Comerica 2008 Annual Report Download - page 76

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Comerica Incorporated and Subsidiaries
Note 1 — Summary of Significant Accounting Policies
Organization
Comerica Incorporated (the Corporation) is a registered financial holding company headquartered in
Dallas, Texas. The Corporation’s major business segments are the Business Bank, the Retail Bank and Wealth &
Institutional Management. For further discussion of each business segment, refer to Note 25. The core
businesses are tailored to each of the Corporation’s four primary geographic markets: Midwest, Western, Texas
and Florida. The Corporation and its banking subsidiaries are regulated at both the state and federal levels.
The accounting and reporting policies of the Corporation conform to U.S. generally accepted accounting
principles and prevailing practices within the banking industry. The preparation of financial statements in
conformity with U.S. generally accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the
reporting period. Actual results could differ from these estimates.
The following summarizes the significant accounting policies of the Corporation applied in the preparation
of the accompanying consolidated financial statements.
Principles of Consolidation
The consolidated financial statements include the accounts of the Corporation and its subsidiaries after
elimination of all significant intercompany accounts and transactions. Certain amounts in the financial
statements for prior years have been reclassified to conform to current financial statement presentation.
The Corporation consolidates variable interest entities (VIE’s) in which it is the primary beneficiary. In
general, a VIE is an entity that either (1) has an insufficient amount of equity to carry out its principal activities
without additional subordinated financial support, (2) has a group of equity owners that are unable to make
significant decisions about its activities or (3) has a group of equity owners that do not have the obligation to
absorb losses or the right to receive returns generated by its operations. If any of these characteristics is present,
the entity is subject to a variable interests consolidation model, and consolidation is based on variable interests,
not on ownership of the entity’s outstanding voting stock. Variable interests are defined as contractual,
ownership or other money interests in an entity that change with fluctuations in the entity’s net asset value. The
primary beneficiary consolidates the VIE; the primary beneficiary is defined as the enterprise that absorbs a
majority of expected losses or receives a majority of residual returns (if the losses or returns occur), or both. The
Corporation consolidates entities not determined to be VIE’s when it holds a majority (controlling) interest in
the entity’s outstanding voting stock. The minority interest in less than 100 percent owned consolidated
subsidiaries is not material and is included in ‘‘accrued expenses and other liabilities’’ on the consolidated
balance sheets. The related minority interest in earnings which is included in ‘‘other noninterest expenses’’ on the
consolidated statements of income was a charge (credit) of $1 million or less for the years ended December 31,
2008, 2007 and 2006.
Equity investments in entities that are not VIE’s where the Corporation owns less than a majority
(controlling) interest and equity investments in entities that are VIE’s where the Corporation is not the primary
beneficiary are not consolidated. Rather, such investments are accounted for using either the equity method or
cost method. The equity method is used for investments in corporate joint ventures and investments where the
Corporation has the ability to exercise significant influence over the investee’s operation and financial policies,
which is generally presumed to exist if the Corporation owns more than 20 percent of the voting interest of the
investee. Equity method investments are included in ‘‘accrued income and other assets’’ on the consolidated
balance sheets, with income and losses recorded in ‘‘other noninterest income’’ on the consolidated statements of
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