Comerica (CMA) Gains 1.2% on Q3 Earnings & Revenues Beat
Comerica Incorporated CMA has reported third-quarter earnings per share of $1.84, beating the Zacks Consensus Estimate of $1.70. The bottom line reflected a fall of 29% from the prior-year quarter.
Shares of CMA gained 1.2% in the pre-market trading following the better-than-expected results. A full-day trading session will depict a clearer picture.
Results have primarily been aided by increased fee income. However, higher expenses and increased allowance for credit losses were the undermining factors.
Net income attributable to common shares was $244 million, down 29% year over year.
Revenues Decline, Expenses Rise
Total quarterly revenues were $896 million, down 9.04% year over year. The top line beat the consensus estimate of $880.8 million.
Quarterly net interest income (NII) fell 15% on a year-over-year basis to $601 million. The net interest margin fell 67 basis points year over year to 2.84%.
Total non-interest income was $295 million, up 6% on a year-over-year basis. The increase was due to a rise in card fees and capital market fees.
Non-interest expenses totaled $555 million, up 11% year over year. An increase in salaries and benefits expenses, as well as advertising expenses, led to the rise.
The efficiency ratio was 61.86% compared with the prior-year quarter’s 50.75%. A rise in this ratio indicates lower profitability.
Total loans declined 4.2% on a sequential basis to $53.39 billion. Total deposits increased 2.4% from the prior quarter to $65.88 billion.
Credit Quality Improves
Total non-performing assets decreased 41.2% year over year to $154 million. The company recorded net charge-offs of $6 million for the quarter under review, down from $13 million in the prior year. A provision for credit losses of $14 million was recorded in the reported quarter compared with $28 million in the prior-year quarter.
However, the allowance for credit losses to total loans ratio was 1.38% as of Sep 30, 2023, up from 1.21% as of Sep 30, 2022. The allowance for credit losses was $736 million, up from the prior-year quarter’s $624 million.
Capital Position Improves
Total capital ratio was 13.16%, up from 12.41% in the year-ago quarter. The Common Equity Tier 1 capital ratio was 10.79%, up from 9.93% in the prior-year quarter.
However, as of Sep 30, 2023, CMA's tangible common equity ratio was 4.62%, down from 4.82% in the prior-year quarter.
Our Viewpoint
Comerica’s revenues and efficiency initiatives are likely to keep boosting its financials. Strong loan growth and robust fee income are expected to continue supporting revenues in the near term. However, a rising expense base is likely to hinder bottom-line growth.
Comerica Incorporated Price, Consensus and EPS Surprise
Comerica Incorporated price-consensus-eps-surprise-chart | Comerica Incorporated Quote
Currently, Comerica carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performance of Other Major Banks
Wells Fargo & Company’s WFC third-quarter 2023 adjusted earnings per share of $1.39 outpaced the Zacks Consensus Estimate of $1.25. The figure improved 6.9% year over year. The adjusted figure excludes the impacts of discrete tax benefits related to the resolution of the prior-year period’s tax matters.
WFC’s results benefited from higher NII and non-interest income. An improvement in capital ratios and a decline in expenses were other positives. However, the worsening credit quality and a dip in loan balances were the undermining factors.
Citigroup Inc.’s C third-quarter 2023 earnings per share (excluding divestiture-related impacts) of $1.52 outpaced the Zacks Consensus Estimate of $1.26.
In the third quarter, C witnessed a rise in revenues due to higher revenues in the Institutional Clients Group, as well as the Personal Banking and Wealth Management segments. The higher cost of credit was another spoilsport.
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