Comerica 2009 Annual Report Download - page 101

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Comerica Incorporated and Subsidiaries
The following presents information regarding impaired loans and the related valuation allowance:
December 31
2009 2008 2007
(in millions)
Average individually evaluated impaired loans for the year .................. $1,078 $690 $264
Total nonaccrual loans ........................................... $1,165 $917 $391
Total reduced-rate loans .......................................... 16 —13
Total nonperforming loans ...................................... 1,181 917 404
Total performing restructured loans .................................. 11 —4
Total impaired loans ........................................... 1,192 917 408
Impaired loans excluded from individual evaluation ...................... (51) (13) (4)
Individually evaluated impaired loans ............................... $1,141 $904 $404
Individually evaluated impaired loans requiring
a valuation allowance .......................................... $1,080 $807 $356
Valuation allowance on individually evaluated impaired loans ................ $ 196 $175 $ 85
Note 6 — Allowance for Loan Losses
An analysis of changes in the allowance for loan losses follows:
2009 2008 2007
(dollar amounts in millions)
Balance at January 1 ........................................... $ 770 $ 557 $ 493
Loan charge-offs .............................................. (895) (500) (196)
Recoveries on loans previously charged-off ............................ 27 29 47
Net loan charge-offs ......................................... (868) (471) (149)
Provision for loan losses ........................................ 1,082 686 212
Foreign currency translation adjustment ............................. 1(2) 1
Balance at December 31 ........................................ $ 985 $ 770 $ 557
As a percentage of total loans .................................... 2.34% 1.52% 1.10%
Note 7 — 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, California and Texas.
The Corporation has an industry concentration with the automotive industry. Loans to automotive dealers
and to borrowers involved with automotive production are reported as automotive, as management believes
these loans have similar economic characteristics that might cause them to react similarly to changes in economic
conditions. This aggregation involves the exercise of judgment. Included in automotive production are:
(a) original equipment manufacturers and Tier 1 and Tier 2 suppliers that produce components used in vehicles
and whose primary revenue source is automotive-related (‘‘primary’’ defined as greater than 50%) and (b) other
manufacturers that produce components used in vehicles and whose primary revenue source is automotive-
related. Loans less than $1 million and loans recorded in the Small Business loan portfolio were excluded from
99