CMA-2012.3.31 10Q
Table of Contents

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
______________________________
FORM 10-Q 
______________________________
(Mark One)
x
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2012
Or
o
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from              to             
Commission file number 1-10706
____________________________________________________________________________________
Comerica Incorporated
(Exact name of registrant as specified in its charter)
___________________________________________________________________________________
Delaware
38-1998421
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer
Identification No.)
Comerica Bank Tower
1717 Main Street, MC 6404
Dallas, Texas 75201
(Address of principal executive offices)
(Zip Code)
(214) 462-6831
(Registrant’s telephone number, including area code) 
_________________________________________________________________________
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  x    No  o
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  x    No  o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act:
Large accelerated filer
x
Accelerated filer
o
Non-accelerated filer
o  (Do not check if a smaller reporting company)
Smaller reporting company
o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  o    No  x
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.
$5 par value common stock:
Outstanding as of April 27, 2012: 196,672,892 shares


Table of Contents

COMERICA INCORPORATED AND SUBSIDIARIES
TABLE OF CONTENTS
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 


Table of Contents

Part I. FINANCIAL INFORMATION
Item 1. Financial Statements
CONSOLIDATED BALANCE SHEETS
Comerica Incorporated and Subsidiaries
(in millions, except share data)
March 31,
2012
 
December 31,
2011
 
March 31,
2011
 
(unaudited)
 
 
 
(unaudited)
ASSETS
 
 
 
 
 
Cash and due from banks
$
984

 
$
982

 
$
875

 
 
 
 
 
 
Federal funds sold
10

 

 

Interest-bearing deposits with banks
2,966

 
2,574

 
3,570

Other short-term investments
180

 
149

 
154

 
 
 
 
 
 
Investment securities available-for-sale
10,061

 
10,104

 
7,406

 
 
 
 
 
 
Commercial loans
25,640

 
24,996

 
21,360

Real estate construction loans
1,442

 
1,533

 
2,023

Commercial mortgage loans
10,079

 
10,264

 
9,697

Lease financing
872

 
905

 
958

International loans
1,256

 
1,170

 
1,326

Residential mortgage loans
1,485

 
1,526

 
1,550

Consumer loans
2,238

 
2,285

 
2,262

Total loans
43,012

 
42,679

 
39,176

Less allowance for loan losses
(704
)
 
(726
)
 
(849
)
Net loans
42,308

 
41,953

 
38,327

Premises and equipment
670

 
675

 
637

Accrued income and other assets
5,414

 
4,571

 
4,048

Total assets
$
62,593

 
$
61,008

 
$
55,017

 
 
 
 
 
 
LIABILITIES AND SHAREHOLDERS’ EQUITY
 
 
 
 
 
Noninterest-bearing deposits
$
20,741

 
$
19,764

 
$
16,357

 
 
 
 
 
 
Money market and NOW deposits
20,502

 
20,311

 
17,888

Savings deposits
1,586

 
1,524

 
1,457

Customer certificates of deposit
6,145

 
5,808

 
5,672

Foreign office time deposits
332

 
348

 
499

Total interest-bearing deposits
28,565

 
27,991

 
25,516

Total deposits
49,306

 
47,755

 
41,873

Short-term borrowings
82

 
70

 
61

Accrued expenses and other liabilities
1,301

 
1,371

 
1,090

Medium- and long-term debt
4,919

 
4,944

 
6,116

Total liabilities
55,608

 
54,140

 
49,140

 
 
 
 
 
 
Common stock - $5 par value:
 
 
 
 
 
Authorized - 325,000,000 shares
 
 
 
 
 
Issued - 228,164,824 shares at 3/31/12 and 12/31/11 and 203,878,110 shares at 3/31/11
1,141

 
1,141

 
1,019

Capital surplus
2,154

 
2,170

 
1,464

Accumulated other comprehensive loss
(326
)
 
(356
)
 
(382
)
Retained earnings
5,630

 
5,546

 
5,317

Less cost of common stock in treasury - 31,032,920 shares at 3/31/12, 30,831,076 shares at 12/31/11 and 27,103,941 shares at 3/31/11
(1,614
)
 
(1,633
)
 
(1,541
)
Total shareholders’ equity
6,985

 
6,868

 
5,877

Total liabilities and shareholders’ equity
$
62,593

 
$
61,008

 
$
55,017

See notes to consolidated financial statements.

1

Table of Contents

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (unaudited)
Comerica Incorporated and Subsidiaries 
 
Three Months Ended March 31,
(in millions, except per share data)
2012
 
2011
INTEREST INCOME
 
 
 
Interest and fees on loans
$
411

 
$
375

Interest on investment securities
64

 
57

Interest on short-term investments
3

 
2

Total interest income
478

 
434

INTEREST EXPENSE
 
 
 
Interest on deposits
19

 
22

Interest on medium- and long-term debt
16

 
17

Total interest expense
35

 
39

Net interest income
443

 
395

Provision for loan losses
23

 
49

Net interest income after provision for loan losses
420

 
346

NONINTEREST INCOME
 
 
 
Service charges on deposit accounts
56

 
52

Fiduciary income
38

 
39

Commercial lending fees
25

 
21

Letter of credit fees
17

 
18

Card fees
11

 
15

Foreign exchange income
9

 
9

Bank-owned life insurance
10

 
8

Brokerage fees
6

 
6

Net securities gains
5

 
2

Other noninterest income
29

 
37

Total noninterest income
206

 
207

NONINTEREST EXPENSES
 
 
 
Salaries
201

 
188

Employee benefits
60

 
50

Total salaries and employee benefits
261

 
238

Net occupancy expense
41

 
40

Equipment expense
17

 
15

Outside processing fee expense
26

 
24

Software expense
23

 
23

FDIC insurance expense
10

 
15

Advertising expense
7

 
7

Other real estate expense
4

 
8

Other noninterest expenses
59

 
45

Total noninterest expenses
448

 
415

Income before income taxes
178

 
138

Provision for income taxes
48

 
35

NET INCOME
130

 
103

Less income allocated to participating securities
1

 
1

Net income attributable to common shares
$
129

 
$
102

Earnings per common share:
 
 
 
Basic
$
0.66

 
$
0.58

Diluted
0.66

 
0.57

 
 
 
 
Comprehensive income
160

 
110

 
 
 
 
Cash dividends declared on common stock
20

 
17

Cash dividends declared per common share
0.10

 
0.10

See notes to consolidated financial statements.

