10-K 1 k66465e10-k.txt ANNUAL REPORT FOR THE FISCAL YEAR ENDED 12/31/01 COMERICA INCORPORATED 2001 FORM 10-K Securities and Exchange Commission Washington, DC 20549 Form 10-K Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934, For the fiscal year ended December 31, 2001. Commission file number 1-10706 Comerica Incorporated Comerica Tower at Detroit Center 500 Woodward Avenue, MC 3391 Detroit, Michigan 48226 1-800-521-1190 Incorporated in the State of Delaware, IRS Employer Identification No. 38-1998421. Securities registered pursuant to Section 12(b) of the Act: - Common Stock, $5 par value - Rights to acquire Series D Preferred Stock, no par value These securities are registered on the New York Stock Exchange. Securities registered pursuant to Section 12(g) of the Act: - 7 1/4 percent Subordinated Notes due in 2007. - 9.98% Series B Capital Securities of Imperial Capital Trust I due 2026.* - 7.60% Trust Preferred of Comerica Capital Trust I due 2050. -------- *The registrant has reporting obligations for these securities which were acquired in connection with the merger of Imperial Bancorp with and into Comerica Holdings Incorporated, a wholly-owned subsidiary of the registrant. As a result of the merger, Imperial Capital Trust became a wholly-owned indirect subsidiary of the registrant. 1 The registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. No disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is contained in the definitive proxy statement incorporated by reference in Part III of this Form 10-K. At March 27, 2002, the registrant's common stock, $5 par value, held by nonaffiliates had an aggregate market value of $10,684,734,720.54 based on the closing price on the New York Stock Exchange on that date of $63.34 per share and 168,688,581 shares of common stock held by nonaffiliates. For purposes of this Form 10-K only, it has been assumed that all common shares Comerica's Trust Department holds for Comerica and Comerica's employee plans, and all common shares the registrant's directors and executive officers hold, are held by affiliates. At March 27, 2002, the registrant had outstanding 178,735,252 shares of its common stock, $5 par value. DOCUMENTS INCORPORATED BY REFERENCE: 1. Parts I and II: Items 1-8--Annual Report to Shareholders for the year ended December 31, 2001. 2. Part III: Items 10-13--Proxy Statement for the Annual Meeting of Shareholders to be held May 21, 2002. PART I ITEM 1. BUSINESS GENERAL Comerica Incorporated ("Comerica" or the "Corporation") is a multi-state financial services provider, incorporated under the laws of the State of Delaware, headquartered in Detroit, Michigan. Based on assets as of December 31, 2001, it was the 17th largest bank holding company in the United States and the largest bank holding company headquartered in Michigan in terms of both total assets and total deposits. Comerica was formed in 1973 to acquire the outstanding common stock of Comerica Bank (formerly Comerica Bank-Detroit), one of Michigan's oldest banks ("Comerica Bank"). Since that time, Comerica has acquired financial institutions in California, Texas and Florida, and, in 1997, formed Comerica Bank-Mexico, S.A. In 2001, Comerica established its Canadian branch and the assets and the majority of the liabilities of Comerica Bank-Canada were transferred to Comerica's Canadian branch. Comerica intends to dissolve the shell subsidiary, Comerica Bank-Canada in 2002. In 2001, Comerica also merged its two national banking 2 subsidiaries, Comerica Bank, National Association and Comerica Bank & Trust, National Association, with Comerica Bank & Trust, National Association as the surviving bank. On January 29, 2001, Comerica completed its acquisition of Imperial Bancorp, and as of September 29, 2001, Comerica merged its two California banking subsidiaries, Comerica Bank-California and Imperial Bank, with Comerica Bank-California as the surviving bank. As of December 31, 2001, Comerica owned directly or indirectly all the outstanding common stock of six banking and fifty-five non-banking subsidiaries. At December 31, 2001, Comerica had total assets of approximately $50.7 billion, total deposits of approximately $37.5 billion, total loans (net of unearned income) of approximately $41.2 billion and common shareholders' equity of approximately $4.8 billion. BUSINESS STRATEGY Comerica has strategically aligned its operations into three major lines of business: the Business Bank, the Individual Bank and the Investment Bank. The Business Bank is comprised of middle market lending, asset-based lending, large corporate banking, international financial services and speciality deposit gathering. This line of business meets the needs of medium-size businesses, multinational corporations and governmental entities by offering various products and services, including commercial loans and lines of credit, deposits, cash management, capital market products, international trade finance, letters of credit, foreign exchange management services and loan syndication services. The Individual Bank includes consumer lending, consumer deposit gathering, mortgage loan origination and servicing, small business banking (annual sales under $10 million) and private banking. This line of business offers a variety of consumer products, including deposit accounts, installment loans, student loans, home equity lines of credit and residential mortgage loans. In addition, a full range of financial services is provided to small businesses and municipalities. Private lending and personal trust services are also provided to meet the personal financial needs of affluent individuals (as defined by individual net income or wealth). The Investment Bank is responsible for the sale of mutual fund and annuity products, as well as life, disability and long-term care insurance products. This line of business also offers institutional trust products, retirement services and provides investment management