Comerica 2008 Annual Report Download - page 132

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Comerica Incorporated and Subsidiaries
Assets and Liabilities Recorded at Fair Value on a Nonrecurring Basis
The Corporation may be required, from time to time, to measure certain assets at fair value on a
nonrecurring basis. These include assets that are measured at the lower of cost or market that were recognized at
fair value below cost at the end of the period. Assets measured at fair value on a nonrecurring basis are included
in the table below.
December 31, 2008
Total Level 1 Level 2 Level 3
(in millions)
Loans .............................................. $ 904 $— $— $ 904
Other assets (1) ....................................... 153 — 5 148
Total assets at fair value ................................. $1,057 $— $ 5 $1,052
Total liabilities at fair value ............................... $ — $— $— $ —
(1) Includes private equity investments, loans held-for-sale, loan servicing rights and foreclosed assets.
Note 24 — Estimated Fair Value of Financial Instruments
Disclosure of the estimated fair values of financial instruments, which differ from carrying values, often
requires the use of estimates. In cases where quoted market values 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. Accordingly, the estimates provided herein do
not necessarily indicate amounts which could be realized in a current exchange. Furthermore, as the
Corporation typically holds the majority of its financial instruments until maturity, it does not expect to realize
many of the estimated amounts disclosed. The disclosures also do not include estimated fair value amounts for
items which 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.
Following is a description of the methods and assumptions used in estimating fair value disclosures for
financial instruments not recorded at fair value in their entirety on a recurring basis on the Corporation’s
consolidated balance sheets. For further information regarding the fair value of financial instruments recorded at
fair value on a recurring basis under SFAS 157, refer to Note 23.
Cash and due from banks, federal funds sold and securities purchased under agreements to resell and
interest-bearing deposits with banks: The carrying amount approximates the estimated fair value of these
instruments.
Loans held-for-sale: The market value of these loans represents estimated fair value or estimated net
selling price. The market value is determined on the basis of existing forward commitments or the current
market values of similar loans.
Loans: Domestic business loans consist of commercial, real estate construction, commercial mortgage
and equipment lease financing loans. The estimated fair value of the Corporation’s variable rate domestic
business loans is represented by the carrying value, adjusted by an amount which estimates the change in fair
value caused by changes in the credit quality of borrowers since the loans were originated. The estimated fair
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