2

Table of Contents

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY (unaudited)
Comerica Incorporated and Subsidiaries
 
Common Stock
 
 
 
Accumulated
Other
Comprehensive
Loss
 
 
 
 
 
Total
Shareholders’
Equity
(in millions, except per share data)
Shares
Outstanding
 
Amount
 
Capital
Surplus
 
 
Retained
Earnings
 
Treasury
Stock
 
BALANCE AT DECEMBER 31, 2010
176.5

 
$
1,019

 
$
1,481

 
$
(389
)
 
$
5,247

 
$
(1,565
)
 
$
5,793

Net income

 

 

 

 
103

 

 
103

Other comprehensive income, net of tax

 

 

 
7

 

 

 
7

Cash dividends declared on common stock ($0.10 per share)

 

 

 

 
(17
)
 

 
(17
)
Purchase of common stock
(0.5
)
 

 

 

 

 
(21
)
 
(21
)
Net issuance of common stock under employee stock plans
0.8

 

 
(30
)
 

 
(16
)
 
45

 
(1
)
Share-based compensation

 

 
13

 

 

 

 
13

BALANCE AT MARCH 31, 2011
176.8

 
$
1,019

 
$
1,464

 
$
(382
)
 
$
5,317

 
$
(1,541
)
 
$
5,877

 
 
 
 
 
 
 
 
 
 
 
 
 
 
BALANCE AT DECEMBER 31, 2011
197.3

 
$
1,141

 
$
2,170

 
$
(356
)
 
$
5,546

 
$
(1,633
)
 
$
6,868

Net income

 

 

 

 
130

 

 
130

Other comprehensive income, net of tax

 

 

 
30

 

 

 
30

Cash dividends declared on common stock ($0.10 per share)

 

 

 

 
(20
)
 

 
(20
)
Purchase of common stock
(1.2
)
 

 

 

 

 
(36
)
 
(36
)
Net issuance of common stock under employee stock plans
1.1

 

 
(32
)
 

 
(26
)
 
58

 

Share-based compensation

 

 
13

 

 

 

 
13

Other
(0.1
)
 

 
3

 

 

 
(3
)
 

BALANCE AT MARCH 31, 2012
197.1

 
$
1,141

 
$
2,154

 
$
(326
)
 
$
5,630

 
$
(1,614
)
 
$
6,985

See notes to consolidated financial statements.



3

Table of Contents

CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)
Comerica Incorporated and Subsidiaries
 
Three Months Ended March 31,
(in millions)
2012
 
2011
OPERATING ACTIVITIES
 
 
 
Net income
$
130

 
$
103

Adjustments to reconcile net income to net cash provided by operating activities:
 
 
 
Provision for loan losses
23

 
49

Provision for deferred income taxes
22

 
13

Depreciation and amortization
33

 
29

Share-based compensation expense
13

 
13

Net amortization of securities
10

 
7

Accretion of loan purchase discount
(25
)
 

Net securities gains
(5
)
 
(2
)
Excess tax benefits from share-based compensation arrangements
(1
)
 
(1
)
Net change in:
 
 
 
Trading securities
(33
)
 
(13
)
Accrued income receivable
(1
)
 
(2
)
Accrued expenses payable
(85
)
 
(59
)
Other, net
77

 
13

Net cash provided by operating activities
158

 
150

INVESTING ACTIVITIES
 
 
 
Investment securities available-for-sale:
 
 
 
Maturities and redemptions
937

 
592

Purchases
(869
)
 
(448
)
Net change in loans
(357
)
 
946

Other, net
(14
)
 
(4
)
Net cash (used in) provided by investing activities
(303
)
 
1,086

FINANCING ACTIVITIES
 
 
 
Net change in:
 
 
 
Deposits
600

 
1,226

Short-term borrowings
12

 
(69
)
Medium- and long-term debt:
 
 
 
Repayment
(4
)
 

Common stock:
 
 
 
Repurchased
(36
)
 
(21
)
Cash dividends paid
(20
)
 
(18
)
Excess tax benefits from share-based compensation arrangements
1

 
1

Other, net
(4
)
 
7

Net cash provided by financing activities
549

 
1,126

Net increase in cash and cash equivalents
404

 
2,362

Cash and cash equivalents at beginning of period
3,556

 
2,083

Cash and cash equivalents at end of period
$
3,960

 
$
4,445

 
 
 
 
Interest paid
$
32

 
$
34

Income taxes, tax deposits and tax-related interest paid
5

 
14

Noncash investing and financing activities:
 
 
 
Loans transferred to other real estate
5

 
13

See notes to consolidated financial statements.