and advisory services, investment banking and discount securities brokerage services. Comerica has positioned itself to deliver financial services in its four primary geographic markets: Michigan, Texas, California and Florida, with operations in 19 other states, Canada and Mexico. In addition to the three major lines of business, the Finance segment is also significant. The Finance segment includes Comerica's securities portfolio and asset and liability management activities. This segment is responsible for managing Comerica's funding, liquidity and capital needs, performing interest sensitivity gap and earnings simulation analysis and executing various strategies to manage Comerica's exposure to liquidity and interest rate risk. 3 SUPERVISION AND REGULATION Banks, financial holding companies and financial institutions are highly regulated at both the state and federal level. Comerica is subject to supervision and regulation by the Federal Reserve Board ("FRB") under the Bank Holding Company Act of 1956, as amended (the "Act"). The Gramm-Leach-Bliley Act of 1999 expanded the activities in which a bank holding company, which is eligible to be a financial holding company, could engage. The conditions to be a financial holding company include the requirement that each deposit institution subsidiary of the holding company be well-capitalized and well-managed. On December 19, 2000, Comerica became a financial holding company. As a financial holding company, Comerica may affiliate with securities firms and insurance companies and engage in other activities that are financial in nature. Activities that are "financial in nature" include, but are not limited to: securities underwriting; dealing and market marking; sponsoring mutual funds and investment companies; insurance underwriting and agency; merchant banking; travel agent services; real estate development; and activities that the FRB has determined to be closely related to banking. A bank holding company that is not also a financial holding company is limited to engaging in banking and such other activities previously determined by the FRB to be closely related to banking. Comerica Bank is chartered by the State of Michigan and is supervised and regulated by the Division of Financial Institutions, Office of Financial and Insurance Services of the State of Michigan and the FRB. Comerica Bank-Texas is chartered by the State of Texas and is supervised and regulated by the Texas Department of Banking and the FRB. Comerica Bank & Trust, National Association is chartered under federal law and subject to supervision and regulation by the Office of the Comptroller of the Currency ("OCC"). Comerica Bank-California is chartered by the State of California and is supervised and regulated by the California Department of Financial Institutions and the FRB. Comerica Bank, Comerica Bank & Trust, National Association, Comerica Bank-California and Comerica Bank-Texas are members of the Federal Reserve System ("FRS"). The deposits of all the foregoing banks are insured by the Bank Insurance Fund ("BIF") of the Federal Deposit Insurance Corporation ("FDIC") to the extent provided by law. Comerica Bank-Mexico, S.A. is chartered under the laws of Mexico and is supervised and regulated by the Ministry of Finance and Public Credit, the Bank of Mexico, and the Mexican National Banking Commission. Comerica Bank-Canada is chartered under the laws of Ontario, Canada and is supervised and regulated by the Office of the Superintendent of Financial Institutions Canada and the Canada Deposit Insurance Corporation. The FRB supervises non-banking activities conducted by companies owned by Comerica Bank, Comerica Bank-California and Comerica Bank-Texas and the OCC supervises non-banking activities conducted by companies owned by Comerica Bank & Trust, National Association. In addition, Comerica's non-banking subsidiaries are subject to supervision and regulation by various state and federal agencies, including, but not limited to, the National Association of Securities Dealers, Inc. (in the case of Comerica Securities, Inc. and Comerica Capital Markets Corporation), the Department of Insurance of the State of Michigan (in the case of Comerica Insurance Services, 4 Inc.), and the Securities and Exchange Commission (in the case of Munder Capital Management, the Corporation's investment advisory subsidiary). No FRB approval is required for Comerica to acquire a company, other than a bank holding company or bank, engaged in activities that are financial in nature or incidental to activities that are financial in nature, as determined by the FRB. Prior FRB approval is required before Comerica may acquire the beneficial ownership or control of more than 5% of the voting shares or substantially all of the assets of a bank holding company, bank or savings association. If any subsidiary bank of Comerica ceases to be "well capitalized" or "well managed" under applicable regulatory standards, the Federal Reserve Board may, among other actions, order Comerica to divest the subsidiary bank. Alternatively, Comerica may elect to conform its non-banking activities to those permissible for a bank holding company that is not also a financial holding company. If any subsidiary bank of Comerica receives a rating under the Community Reinvestment Act of 1977 of less than satisfactory, Comerica will be prohibited from engaging in new activities or acquiring companies other than bank holding companies, banks or savings associations. Various governmental requirements, including Sections 23A and 23B of the Federal Reserve Act and Regulation W, limit borrowings by Comerica and its nonbank subsidiaries from its affiliate insured depository institutions, and also limit various other transactions between Comerica and its nonbank subsidiaries, on the one hand, and its affiliate insured depository institutions, on the other. For example, Section 23A of the Federal Reserve Act limits to