Comerica 2011 Annual Report Download - page 48

F-11
NONINTEREST EXPENSES
(in millions)
Years Ended December 31
Salaries
Employee benefits
Total salaries and employee benefits
Net occupancy expense
Equipment expense
Outside processing fee expense
Software expense
Merger and restructuring charges
FDIC Insurance expense
Legal fees
Advertising expense
Other real estate expense
Litigation and operational losses
Provision for credit losses on lending-related commitments
Other noninterest expenses
Total noninterest expenses
2011
$ 770
205
975
169
66
101
88
75
43
43
28
22
17
(9)
144
$ 1,762
2010
$ 740
179
919
162
63
96
89
—
62
35
30
29
11
(2)
146
$ 1,640
2009
$ 687
210
897
162
62
97
84
—
90
37
29
48
10
—
134
$ 1,650
Noninterest expenses increased $122 million, or seven percent, to $1.8 billion in 2011, compared to $1.6 billion in
2010, and decreased $10 million, or one percent, in 2010, from $1.7 billion in 2009. Excluding merger and restructuring
charges of $75 million in 2011, noninterest expenses increased $47 million, or three percent, in 2011, compared to 2010,
primarily due to the addition of Sterling noninterest expenses. An analysis of increases and decreases by individual line item is
presented below.
Salaries expense increased $30 million, or four percent, in 2011, compared to an increase of $53 million, or eight percent,
in 2010. The increase in salaries expense in 2011 was primarily due to the addition of Sterling ($18 million) and increases in
incentive compensation, reflecting overall performance, including the Corporation's performance relative to peer performance.
The Corporation's incentive programs are designed to reward performance and provide market competitive total compensation.
Business unit incentives are tied to new business and business unit profitability, while executive incentives are tied to the
Corporation's overall performance and peer-based comparisons of results. The increase in salaries expense in 2010 was primarily
due to an increase in incentive compensation, reflecting improved overall performance and performance relative to peer
performance. During the time the Corporation was a participant in the U.S. Department of Treasury (U.S. Treasury) Capital
Purchase Program, from November 2008 through March 2010, adjustments were made to the Corporation's incentive programs
to comply with related required restrictions.
Employee benefits expense increased $26 million, or 14 percent, in 2011, compared to a decrease of $31 million, or 15
percent, in 2010. The increase in 2011 resulted primarily from an increase in defined benefit pension expense ($17 million) largely
driven by declines in the discount rate and the expected long-term rate of return on plan assets, as well as the addition of Sterling
($6 million). The decrease in 2010 resulted primarily from a decline in defined benefit pension expense largely driven by higher
than expected net gains on plan assets in 2009. For a further discussion of defined benefit pension expense, refer to the “Critical
Accounting Policies” section of this financial review and Note 18 to the consolidated financial statements.
Net occupancy and equipment expense increased $10 million, or four percent, to $235 million in 2011, compared to an
increase of $1 million, or less than one percent, in 2010. The increase in 2011 was primarily due to the addition of Sterling banking
centers.
Outside processing fee expense increased $5 million, or five percent, to $101 million in 2011, compared to a decrease
of $1 million, or one percent, in 2010. The increase in 2011 was primarily due to the Corporation's conversion to an enhanced
brokerage platform and higher volumes in activity-based processing charges, primarily driven by expanded card products.
Software expense decreased $1 million, or two percent, in 2011, compared to an increase of $5 million, or seven percent,
in 2010. The increase in 2010 was primarily due to software upgrades in the banking centers and throughout the Corporation.
The Corporation recognized merger and restructuring charges of $75 million in 2011 in connection with the acquisition
of Sterling. Merger and restructuring charges include facilities and contract termination charges, systems integration and related
charges, severance and other employee-related charges and transaction-related costs. The restructuring plan, which is expected