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Comerica Incorporated (CMA - Free Report) reported fourth-quarter earnings per share of $2.58, beating the Zacks Consensus Estimate of $2.56. The bottom line reflects a rise of 55.4% 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 $342 million, up 54.8% year over year.
Earnings per share for 2022 were $8.47, in line with the Zacks Consensus Estimate. The bottom line reflects a rise of 1.4% from the prior year. Net income attributable to common shares was $1.12 billion, down 1.6% year over year.
Revenues Improve, Expenses Rise
Total quarterly revenues were $1.02 billion, up 36% year over year. The top line marginally beat the consensus estimate of $1.01 billion.
Revenues for 2022 were $3.53 billion, up 19.1% year over year. The top line marginally beat the consensus estimate of $3.52 billion.
Quarterly NII increased 61% on a year-over-year basis to $742 million. Net interest margin (NIM) rose 170 basis points (bps) year over year to 3.74%.
Total non-interest income was $278 million, down 3.8% on a year-over-year basis. The decrease was due to a fall in bank-owned life insurance fees, derivative income, service charges on deposit accounts, fiduciary income, and card fees.
Non-interest expenses totaled $541 million, up 11.3% year over year. The rise was due to an increase in almost all cost components except for outside processing fee expenses.
The efficiency ratio was 53% compared with the prior-year quarter’s 64.24%. A decrease in the ratio indicates higher profitability.
Balance Sheet Position Robust
As of Dec 31, 2022, total assets and shareholders' equity were $85.41 billion and $5.18 billion, respectively, compared with $84.14 billion and $5.07 billion, as of Sep 30, 2022.
Total loans increased 3.3% on a sequential basis to $53.40 billion. However, total deposits declined 2.2% from the prior quarter to $71.40 billion.
Credit Quality: Mixed Bag
Total non-performing assets decreased 9.3% year over year to $244 million. The allowance for credit losses to total loans ratio was 1.24% as of Dec 31, 2022, down from 1.26% as of Dec 31, 2021.
However, the allowance for credit losses was $661 million, up 7% from the prior-year quarter. The company recorded net credit-related recoveries of $4 million for the quarter under review, unchanged from the prior-year quarter. A provision for credit losses of $33 million was recorded in the reported quarter against a benefit of $25 million in the prior-year quarter.
Capital Position Weakens
As of Dec 31, 2022, CMA's tangible common equity ratio was 4.89%, down from 7.30% in the prior-year quarter. The total capital ratio was 12.48%, up from 12.35% in the year-ago quarter.
The Common Equity Tier 1 (CET1) capital ratio was 10.02%, falling from 10.13% 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
Bank of New York Mellon Corporation’s (BK - Free Report) fourth-quarter 2022 adjusted earnings of $1.30 per share surpassed the Zacks Consensus Estimate of $1.22. The bottom line reflects a rise of 25% from the prior-year quarter. Our estimate for earnings was $1.09.
BK’s results were aided by a rise in net interest revenues. However, asset balances witnessed a decline, which was a negative. Higher expenses and lower fee revenues hurt BK’s results to some extent.
Higher loan balance, rising rates and robust trading performance drove JPMorgan’s (JPM - Free Report) fourth-quarter 2022 adjusted earnings of $3.56 per share, which surpassed the Zacks Consensus Estimate of $3.11. Results excluded gains from the sale of Visa B shares and net investment securities losses in the Corporate segment. Our estimate for earnings was $2.98 per share.
As expected, the performance of JPM’s investment banking business was hugely disappointing. Further, mortgage fees and related income declined 69%, as mortgage rates remained above the 6% mark in the fourth quarter. Then again, higher interest rates and a solid rise in loan balance aided JPMorgan’s net interest income.
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Comerica (CMA) Q4 Earnings Beat, Revenues & Costs Rise Y/Y
Comerica Incorporated (CMA - Free Report) reported fourth-quarter earnings per share of $2.58, beating the Zacks Consensus Estimate of $2.56. The bottom line reflects a rise of 55.4% 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 $342 million, up 54.8% year over year.
Earnings per share for 2022 were $8.47, in line with the Zacks Consensus Estimate. The bottom line reflects a rise of 1.4% from the prior year. Net income attributable to common shares was $1.12 billion, down 1.6% year over year.
Revenues Improve, Expenses Rise
Total quarterly revenues were $1.02 billion, up 36% year over year. The top line marginally beat the consensus estimate of $1.01 billion.
Revenues for 2022 were $3.53 billion, up 19.1% year over year. The top line marginally beat the consensus estimate of $3.52 billion.
Quarterly NII increased 61% on a year-over-year basis to $742 million. Net interest margin (NIM) rose 170 basis points (bps) year over year to 3.74%.
Total non-interest income was $278 million, down 3.8% on a year-over-year basis. The decrease was due to a fall in bank-owned life insurance fees, derivative income, service charges on deposit accounts, fiduciary income, and card fees.
Non-interest expenses totaled $541 million, up 11.3% year over year. The rise was due to an increase in almost all cost components except for outside processing fee expenses.
The efficiency ratio was 53% compared with the prior-year quarter’s 64.24%. A decrease in the ratio indicates higher profitability.
Balance Sheet Position Robust
As of Dec 31, 2022, total assets and shareholders' equity were $85.41 billion and $5.18 billion, respectively, compared with $84.14 billion and $5.07 billion, as of Sep 30, 2022.
Total loans increased 3.3% on a sequential basis to $53.40 billion. However, total deposits declined 2.2% from the prior quarter to $71.40 billion.
Credit Quality: Mixed Bag
Total non-performing assets decreased 9.3% year over year to $244 million. The allowance for credit losses to total loans ratio was 1.24% as of Dec 31, 2022, down from 1.26% as of Dec 31, 2021.
However, the allowance for credit losses was $661 million, up 7% from the prior-year quarter. The company recorded net credit-related recoveries of $4 million for the quarter under review, unchanged from the prior-year quarter. A provision for credit losses of $33 million was recorded in the reported quarter against a benefit of $25 million in the prior-year quarter.
Capital Position Weakens
As of Dec 31, 2022, CMA's tangible common equity ratio was 4.89%, down from 7.30% in the prior-year quarter. The total capital ratio was 12.48%, up from 12.35% in the year-ago quarter.
The Common Equity Tier 1 (CET1) capital ratio was 10.02%, falling from 10.13% 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 #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performance of Other Banks
Bank of New York Mellon Corporation’s (BK - Free Report) fourth-quarter 2022 adjusted earnings of $1.30 per share surpassed the Zacks Consensus Estimate of $1.22. The bottom line reflects a rise of 25% from the prior-year quarter. Our estimate for earnings was $1.09.
BK’s results were aided by a rise in net interest revenues. However, asset balances witnessed a decline, which was a negative. Higher expenses and lower fee revenues hurt BK’s results to some extent.
Higher loan balance, rising rates and robust trading performance drove JPMorgan’s (JPM - Free Report) fourth-quarter 2022 adjusted earnings of $3.56 per share, which surpassed the Zacks Consensus Estimate of $3.11. Results excluded gains from the sale of Visa B shares and net investment securities losses in the Corporate segment. Our estimate for earnings was $2.98 per share.
As expected, the performance of JPM’s investment banking business was hugely disappointing. Further, mortgage fees and related income declined 69%, as mortgage rates remained above the 6% mark in the fourth quarter. Then again, higher interest rates and a solid rise in loan balance aided JPMorgan’s net interest income.