no more than 10% of its total capital the aggregate outstanding amount of any insured depository institution's loans and other "covered transactions" with any particular nonbank affiliate, and limits to no more than 20% of its total capital the aggregate outstanding amount of any insured depository institution's covered transactions with all of its nonbank affiliates. Section 23A of the Federal Reserve Act also generally requires that an insured depository institution's loans to its nonbank affiliates be secured, and Section 23B of the Federal Reserve Act generally requires that an insured depository institution's transactions with its nonbank affiliates be on arms-length terms. Set forth below are summaries of selected laws and regulations applicable to Comerica and its subsidiaries. The summaries are not complete and are qualified in their entirety by references to the particular statutes and regulations. A change in applicable law or regulation could have a material effect on the business of Comerica. Interstate Banking and Branching Pursuant to the Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994 (the "Interstate Act"), a bank holding company became able to acquire banks in states other than its home state, without regard to the permissibility of such acquisition under state law, but subject to any state requirement that the bank has been organized and operating for a minimum period of time, not to exceed five years, and the requirement that the bank holding company, prior to and following the proposed acquisition, control no more than ten percent of the total amount of deposits of insured depository institutions in the United States and no more than thirty percent of such deposits in that state (or such amount as established by state law). 5 The Interstate Act also authorizes banks to merge across state lines, thereby creating interstate branching. All of the states in which Comerica's banking subsidiaries are located allow interstate branching. Furthermore, under the Interstate Act, a bank is now able to open new branches in a state in which it does not already have banking operations if such state enacts a law permitting such de novo branching. Since the provision permitting interstate bank acquisitions became effective, Comerica has had enhanced opportunities to acquire banks in any state subject to approval by the appropriate federal and state regulatory agencies. Under the Interstate Act, Comerica has the opportunity to consolidate its affiliate banks to create one bank with branches in more than one state, or to establish branches in different states, subject to any state "opt-in" and "opt-out" provisions. Dividends Comerica is a legal entity separate and distinct from its banking and other subsidiaries. Most of Comerica's revenues result from dividends its bank subsidiaries pay it. There are statutory and regulatory requirements applicable to the payment of dividends by subsidiary banks to Comerica as well as by Comerica to its shareholders. Certain, but not all, of these requirements are discussed below. Each state bank subsidiary that is a member of the FRS and each national banking association is required by federal law to obtain the prior approval of the FRB or the OCC, as the case may be, for the declaration and payment of dividends, if the total of all dividends declared by the board of directors of such bank in any calendar year will exceed the total of (i) such bank's retained net income (as defined and interpreted by regulation) for that year plus (ii) the retained net income (as defined and interpreted by regulation) for the preceding two years, less any required transfers to surplus or to fund the retirement of preferred stock. Further, federal regulatory agencies can prohibit a banking institution or bank holding company from engaging in unsafe and unsound business practices and could prohibit the payment of dividends if such payment could be deemed an unsafe and unsound banking practice. In addition, Comerica's state bank subsidiaries are also subject to limitations under state law regarding the amount of earnings that may be paid out as dividends, and require prior approval for payments of dividends that exceed certain levels. At January 1, 2002, Comerica's subsidiary banks, without obtaining prior governmental approvals, could declare aggregate dividends of approximately $641 million from retained net profits of the preceding two years, plus an amount approximately equal to the net profits (as measured under current regulations), if any, earned for the period from January 1, 2002 through the date of declaration. Comerica's subsidiary banks paid dividends of $580 million in 2001, $339 million in 2000, and $261 million in 1999. 6 Source of Strength According to Federal Reserve Board policy, bank holding companies are expected to act as a source of strength to each subsidiary bank and to commit resources to support each subsidiary bank. This support may be required at times when a bank holding company may not be able to provide such support. Similarly, under the cross-guarantee provisions of the Federal Deposit Insurance Act, in the event of a loss suffered or anticipated by the FDIC (either as a result of the default of a banking or thrift subsidiary or related to FDIC assistance provided to a subsidiary in danger of default) the other banking subsidiaries may be assessed for the FDIC's loss, subject to certain exceptions. FDICIA FDICIA substantially revised the bank regulatory and funding provisions of the Federal Deposit Insurance Act and made revisions to several other federal banking statutes. Among other things, FDICIA requires the federal banking agencies to take "prompt corrective action" in respect of depository institutions that do not meet minimum capital requirements. FDICIA establishes five capital tiers: "well capitalized," "adequately capitalized," "undercapitalized," "significantly undercapitalized" and "critically