4

Table of Contents

Notes to Consolidated Financial Statements (unaudited)
Comerica Incorporated and Subsidiaries
NOTE 1 - BASIS OF PRESENTATION AND ACCOUNTING POLICIES
The accompanying unaudited consolidated financial statements were prepared in accordance with U.S. generally accepted accounting principles (GAAP) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, the statements do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation were included. The results of operations for the three months ended March 31, 2012 are not necessarily indicative of the results that may be expected for the year ending December 31, 2012. Certain items in prior periods were reclassified to conform to the current presentation. For further information, refer to the consolidated financial statements and footnotes thereto included in the Annual Report of Comerica Incorporated and Subsidiaries (the Corporation) on Form 10-K for the year ended December 31, 2011.
Recently Adopted Accounting Standards
In the first quarter 2012, the Corporation adopted amendments to GAAP which revise the presentation of comprehensive income in the financial statements. As a result, the Corporation presents on an interim basis the components of net income and a total for comprehensive income in one continuous consolidated statement of comprehensive income and will present on an annual basis the components of net income and other comprehensive income in two separate, but consecutive statements. Information on the components of other comprehensive income is provided on an interim basis in Note 9 to these unaudited financial statements.
In the first quarter 2012, the Corporation adopted an amendment to GAAP which generally aligns the principles of fair value measurements with International Financial Reporting Standards (IFRSs) and requires expanded disclosures. The adoption of the amendment had no impact on the Corporation's financial condition or results of operations. The required disclosures are provided in Note 2 to these unaudited financial statements.
Pending Accounting Pronouncements
In December 2011, the Financial Accounting Standards Board issued an amendment to GAAP which requires enhanced disclosures about the nature and effect or potential effect of an entity's rights of setoff associated with its financial and derivative instruments. The Corporation will adopt the amendment in the first quarter 2013. While the amendment will expand the Corporation's financial and derivative instruments disclosures, the Corporation does not expect the adoption of the amendment to have any effect on the Corporation's financial condition and results of operations.
NOTE 2 – FAIR VALUE MEASUREMENTS
The Corporation utilizes fair value measurements to record fair value adjustments to certain assets and liabilities and to determine fair value disclosures. The determination of fair values of financial instruments often requires the use of estimates. In cases where quoted market values in an active market are not available, the Corporation uses present value techniques and other valuation methods to estimate the fair values of its financial instruments. These valuation methods require considerable judgment and the resulting estimates of fair value can be significantly affected by the assumptions made and methods used.
Fair value is an estimate of the exchange price that would be received to sell an asset or paid to transfer a liability in an orderly transaction (i.e., not a forced transaction, such as a liquidation or distressed sale) between market participants at the measurement date. However, the calculated fair value estimates in many instances cannot be substantiated by comparison to independent markets and, in many cases, may not be realizable in a current sale of the financial instrument.
Trading securities, investment securities available-for-sale, derivatives and deferred compensation plan liabilities are recorded at fair value on a recurring basis. Additionally, from time to time, the Corporation may be required to record other assets and liabilities at fair value on a nonrecurring basis, such as impaired loans, other real estate (primarily foreclosed property), nonmarketable equity securities and certain other assets and liabilities. These nonrecurring fair value adjustments typically involve write-downs of individual assets or application of lower of cost or fair value accounting.
The Corporation categorizes assets and liabilities recorded at fair value on a recurring or nonrecurring basis and the estimated fair value of financial instruments not recorded at fair value on a recurring basis into a three-level hierarchy, based on the markets in which the assets and liabilities are traded and the reliability of the assumptions used to determine fair value.

5

Table of Contents

Notes to Consolidated Financial Statements (unaudited)
Comerica Incorporated and Subsidiaries

 
Level 1
  
Valuation is based upon quoted prices for identical instruments traded in active markets.
 
 
 
 
 
Level 2
  
Valuation is based upon quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-based valuation techniques for which all significant assumptions are observable in the market.
 
 
 
 
 
Level 3
  
Valuation is generated from model-based techniques that use at least one significant assumption not observable in the market. These unobservable assumptions reflect estimates of assumptions that market participants would use in pricing the asset or liability. Valuation techniques include use of option pricing models, discounted cash flow models and similar techniques.
The Corporation generally utilizes third-party pricing services to value Level 1 and Level 2 trading and investment securities, as well as certain derivatives designated as fair value hedges. Management reviews the methodologies and assumptions used by the third-party pricing services and evaluates the values provided, principally by comparison with other available market quotes for similar instruments and/or analysis based on internal models using available third-party market data. The Corporation may occasionally adjust certain values provided by the third-party pricing service when management believes, as the result of its review, that the adjusted price most appropriately reflects the fair value of the particular security.
Following are descriptions of the valuation methodologies and key inputs used to measure financial assets and liabilities recorded at fair value, as well as a description of the methods and significant assumptions used to estimate fair value disclosures for financial instruments not recorded at fair value in their entirety on a recurring basis. The descriptions include an indication of the level of the fair value hierarchy in which the assets or liabilities are classified. Transfers of assets or liabilities between levels of the fair value hierarchy are recognized at the beginning of the reporting period, when applicable.
Cash and due from banks, federal funds sold and interest-bearing deposits with banks
Due to their short-term nature, the carrying amount of these instruments approximates the estimated fair value. As such, the Corporation classifies the estimated fair value of these instruments as Level 1.
Trading securities and associated deferred compensation plan liabilities
Securities held for trading purposes and associated deferred compensation plan liabilities are recorded at fair value on a recurring basis and included in “other short-term investments” and “accrued expenses and other liabilities,” respectively, on the consolidated balance sheets. Level 1 securities held for trading purposes include assets related to employee deferred compensation plans, which are invested in mutual funds, U.S. Treasury securities that are traded by dealers or brokers in active over-the-counter markets and other securities traded on an active exchange, such as the New York Stock Exchange. Deferred compensation plan liabilities represent the fair value of the obligation to the employee, which corresponds to the fair value of the invested assets. Level 2 trading securities include municipal bonds and residential mortgage-backed securities issued by U.S. government-sponsored entities and corporate debt securities. Securities classified as Level 3 include securities in less liquid markets and securities not rated by a credit agency. The methods used to value trading securities are the same as the methods used to value investment securities available-for-sale, discussed below.
Loans held-for-sale
Loans held-for-sale, included in “other short-term investments” on the consolidated balance sheets, are recorded at the lower of cost or fair value. Loans held-for-sale may be carried at fair value on a nonrecurring basis when fair value is less than cost. The fair value is based on what secondary markets are currently offering for portfolios with similar characteristics. As such, the Corporation classifies both loans held-for-sale subjected to nonrecurring fair value adjustments and the estimated fair value of loans held-for sale as Level 2.
Investment securities available-for-sale
Investment securities available-for-sale are recorded at fair value on a recurring basis. Fair value measurement is based upon quoted prices, if available. If quoted prices are not available or the market is deemed to be inactive at the measurement date, an adjustment to the quoted prices may be necessary. In some circumstances, the Corporation may conclude that a change in valuation technique or the use of multiple valuation techniques may be appropriate to estimate an instrument's fair value. Level 1 securities include those traded on an active exchange, such as the New York Stock Exchange, U.S. Treasury securities that are traded by dealers or brokers in active over-the-counter markets and money market funds. Level 2 securities include residential mortgage-backed securities issued by U.S. government agencies and U.S. government-sponsored entities and corporate debt securities. The fair value of Level 2 securities was determined using quoted prices of securities with similar characteristics, or pricing models based on observable market data inputs, primarily interest rates, spreads and prepayment information.

