Comerica Incorporated 10-K (2022-02-16)

For the fiscal year ended December 31, 2021

 

 

Business

 

 

GENERAL

 

Comerica Incorporated (“Comerica”) is a financial services company, incorporated under the laws of the State of Delaware in 1973, and headquartered in Dallas, Texas. Based on total assets as reported in the most recently filed Consolidated Financial Statements for Bank Holding Companies (FR Y-9C), it was among the 25 largest commercial United States (“U.S.”) financial holding companies.

 

incorporated : formed into a business company with legal status

 

consolidated financial statement : a report that gives information about the financial position of all the companies belonging to a business group, rather than giving information about each company separately

 

holding company : a company whose main purpose is to control another company or companies through owning shares in it or them

 

 

 

As of December 31, 2021, Comerica owned directly or indirectly all the outstanding common stock of 2 active banking subsidiaries (Comerica Bank, a Texas banking association, and Comerica Bank & Trust, National Association) and 29 non-banking subsidiaries. At December 31, 2021, Comerica had total assets of approximately $94.6 billion, total deposits of approximately $82.3 billion, total loans of approximately $49.3 billion and shareholders’ equity of approximately $7.9 billion.

 

subsidiary : a business company that is owned or controlled by another larger company

 

shareholders' equity : net assets

 

 

 

Comerica has strategically aligned its operations into three major business segments: the Commercial Bank, the Retail Bank, and Wealth Management. In addition to the three major business segments, Finance is also reported as a segment.

 

align : to arrange something in the correct position, or to be in the correct position, in relation to something else, especially in a straight line / to change something slightly so that it is in the correct relationship to something else 

 

 

 

Comerica operates in three primary geographic markets - Texas, California, and Michigan, as well as in Arizona and Florida, with select businesses operating in several other states, and in Canada and Mexico.

 

 

 

We provide information about the net interest income and noninterest income we received from our various classes of products and services: (1) under the caption, “Analysis of Net Interest Income” on page F-4 of the Financial Section of this report; (2) under the caption “Rate/Volume Analysis” on page F-5 of the Financial Section of this report; and (3) under the caption “Noninterest Income” on pages F-6 through F-7 of the Financial Section of this report.

 

 

 

COMPETITION

 

The financial services business is highly competitive. Comerica and its subsidiaries mainly compete in their primary geographic markets covering the major metropolitan areas in Texas, California, and Michigan, as well as in Arizona and Florida.

 

 

 

In addition, they compete throughout the continental U.S., Mexico and Canada as they pursue certain businesses on a national scale that fall outside of the primary markets, such as U.S. Banking, Mortgage Banker, Environmental Services and National Dealer Services.

 

pursue : to do something or try to achieve something over a period of time / to continue to discuss, find out about or be involved in something

 

 

 

They have strategically placed offices in faster growing markets where there is a concentration of customers and industries they serve. In 2021, Comerica also expanded its presence in the Southeastern U.S. by establishing three commercial offices in North Carolina.

 

 

 

Comerica is subject to competition with respect to various products and services, including, without limitation, commercial loans and lines of credit, deposits, cash management, capital market products, international trade finance, letters of credit, foreign exchange management services, loan syndication services, consumer lending, consumer deposit gathering, mortgage loan origination, consumer products, fiduciary services, private banking, retirement services, investment management and advisory services, investment banking services, brokerage services, the sale of annuity products, and the sale of life, disability and long-term care insurance products.

 

limitation : the act or process of limiting or controlling somebody/something / a rule, fact or condition that limits something

 

syndication : the act of selling an article, a photograph, a television programme, etc. to several different newspapers, etc.

 

fiduciary : involving trust, especially in a situation where a person or company controls money or property belonging to others 

 

annuity : a fixed amount of money paid to somebody each year, usually for the rest of their life / a type of insurance that pays a fixed amount of money to somebody each year

 

 

 

Comerica competes largely on the basis of industry expertise, the range of products and services offered, pricing and reputation, customer convenience, quality customer service and responsiveness to customer needs and the overall relationship with our clients.

 

responsiveness : the ability to react quickly and in a positive way to something / an interested and enthusiastic reaction to somebody/something

 

 

 

Our competitors are large national and regional financial institutions as well as smaller financial institutions. Some of Comerica's larger competitors, including certain nationwide banks that have a significant presence in Comerica's market area, may make available to their customers a broader array of product, pricing and structure alternatives and, due to their asset size, may more easily absorb credit losses in a larger overall portfolio.

 

absorb : to take in a liquid, gas or other substance from the surface or space around / to take in and keep heat, light, energy, sound, etc. instead of reflecting it 

 

 

 

Some of Comerica's competitors (larger or smaller) may have more liberal lending policies and processes. Increasingly, Comerica competes with other companies based on financial technology and capabilities, such as mobile banking applications and funds transfer.

 

liberal : willing to understand and respect other people’s behaviour, opinions, etc., especially when they are different from your own; believing people should be able to choose how they behave / having or relating to political and social beliefs that support individual freedom and rights, democracy and free enterprise (= businesses competing against each other with little government control) 

 

 

 

Further, Comerica's banking competitors may be subject to a significantly different or reduced degree of regulation due to their asset size or types of products offered. They may also have the ability to more efficiently utilize resources to comply with regulations or may be able to more effectively absorb the costs of regulations into their existing cost structure. Comerica believes that the level of competition in all geographic markets will continue to increase in the future.

 

 

 

In addition to banks, Comerica's banking subsidiaries also face competition from other financial intermediaries, including savings and loan associations, consumer and commercial finance companies, leasing companies, venture capital funds, credit unions, investment banks, insurance companies and securities firms.

 

intermediary : a person or an organization that helps other people or organizations to make an agreement by being a means of communication between them

 

 

 

Competition among providers of financial products and services continues to increase as technology advances have lowered the barriers to entry for financial technology companies, with customers having the opportunity to select from a growing variety of traditional and nontraditional alternatives, including crowdfunding, digital wallets and money transfer services.

 

 

 

The ability of non-banking financial institutions to provide services previously limited to commercial banks has intensified competition. Because non-banking financial institutions are not subject to many of the same regulatory restrictions as banks and bank holding companies, they can often operate with greater flexibility and lower cost structures.

 

intensify : to increase in degree or strength; to make something increase in degree or strength

 

 

 

In addition, the industry continues to consolidate, which affects competition by eliminating some regional and local institutions, while potentially strengthening the franchises of acquirers.

 

 

 

(the rest omitted)