undercapitalized." A depository institution's capital tier will depend upon where its capital levels are in relation to various relevant capital measures, which, among others, include a Tier 1 and total risk-based capital measure and a leverage ratio capital measure, and certain other factors. Regulations establishing the specific capital tiers provide that, for a depository institution to be well capitalized it must have a total risk-based capital ratio of at least 10 percent, a Tier 1 risk-based capital ratio of at least 6 percent, a Tier 1 leverage ratio of at least 5 percent and not be subject to any specific capital order or directive. For an institution to be adequately capitalized it must have a total risk-based capital ratio of at least 8 percent, a Tier 1 risk-based capital ratio of at least 4 percent and a Tier 1 leverage ratio of at least 4 percent (and in some cases 3 percent). Under certain circumstances, the appropriate banking agency may treat a well capitalized, adequately capitalized or undercapitalized institution as if the institution were in the next lower capital category. As of December 31, 2001, each of the banking subsidiaries of Comerica were well capitalized under these regulations. FDICIA generally prohibits a depository institution from making any capital distribution (including payment of a dividend) or paying any management fee to its holding company if the depository institution would thereafter be undercapitalized. Undercapitalized depository institutions are subject to limitations on growth and certain activities and are required to submit an acceptable capital restoration plan. The federal banking agencies may not accept a capital plan without determining, among other things, that the plan is based on realistic assumptions and is likely to succeed in restoring the depository institution's capital. In addition, for a capital restoration plan to be acceptable, the depository institution's parent holding company must guarantee for a specific time period that the institution will comply with such capital restoration plan. The aggregate liability of the parent holding company under the guaranty is limited to the lesser of (i) an amount equal to 5 7 percent of the depository institution's total assets at the time it became undercapitalized, or (ii) the amount that is necessary (or would have been necessary) to bring the institution into compliance with all capital standards applicable with respect to such institution as of the time it fails to comply with the plan. If a depository institution fails to submit or implement an acceptable plan, it is treated as if it is significantly undercapitalized. Significantly undercapitalized depository institutions are subject to a number of requirements and restrictions. Specifically, such a depository institution may be required to do one or more of the following: sell sufficient voting stock to become adequately capitalized, reduce the interest rates it pays on deposits, reduce its rate of asset growth, dismiss certain senior executive officers or directors, and stop accepting deposits from correspondent banks. Critically undercapitalized institutions are subject to the appointment of a receiver or conservator or such other action as the FDIC and the applicable federal banking agency shall determine appropriate. Under FDICIA, the FDIC is permitted to provide financial assistance to an insured bank before appointment of a conservator or receiver only if (i) such assistance would be the least costly method of meeting the FDIC's insurance obligations, (ii) grounds for appointment of a conservator or a receiver exist or are likely to exist in the future, (iii) it is unlikely that the bank can meet all capital standards without assistance and (iv) the bank's management has been competent, has complied with applicable laws, regulations, rules and supervisory directives and has not engaged in any insider dealing, speculative practice or other abusive activity. FDICIA also contains a variety of other provisions that may affect the operations of depository institutions including reporting requirements, regulatory standards for real estate lending, "truth in savings" provisions, the requirement that a depository institution give 90 days prior notice to customers and regulatory authorities before closing any branch and a prohibition on the acceptance or renewal of brokered deposits by depository institutions that are not well capitalized or are adequately capitalized and have not received a waiver from the FDIC. Comerica's United States subsidiary banks are all well-capitalized and may accept brokered deposits. Capital Requirements The FRB imposes, on Comerica, risk-based capital requirements and guidelines, which are substantially similar to the capital requirements and guidelines imposed by the FRB, the OCC and the FDIC on depository institutions under their jurisdictions. The FRB may set higher capital requirements for holding companies whose circumstances warrant it. For example, holding companies experiencing internal growth or making acquisitions are expected to maintain strong capital positions substantially above the minimum supervisory levels, without significant reliance on intangible assets. The FRB also considers a "tangible Tier 1 leverage ratio" (deducting all intangibles) and other indications of capital strength in evaluating proposals for expansion or new activities. 