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Table of Contents

Notes to Consolidated Financial Statements (unaudited)
Comerica Incorporated and Subsidiaries

Securities classified as Level 3, of which the substantial majority is auction-rate securities, represent securities in less liquid markets requiring significant management assumptions when determining fair value. Due to the lack of a robust secondary auction-rate securities market with active fair value indicators, fair value for all periods presented was determined using an income approach based on a discounted cash flow model. The discounted cash flow model utilizes two significant inputs: discount rate and workout period. The discount rate was calculated using credit spreads of the underlying collateral or similar securities plus a liquidity risk premium. The liquidity risk premium was derived from observed liquidity premiums based on auction-rate securities valuations performed by third parties and incorporated the rate at which the various types of similar auction-rate securities had been redeemed or sold since acquisition in 2008. The workout period was based on an assessment of publicly available information on efforts to re-establish functioning markets for these securities and the Corporation's own redemption experience. As of March 31, 2012, approximately 72 percent of the aggregate auction-rate securities par value had been redeemed or sold since acquisition. Significant increases in any of these inputs in isolation would result in a significantly lower fair value. Additionally, as the discount rate incorporates the liquidity risk premium, a change in an assumption used for the liquidity risk premium would be accompanied by a directionally similar change in the discount rate. On an annual basis, an independent third party verifies the fair value by reviewing the appropriateness of the discounted cash flow model and its significant inputs.
Loans
The Corporation does not record loans at fair value on a recurring basis. However, periodically, the Corporation records nonrecurring adjustments to the carrying value of loans based on fair value measurements. Loans for which it is probable that payment of interest or principal will not be made in accordance with the contractual terms of the original loan agreement are considered impaired, which are reported as nonrecurring fair value measurements when a specific allowance for the impaired loan is established based on the fair value of collateral. Collateral values supporting individually evaluated impaired loans are evaluated quarterly. When management determines that the fair value of the collateral requires additional adjustments, either as a result of non-current appraisal value or when there is no observable market price, the Corporation classifies the impaired loan as Level 3.
The Corporation provides fair value estimates for loans not recorded at fair value. The estimated fair value is determined based on characteristics such as loan category, repricing features and remaining maturity, and includes prepayment and credit loss estimates. For variable rate business loans that reprice frequently, the estimated fair value is based on carrying values adjusted for estimated credit losses inherent in the portfolio at the balance sheet date. For other business loans and retail loans, fair values are estimated using a discounted cash flow model that employs a discount rate that reflect the Corporation's current pricing for loans with similar characteristics and remaining maturity, adjusted by an amount for estimated credit losses inherent in the portfolio at the balance sheet date. The rates take into account the expected yield curve, as well as an adjustment for prepayment risk, when applicable. The Corporation classifies the estimated fair value of loans held for investment as Level 3.
Customers’ liability on acceptances outstanding and acceptances outstanding
The carrying amount of these instruments approximates the estimated fair value, due to their short-term nature. As such, the Corporation classifies the estimated fair value of these instruments as Level 1.
Derivative assets and derivative liabilities
Derivative instruments held or issued for risk management or customer-initiated activities are traded in over-the-counter markets where quoted market prices are not readily available. Fair value for over-the-counter derivative instruments is measured on a recurring basis using internally developed models that use primarily market observable inputs, such as yield curves and option volatilities. The Corporation manages credit risk for its over-the-counter derivative positions on a counterparty-by-counterparty basis and calculates credit valuation adjustments, included in the fair value of these instruments, on the basis of its relationships at the counterparty portfolio/master netting agreement level. These credit valuation adjustments are determined by applying a credit spread for the counterparty or the Corporation, as appropriate, to the total expected exposure of the derivative after considering collateral and other master netting arrangements. These adjustments, which are considered Level 3 inputs, are based on estimates of current credit spreads to evaluate the likelihood of default. The Corporation assessed the significance of the impact of the credit valuation adjustments on the overall valuation of its derivative positions and determined that the credit valuation adjustments were not significant to the overall valuation of its derivatives. As a result, the Corporation classifies its over-the-counter derivative valuations in Level 2 of the fair value hierarchy. Examples of Level 2 derivative instruments are interest rate swaps and energy derivative and foreign exchange contracts.
The Corporation holds a portfolio of warrants for generally nonmarketable equity securities. These warrants are primarily from high technology, non-public companies obtained as part of the loan origination process. Warrants which contain a net exercise provision or a non-contingent put right embedded in the warrant agreement are accounted for as derivatives and recorded at fair

7

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Notes to Consolidated Financial Statements (unaudited)
Comerica Incorporated and Subsidiaries

