders’ equity
	As reported	$	4,915
	As restated	$	4,892

REPORT OF MANAGEMENT

Management is responsible for the accompanying consolidated financial statements and all other financial information in this Annual Report. The consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States and include amounts which of necessity are based on management’s best estimates and judgments and give due consideration to materiality. The other financial information herein is consistent with that in the consolidated financial statements.

In meeting its responsibility for the reliability of the consolidated financial statements, management develops and maintains systems of internal accounting controls. These controls are designed to provide reasonable assurance that assets are safeguarded and transactions are executed and recorded in accordance with management’s authorization. The concept of reasonable assurance is based on the recognition that the cost of internal accounting control systems should not exceed the related benefits. The systems of control are continually monitored by the internal auditors whose work is closely coordinated with and supplements in many instances the work of independent auditors.

The consolidated financial statements have been audited by independent auditors Ernst & Young LLP. Their role is to render an independent professional opinion on management’s consolidated financial statements based upon performance of procedures they deem appropriate under auditing standards generally accepted in the United States.

The Corporation’s Board of Directors oversees management’s internal control and financial reporting responsibilities through its Audit and Legal Committee as well as various other committees. The Audit and Legal Committee, which consists of directors who are not officers or employees of the Corporation, meets periodically with management and internal and independent auditors to assure that they and the Committee are carrying out their responsibilities, and to review auditing, internal control and financial reporting matters.

Ralph W. Babb Jr.
Chairman, President and Chief Executive Officer

Elizabeth S. Acton
Executive Vice President and Chief Financial Officer

Marvin J. Elenbaas
Senior Vice President and Controller

REPORT OF INDEPENDENT AUDITORS

Board of Directors
Comerica Incorporated

We have audited the accompanying consolidated balance sheets of Comerica Incorporated and subsidiaries as of December 31, 2002 and 2001, and the related consolidated statements of income, changes in shareholders’ equity, and cash flows for each of the two years in the period ended December 31, 2002. These financial statements are the responsibility of the Corporation’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted in the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Comerica Incorporated and subsidiaries at December 31, 2002 and 2001, and the consolidated results of their operations and their cash flows for each of the two years in the period ended December 31, 2002, in conformity with accounting principles generally accepted in the United States.

As discussed in Note 8 to the consolidated financial statements, in 2002 Comerica Incorporated and subsidiaries changed their method of accounting for goodwill and other intangible assets. Also, as discussed in Note 16 to the consolidated financial statements, Comerica Incorporated and subsidiaries changed their method of accounting for stock-based compensation.

We previously audited and reported on the consolidated statements of income, changes in shareholders’ equity, and cash flows for the year ended December 31, 2000, prior to their restatement for the 2001 pooling of interests as described in Note 2 to the consolidated financial statements. The contribution of Comerica Incorporated to total revenues and net income represented 86% and 95% of the respective 2000 restated totals. Financial statements of the other pooled company included in the 2000 restated consolidated statements were audited and reported on separately by other auditors. We also have audited, as to combination only, the accompanying related consolidated statements of income, changes in shareholders’ equity, and cash flows for the year ended December 31, 2000, after restatement for the 2001 pooling of interests; in our opinion, such consolidated financial statements have been properly combined on the basis described in Note 2 to the consolidated financial statements.

Detroit, Michigan
January 16, 2003

HISTORICAL REVIEW — AVERAGE BALANCE SHEETS

COMERICA INCORPORATED AND SUBSIDIARIES


CONSOLIDATED FINANCIAL INFORMATION (in millions)
December 31		2002			2001			2000			1999			1998

ASSETS
Cash and due from banks		$	1,800		$	1,835		$	1,842		$	1,896		$	1,963
Short-term investments			602			442			978			650			642
Investment securities			4,360			3,909			3,688			3,107			4,041
Commercial loans			25,460			26,401			25,313			23,069			19,850
International loans			2,988			2,800			2,552			2,627			2,342
Real estate construction loans			3,353			3,090			2,554			1,729			1,200
Commercial mortgage loans			6,786			5,695			5,142			4,583			4,011
Residential mortgage loans			758			795			833			930			1,331
Consumer loans			1,504			1,479			1,434			1,853			2,606
Lease financing			1,242			1,111			870			699			576

	Total loans		42,091			41,371			38,698			35,490			31,916
Less allowance for loan losses			(739	)		(654	)		(595	)		(531	)		(498	)

