Comerica Incorporated (CMA) continues with its efforts to boost shareholder value. Recently, its board of directors announced an increased quarterly cash dividend of 20 cents per share, up 5% from the prior dividend of 19 cents. The dividend will be paid on Jul 1, to common shareholders of record as of Jun 13. Additionally, the board increased the current share buyback program by 2 million shares.
These actions come following the Federal Reserve’s approval of Comerica's 2014 capital plan under the Comprehensive Capital Analysis and Review (CCARF) in March. The plan included share repurchase of up to $236 million for the upcoming four quarters beginning in the second quarter of 2014 and ending in the first quarter of the next year.
Comerica has maintained its healthy capital deployment activities over the years. Earlier, in January, Comerica announced a 12% increase in its quarterly dividend to 19 cents per share, which was paid on Apr 1. This increase was part of the company’s 2013 Capital Plan.
The latest boost in its share repurchase authorization reflects the company’s commitment to return value to shareholders with its strong cash generation capabilities. Further, Comerica’s current capital position may allow it to further enhance shareholder value. The company’s cash and due from banks was $1.19 billion as of Mar 31, 2014.
Notably, in first-quarter 2014, Comerica repurchased 1.5 million shares under the existing share repurchase program. This, combined with dividends, resulted in a total payout of 77% of the first-quarter net income to shareholders.
Going forward, we expect synergies from Comerica’s strategic acquisitions to support its top-line growth. Moreover, the company’s efficient capital deployment activities in the form of shares repurchase, regular payouts and dividend hikes seem impressive as well.
Comerica maintains a strong capital position. Therefore, meeting higher regulatory requirements will not be difficult for the company.
Nevertheless, the sluggish economic scenario, still low rate of interest and a stringent regulatory environment remain challenges to the company’s top-line growth in the coming quarters. Though the pressure on NIM is likely to ease in the long run with improvement in interest rates, we do not see signs of respite anytime soon.
Comerica currently carries a Zacks Rank #3 (Hold). Some better-ranked major regional banks include Wells Fargo & Company (WFC), KeyCorp. (KEY) and BankUnited, Inc. (BKU). All these stocks carry a Zacks Rank #2 (Buy).