value on a recurring basis using a Black-Scholes valuation model. The Black-Scholes valuation model utilizes five inputs: risk-free rate, expected life, volatility, exercise price, and the per share market value of the underlying company. Significant increases in any of these inputs in isolation, with the exception of exercise price, would result in a significantly higher fair value. Significant increases in exercise price in isolation would result in a significantly lower fair value. The Corporation classifies warrants accounted for as derivatives as Level 3.
The Corporation also holds a derivative contract associated with the 2008 sale of its remaining ownership of Visa Inc. (Visa) Class B shares. Under the terms of the derivative contract, the Corporation will compensate the counterparty primarily for dilutive adjustments made to the conversion factor of the Visa Class B to Class A shares based on the ultimate outcome of litigation involving Visa. Conversely, the Corporation will be compensated by the counterparty for any increase in the conversion factor from anti-dilutive adjustments. The recurring fair value of the derivative contract is based on unobservable inputs consisting of management's estimate of the litigation outcome, timing of litigation settlements and payments related to the derivative. Significant increases in the estimate of litigation outcome and the timing of litigation settlements in isolation would result in a significantly higher liability fair value. Significant increases in payments related to the derivative in isolation would result in a significantly lower liability fair value. The Corporation classifies the derivative liability as Level 3.
Nonmarketable equity securities
The Corporation has a portfolio of indirect (through funds) private equity and venture capital investments. These funds generally cannot be redeemed and the majority are not readily marketable. Distributions from these funds are received by the Corporation as a result of the liquidation of underlying investments of the funds and/or as income distributions. It is estimated that the underlying assets of the funds will be liquidated over a period of up to 15 years. The value of these investments is at risk to changes in equity markets, general economic conditions and a variety of other factors. The investments are accounted for on the cost or equity method and are individually reviewed for impairment on a quarterly basis by comparing the carrying value to the estimated fair value. These investments may be carried at fair value on a nonrecurring basis when they are deemed to be impaired and written down to fair value. Where there is not a readily determinable fair value, the Corporation estimates fair value for indirect private equity and venture capital investments based on the Corporation's percentage ownership in the net asset value of the entire fund, as reported by the fund, after indication that the fund adheres to applicable fair value measurement guidance. For those funds where the net asset value is not reported by the fund, the Corporation derives the fair value of the fund by estimating the fair value of each underlying investment in the fund. In addition to using qualitative information about each underlying investment, as provided by the fund, the Corporation gives consideration to information pertinent to the specific nature of the debt or equity investment, such as relevant market conditions, offering prices, operating results, financial conditions, exit strategy and other qualitative information, as available. The lack of an independent source to validate fair value estimates, including the impact of future capital calls and transfer restrictions, is an inherent limitation in the valuation process. The Corporation classifies both nonmarketable equity securities subjected to nonrecurring fair value adjustments and the estimated fair value of nonmarketable equity securities not recorded at fair value in their entirety on a recurring basis as Level 3. Commitments to fund additional investments in nonmarketable equity securities recorded at fair value on a nonrecurring basis were $2 million and $1 million at March 31, 2012 and December 31, 2011, respectively.
The Corporation also holds restricted equity investments, primarily Federal Home Loan Bank (FHLB) and Federal Reserve Bank (FRB) stock. Restricted equity securities are not readily marketable and are recorded at cost (par value) and evaluated for impairment based on the ultimate recoverability of the par value. No significant observable market data for these instruments is available. The Corporation considers the profitability and asset quality of the issuer, dividend payment history and recent redemption experience, when determining the ultimate recoverability of the par value. The Corporation’s investment in FHLB stock totaled $92 million and its investment in FRB stock totaled $85 million at both March 31, 2012 and December 31, 2011, respectively. The Corporation believes its investments in FHLB and FRB stock are ultimately recoverable at par.
Other real estate
Other real estate is included in “accrued income and other assets” on the consolidated balance sheets and includes primarily foreclosed property. Foreclosed property is initially recorded at fair value, less costs to sell, at the date of foreclosure, establishing a new cost basis. Subsequently, foreclosed property is carried at the lower of cost or fair value, less costs to sell. Other real estate may be carried at fair value on a nonrecurring basis when fair value is less than cost. Fair value is based upon independent market prices, appraised value or management's estimate of the value of the property. Throughout each quarter, the Corporation obtains updated independent market prices and appraised values as are required by state regulation or as are deemed necessary based on market conditions and determines if additional write-downs are necessary. On a quarterly basis, senior management reviews all other real estate and determines whether the carrying values are reasonable, based on collateral values and other current market

8

Table of Contents

Notes to Consolidated Financial Statements (unaudited)
Comerica Incorporated and Subsidiaries

factors. Other real estate carried at fair value based on an observable market price or a current appraised value is classified by the Corporation as Level 2. When management determines that the fair value of other real estate requires additional adjustments, either as a result of a non-current appraisal or when there is no observable market price, the Corporation classifies the other real estate as Level 3.
Loan servicing rights
Loan servicing rights, included in “accrued income and other assets” on the consolidated balance sheets and primarily related to Small Business Administration loans, are subject to impairment testing. Loan servicing rights may be carried at fair value on a nonrecurring basis when impairment testing indicates that the fair value of the loan servicing rights is less than the recorded value. A valuation model is used for impairment testing on a quarterly basis, which utilizes a discounted cash flow model, using interest rates and prepayment speed assumptions currently quoted for comparable instruments and a discount rate determined by management. If the valuation model reflects a value less than the carrying value, loan servicing rights are adjusted to fair value through a valuation allowance as determined by the model. As such, the Corporation classifies loan servicing rights as Level 3.
Deposit liabilities
The estimated fair value of checking, savings and certain money market deposit accounts is represented by the amounts payable on demand. The estimated fair value of term deposits is calculated by discounting the scheduled cash flows using the period-end rates offered on these instruments. As such, the Corporation classifies the estimated fair value of deposit liabilities as Level 2.
Short-term borrowings
The carrying amount of federal funds purchased, securities sold under agreements to repurchase and other short-term borrowings approximates the estimated fair value. As such, the Corporation classifies the estimated fair value of short-term borrowings as Level 1.
Medium- and long-term debt
The carrying value of variable-rate FHLB advances approximates the estimated fair value. The estimated fair value of the Corporation's remaining variable- and fixed-rate medium- and long-term debt is based on quoted market values when available. If quoted market values are not available, the estimated fair value is based on the market values of debt with similar characteristics. The Corporation classifies the estimated fair value of medium- and long-term debt as Level 2.
Credit-related financial instruments
Credit-related financial instruments include unused commitments to extend credit and standby and commercial letters of credit. These instruments generate ongoing fees which are recognized over the term of the commitment. In situations where credit losses are probable, the Corporation records an allowance. The carrying value of these instruments, which includes the carrying value of the deferred fees plus the related allowance, approximates the estimated fair value. The Corporation classifies the estimated fair value of credit-related financial instruments as Level 3.

