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Comerica Incorporated (CMA - Free Report) reported third-quarter earnings per share of $2.60, beating the Zacks Consensus Estimate of $2.57. The bottom line reflects a rise of 36.8% from the prior-year quarter.
Results have been primarily aided by increased net interest income (NII), supported by higher interest rates and loan growth. However, a decline in non-interest income, higher expenses and increased provisions were the undermining factors.
Net income attributable to common shares was $343 million, up 34.5% year over year.
Revenues Improve, Expenses Rise
Total revenues were $985 million, up 30.5% year over year. Further, the top line beat the consensus estimate of $961.5 million.
NII increased 48.8% on a year-over-year basis to $707 million. Net interest margin (NIM) rose 127 basis points (bps) year over year to 3.50%.
Total non-interest income was $278 million, down 1% on a year-over-year basis. The decrease was due to a fall in card fees, commercial lending fees and other non-interest income.
Non-interest expenses totaled $502 million, up 8% year over year. The rise was due to an increase in salaries and benefits expenses, occupancy expenses, FDIC insurance expenses and other non-interest expenses.
The efficiency ratio was 50.75% compared with the prior-year quarter’s 61.13%. A decrease in the ratio indicates higher profitability.
Balance Sheet Position Robust
As of Sep 30, 2022, total assets and shareholders' equity were $84.14 billion and $5.07 billion, respectively, compared with $86.89 billion and $6.44 billion, as of Jun 30, 2022.
Total loans increased marginally on a sequential basis to $51.71 billion. However, total deposits declined 3.6% from the prior quarter to $73.02 billion.
Credit Quality: Mixed Bag
Total non-performing assets decreased 11.5% year over year to $262 million. The allowance for credit losses was $624 million, down 2.3% from the prior-year quarter. The allowance for credit losses to total loans ratio was 1.21% as of Sep 30, 2022, down from 1.33% as of Sep 30, 2021.
However, the company recorded net credit-related charge-offs of $13 million for the quarter under review, up from $2 million in the prior-year quarter. A provision for credit losses of $28 million was recorded in the reported quarter against a benefit of $42 million in the prior-year quarter.
Capital Position Weakens
As of Sep 30, 2022, CMA's tangible common equity ratio was 4.82%, down from 7.20% in the prior-year quarter. The total capital ratio was 12.40%, declining from 12.57% in the year-ago quarter.
Common Equity Tier 1 (CET1) capital ratio was 9.92%, falling from 10.27% in the prior-year quarter.
Our Viewpoint
Gradually improving loan commitments and higher interest rates are expected to continue to support NII and margin growth in the near term. Comerica’s revenues and efficiency initiatives are likely to keep boosting its financials. However, a rising expense base might hinder bottom-line growth in the near term.
Comerica Incorporated Price, Consensus and EPS Surprise
Higher loan balance, rising rates and solid markets performance drive JPMorgan’s (JPM - Free Report) third-quarter 2022 earnings of $3.12 per share, which surpassed the Zacks Consensus Estimate of $2.97. The results included $959 million or 24 cents of net investment securities losses in the Corporate segment. Our estimate for earnings was $2.98 per share.
The disappointing investment banking performance, bigger reserve build and increased operating expenses hampered JPM’s quarterly performance to some extent.
Wells Fargo’s (WFC - Free Report) third-quarter 2022 adjusted earnings per share of $1.30 outpaced the Zacks Consensus Estimate of $1.09. Results excluded $2 billion or 45 cents per share of charges related to a number of “historical matters, including litigation, customer remediation, and regulatory matters.”
Results benefited from higher NII, rising rates and solid average loan growth. Yet, dismal non-interest income, higher provisions and weakness in the mortgage business were the major undermining factors for WFC. The rise in non-interest expenses acted as another headwind.