	Net loans		41,352			40,717			38,103			34,959			31,418
Accrued income and other assets			3,016			2,785			2,266			2,050			1,905

	Total assets	$	51,130		$	49,688		$	46,877		$	42,662		$	39,969

LIABILITIES AND SHAREHOLDERS’ EQUITY
Noninterest-bearing deposits		$	11,841		$	10,253		$	9,068		$	8,661		$	8,445
Interest-bearing deposits			25,871			25,059			21,272			18,817			18,159

	Total deposits		37,712			35,312			30,340			27,478			26,604
Short-term borrowings			1,962			2,584			3,323			3,562			3,517
Accrued expenses and other liabilities			809			823			703			522			494
Medium- and long-term debt			5,763			6,198			8,298			7,441			6,109

	Total liabilities		46,246			44,917			42,664			39,003			36,724
Shareholders’ equity			4,884			4,771			4,213			3,659			3,245

	Total liabilities and shareholders’ equity	$	51,130		$	49,688		$	46,877		$	42,662		$	39,969

HISTORICAL REVIEW — STATEMENTS OF INCOME

COMERICA INCORPORATED AND SUBSIDIARIES


CONSOLIDATED FINANCIAL INFORMATION (in millions, except per share data)
Years Ended December 31		2002		2001			2000		1999		1998


INTEREST INCOME
Interest and fees on loans		$	2,524	$	3,121		$	3,379	$	2,859	$	2,706
Interest on investment securities			246		246			259		199		263
Interest on short-term investments			27		26			78		39		35

	Total interest income		2,797		3,393			3,716		3,097		3,004

INTEREST EXPENSE
Interest on deposits			479		888			951		693		739
Interest on short-term borrowings			37		105			215		183		191
Interest on medium- and long-term debt			149		298			546		404		354

	Total interest expense		665		1,291			1,712		1,280		1,284

	Net interest income		2,132		2,102			2,004		1,817		1,720
Provision for loan losses			635		241			251		144		145

	Net interest income after provision for loan losses		1,497		1,861			1,753		1,673		1,575

NONINTEREST INCOME
Service charges on deposit accounts			227		211			189		177		164
Fiduciary income			171		180			181		183		175
Commercial lending fees			69		67			61		55		58
Letter of credit fees			60		58			52		46		31
Foreign exchange income			40		35			27		21		14
Brokerage fees			38		44			44		36		46
Investment advisory revenue, net			27		12			119		61		18
Bank-owned life insurance			53		33			23		26		25
Equity in earnings of unconsolidated subsidiaries			8		(43	)		14		15		(6	)
Warrant income			5		5			30		33		22
Securities gains			41		20			16		9		7
Net gain on sales of businesses			12		31			50		76		11
Other noninterest income			149		184			174		155		127

	Total noninterest income		900		837			980		893		692

NONINTEREST EXPENSES
Salaries and employee benefits			844		842			874		804		705
Net occupancy expense			122		115			110		104		100
Equipment expense			62		70			76		73		70
Outside processing fee expense			65		61			59		60		53
Customer services			26		41			37		40		50
Goodwill impairment			86		—			—		—		—
Restructuring charges			—		152			—		—		(7	)
Other noninterest expenses			310		306			355		306		292

	Total noninterest expenses		1,515		1,587			1,511		1,387		1,263

Income before income taxes			882		1,111			1,222		1,179		1,004
Provision for income taxes			281		401			431		420		353

NET INCOME		$	601	$	710		$	791	$	759	$	651

Net income applicable to common stock		$	601	$	698		$	774	$	742	$	634

Basic net income per common share		$	3.43	$	3.93		$	4.38	$	4.20	$	3.58
Diluted net income per common share			3.40		3.88			4.31		4.13		3.51

Cash dividends declared on common stock			335		313			250		225		199
Dividends per common share			1.92		1.76			1.60		1.44		1.28

HISTORICAL REVIEW — STATISTICAL DATA

COMERICA INCORPORATED AND SUBSIDIARIES

CONSOLIDATED FINANCIAL INFORMATION


Years Ended December 31		2002			2001			2000			1999			1998

AVERAGE RATES (FULLY TAXABLE EQUIVALENT BASIS)
Short-term investments			4.45	%		6.02	%		7.97	%		6.06	%		5.61	%
Investment securities			5.74			6.37			6.99			6.42			6.61