9

Table of Contents

Notes to Consolidated Financial Statements (unaudited)
Comerica Incorporated and Subsidiaries

ASSETS AND LIABLILITIES RECORDED AT FAIR VALUE ON A RECURRING BASIS
The following tables present the recorded amount of assets and liabilities measured at fair value on a recurring basis as of March 31, 2012 and December 31, 2011.
(in millions)
Total
 
Level 1
 
Level 2
 
Level 3
March 31, 2012
 
 
 
 
 
 
 
Trading securities:
 
 
 
 
 
 
 
Deferred compensation plan assets
$
94

 
$
94

 
$

 
$

Residential mortgage-backed securities (a)
5

 

 
5

 

State and municipal securities
46

 

 
46

 

Corporate debt securities
2

 

 
2

 

Total trading securities
147

 
94

 
53

 

Investment securities available-for-sale:
 
 
 
 
 
 
 
U.S. Treasury and other U.S. government agency securities
20

 
20

 

 

Residential mortgage-backed securities (a)
9,584

 

 
9,584

 

State and municipal securities (b)
23

 

 

 
23

Corporate debt securities:
 
 
 
 
 
 
 
Auction-rate debt securities
1

 

 

 
1

Other corporate debt securities
47

 

 
47

 

Equity and other non-debt securities:
 
 
 
 
 
 
 
Auction-rate preferred securities
320

 

 

 
320

Money market and other mutual funds
66

 
66

 

 

Total investment securities available-for-sale
10,061

 
86

 
9,631

 
344

Derivative assets:
 
 
 
 
 
 
 
Interest rate contracts
564

 

 
564

 

Energy derivative contracts
152

 

 
152

 

Foreign exchange contracts
33

 

 
33

 

Warrants
3

 

 

 
3

Total derivative assets
752

 

 
749

 
3

Total assets at fair value
$
10,960

 
$
180

 
$
10,433

 
$
347

Derivative liabilities:
 
 
 
 
 
 
 
Interest rate contracts
$
235

 
$

 
$
235

 
$

Energy derivative contracts
151

 

 
151

 

Foreign exchange contracts
28

 

 
28

 

Total derivative liabilities
414

 

 
414

 

Deferred compensation plan liabilities
94

 
94

 

 

Total liabilities at fair value
$
508

 
$
94

 
$
414

 
$

(a)
Residential mortgage-backed securities issued and/or guaranteed by U.S. government agencies or U.S. government-sponsored enterprises.
(b)
Primarily auction-rate securities.

10

Table of Contents

Notes to Consolidated Financial Statements (unaudited)
Comerica Incorporated and Subsidiaries

(in millions)
Total
 
Level 1
 
Level 2
 
Level 3
December 31, 2011
 
 
 
 
 
 
 
Trading securities:
 
 
 
 
 
 
 
Deferred compensation plan assets
$
90

 
$
90

 
$

 
$

Residential mortgage-backed securities (a)
2

 

 
2

 

Other government-sponsored enterprise securities
9

 

 
9

 

State and municipal securities
12

 

 
12

 

Corporate debt securities
1

 

 
1

 

Other securities
1

 
1

 

 

Total trading securities
115

 
91

 
24

 

Investment securities available-for-sale:
 
 
 
 
 
 
 
U.S. Treasury and other U.S. government agency securities
20

 
20

 

 

Residential mortgage-backed securities (a)
9,512

 

 
9,512

 

State and municipal securities (b)
24

 

 

 
24

Corporate debt securities:
 
 
 
 
 
 
 
Auction-rate debt securities
1

 

 

 
1

Other corporate debt securities
46

 

 
46

 

Equity and other non-debt securities:
 
 
 
 
 
 
 
Auction-rate preferred securities
408

 

 

 
408

Money market and other mutual funds
93

 
93

 

 

Total investment securities available-for-sale
10,104

 
113

 
9,558

 
433

Derivative assets:
 
 
 
 
 
 
 
Interest rate contracts
602

 

 
602

 

Energy derivative contracts
115

 

 
115

 

Foreign exchange contracts
40

 

 
40

 

Warrants
3

 

 

 
3

Total derivative assets
760

 

 
757

 
3

Total assets at fair value
$
10,979

 
$
204

 
$
10,339

 
$
436

Derivative liabilities:
 
 
 
 
 
 
 
Interest rate contracts
$
253

 
$

 
$
253

 
$

Energy derivative contracts
115

 

 
115

 

Foreign exchange contracts
35

 

 
35

 

Other
6

 

 

 
6

Total derivative liabilities
409

 

 
403

 
6

Deferred compensation plan liabilities
90

 
90

 

 

Total liabilities at fair value
$
499

 
$
90

 
$
403

 
$
6

(a)
Residential mortgage-backed securities issued and/or guaranteed by U.S. government agencies or U.S. government-sponsored enterprises.
(b)
Primarily auction-rate securities.
There were no transfers of assets or liabilities recorded at fair value on a recurring basis into or out of Level 1, Level 2 and Level 3 fair value measurements during the three-month periods ended March 31, 2012 and 2011.

11

Table of Contents

Notes to Consolidated Financial Statements (unaudited)
Comerica Incorporated and Subsidiaries

The following table summarizes the changes in Level 3 assets and liabilities measured at fair value on a recurring basis for the three-month periods ended March 31, 2012 and 2011.
 
 
 
Net Realized/Unrealized Gains (Losses)
 
 
 
 
 
 
 
Balance at
Beginning
of Period
 
Recorded in Earnings
 
Recorded in
Other
Comprehensive
Income (Pre-tax)
 
 
 
 
 
Balance at
End of 
Period
 
 
 
 
 
 
 
 
 
 
(in millions)
 
Realized
Unrealized
 
 
Sales
 
Settlements

 
Three Months Ended March 31, 2012
 
 
 
 
 
 
 
 
 
 
 
 
Investment securities available-for-sale:
 
 
 
 
 
 
 
 
 
 
 
 
State and municipal securities (a)
$
24

 
$

$

 
$
(1
)
(b)
$

 
$

 
$
23

Auction-rate debt securities
1

 


 

 

 

 
1

Auction-rate preferred securities
408

 
5


 
4

(b)
(97
)
 

 
320

Total investment securities available-for-sale
433

 
5


 
3

(b)
(97
)
 

 
344

Derivative assets:
 
 
 
 
 
 
 
 
 
 
 
 
Warrants
3

 
1


 

 
(1
)
 

 
3

Derivative liabilities:
 
 
 
 
 
 
 
 
 
 
 
 
Other
6

 


 

 

 
(6
)
 

 
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended March 31, 2011
 
 
 
