How Comerica Looks After Earnings

The company gave its full year outlook as net interest income relatively stable, average full-year loan growth consistent with 2014 and noninterest expenses higher. The consensus estimates are $3.01 in EPS on $2.71 billion in revenue for the full year.

In this quarter, average loans were up $2.1 billion, or 5%, compared to a year ago, and were up $682 million, or 1%, relative to the first quarter, with increases in most markets and business lines. Relative to the first quarter, average deposits increased $408 million, or 1%, with noninterest-bearing deposits up $668 million.

The estimated common equity Tier 1 capital ratio was 10.53% for the second quarter. The company noted that the estimated ratio under fully phased-in Basel III capital rules was not significantly different from the transitional ratio. Comerica’s tangible common equity ratio was 9.92%.

Ralph Babb Jr., chairman and CEO of Comerica, commented on earnings:

Revenue was up 2 percent, with growth in both net interest income and fee income in the second quarter. Charge-offs, nonaccruals and criticized loans remained well below normal historical levels. The provision for credit losses increased, primarily as a result of an increase in reserves for energy exposure. Noninterest expenses decreased $23 million to $436 million, primarily due to a decrease in litigation-related expense.

Our balance sheet is well positioned to benefit as rates rise. We remain focused on the long term with a relationship banking strategy that continues to serve us well.

Shares of Comerica closed Thursday up 0.7% to $50.47, in a 52-week trading range of $40.09 to $53.45. The stock has a consensus analyst price target of $51.80.

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