8 The FRB, FDIC and OCC rules require Comerica to incorporate market and interest rate risk components into their risk-based capital standards. Under the market risk requirements, capital is allocated to support the amount of market risk related to a financial institution's ongoing trading activities. As an additional means to identify problems in the financial management of depository institutions, FDICIA requires federal bank regulatory agencies to establish certain non-capital safety and soundness standards for institutions for which they are the primary federal regulator. The standards relate generally to operations and management, asset quality, interest rate exposure and executive compensation. The agencies are authorized to take action against institutions that fail to meet such standards. FDIC Insurance Assessments Comerica's subsidiary banks are subject to FDIC deposit insurance assessments. The FDIC operates a risk-based deposit premium assessment system under which each depository institution is placed in one of nine assessment categories based on certain capital and supervisory measures. The deposit insurance assessment schedule published by the FDIC for the assessment period commencing January 1, 1998, maintained the nine categories but provided for major reductions in the assessment rates for institutions insured by BIF. These reductions occurred because the balance in BIF had reached or surpassed the "designated reserve ratio" set by law for the balance in the fund to maintain with respect to BIF-insured deposits. The FDIC has continued these reduced assessment levels. There is legislation pending in a committee in the House of Representatives to change these assessment levels. It is uncertain if such legislation will be enacted and, if enacted, the form of such legislation. Enforcement Powers of Federal Banking Agencies The FRB and other federal banking agencies have broad enforcement powers, including the power to terminate deposit insurance, impose substantial fines and other civil and criminal penalties and appoint a conservator or receiver. Failure to comply with applicable laws, regulations and supervisory agreements could subject Comerica or its banking subsidiaries, as well as officers and directors of these organizations, to administrative sanctions and potentially substantial civil penalties. COMPETITION Banking is a highly competitive business. The Michigan banking subsidiary of the Corporation competes primarily with Detroit and outstate Michigan banks for loans, deposits and trust accounts. Through its offices in Arizona, California, Colorado, Connecticut, Florida, Georgia, Indiana, Illinois, Nevada, and Texas, Comerica competes with other financial institutions for various types of loans. 9 At year-end 2001, Comerica was the largest financial holding company headquartered in Michigan in terms of total assets and deposits. Based on the Interstate Act as described above and the Gramm-Leach Bliley Act, Comerica believes that the level of competition in all geographic markets will increase in the future. Comerica's banking subsidiaries also face competition from other financial intermediaries, including savings and loan associations, consumer finance companies, leasing companies and credit unions. EMPLOYEES As of December 31, 2001, Comerica and its subsidiaries had 10,307 full-time and 1,485 part-time employees. ITEM 2. PROPERTIES The executive offices of the Corporation are located in the Comerica Tower at Detroit Center, 500 Woodward Avenue, Detroit, Michigan 48226. Comerica and its subsidiaries occupy 14 floors of the building, which is leased through Comerica Bank from an unaffiliated third party. This lease extends through January 2007. As of December 31, 2001, Comerica, through its banking affiliates, operates a total of 496 banking branches, trust services locations, and loan production or other financial services offices, in the States of Michigan, California, Texas and Florida. Of these, 212 were owned and 284 were leased. Affiliates also operate from leased spaces in Daphne, Alabama; Phoenix, Arizona; Denver Colorado; Darien, Connecticut; Oakbrook Terrace, Chicago and Barrington, Illinois; Indianapolis, Indiana; New Orleans, Louisiana; Boston, Massachusetts; Minneapolis, Minnesota; Durham and Charlotte, North Carolina; Red Bank, New Jersey; Las Vegas, Nevada; New York, New York; Beachwood, West Chester, Cincinnati and Toledo, Ohio; Portland, Oregon; King of Prussia, Pennsylvania; Knoxville and Memphis, Tennessee; Reston, Virginia; Bellevue, Kirkland and Olympia, Washington; Sao Paulo, Brazil; Mexico City, Mexico; Queretaro, Mexico; Monterey, Mexico; Wanchai, Hong Kong; and Toronto, Ontario, Canada. The Corporation owns a check processing center in Livonia, Michigan; a ten-story building in the central business district of Detroit that houses certain departments of the Corporation and Comerica Bank; and a building in Auburn Hills, Michigan, used mainly for lending functions and operations. In 1983, Comerica entered into a sale/leaseback agreement with an unaffiliated party covering an operations center which was built in Auburn Hills, Michigan, and now is occupied by various departments of the Corporation and Comerica Bank. 10 ITEM 3. LEGAL PROCEEDINGS The Corporation and its subsidiaries are parties to litigation and claims arising in the normal course of their activities. Although the amount of ultimate liability, if any, with respect to such matters cannot be determined with reasonable certainty, management, after consultation with legal counsel, believes that the litigation and claims, some of which are substantial, will not have a material adverse effect on the Corporation's consolidated financial position. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS The Corporation did not submit any matters for a shareholders' vote in the fourth quarter of 2001. 11 PART II ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS The common stock of Comerica Incorporated is traded on the New York Stock Exchange (NYSE Trading Symbol: CMA). At March 27, 2002, there were approximately 16,915 record holders of the Corporation's common stock. Quarterly cash dividends were declared during 2001 and 2000, totaling $1.76 and $1.60 per common share per year, respectively. The following table sets forth, for the periods indicated, the high and low sale prices per share of the Corporation's common stock as reported on the NYSE Composite Transactions Tape for all quarters of 2001 and 2000.