 
 
 
 
 
 
 
 
 
Trading securities:
 
 
 
 
 
 
 
 
 
 
 
 
Other securities
1

 


 

 
(1
)
 

 

Total trading securities
1

 


 

 
(1
)
 

 

Investment securities available-for-sale:
 
 
 
 
 
 
 
 
 
 
 
 
State and municipal securities (a)
39

 


 

 
(13
)
 

 
26

Auction-rate debt securities
1

 


 

 

 

 
1

Other corporate debt securities
1

 


 

 

 

 
1

Auction-rate preferred securities
570

 
3


 
(11
)
(b)
(58
)
 

 
504

Total investment securities available-for-sale
611

 
3


 
(11
)
(b)
(71
)
 

 
532

Derivative assets:
 
 
 
 
 
 
 
 
 
 
 
 
Warrants
7

 
2

1

 

 
(2
)
 

 
8

Derivative liabilities:
 
 
 
 
 
 
 
 
 
 
 
 
Other
1

 

(1
)
 

 

 

 
2

(a)
Primarily auction-rate securities.
(b)
Recorded in "net unrealized gains (losses) on investment securities available-for-sale" in other comprehensive income.

12

Table of Contents

Notes to Consolidated Financial Statements (unaudited)
Comerica Incorporated and Subsidiaries

The following table presents the income statement classification of realized and unrealized gains and losses due to changes in fair value recorded in earnings for the three months ended March 31, 2012 and 2011 for recurring Level 3 assets and liabilities, as shown in the previous table.
 
Net Securities Gains (Losses)
 
Other Noninterest Income
 
Total
(in millions)
Realized
 
Unrealized
 
Realized
 
Unrealized
 
Realized
 
Unrealized
Three Months Ended March 31, 2012
 
 
 
 
 
 
 
 
 
 
 
Investment securities available-for-sale:
 
 
 
 
 
 
 
 
 
 
 
Auction-rate preferred securities
$
5

 
$

 
$

 
$

 
$
5

 
$

Derivative assets:
 
 
 
 
 
 
 
 
 
 
 
Warrants

 

 
1

 

 
1

 

 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended March 31, 2011
 
 
 
 
 
 
 
 
 
 
 
Investment securities available-for-sale:
 
 
 
 
 
 
 
 
 
 
 
Auction-rate preferred securities
3

 

 

 

 
3

 

Derivative assets:
 
 
 
 
 
 
 
 
 
 
 
Warrants

 

 
2

 
1

 
2

 
1

Derivative liabilities:
 
 
 
 
 
 
 
 
 
 
 
Other

 
(1
)
 

 

 

 
(1
)
ASSETS AND LIABILITIES RECORDED AT FAIR VALUE ON A NONRECURRING BASIS
The Corporation may be required, from time to time, to record certain assets and liabilities at fair value on a nonrecurring basis. These include assets that are recorded at the lower of cost or fair value that were recognized at fair value below cost at the end of the period. Assets recorded at fair value on a nonrecurring basis are presented in the following table. No liabilities were recorded at fair value on a nonrecurring basis at March 31, 2012 and December 31, 2011.
(in millions)
Total
 
Level 3
March 31, 2012
 
 
 
Loans:
 
 
 
Commercial
$
133

 
$
133

Real estate construction
72

 
72

Commercial mortgage
288

 
288

Lease financing
3

 
3

International
4

 
4

Total loans
500

 
500

Nonmarketable equity securities
1

 
1

Other real estate
10

 
10

Loan servicing rights
3

 
3

Total assets at fair value
$
514

 
$
514

 
 
 
 
December 31, 2011
 
 
 
Loans:
 
 
 
Commercial
$
164

 
$
164

Real estate construction
87

 
87

Commercial mortgage
302

 
302

Lease financing
3

 
3

International
8

 
8

Total loans
564

 
564

Nonmarketable equity securities
1

 
1

Other real estate
29

 
29

Loan servicing rights
3

 
3

Total assets at fair value
$
597

 
$
597


13

Table of Contents

Notes to Consolidated Financial Statements (unaudited)
Comerica Incorporated and Subsidiaries


The following table presents quantitative information related to the significant unobservable inputs utilized in the Corporation's Level 3 recurring fair value measurements as of March 31, 2012. No liabilities were recorded as Level 3 at March 31, 2012.
 
 
 
Discounted Cash Flow Model
 
 
 
Unobservable Input
March 31, 2012
Fair Value
(in millions)
 
Discount Rate
 
Workout Period (in years)
State and municipal securities (a)
$
23

 
5% - 10%
 
4 - 5
Equity and other non-debt securities:
 
 
 
 
 
Auction-rate preferred securities
320

 
3% - 7%
 
2 - 4
(a)
Primarily auction-rate securities.
Level 3 assets recorded at fair value on a nonrecurring basis at March 31, 2012 included loans for which a specific allowance was established based on the fair value of collateral and other real estate for which fair value of the properties was less than the cost basis. For both asset classes, the unobservable inputs were the additional adjustments applied by management to the appraised values to reflect such factors as non-current appraisals and revisions to estimated time to sell. These adjustments are determined based on qualitative judgments made by management on a case-by-case basis and are not quantifiable inputs, although they are used in the determination of fair value.
ESTIMATED FAIR VALUES OF FINANCIAL INSTRUMENTS NOT RECORDED AT FAIR VALUE ON A RECURRING BASIS
The Corporation typically holds the majority of its financial instruments until maturity and thus does not expect to realize many of the estimated fair value amounts disclosed. The disclosures also do not include estimated fair value amounts for items that are not defined as financial instruments, but which have significant value. These include such items as core deposit intangibles, the future earnings potential of significant customer relationships and the value of trust operations and other fee generating businesses. The Corporation believes the imprecision of an estimate could be significant.

