Comerica 2015 Annual Report Download - page 51

F-13
STRATEGIC LINES OF BUSINESS
The Corporation's operations are strategically aligned into three major business segments: the Business Bank, the Retail
Bank and Wealth Management. These business segments are differentiated based upon the products and services provided. In
addition to the three major business segments, Finance is also reported as a segment. The Other category includes items not directly
associated with these business segments or the Finance segment. 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. Market segment results are also provided for the
Corporation's three primary geographic markets: Michigan, California and Texas. In addition to the three primary geographic
markets, Other Markets is also reported as a market segment. Note 22 to the consolidated financial statements describes the
Corporation's segment reporting methodology as well as the business activities of each business segment and presents financial
results of these business segments for the years ended December 31, 2015, 2014 and 2013.
The Corporation's management accounting system assigns balance sheet and income statement items to each segment
using certain methodologies, which are regularly reviewed and refined. These methodologies may be modified as the management
accounting system is enhanced and changes occur in the organizational structure and/or product lines.
In the second quarter 2014, the Corporation enhanced the approach used to determine the standard reserve factors used
in estimating the allowance for credit losses, which had the effect of capturing certain elements in the standard reserve component
that had formerly been included in the qualitative assessment. The impact of the change was largely neutral to the total allowance
for loan losses. However, because standard reserves are allocated to the segments at the loan level, while qualitative reserves are
allocated at the portfolio level, the impact of the methodology change on the allowance of each segment reflected the characteristics
of the individual loans within each segment's portfolio, causing segment reserves to increase or decrease accordingly. As a result,
the current year provision for credit losses within each segment is not comparable to prior year amounts.
BUSINESS SEGMENTS
The following table presents net income (loss) by business segment.
(dollar amounts in millions)
Years Ended December 31 2015 2014 2013
Business Bank $ 765 85% $ 822 86% $ 799 87%
Retail Bank 47 5 44 5 36 4
Wealth Management 85 10 84 9 79 9
897 100% 950 100% 914 100%
Finance (375) (357) (376)
Other (a) (1) —3
Total $ 521 $ 593 $ 541
(a) Includes items not directly associated with the three major business segments or the Finance Division.
The Business Bank's net income of $765 million in 2015 decreased $57 million, compared to $822 million in 2014. Net
interest income (FTE) of $1.5 billion increased $4 million in 2015, primarily the result of the benefit from an increase in average
loans of $1.7 billion and the funds transfer pricing (FTP) benefit from a $2.4 billion increase in average deposits, partially offset
by a decrease in accretion of the purchase discount on the acquired loan portfolio, lower loan yields and a lower FTP crediting
rate. The increase in average loans primarily reflected increases in Technology and Life Sciences, Mortgage Banker Finance,
National Dealer Services and Commercial Real Estate, partially offset by a decrease in Corporate Banking. Average deposits
increased in nearly all lines of business, with the largest increases in general Middle Market, Technology and Life Sciences,
Corporate Banking and Commercial Real Estate. The provision for credit losses increased $102 million, to $158 million in 2015,
compared to the prior year. The increase in the provision primarily reflected increased reserves for loans related to energy, as a
result of stress in the energy and energy-related portfolio as a result of sustained lower energy prices. Corporate Banking and
Technology and Life Sciences also contributed to the increase in the provision. These increases were partially offset by
improvements in credit quality in the remainder of the portfolio. Net loan charge-offs of $89 million increased $73 million in
2015, compared to 2014, primarily reflecting increases in Energy, general Middle Market (largely due to an increase in charge-
offs on energy-related loans), Corporate Banking and Technology and Life Sciences. Excluding the $181 million impact of the
change in accounting presentation on card fees as described under the "Noninterest Income" subheading in the "Results of
Operations" section of this financial review, noninterest income of $393 million in 2015 increased $1 million from the prior year,
primarily reflecting a $13 million increase in card fees, partially offset by a $6 million decrease in income from unconsolidated
subsidiaries and a $6 million decrease in investment banking fees, largely for the same reasons as previously discussed under the
"Noninterest Income" subheading in the "Results of Operations" section of this financial review. Also excluding the impact of the
change in accounting presentation for a card program, noninterest expenses of $605 million in 2015 increased $16 million compared
to the prior year, primarily due to a $17 million increase in outside processing expenses, largely due to the increase in third-party