--------------------------------------------------------------------- Dividend Dividend* Quarter High Low Per Share Yield --------------------------------------------------------------------- 2001 Fourth $58.40 $44.02 $0.44 3.4% Third 63.88 50.27 0.44 3.1 Second 62.75 50.73 0.44 3.1 First 65.15 53.00 0.44 3.0 2000 Fourth $61.13 $47.19 $0.40 3.0% Third 59.44 45.00 0.40 3.1 Second 54.38 39.88 0.40 3.4 First 46.25 32.94 0.40 4.1
* Dividend yield is calculated by annualizing the quarterly dividend per share and dividing by an average of the high and low price in the quarter. ITEM 6. SELECTED FINANCIAL DATA The response to this item is included on page 23 of the Corporation's Annual Report to Shareholders for the year ended December 31, 2001, which page is hereby incorporated by reference. 12 ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The response to this item includes the discussion set forth below and the information included under the caption "Financial Review and Report" on pages 23 through 41 of the Corporation's Annual Report to Shareholders for the year ended December 31, 2001, which pages are hereby incorporated by reference. CONTRACTUAL OBLIGATIONS AND CREDIT-RELATED COMMITMENTS As disclosed in the footnotes to the Consolidated Financial Statements incorporated by reference, the Corporation has certain obligations to make future payments under contracts and credit-related financial instruments and commitments. At December 31, 2001, aggregate contractual obligations and credit-related commitments are summarized as follows:
(in millions) PAYMENTS DUE BY PERIOD ---------------------------------------------- Less 1 - 3 3 - 5 After 5 Contractual obligations Total Than Years Years Years 1 Year =========================================================================================================================== Medium- and long-term debt $5,402 $1,558 $ 780 $ 185 $ 2,879 Leases and other noncancellable obligations 540 70 126 89 255 --------------------------------------------------------------------------------------------------------------------------- Total contractual cash obligations $5,942 $1,628 $ 906 274 3,134 REMAINING MATURITY OF CREDIT-RELATED COMMITMENTS -------------------------------------------------------------- Credit-related commitments Less 1 - 3 3 - 5 After 5 Total Than Years Years Years 1 Year =========================================================================================================================== Unused commitments to extend credit $28,695 $17,93 $7,244 3,300 $215 6 Standby letters of credit and financial guarantees 5,118 3,556 916 506 140 Commercial letters of credit 258 258 - - - Credit default swaps 7 - 7 - - --------------------------------------------------------------------------------------------------------------------------- Total credit-related commitments $34,078 21,750 8,167 3,806 355 ===========================================================================================================================
13 ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK The response to this item is included on pages 37 through 41 of the Corporation's Annual Report to Shareholders for the year ended December 31, 2001, which pages are hereby incorporated by reference. ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA The response to this item is included on pages 42 through 71 of the Corporation's Annual Report to Shareholders for the year ended December 31, 2001, which pages are hereby incorporated by reference. ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE None. PART III ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT The response to this item will be included under the sections captioned "Information About Nominees and Incumbent Directors," "Executive Officers" and "Section 16(a) Beneficial Ownership Reporting Compliance" of the Corporation's definitive Proxy Statement relating to the Annual Meeting of Shareholders to be held on May 21, 2002, which sections are hereby incorporated by reference. ITEM 11. EXECUTIVE COMPENSATION The response to this item will be included under the sections captioned "Compensation of Directors" and "Compensation of Executive Officers" of the Corporation's definitive Proxy Statement relating to the Annual Meeting of Shareholders to be held on May 21, 2002, which sections are hereby incorporated by reference. ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT The response to this item will be included under the sections captioned "Security Ownership of Certain Beneficial Owners" and "Security Ownership of Management" of the Corporation's definitive Proxy Statement relating to the Annual Meeting of Shareholders to be held on May 21, 2002, which sections are hereby incorporated by reference. 14 ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS The response to this item will be included under the sections captioned "Transactions of Directors and Executive Officers with Comerica" and "Information about Nominees and Incumbent Directors" of the Corporation's definitive Proxy Statement relating to the Annual Meeting of Shareholders to be held on May 21, 2002, which sections are hereby incorporated by reference. 15 Comerica Incorporated and Subsidiaries FORM 10-K CROSS-REFERENCE INDEX Certain information required to be included in this Form 10-K is included in the 2001 Annual Report to Shareholders or in the 2002 Proxy Statement used in connection with the 2002 annual meeting of shareholders to be held on May 21, 2002. The following cross-reference index shows the page location in the 2001 Annual Report or the section of the 2002 Proxy Statement of only that information which is to be incorporated by reference into this Form 10-K. All other sections of the 2001 Annual Report or the 2002 Proxy Statement are not required in this Form 10-K and are not to be considered a part of this Form 10-K.