14

Table of Contents

Notes to Consolidated Financial Statements (unaudited)
Comerica Incorporated and Subsidiaries

The carrying amount and estimated fair value of financial instruments not recorded at fair value in their entirety on a recurring basis on the Corporation’s consolidated balance sheets are as follows:
 
Carrying
Amount
 
Estimated Fair Value
(in millions)
 
Total
 
Level 1
 
Level 2
 
Level 3
March 31, 2012
 
 
 
 
 
 
 
 
 
Assets
 
 
 
 
 
 
 
 
 
Cash and due from banks
$
984

 
$
984

 
$
984

 
$

 
$

Federal funds sold
10

 
10

 
10

 

 

Interest-bearing deposits with banks
2,966

 
2,966

 
2,966

 

 

Loans held-for-sale
32

 
32

 

 
32

 

Total loans, net of allowance for loan losses (a)
42,308

 
42,597

 

 

 
42,597

Customers’ liability on acceptances outstanding
17

 
17

 
17

 

 

Nonmarketable equity securities (b)
15

 
28

 

 

 
28

Liabilities
 
 
 
 
 
 
 
 
 
Demand deposits (noninterest-bearing)
20,741

 
20,741

 

 
20,741

 

Interest-bearing deposits
22,420

 
22,420

 

 
22,420

 

Customer certificates of deposit
6,145

 
6,144

 

 
6,144

 

Total deposits
49,306

 
49,305

 

 
49,305

 

Short-term borrowings
82

 
82

 
82

 

 

Acceptances outstanding
17

 
17

 
17

 

 

Medium- and long-term debt
4,919

 
4,805

 

 
4,805

 

Credit-related financial instruments
(97
)
 
(97
)
 

 

 
(97
)
 
 
 
 
 
 
 
 
 
 
December 31, 2011
 
 
 
 
 
 
 
 
 
Assets
 
 
 
 
 
 
 
 
 
Cash and due from banks
$
982

 
$
982

 
$
982

 
$

 
$

Interest-bearing deposits with banks
2,574

 
2,574

 
2,574

 

 

Loans held-for-sale
34

 
34

 

 
34

 

Total loans, net of allowance for loan losses (a)
41,953

 
42,233

 

 

 
42,233

Customers’ liability on acceptances outstanding
22

 
22

 
22

 

 

Nonmarketable equity securities (b)
16

 
27

 

 

 
27

Liabilities
 
 
 
 
 
 
 
 
 
Demand deposits (noninterest-bearing)
19,764

 
19,764

 

 
19,764

 

Interest-bearing deposits
22,183

 
22,183

 

 
22,183

 

Customer certificates of deposit
5,808

 
5,809

 

 
5,809

 

Total deposits
47,755

 
47,756

 

 
47,756

 

Short-term borrowings
70

 
70

 
70

 

 

Acceptances outstanding
22

 
22

 
22

 

 

Medium- and long-term debt
4,944

 
4,794

 

 
4,794

 

Credit-related financial instruments
(101
)
 
(101
)
 

 

 
(101
)
(a)
Included $500 million and $564 million of impaired loans recorded at fair value on a nonrecurring basis at March 31, 2012 and December 31, 2011, respectively.
(b)
Included $1 million of nonmarketable equity securities recorded at fair value on a nonrecurring basis at both March 31, 2012 and December 31, 2011.


15

Table of Contents

Notes to Consolidated Financial Statements (unaudited)
Comerica Incorporated and Subsidiaries

NOTE 3 - INVESTMENT SECURITIES
A summary of the Corporation’s investment securities available-for-sale follows:
(in millions)
Amortized
Cost
 
Gross
Unrealized
Gains
 
Gross
Unrealized
Losses
 
Fair Value
March 31, 2012
 
 
 
 
 
 
 
U.S. Treasury and other U.S. government agency securities
$
20

 
$

 
$

 
$
20

Residential mortgage-backed securities (a)
9,334

 
250

 

 
9,584

State and municipal securities (b)
29

 

 
6

 
23

Corporate debt securities:
 
 
 
 
 
 
 
Auction-rate debt securities
1

 

 

 
1

Other corporate debt securities
47

 

 

 
47

Equity and other non-debt securities:
 
 
 
 
 
 
 
Auction-rate preferred securities
331

 

 
11

 
320

Money market and other mutual funds
66

 

 

 
66

Total investment securities available-for-sale
$
9,828

 
$
250

 
$
17

 
$
10,061

 
 
 
 
 
 
 
 
December 31, 2011
 
 
 
 
 
 
 
U.S. Treasury and other U.S. government agency securities
$
20

 
$

 
$

 
$
20

Residential mortgage-backed securities (a)
9,289

 
224

 
1

 
9,512

State and municipal securities (b)
29

 

 
5

 
24

Corporate debt securities:
 
 
 
 
 
 
 
Auction-rate debt securities
1

 

 

 
1

Other corporate debt securities
46

 

 

 
46

Equity and other non-debt securities:
 
 
 
 
 
 
 
Auction-rate preferred securities
423

 

 
15

 
408

Money market and other mutual funds
93

 

 

 
93

Total investment securities available-for-sale
$
9,901

 
$
224

 
$
21

 
$
10,104

(a)
Residential mortgage-backed securities issued and/or guaranteed by U.S. government agencies or U.S. government-sponsored enterprises.
(b)
Primarily auction-rate securities.

16

Table of Contents

Notes to Consolidated Financial Statements (unaudited)
Comerica Incorporated and Subsidiaries

A summary of the Corporation’s investment securities available-for-sale in an unrealized loss position as of March 31, 2012 and December 31, 2011 follows:
 
Temporarily Impaired
 
Less than 12 months
 
12 months or more
 
Total
(in millions)
Fair
Value
 
Unrealized
Losses
 
Fair
Value
 
Unrealized
Losses
 
Fair
Value
 
Unrealized
Losses
March 31, 2012
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Residential mortgage-backed securities (a)
$
362

 
$

(c)
 
$

 
$

 
 
$
362

 
$

(c)
State and municipal securities (b)

 

 
 
23

 
6

 
 
23

 
6

 
Corporate debt securities:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Auction-rate debt securities

 

 
 
1

 

(c)
 
1

 

(c)
Equity and other non-debt securities:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Auction-rate preferred securities
88

 

(c)
 
232

 
11

 
 
320

 
11

 
Total impaired securities
$
450

 
$

 
 
$
256

 
$
17

 
 
$
706

 
$
17

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
December 31, 2011