Commercial loans			4.70			6.85			8.87			7.71			8.12
International loans			4.70			7.38			9.21			7.86			7.97
Real estate construction loans			5.74			7.95			10.09			9.21			9.94
Commercial mortgage loans			6.12			7.65			8.80			8.27			8.76
Residential mortgage loans			7.15			7.59			7.64			7.47			7.70
Consumer loans			6.55			8.39			9.09			9.95			10.19
Lease financing			5.37			6.25			6.24			6.91			7.65

	Total loans		6.00			7.55			8.74			8.06			8.48
	Interest income as a percentage of earning assets		5.96			7.44			8.57			7.90			8.23

Domestic deposits			1.81			3.48			4.34			3.55			3.97
Deposits in foreign offices			3.36			5.97			7.75			7.05			6.71

	Total interest-bearing deposits		1.85			3.54			4.47			3.68			4.07
Short-term borrowings			1.85			4.08			6.48			5.14			5.43
Medium- and long-term debt			2.58			4.80			6.57			5.44			5.80
	Interest expense as a percentage of interest-bearing sources		1.98			3.82			5.20			4.29			4.62

	Interest rate spread		3.98			3.62			3.37			3.61			3.61
Impact of net noninterest-bearing sources of funds			0.57			0.99			1.26			1.03			1.11

Net interest margin as a percentage of earning assets			4.55			4.61			4.63			4.64			4.72

RATIOS
Return on average common shareholders’ equity			12.31	%		15.16	%		19.52	%		21.78	%		21.16	%
Return on average assets			1.18			1.43			1.69			1.78			1.63
Efficiency ratio			50.59			54.30			50.88			51.26			52.38
Tier 1 common capital as a percentage of risk-weighted assets			7.39			7.30			6.80			6.70			5.90

PER SHARE DATA
Book value at year-end		$	28.31		$	27.17		$	23.98		$	20.87		$	17.99
Market value at year-end			43.24			57.30			59.38			46.69			68.19
Market value for the year
	High		66.09			65.15			61.13			70.00			73.00
	Low		35.20			44.02			32.94			44.00			46.50

OTHER DATA
Number of banking offices			352			342			354			348			348
Number of employees (full-time equivalent)			11,358			11,406			11,444			11,484			11,363

SHAREHOLDER INFORMATION

STOCK

Comerica’s stock trades on the New York Stock Exchange (NYSE) under the symbol CMA.

SHAREHOLDER ASSISTANCE

Inquiries related to shareholder records, change of name, address or ownership of stock, and lost or stolen stock certificates should be directed to the transfer agent and registrar:

Wells Fargo Shareowner Services
P.O. Box 64854
St. Paul, Minnesota 55164-0854
(877) 536-3551
stocktransfer@wellsfargo.com

ELIMINATION OF DUPLICATE MATERIALS

If you receive duplicate mailings at one address, you may have multiple shareholder accounts. You can consolidate your multiple accounts into a single, more convenient account by contacting the transfer agent shown above. In addition, if more than one member of your household is receiving shareholder materials, you can eliminate the duplicate mailings by contacting the transfer agent.

DIVIDEND REINVESTMENT PLAN

Comerica offers a dividend reinvestment plan which permits participating shareholders of record to reinvest dividends in Comerica common stock without paying brokerage commissions or service charges. Participating shareholders also may invest up to $3,000 in additional funds each quarter for the purchase of additional shares. A brochure describing the plan in detail and an authorization form can be requested from the transfer agent shown above.

DIVIDEND DIRECT DEPOSIT

Common shareholders of Comerica may have their dividends deposited into their savings or checking account at any bank that is a member of the National Automated Clearing House (ACH) system. Information describing this service and an authorization form can be requested from the transfer agent shown above.

DIVIDEND PAYMENTS

Subject to approval of the board of directors, dividends customarily are paid on Comerica’s common stock on or about January 1, April 1, July 1 and October 1.

ANNUAL MEETING

The Annual Meeting of Shareholders of Comerica Incorporated will be held at 9:30 a.m. on Tuesday, May 20, 2003, at the Detroit Public Library, 5201 Woodward Avenue, Detroit, Michigan 48202.

FORM 10-K

A copy of the Corporation’s Annual Report on Form 10-K, as filed with the Securities and Exchange Commission, may be obtained without charge upon written request to the Secretary of the Corporation at the address listed at the bottom of this page.

