Comerica Incorporated ( CMA Quick Quote CMA - Free Report) reported second-quarter earnings per share of $1.92, beating the Zacks Consensus Estimate of $1.77. However, the bottom line came in lower than the prior-year quarter figure of $2.32. The result reflected strong net interest income (NII) growth, high total loan balances and a significant decrease in non-performing assets. However, high expenses were an undermining factor. Net income attributable to common shares came in at $255 million in the quarter, plunging 21% year over year from $321 million. Revenues Rise, Expenses Flare Up
Comerica’s second-quarter total revenues were $829 million, up 11% year over year. Further, the top line beat the consensus estimate of $805.5 million.
NII increased 21% on a year-over-year basis to $561 million in the quarter on higher short-term rates and volume of earning assets. NIM rose 55 basis points (bps) to 2.74%. Total non-interest income was $268 million, down 6% on a year-over-year basis. The decrease in non-interest income was mainly due to a decrease in card fees. Non-interest expenses totaled $482 million, up 4% year over year. The upswing resulted chiefly from higher salaries and benefit expenses, consulting fees, software expenses and operational losses. The efficiency ratio was 58.03% compared with the prior-year quarter’s 61.72%. The decrease in the ratio indicates high profitability. Balance-Sheet Position Mixed
As of Jun 30, 2022, total assets and common shareholders' equity were $86.89 billion and $6.04 billion, respectively, compared with $89.17 billion and $6.64 billion, as of Mar 31, 2022.
Total loans increased 4% on a sequential basis to $51.45 billion. However, total deposits declined 2.3% from the prior quarter’s level to $75.77 billion. Credit Quality Improves
Total non-performing assets decreased 17% year over year to $266 million. The allowance for credit losses was $609 million, down from $683 million in the prior-year quarter. The allowance for credit losses to total loans ratio was 1.18% as of Jun 30, 2022, down from 1.36% as of Jun 30, 2021.
However, the company did not record any net credit-related charge-offs during the quarter compared with $11 million of recoveries in the prior-year quarter. A provision for credit losses of $10 million was recorded in the reported quarter against a benefit of $135 million in the prior-year quarter. Weak Capital Position
As of Jun 30, 2022, CMA's tangible common equity ratio was 6.26%, down from 7.85% in the prior-year quarter. The total capital ratio was 11.75%, declining from 12.95% in the year-ago quarter.
Common Equity Tier 1 (CET1) capital ratio was 9.72%, falling from 10.35% in the prior-year quarter. Our Viewpoint
Comerica came up with a decent performance in the second quarter of 2022. The rise in revenues was backed by high NII. Furthermore, the company’s credit quality improved from the prior-year quarter. However, a decrease in total deposits, weak capital position and rise in provision for credit losses were concerns.
Currently, Comerica sports a Zacks Rank #1 (Strong Buy). You can see
the complete list of today’s Zacks #1 Rank stocks here. Performance of Other Banks Citigroup Inc.’s ( C Quick Quote C - Free Report) second-quarter 2022 income from continuing operations per share of $2.30 handily outpaced the Zacks Consensus Estimate of $1.67. However, the reported figure declined 19% from the prior-year quarter. Citigroup witnessed growth in NII and non-interest revenues. However, declines in investment banking revenues, loans and deposits were spoilsports. Truist Financial’s ( TFC Quick Quote TFC - Free Report) second-quarter 2022 adjusted earnings of $1.20 per share surpassed the Zacks Consensus Estimate of $1.17. However, TFC’s bottom line declined 22.6% from the prior-year quarter. TFC’s results were aided by average loan growth and higher rates, which drove NII. However, lower non-interest income and a rise in provisions were the major headwinds.