Comerica 2014 Annual Report Download - page 138

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Comerica Incorporated and Subsidiaries
F-101
The Corporation and certain of its subsidiaries are subject to various other pending or threatened legal proceedings arising
out of the normal course of business or operations. The Corporation believes it has meritorious defenses to the claims asserted
against it in its other currently outstanding legal proceedings and, with respect to such legal proceedings, intends to continue to
defend itself vigorously, litigating or settling cases according to management’s judgment as to what is in the best interests of the
Corporation and its shareholders. Settlement may result from the Corporation's determination that it may be more prudent financially
to settle, rather than litigate, and should not be regarded as an admission of liability. On at least a quarterly basis, the Corporation
assesses its potential liabilities and contingencies in connection with outstanding legal proceedings utilizing the latest information
available. On a case-by-case basis, reserves are established for those legal claims for which it is probable that a loss will be incurred
either as a result of a settlement or judgment, and the amount of such loss can be reasonably estimated. The actual costs of resolving
these claims may be substantially higher or lower than the amounts reserved. Based on current knowledge, and after consultation
with legal counsel, management believes that current reserves are adequate, and the amount of any incremental liability arising
from these matters is not expected to have a material adverse effect on the Corporation’s consolidated financial condition,
consolidated results of operations or consolidated cash flows. Legal fees of $24 million for each of the years ended December 31,
2014 and 2013, and $31 million for the year ended December 31, 2012, were included in "other noninterest expenses" on the
consolidated statements of income.
For matters where a loss is not probable, the Corporation has not established legal reserves. The Corporation believes the
estimate of the aggregate range of reasonably possible losses, in excess of reserves established, for all legal proceedings in which
it is involved is from zero to approximately $36 million at December 31, 2014. This estimated aggregate range of reasonably
possible losses is based upon currently available information for those proceedings in which the Corporation is involved, taking
into account the Corporation’s best estimate of such losses for those cases for which such estimate can be made. For certain cases,
the Corporation does not believe that an estimate can currently be made. The Corporation’s estimate involves significant judgment,
given the varying stages of the proceedings (including the fact that many are currently in preliminary stages), the existence in
certain proceedings of multiple defendants (including the Corporation) whose share of liability has yet to be determined, the
numerous yet-unresolved issues in many of the proceedings (including issues regarding class certification and the scope of many
of the claims) and the attendant uncertainty of the various potential outcomes of such proceedings. Accordingly, the Corporation’s
estimate will change from time to time, and actual losses may be more or less than the current estimate.
In the event of unexpected future developments, it is possible that the ultimate resolution of these matters, if unfavorable,
may be material to the Corporation's consolidated financial condition, consolidated results of operations or consolidated cash
flows.
For information regarding income tax contingencies, refer to Note 18.
NOTE 22 - BUSINESS SEGMENT INFORMATION
The Corporation has strategically aligned its operations into three major business segments: the Business Bank, the Retail
Bank and Wealth Management. These business segments are differentiated based on the type of customer and the related products
and services provided. In addition to the three major business segments, the Finance Division is also reported as a segment. Business
segment results are produced by the Corporation’s internal management accounting system. This system measures financial results
based on the internal business unit structure of the Corporation. The performance of the business segments is not comparable with
the Corporation's consolidated results and is not necessarily comparable with similar information for any other financial institution.
Additionally, because of the interrelationships of the various segments, the information presented is not indicative of how the
segments would perform if they operated as independent entities. The management accounting system assigns balance sheet and
income statement items to each business segment using certain methodologies, which are regularly reviewed and refined. From
time to time, the Corporation may make reclassifications among the segments to more appropriately reflect management's current
view of the segments, and methodologies may be modified as the management accounting system is enhanced and changes occur
in the organizational structure and/or product lines. For comparability purposes, amounts in all periods are based on business unit
structure and methodologies in effect at December 31, 2014.
Net interest income for each business segment is the total of interest income generated by earning assets less interest
expense on interest-bearing liabilities plus the net impact from associated internal funds transfer pricing (FTP) funding credits and
charges. The FTP methodology provides the business segments credits for deposits and other funds provided and charges the
business segments for loans and other assets utilizing funds. This credit or charge is based on matching stated or implied maturities
for these assets and liabilities. The FTP credit provided for deposits reflects the long-term value of deposits generated based on
their implied maturity. The FTP charge for funding assets reflects a matched cost of funds based on the pricing and term
characteristics of the assets. For acquired loans and deposits, matched maturity funding is determined based on origination
date. Accordingly, the FTP process reflects the transfer of interest rate risk exposures to the Treasury group within the Finance
segment, where such exposures are centrally managed. The allowance for loan losses is allocated to the business segments based