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Comerica (CMA) Q3 Earnings Beat, Revenues & Costs Rise Y/Y
Comerica Incorporated (CMA - Free Report) reported third-quarter earnings per share of $2.60, beating the Zacks Consensus Estimate of $2.57. The bottom line reflects a rise of 36.8% from the prior-year quarter.
Results have been primarily aided by increased net interest income (NII), supported by higher interest rates and loan growth. However, a decline in non-interest income, higher expenses and increased provisions were the undermining factors.
Net income attributable to common shares was $343 million, up 34.5% year over year.
Revenues Improve, Expenses Rise
Total revenues were $985 million, up 30.5% year over year. Further, the top line beat the consensus estimate of $961.5 million.
NII increased 48.8% on a year-over-year basis to $707 million. Net interest margin (NIM) rose 127 basis points (bps) year over year to 3.50%.
Total non-interest income was $278 million, down 1% on a year-over-year basis. The decrease was due to a fall in card fees, commercial lending fees and other non-interest income.
Non-interest expenses totaled $502 million, up 8% year over year. The rise was due to an increase in salaries and benefits expenses, occupancy expenses, FDIC insurance expenses and other non-interest expenses.
The efficiency ratio was 50.75% compared with the prior-year quarter’s 61.13%. A decrease in the ratio indicates higher profitability.
Balance Sheet Position Robust
As of Sep 30, 2022, total assets and shareholders' equity were $84.14 billion and $5.07 billion, respectively, compared with $86.89 billion and $6.44 billion, as of Jun 30, 2022.
Total loans increased marginally on a sequential basis to $51.71 billion. However, total deposits declined 3.6% from the prior quarter to $73.02 billion.
Credit Quality: Mixed Bag
Total non-performing assets decreased 11.5% year over year to $262 million. The allowance for credit losses was $624 million, down 2.3% from the prior-year quarter. The allowance for credit losses to total loans ratio was 1.21% as of Sep 30, 2022, down from 1.33% as of Sep 30, 2021.
However, the company recorded net credit-related charge-offs of $13 million for the quarter under review, up from $2 million in the prior-year quarter. A provision for credit losses of $28 million was recorded in the reported quarter against a benefit of $42 million in the prior-year quarter.
Capital Position Weakens
As of Sep 30, 2022, CMA's tangible common equity ratio was 4.82%, down from 7.20% in the prior-year quarter. The total capital ratio was 12.40%, declining from 12.57% in the year-ago quarter.
Common Equity Tier 1 (CET1) capital ratio was 9.92%, falling from 10.27% in the prior-year quarter.
Our Viewpoint
Gradually improving loan commitments and higher interest rates are expected to continue to support NII and margin growth in the near term. Comerica’s revenues and efficiency initiatives are likely to keep boosting its financials. However, a rising expense base might hinder bottom-line growth in the near term.
Comerica Incorporated Price, Consensus and EPS Surprise
Comerica Incorporated price-consensus-eps-surprise-chart | Comerica Incorporated Quote
Currently, Comerica carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performance of Other Banks
Higher loan balance, rising rates and solid markets performance drive JPMorgan’s (JPM - Free Report) third-quarter 2022 earnings of $3.12 per share, which surpassed the Zacks Consensus Estimate of $2.97. The results included $959 million or 24 cents of net investment securities losses in the Corporate segment. Our estimate for earnings was $2.98 per share.
The disappointing investment banking performance, bigger reserve build and increased operating expenses hampered JPM’s quarterly performance to some extent.
Wells Fargo’s (WFC - Free Report) third-quarter 2022 adjusted earnings per share of $1.30 outpaced the Zacks Consensus Estimate of $1.09. Results excluded $2 billion or 45 cents per share of charges related to a number of “historical matters, including litigation, customer remediation, and regulatory matters.”
Results benefited from higher NII, rising rates and solid average loan growth. Yet, dismal non-interest income, higher provisions and weakness in the mortgage business were the major undermining factors for WFC. The rise in non-interest expenses acted as another headwind.