Comerica 2011 Annual Report Download - page 49

F-12
to be substantially completed by December 31, 2012, is expected to result in cumulative costs of approximately $115 million. For
additional information regarding merger and restructuring charges, refer to Note 2 to the consolidated financial statements.
FDIC insurance expense decreased $19 million, or 30 percent, to $43 million in 2011, compared to a decrease of $28
million in 2010. The decrease in 2011 was primarily due to the implementation of changes to the deposit insurance assessment
system effective April 1, 2011. The decrease in 2010 was primarily due to an industry-wide special assessment charge in 2009
of $29 million.
Legal fees increased $8 million, or 23 percent, to $43 million in 2011, compared to a decrease of $2 million, or five
percent, in 2010. The increase in 2011 was primarily due to increased litigation expense and the addition of Sterling. The increase
in litigation expenses primarily related to the favorable resolution of a long-standing matter by the Corporation in 2011.
Other real estate expenses decreased $7 million to $22 million in 2011, from $29 million in 2010, and decreased $19
million in 2010. Other real estate expenses reflects write-downs, net gains (losses) on sales and carrying costs related primarily
to foreclosed property. The decrease in 2011 was primarily due to decreases in write-downs on foreclosed property, the recognition
of net gains on foreclosed property sold and decreased carrying costs. The decrease in 2010 was primarily due to decreases in
write-downs on foreclosed property and the recognition of net gains on foreclosed property sold. For additional information
regarding foreclosed property, refer to “Nonperforming Assets” in the “Credit Risk” section of this financial review.
Litigation and operational losses increased $6 million to $17 million in 2011, from $11 million in 2010, and increased
$1 million in 2010. Litigation and operational losses include traditionally defined operating losses, such as fraud and processing
losses, as well as uninsured losses and litigation losses. These expenses are subject to fluctuation due to timing of authorized and
actual litigation settlements, as well as insurance settlements. The increase in 2011 primarily reflected an increase in estimated
probable litigation losses, as certain litigation contingencies progressed closer to resolution in 2011 and accruals were made for
certain litigation arising during the year.
The provision for credit losses on lending-related commitments decreased $7 million to a benefit of $9 million in 2011,
from a benefit of $2 million in 2010. For discussion of the provision for credit losses on lending related commitments, refer to
the "Credit Risk" subheading in the "Risk Management" section of this financial review.
Other noninterest expenses decreased $2 million, or one percent, in 2011, and increased $12 million, or eight percent, in
2010. In 2011, other noninterest expenses included core deposit intangible amortization of $5 million due to the acquisition of
Sterling, which was more than offset by smaller decreases in several other noninterest expense categories. The increase in 2010
was primarily due to a $5 million loss on the redemption of trust preferred securities and smaller increases in several other
noninterest expense categories.
INCOME TAXES AND TAX-RELATED ITEMS
The provision for income taxes was $137 million in 2011, compared to $55 million in 2010 and a benefit of $131 million
in 2009. The increase in the provision for income taxes in 2011 was due primarily to an increase in income before income taxes
and a $19 million charge related to a final settlement agreement with the Internal Revenue Service involving the repatriation of
foreign earnings on a structured investment transaction, partially offset by the release of tax reserves of $7 million due to the
Corporation's participation in a recently enacted State of California voluntary compliance initiative. At December 31, 2011, the
Corporation had no investment structures with uncertain tax positions. The increase in the provision for income taxes in 2010 was
due primarily to an increase in income before income taxes.
Net deferred tax assets were $395 million at December 31, 2011, compared to $383 million at December 31, 2010, an
increase of $12 million, primarily due to an increase in deferred tax assets due to the acquisition of Sterling and a decrease in
deferred tax liabilities due to lease financing transactions, partially offset by a reduction in deferred tax assets due to an increase
in unrealized gains recognized in other comprehensive income. Included in net deferred tax assets at December 31, 2011 were
deferred tax assets of $696 million. Deferred tax assets were evaluated for realization and it was determined that no valuation
allowance was needed. This conclusion was based on available evidence of loss carryback capacity, projected future reversals of
existing taxable temporary differences and assumptions made regarding future events.
INCOME FROM DISCONTINUED OPERATIONS, NET OF TAX
There was no income from discontinued operations, net of tax, in 2011, compared to $17 million in 2010 and $1 million
in 2009. The income from discontinued operations, net of tax, of $17 million recognized in 2010 resulted from an after-tax gain
in the first quarter 2010 from the cash settlement of a note receivable related to the 2006 sale of an investment advisory subsidiary.
For further information on the cash settlement of the note and discontinued operations, refer to Note 25 to the consolidated financial
statements.