Page Number of 2001 Annual Report or Section of 2002 Proxy Statement PART I ITEM 1. Business................................................................................Included herein ITEM 2. Properties..............................................................................Included herein ITEM 3. Legal Proceedings.......................................................................Included herein ITEM 4. Submission of Matters to a Vote of Security Holders -- The Corporation did not submit any matters for the shareholders' vote in the fourth quarter of 2001. PART II ITEM 5. Market for Registrant's Common Equity and Related Security Holder Matters...............Included herein ITEM 6. Selected Financial Data..............................................................................23 ITEM 7. Management's Discussion and Analysis of Financial Condition and Results of Operations.............23-41 ITEM 7A. Quantitative and Qualitative Disclosures About Market Risk........................................37-41 ITEM 8. Financial Statements and Supplementary Data: Comerica Incorporated and Subsidiaries Consolidated Balance Sheets....................................................................42 Consolidated Statements of Income..............................................................43 Consolidated Statements of Changes in Shareholders' Equity.....................................44 Consolidated Statements of Cash Flows..........................................................45 Notes to Consolidated Financial Statements .................................................. 46-67 Report of Management.................................................................................68 Report of Independent Auditors.......................................................................68 Statistical Disclosure by Bank Holding Companies: Analysis of Net Interest Income - Fully Taxable Equivalent ..........................................25 Rate-Volume Analysis - Fully Taxable Equivalent......................................................26 Analysis of the Allowance for Credit Losses..........................................................28 Analysis of Investment Securities and Loans..........................................................32 Loan Maturities and Interest Rate Sensitivity........................................................33 Allocation of the Allowance for Credit Losses........................................................33 Mexican Cross-Border Risk............................................................................33 Analysis of Investment Securities Portfolio - Fully Taxable Equivalent...............................34 Summary of Nonperforming Assets and Past Due Loans...................................................36 Schedule of Rate Sensitive Assets and Liabilities ...................................................38 Remaining Expected Maturity of Risk Management Interest Rate Swaps ..................................39 Deposits - Maturity Distribution of Domestic Certificates of Deposit of $100,000 and Over...........50 ITEM 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure - None. PART III ITEM 10. Directors and Executive Officers of the Registrant.............Information About Nominees and Incumbent
16 Directors, Executive Officers of the Corporation and Section 16(a) Beneficial Ownership Reporting Compliance ITEM 11. Executive Compensation.................Compensation of Directors and Compensation of Executive Officers ITEM 12. Security Ownership of Certain Beneficial Owners and Management............Security Ownership of Certain Beneficial Owners and Security Ownership of Management ITEM 13. Certain Relationships and Related Transactions............................Transactions of Directors and Executive Officers with Comerica and Information about Nominees and Incumbent Directors
17 PART IV ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K (a) The following documents are filed as a part of this report: 1. Financial Statements: The financial statements that are filed as part of this report are listed under Item 8 in the Form 10-K Cross-Reference Index on page 12. 2. All of the schedules for which provision is made in the applicable accounting regulations of the Securities and Exchange Commission are either not required under the related instruction, the required information is contained elsewhere in the Form 10-K, or the schedules are inapplicable and therefore have been omitted. Exhibits: Exhibit Document Number* 3.1(a) Restated Certificate of Incorporation of Comerica Incorporated, as amended(1) 3.1(b) Certificate of Amendment to Restated Certificate of Incorporation of Comerica Incorporated(2) 3.2 Amended and restated bylaws of Comerica Incorporated (3) 4 Rights Agreement between Comerica Incorporated and Comerica Bank(4) 10.1+ Comerica Incorporated Amended and Restated 1997 Long-Term Incentive Plan (restated 2001) 10.2+ Comerica Incorporated Amended and Restated Management Incentive Plan (restated 2001) 10.3+ Comerica Incorporated Director Fee Deferral Plan(5) 10.4+ Benefit Equalization Plan for Employees of Comerica Incorporated(5) 10.5+ Comerica Incorporated's Retirement Plan for Non-Employee Directors(6) 10.6+ Manufacturers National Corporation's 1987 and 1989 Stock Option Plans for Key Employees(6) 10.7+ Manufacturers National Corporation's Executive Incentive Plan(6) 10.8+ Manufacturers National Corporation's Key Employee Retention Plan(6) 10.9+ Form of Employment Agreement (Exec. Off.)(7) 10.10+ Form of Director Indemnification Agreement between Comerica Incorporated and its directors(4) 10.11+ Employment Continuation Agreement with Eugene A. Miller(6) 10.12+ Employment Agreement with Ralph W. Babb, Jr. (8) 10.13+ Supplemental Pension and Retiree Medical Agreement with Ralph W. 18 Babb, Jr.