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Analyst Blog

Comerica Incorporated (CMA - Analyst Report) continues its efforts to boost shareholder value. Recently, its Board of Directors increased the current share buyback program by up to 10 million shares. Additionally, the Board announced a quarterly cash dividend of 17 cents per share. The dividend will be paid on Jul 1, to common stock shareholders of record as of Jun 14.

These actions come following the Federal Reserve’s approval of Comerica's 2013 capital plan under the Comprehensive Capital Analysis and Review (CCAR) in March.  The plan included share repurchase of up to $288 million for the upcoming four quarters beginning in the second quarter of 2013 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 13% increase in its quarterly dividend to 17 cents per share, which was paid on Apr 1. This increase was part of the company’s 2012 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 $877 million as of Mar 31, 2013.

Going forward, we believe that Comerica’s continuous geographic diversification beyond its traditional and relatively slower-growing Midwest markets could bolster growth in the upcoming quarters. Also, revenue synergies from the Sterling acquisition should be a driver of top-line growth. However, the company’s significant exposure to risky commercial real estate markets, unsettled economic environment and other regulatory issues are matters of concern.

Comerica currently carries a Zacks Rank #3 (Hold). Other banks that are performing better than Comerica include JPMorgan Chase & Co. (JPM - Analyst Report), Fifth Third Bancorp (FITB - Analyst Report) and State Street Corporation (STT - Analyst Report). All these stocks carry a Zacks Rank #2 (Buy).

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