STOCK PRICES, DIVIDENDS AND YIELDS


					Dividends		Dividend
Quarter	High		Low		Per Share		Yield*

2002
Fourth	$	50.30	$	35.20	$	0.48		4.5	%
Third		63.80		47.00		0.48		3.5
Second		66.09		59.70		0.48		3.1
First		64.85		52.75		0.48		3.3
2001
Fourth	$	58.40	$	44.02	$	0.44		3.4	%
Third		63.88		50.27		0.44		3.1
Second		62.75		50.73		0.44		3.1
First		65.15		53.00		0.44		3.0

* Dividend yield is calculated by annualizing the quarterly dividend per share and dividing by an average of the high and low price in the quarter.

At January 31, 2003, there were 16,560 holders of record of the Corporation’s common stock.

INVESTOR RELATIONS ON THE INTERNET

Go to www.comerica.com to find the latest investor relations information about Comerica, including stock quotes, news releases and customized financial data.

COMMUNITY REINVESTMENT ACT (CRA) PERFORMANCE

Comerica is committed to meeting the credit needs of the communities it serves. Following are the most recent CRA ratings for Comerica subsidiaries:

Comerica Bank (Michigan) Outstanding

Comerica Bank — California Satisfactory

Comerica Bank — Texas Satisfactory

EQUAL EMPLOYMENT OPPORTUNITY

Comerica is committed to its affirmative action program and practices which ensure uniform treatment of employees without regard to race, creed, color, age, national origin, religion, handicap, marital status, veteran status, weight, height or sex.

PRODUCT INFORMATION CENTER

If you have any questions about Comerica’s products and services, please contact our Product Information Center at (800) 292-1300.

CAREER OPPORTUNITIES

Go to www.comericajobs.com to find the latest information about career opportunities at Comerica.

Comerica Incorporated, Comerica Tower at Detroit Center, 500 Woodward Avenue, MC 3391, Detroit, Michigan 48226
(248) 371-5000 (metro Detroit) • (800) 521-1190 (outside Detroit area) • www.comerica.com

MEDIA CONTACT : Sharon R. McMurray, (313) 222-4881 INVESTOR CONTACT : Helen L. Arsenault, (313) 222-2840

.
.

EXHIBIT 21
SUBSIDIARIES OF REGISTRANT

AS OF DECEMBER 31, 2002

Name State or Jurisdiction of Incorporation or Organization
---- ------------------------------------------------------

Comerica Investment Services, Inc. Michigan
Comerica Capital Markets Corporation Michigan
Comerica Insurance Services, Inc. Michigan
Comerica Insurance Group, Inc. Michigan
Comerica Securities, Inc. Michigan
Wilson, Kemp & Associates, Inc. Michigan
WAM Holdings, Inc. Delaware
WAM Holdings II, Inc. Delaware
Comerica Financial Incorporated Michigan
(f/n/a/ Comerica AutoLease, Inc.)
Comerica 10A Financial LLC Michigan
(f/n/a Project 10A, LLC)
VRB Corp. Michigan
Comerica International Corporation U.S.
Comerica (Bermuda), Ltd. Bermuda
(f/k/a Comerica Trust Company of Bermuda, Ltd.)
CMA Insurance Services of Texas Incorporated Texas
(f/k/a CMA Insurance Services, Inc.)
Comerica Holdings Incorporated Delaware
CMT Holdings, Inc. Texas
Comerica Merchant Services, Inc. Delaware
Interstate Select Insurance Services, Inc. California
Comerica Assurance Ltd. Bermuda
Comerica Reinsurance Company, Ltd. British Virgin Islands
Comerica Properties Corporation Michigan
Professional Life Underwriters Services, Inc. Michigan
Comerica Trade Services Limited Hong Kong
Comerica Leasing Corporation Michigan
Comerica Management Company Michigan
Comerica Equities Incorporated Delaware
Comerica West Incorporated Delaware
Comerica West Financial Incorporated Delaware
Comerica West Enterprises Incorporated Delaware
Munder Capital Management Delaware
Munder UK, L.L.C. Delaware
Comerica Bank-Mexico, S.A. Mexico
Comerica Bank-California California