(9) 10.14+ Comerica Incorporated Deferred Compensation Plan, 1997 Amendment and Restatement(4) 10.17+ Form of Comerica Incorporated Senior Officer Severance Plan between registrant and listed officers, January 1, 1997(4) 10.18+ 1999 Comerica Incorporated Deferred Compensation Plan, January 1, 1999 (3) 10.19+ 1999 Comerica Incorporated Deferred 3 Year ROE Award Plan, January 1, 1999 (3) 10.20+ Amended and Restated Comerica Incorporated Stock Option Plan For Non-Employee Directors, January 20, 2000 (3) 10.21+ Comerica Incorporated 1999 Discretionary Director Fee Deferral Plan May 21, 1999 (3) 10.22+ Comerica Incorporated 1999 Common Stock Director Fee Deferral Plan May 21, 1999 (3) 10.23+ 1986 Imperial Bancorp Stock Option Plan (as amended) 11 Statement regarding Computation of Per Share Earnings(10) 13 Incorporated Sections of Registrant's 2001 Annual Report to Shareholders 21 Subsidiaries of Registrant 23(a) Consent of Ernst & Young LLP 23(b) Consent of KPMG LLP 99.1 Independent Auditors' Report of KPMG LLP 19 --------------------------------------- (1) Filed as Exhibit 3.1 to Registrant's Annual Report on Form 10-K for the year ended December 31, 1996, and incorporated herein by reference. (2) Filed as Exhibit 3.1 to Registrant's Registrant Statement on Form S-4, No. 333-51042. (3) Filed as the same exhibit number to Registrant's Annual Report on Form 10-K for the year ended December 31, 1999, and incorporated herein by reference. (4) Filed as Exhibit 4 to Registrant's Current Report on Form 8-K dated June 18, 1996, regarding the Registrant's Rights Agreement with Comerica Bank, and incorporated herein by reference. (5) Filed as the same exhibit number to Registrant's Annual Report on Form 10-K for the year ended December 31, 1996, and incorporated herein by reference. (6) Filed as the same exhibit number to the Registrant's Annual Report on Form 10-K for the year ended December 31, 1992 and incorporated herein by reference. (7) Filed as Exhibit 10.9 to Registrant's Annual Report on Form 10-K for the year ended December 31, 1997 -- Commission File Number 1-10706 and incorporated herein by reference. (8) Filed as Exhibit 10.1 to Registrant's Form 10-Q for the quarter ended June 30, 1998 and incorporated herein by reference. (9) Filed as Exhibit 10.2 to Registrant's Form 10-Q for the quarter ended June 30, 1998 and incorporated herein by reference. (10) Incorporated by reference from Note 13 on page 53 of Registrant's 2001 Annual Report to Shareholders attached hereto as Exhibit 13. + Management compensation plan. (b) The Corporation did not file any Current Reports on Form 8-K during the fourth quarter of 2001. 20 SIGNATURES Pursuant to the requirements of Section 13 and 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized in the City of Detroit, State of Michigan on the 26th day of March, 2002. COMERICA INCORPORATED /s/ Eugene A. Miller ----------------------------------------------------- Eugene A. Miller Chairman /s/ Ralph W. Babb, Jr. ----------------------------------------------------- Ralph W. Babb, Jr. President and Chief Executive Officer Chief Financial Officer /s/ Marvin J. Elenbaas ----------------------------------------------------- Marvin J. Elenbaas Senior Vice President and Controller (Chief Accounting Officer) Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed by the following persons in the capacities indicated on the 26th day of March, 2002. BY DIRECTORS /s/ Ralph W. Babb, Jr. ----------------------------------------------------- Ralph W. Babb, Jr. /s/ Lillian Bauder ----------------------------------------------------- Lillian Bauder /s/ Joseph J. Buttigieg, III ----------------------------------------------------- Joseph J. Buttigieg, III /s/ James F. Cordes ----------------------------------------------------- James F. Cordes /s/ Peter D. Cummings ----------------------------------------------------- Peter D. Cummings /s/ J. Philip DiNapoli ----------------------------------------------------- J. Philip DiNapoli 21 /s/ Anthony F. Earley, Jr. ----------------------------------------------------- Anthony F. Earley, Jr. /s/ Max M. Fisher ----------------------------------------------------- Max M. Fisher ----------------------------------------------------- Roger Fridholm /s/ Todd W. Herrick ----------------------------------------------------- Todd W. Herrick /s/ David Baker Lewis ----------------------------------------------------- David Baker Lewis /s/ John D. Lewis ----------------------------------------------------- John D. Lewis /s/ Wayne B. Lyon ----------------------------------------------------- Wayne B. Lyon /s/ Eugene A. Miller ----------------------------------------------------- Eugene A. Miller /s/ Alfred A. Piergallini ----------------------------------------------------- Alfred A. Piergallini /s/ John W. Porter ----------------------------------------------------- John W. Porter ----------------------------------------------------- Howard F. Sims /s/ Robert S. Taubman ----------------------------------------------------- Robert S. Taubman /s/ William P. Vititoe ----------------------------------------------------- William P. Vititoe /s/ Martin D. Walker ----------------------------------------------------- Martin D. Walker /s/ Patricia M. Wallington ----------------------------------------------------- Patricia M. Wallington /s/ Gail L. Warden ----------------------------------------------------- Gail L. Warden 22 /s/ Kenneth L. Way ----------------------------------------------------- Kenneth L. Way 23 Exhibit Index Exhibit Exhibit Number Description ------ ----------- 10.1 Comerica Incorporated Amended and Restated 1997 Long-Term Incentive Plan (restated 2001) 10.2 Comerica Incorporated Amended and Restated Management Incentive Plan (restated 2001) 10.23 1986 Imperial Bancorp Stock Option Plan (as amended) 13 Incorporated Sections of Registrant's 2001 Annual Report to Shareholders 21 Subsidiaries of Registrant 23(a) Consent of Ernst & Young LLP 23(b) Consent of KPMG LLP 99.1 Independent Auditors' Report of KPMG LLP