Regulatory Capital and Reserve Requirements

12 Months Ended

Dec. 31, 2020

Broker-Dealer, Net Capital Requirement, SEC Regulation [Abstract]

Regulatory Capital and Reserve Requirements

REGULATORY CAPITAL AND RESERVE REQUIREMENTS

Reserves required to be maintained and/or deposited with the FRB are classified in interest-bearing deposits with banks. These reserve balances vary, depending on the level of customer deposits in the Corporation’s banking subsidiaries. The average required reserve balances were $135 million and $586 million for the years ended December 31, 2020 and 2019, respectively. On March 15, 2020, the Federal Reserve Board announced the reserve requirement ratios would be reduced to zero effective March 26, 2020, eliminating reserve requirements for all depository institutions.

Banking regulations limit the transfer of assets in the form of dividends, loans or advances from the bank subsidiaries to the parent company. Under the most restrictive of these regulations, the aggregate amount of dividends which can be paid to the parent company, with prior approval from bank regulatory agencies, approximated $12 million at January 1, 2021, plus 2021 net profits. Substantially all the assets of the Corporation’s banking subsidiaries are restricted from transfer to the parent company of the Corporation in the form of loans or advances.

The Corporation’s subsidiary banks declared dividends of $498 million, $1.2 billion and $1.1 billion in 2020, 2019 and 2018, respectively.

The Corporation and its U.S. banking subsidiaries are subject to various regulatory capital requirements administered by federal and state banking agencies under the Basel III regulatory framework (Basel III). This regulatory framework establishes comprehensive methodologies for calculating regulatory capital and risk-weighted assets (RWA). Basel III also set minimum capital ratios as well as overall capital adequacy standards.

Under Basel III, regulatory capital comprises Common Equity Tier 1 (CET1) capital, additional Tier 1 capital and Tier II capital. CET1 capital predominantly includes common shareholders' equity, less certain deductions for goodwill, intangible assets and deferred tax assets that arise from net operating losses and tax credit carry-forwards. Additionally, the Corporation has elected to permanently exclude capital in accumulated other comprehensive income (AOCI) related to debt and equity securities classified as available-for-sale as well as for cash flow hedges and defined benefit postretirement plans from CET1, an option available to standardized approach entities under Basel III. Tier 1 capital incrementally includes noncumulative perpetual preferred stock. Tier 2 capital includes Tier 1 capital as well as subordinated debt qualifying as Tier 2 and qualifying allowance for credit losses. In addition to the minimum risk-based capital requirements, the Corporation and its Bank subsidiaries are required to maintain a minimum capital conservation buffer, in the form of common equity, of 2.5 percent in order to avoid restrictions on capital distributions and discretionary bonuses.

The Corporation computes RWA using the standardized approach. Under the standardized approach, RWA is generally based on supervisory risk-weightings which vary by counterparty type and asset class. Under the Basel III standardized approach, capital is required for credit risk RWA, to cover the risk of unexpected losses due to failure of a customer or counterparty to meet its financial obligations in accordance with contractual terms; and if trading assets and liabilities exceed certain thresholds, capital is also required for market risk RWA, to cover the risk of losses due to adverse market movements or from position-specific factors.

Quantitative measures established by regulation to ensure capital adequacy require the maintenance of minimum amounts and ratios of CET1, Tier 1 and total capital (as defined in the regulations) to average and/or risk-weighted assets. Failure to meet minimum capital requirements can initiate certain mandatory and possibly additional discretionary actions by regulators that, if undertaken, could have a direct material effect on the Corporation’s financial statements. At December 31, 2020 and 2019, the Corporation and its U.S. banking subsidiaries exceeded the ratios required for an institution to be considered “well capitalized” For U.S. banking subsidiaries, those requirements were total risk-based capital, Tier 1 risk-based capital, CET1 risk-based capital and leverage ratios greater than 10 percent, 8 percent, 6.5 percent and 5 percent, respectively, at December 31, 2020 and 2019. For the Corporation, requirements to be considered "well capitalized" were total risk-based capital and Tier 1 risk-based capital ratios greater than 10 percent and 6 percent, respectively, at December 31, 2020 and 2019. There have been no conditions or events since December 31, 2020 that management believes have changed the capital adequacy classification of the Corporation or its U.S. banking subsidiaries.

The following is a summary of the capital position of the Corporation and Comerica Bank, its principal banking subsidiary.

(dollar amounts in millions)	Comerica Incorporated (Consolidated)			Comerica Bank
December 31, 2020
CET1 capital (minimum $3.0 billion (Consolidated))	$	6,919		$	7,278
Tier 1 capital (minimum $4.0 billion (Consolidated))	7,313			7,278
Total capital (minimum $5.4 billion (Consolidated))	8,833			8,547
Risk-weighted assets	66,931			66,759
Average assets (fourth quarter)	84,705			84,536
CET1 capital to risk-weighted assets (minimum-4.5%)	10.34		%	10.90		%
Tier 1 capital to risk-weighted assets (minimum-6.0%)	10.93			10.90
Total capital to risk-weighted assets (minimum-8.0%)	13.20			12.80
Tier 1 capital to average assets (minimum-4.0%)	8.63			8.61
Capital conservation buffer (minimum-2.5%)	4.93			4.80
December 31, 2019
CET1 capital (minimum $3.1 billion (Consolidated))	$	6,919		$	7,199
Tier 1 capital (minimum $4.1 billion (Consolidated))	6,919			7,199
Total capital (minimum $5.5 billion (Consolidated))	8,282			8,371
Risk-weighted assets	68,273			68,071
Average assets (fourth quarter)	72,773			72,564
CET1 capital to risk-weighted assets (minimum-4.5%)	10.13		%	10.58		%
Tier 1 capital to risk-weighted assets (minimum-6.0%)	10.13			10.58
Total capital to risk-weighted assets (minimum-8.0%)	12.13			12.30
Tier 1 capital to average assets (minimum-4.0%)	9.51			9.92
Capital conservation buffer (minimum-2.5%)	4.13			4.30