Comerica Bank-Texas                                           Texas
Comerica Bank & Trust, National Association                   United States
Comerica Bank-Canada                                          Canada
Comerica Bank                                                 Michigan
Imperial Capital Trust I                                      Delaware
ROC Technologies, Inc.                                        Delaware
Imperial Bank Realty Company, Incorporated                    California
Imperial Trade Services Ltd.                                  Hong Kong
Imperial Asset Advisors, Inc.                                 California
Imperial Asset Management, Inc.                               California
Pacific Bancard Association, Inc.                             California
Comerica Ventures Incorporated                                California
(f/n/a Imperial Ventures, Inc.)
Imperial International, Inc.                                  California
Imperial Management, Inc.                                     Delaware
Comerica do Brasil Participacoes e Servicos Ltda.             Brazil
Comerica Coastal Incorporated                                 Delaware
Comerica Preferred Capital, LLC                               Delaware
Comerica Dealer Finance, LLC                                  Delaware
Comerica Auto Floorplan, LLC                                  Delaware
DFP Cayman LP                                                 Cayman Islands
DFP Luxembourg S.A.                                           Luxembourg
Comerica Capital Advisors Incorporated                        Delaware
Comerica Capital Trust I                                      Delaware
Comerica Capital Trust II                                     Delaware
CDV I Incorporated                                            Delaware
Comerica California Preferred Capital, LLC                    Delaware
Comerica Texas Preferred Capital, LLC                         Delaware

EXHIBIT 23(a)

Consent of Independent Auditors

We consent to the incorporation by reference in the Registration Statements listed below of our report on the consolidated financial statements of Comerica Incorporated and subsidiaries dated January 16, 2003, incorporated by reference in the Annual Report on Form 10-K for the year ended December 31, 2002:

Registration Statement No. 33-42485 on Form S-8 dated August 29, 1991

Registration Statement No. 33-45500 on Form S-8 dated February 11, 1992

Registration Statement No. 33-49964 on Form S-8 dated July 23, 1992

Registration Statement No. 33-49966 on Form S-8 dated July 23, 1992

Registration Statement No. 33-53220 on Form S-8 dated October 13, 1992

Registration Statement No. 33-53222 on Form S-8 dated October 13, 1992

Registration Statement No. 33-58823 on Form S-8 dated April 26, 1995

Registration Statement No. 33-58837 on Form S-8 dated April 26, 1995

Registration Statement No. 33-58841 on Form S-8 dated April 26, 1995

Registration Statement No. 33-65457 on Form S-8 dated December 29, 1995

Registration Statement No. 33-65459 on Form S-8 dated December 29, 1995

Registration Statement No. 333-00839 on Form S-8 dated February 9, 1996

Registration Statement No. 333-24569 on Form S-8 dated April 4, 1997

Registration Statement No. 333-24567 on Form S-8 dated April 4, 1997

Registration Statement No. 333-24565 on Form S-8 dated April 4, 1997

Registration Statement No. 333-24555 on Form S-8 dated April 4, 1997

Registration Statement No. 333-37061 on Form S-8 dated October 2, 1997

Registration Statement No. 333-48118 on Form S-8 dated October 18, 2000

Registration Statement No. 333-48120 on Form S-8 dated October 18, 2000

Registration Statement No. 333-48122 on Form S-8 dated October 18, 2000

Registration Statement No. 333-48124 on Form S-8 dated October 18, 2000

Registration Statement No. 333-48126 on Form S-8 dated October 18, 2000

Registration Statement No. 333-50966 on Form S-8 dated November 30, 2000

Registration Statement No. 333-51042 on Form S-8 to Form S-4 dated February 6, 2001

/s/ Ernst & Young LLP
March 26, 2003
Detroit, Michigan

EXHIBIT 23(b)

CONSENT OF INDEPENDENT AUDITORS

We consent to the incorporation by reference in the Registration Statements listed below of our report, dated January 26, 2001, on the consolidated statements of income, changes in shareholders' equity and comprehensive income, and cash flows of Imperial Bancorp and subsidiaries for the year ended December 31, 2000, included in Comerica's Annual Report on Form 10-K for the year ended December 31, 2002:

Registration Statement No. 33-42485 on Form S-8 dated August 29, 1991 Registration Statement No. 33-45500 on Form S-8 dated February 11, 1992 Registration Statement No. 33-49964 on Form S-8 dated July 23, 1992 Registration Statement No. 33-49966 on Form S-8 dated July 23, 1992 Registration Statement No. 33-53220 on Form S-8 dated October 13, 1992 Registration Statement No. 33-53222 on Form S-8 dated October 13, 1992 Registration Statement No. 33-58823 on Form S-8 dated April 26, 1995 Registration Statement No. 33-58837 on Form S-8 dated April 26, 1995 Registration Statement No. 33-58841 on Form S-8 dated April 26, 1995 Registration Statement No. 33-65457 on Form S-8 dated December 29, 1995 Registration Statement No. 33-65459 on Form S-8 dated December 29, 1995 Registration Statement No. 333-00839 on Form S-8 dated February 9, 1996 Registration Statement No. 333-24569 on Form S-8 dated April 4, 1997 Registration Statement No. 333-24567 on Form S-8 dated April 4, 1997 Registration Statement No. 333-24565 on Form S-8 dated April 4, 1997 Registration Statement No. 333-24555 on Form S-8 dated April 4, 1997 Registration Statement No. 333-37061 on Form S-8 dated October 2, 1997 Registration Statement No. 333-48118 on Form S-8 dated October 18, 2000 Registration Statement No. 333-48120 on Form S-8 dated October 18, 2000 Registration Statement No. 333-48122 on Form S-8 dated October 18, 2000 Registration Statement No. 333-48124 on Form S-8 dated October 18, 2000 Registration Statement No. 333-48126 on Form S-8 dated October 18, 2000 Registration Statement No. 333-50966 on Form S-8 dated November 30, 2000
Registration Statement No. 333-51042 on Form S-8 to Form S-4 dated February 6, 2001

/s/ KPMG LLP

March 26, 2003
Los Angeles, California

EXHIBIT 99.1

INDEPENDENT AUDITORS' REPORT

The Board of Directors
Imperial Bancorp and subsidiaries:

We have audited the consolidated statements of income, changes in shareholders' equity and comprehensive income and cash flows of Imperial Bancorp and subsidiaries for the year ended December 31, 2000. These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the results of operations and cash flows of Imperial Bancorp and subsidiaries, for the year ended December 31, 2000 in conformity with accounting principles generally accepted in the United States of America.

/s/ KPMG LLP

Los Angeles, California
January 26, 2001

EXHIBIT 99.2

CERTIFICATION OF PERIODIC REPORT

I, Ralph W. Babb, Jr. 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 Annual Report on Form 10-K of the Company for the year ended December 31, 2002 (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: March 25, 2003

                                   /s/ Ralph W. Babb, Jr.
                                 -----------------------------------------------
                                 Ralph W. Babb, Jr.
                                 Chairman, President and Chief Executive Officer

A signed original of this written statement required by Section 906 has been provided to Comerica Incorporated and will be retained by Comerica Incorporated and furnished to the Securities and Exchange Commission or its staff upon request.

EXHIBIT 99.3

CERTIFICATION OF PERIODIC REPORT

I, Elizabeth S. Acton of Comerica Incorporated (the "Company"), certify, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350, that:

(2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated: March 25, 2003

                                                      /s/ Elizabeth S. Acton
                                                     ---------------------------
                                                     Elizabeth S. Acton
                                                     Executive Vice President
                                                     and Chief Financial Officer

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•		general political and economic conditions, either domestically or internationally, may be less favorable that expected;

•		Latin America may continue to experience economic, political and social uncertainties;

•		developments concerning credit quality in various industry sectors may result in an increase in the level of the Corporation’s provision for credit losses, nonperforming assets, net charge-offs and reserve for credit losses;

•		domestic demand for commercial loan and investment advisory products may continue to be weak;

•		customer borrowing, repayment, investment and deposit practices generally may be less favorable than anticipated;

•		interest rate and currency fluctuations, equity and bond market fluctuations, and inflation may be greater than expected;

•		the mix of interest rates and maturities of the Corporation’s interest earning assets and interest bearing liabilities (primarily loans and deposits) may be less favorable than expected;

•		global capital markets in general, and the technology industry in particular, may continue to exhibit weakness, adversely affecting the Corporation’s investment advisory business line, as well as the Corporation’s private banking and brokerage business lines, and the availability and terms of funding necessary to meet the Corporation’s liquidity needs;

•		the introductions, withdrawal, success and timing of business initiatives and strategies;

•		competitive product and pricing pressures among financial institutions within the Corporation’s markets may increase;

•		legislative or regulatory developments, including changes in laws or regulations concerning taxes, banking, securities, capital requirements and risk-based capital guidelines, reserve methodologies, deposit insurance and other aspects of the financial services industry, may adversely affect the business in which the Corporation is engaged or the Corporation’s financial results;

•		legal and regulatory proceedings and related matters with respect to the financial services industry, including those directly involving the Corporation and its subsidiaries, could adversely affect the Corporation or the financial services industry generally;

•		pending and proposed changes in accounting rules, policies, practices and procedures could adversely affect the Corporation’s financial results;

•		instruments and strategies used to hedge or otherwise manage exposure to various types of market and credit risk could be less effective than anticipated, and the Corporation may not be able to effectively mitigate its risk exposures in particular market environments or against

		particular types of risk;

•		terrorist activities or other hostilities, which may adversely affect the general economy, financial and capital markets, specific industries, and the Corporation; and

•		technological changes, including the impact of the internet on the Corporation’s businesses, may be more difficult or expensive than anticipated.

1.		I have reviewed this annual report on Form 10-K of the Registrant for the year ended December 31, 2002 (the “Annual Report”);

2.		Based on my knowledge, this Annual 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 Annual Report;

3.		Based on my knowledge, the financial statements, and other financial information included in this Annual 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 Annual Report;

4.		The Registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the Registrant and we have:

	a)		designed such disclosure controls and procedures 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 Annual Report is being prepared;

	b)		evaluated the effectiveness of the Registrant’s disclosure controls and procedures as of a date within 90 days prior to the filing date of this Annual Report (the “Evaluation Date”); and

	c)		presented in this Annual Report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;

•		Increased allowance for loan losses as a percentage of total loans to 1.87 percent at December 31, 2002.

•		Returned 12.31 percent on average common shareholders’ equity.

•		Returned 1.18 percent on average assets.

•		Maintained a lean organization, as shown by the efficiency ratio of 50.59 percent.

•		Added $154 million to the allowance for loan losses and $140 million to shareholders’ equity to solidify our financial risk profile in this uncertain economy.

•		Experienced two percent growth in average loans in 2002 despite the continued uncertainty in the economy and a strategy to reduce large corporate non-relationship loans and loans in certain Latin American countries experiencing difficulties.

•		Averaged $38 billion in total deposits, a seven percent increase from 2001.

•		Increased average common shareholders’ equity to $4.9 billion, a six percent increase from 2001.

•		Raised the quarterly cash dividend nine percent, to $0.48 per share, an annual rate of $1.92 per share.

•		Improved core capital ratios, as evidenced by an increase in the Tier 1 common capital ratio to 7.39%, after repurchasing 3.5 million shares for $210 million in 2002.

•		Maintained our focus on Connectivity, a national Comerica initiative to increase fee income and our share of new and current customers’ business through cross-selling.

•		Merged and/or streamlined several business units: collateralized lending, technology and life sciences lending and asset management.

•		Continued to expand our delivery network, including opening 9 new branches and 2 ComeriMarts in 2002.

•		Initiated enterprise-wide risk management programs to invest in people and systems to enhance operational and credit risk management.

•		Invested in governance and regulatory affairs to monitor and coordinate corporate-wide activities.

*		Balances are excluded from the calculation of total yield.
†		Based on final contractual maturity.

(1)		Variable rates paid on receive fixed swaps are based on one-month and three-month LIBOR or one-month Canadian Deposit Offered Rate (CDOR) effective December 31, 2002. Variable rates received on pay fixed swaps are based on prime at December 31, 2002.

(2)		Variable rates received are based on three-month and six-month LIBOR or one-month and three-month CDOR rates in effect at December 31, 2002.

*		Included in noninterest expenses are fees internally transferred to other lines of business for referrals to the Investment Bank. If excluded, Investment Bank net income (loss) would have been $(45) million in 2002, $(53) million in 2001 and $25 million in 2000. Return on average allocated equity would have been (23.46)% in 2002, (19.82)% in 2001 and 8.92% in 2000.

**		Return on average assets for the Individual Bank and Finance segments is calculated based on total average liabilities and allocated equity.

(1)	First quarter 2001 provision for loan losses includes a $25 million merger-related charge to conform the credit policies of Imperial with the Corporation.
(2)	Second quarter 2002 results are adjusted for the previous restatement of earnings to reflect additional provision for loan losses (see Note 30 on page 75) and to record the effect of the third quarter adoption of SFAS No. 123 (see Notes 1 and 16 on pages 50 and 59, respectively).

Comerica Bank (Michigan)		Outstanding
Comerica Bank — California		Satisfactory
Comerica Bank — Texas		Satisfactory