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Comerica (CMA) Q1 Earnings Top Estimates on NII Rise, Costs Up
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Comerica Incorporated (CMA - Free Report) reported first-quarter earnings per share of $2.39, beating the Zacks Consensus Estimate of $2.26. The bottom line reflected a rise of 74.4% 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 higher expenses and increased provisions were the undermining factors.
Net income attributable to common shares was $317 million, up 74.2% year over year.
Revenues Improve, Expenses Rise
Total quarterly revenues were $990 million, up 41.4% year over year. The top line beat the consensus estimate of $966.4 million.
Quarterly NII increased 55.3% on a year-over-year basis to $708 million. Net interest margin rose 138 basis points year over year to 3.57%.
Total non-interest income was $282 million, up 15.6% on a year-over-year basis. The increase was due to a rise in capital markets income, commercial lending fees, letter of credit fees, brokerage fees and other non-interest income partially offset by a decline in service charges on deposit accounts and bank-owned life insurance.
Non-interest expenses totaled $551 million, up 16.5% year over year. An increase in all components of cost resulted in this upsurge.
The efficiency ratio was 55.53% compared with the prior-year quarter’s 66.91%. A decrease in this ratio indicates higher profitability.
Strong Balance Sheet Position
As of Mar 31, 2023, total assets and shareholders' equity were $91.13 billion and $5.99 billion, respectively, compared with $85.41 billion and $5.18 billion, as of Dec 31, 2022.
Total loans increased 2.9% on a sequential basis to $54.93 billion. However, total deposits declined 9.4% from the prior quarter to $64.71 billion.
Credit Quality: Mixed Bag
Total non-performing assets decreased 19.3% year over year to $221 million. The company recorded net credit-related recoveries of $2 million for the quarter under review against a net credit-related charge-off of $8 million in the prior-year quarter.
However, the allowance for credit losses to total loans ratio was 1.26% as of Mar 31, 2023, up from 1.21% as of Mar 31, 2022. The allowance for credit losses was $693 million, up 15.7% from the prior-year quarter. A provision for credit losses of $30 million was recorded in the reported quarter against a benefit of $11 million in the prior-year quarter.
Capital Position – A Mixed Bag
As of Mar 31, 2023, CMA's tangible common equity ratio was 5.48%, down from 6.77% in the prior-year quarter.
Total capital ratio was 12.53%, up from 12.04% in the year-ago quarter. Common Equity Tier 1 (CET1) capital ratio was 10.09%, up from 9.93% in the prior-year quarter.
Our Viewpoint
Comerica’s revenues and efficiency initiatives are likely to keep boosting its financials. Strong loan growth and robust fee income are expected to continue supporting revenues in the near term. However, a rising expense base might hinder bottom-line growth.
Comerica Incorporated Price, Consensus and EPS Surprise
U.S. Bancorp’s (USB - Free Report) first-quarter 2023 earnings per share (excluding merger and integration-related charges) of $1.16 handily beat the Zacks Consensus Estimate of $1.13 per share and improved 17.2% from the prior-year quarter.
USB’s results were benefited from an increase in NII, supported by higher interest rates. However, a decline in non-interest income (largely on lower mortgage banking income) and higher expenses were concerns. Also, USB’s credit quality deteriorated in the reported quarter.
Citizens Financial Group (CFG - Free Report) reported first-quarter 2023 earnings per share of $1, missing the Zacks Consensus Estimate of $1.11. Nonetheless, the bottom line rose from 93 cents in the year-ago quarter.
CFG’s results reflected NII growth on a rise in interest-earning assets. However, an escalation in expenses, lower non-interest income and a rise in provisions were dampeners.
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Comerica (CMA) Q1 Earnings Top Estimates on NII Rise, Costs Up
Comerica Incorporated (CMA - Free Report) reported first-quarter earnings per share of $2.39, beating the Zacks Consensus Estimate of $2.26. The bottom line reflected a rise of 74.4% 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 higher expenses and increased provisions were the undermining factors.
Net income attributable to common shares was $317 million, up 74.2% year over year.
Revenues Improve, Expenses Rise
Total quarterly revenues were $990 million, up 41.4% year over year. The top line beat the consensus estimate of $966.4 million.
Quarterly NII increased 55.3% on a year-over-year basis to $708 million. Net interest margin rose 138 basis points year over year to 3.57%.
Total non-interest income was $282 million, up 15.6% on a year-over-year basis. The increase was due to a rise in capital markets income, commercial lending fees, letter of credit fees, brokerage fees and other non-interest income partially offset by a decline in service charges on deposit accounts and bank-owned life insurance.
Non-interest expenses totaled $551 million, up 16.5% year over year. An increase in all components of cost resulted in this upsurge.
The efficiency ratio was 55.53% compared with the prior-year quarter’s 66.91%. A decrease in this ratio indicates higher profitability.
Strong Balance Sheet Position
As of Mar 31, 2023, total assets and shareholders' equity were $91.13 billion and $5.99 billion, respectively, compared with $85.41 billion and $5.18 billion, as of Dec 31, 2022.
Total loans increased 2.9% on a sequential basis to $54.93 billion. However, total deposits declined 9.4% from the prior quarter to $64.71 billion.
Credit Quality: Mixed Bag
Total non-performing assets decreased 19.3% year over year to $221 million. The company recorded net credit-related recoveries of $2 million for the quarter under review against a net credit-related charge-off of $8 million in the prior-year quarter.
However, the allowance for credit losses to total loans ratio was 1.26% as of Mar 31, 2023, up from 1.21% as of Mar 31, 2022. The allowance for credit losses was $693 million, up 15.7% from the prior-year quarter. A provision for credit losses of $30 million was recorded in the reported quarter against a benefit of $11 million in the prior-year quarter.
Capital Position – A Mixed Bag
As of Mar 31, 2023, CMA's tangible common equity ratio was 5.48%, down from 6.77% in the prior-year quarter.
Total capital ratio was 12.53%, up from 12.04% in the year-ago quarter. Common Equity Tier 1 (CET1) capital ratio was 10.09%, up from 9.93% in the prior-year quarter.
Our Viewpoint
Comerica’s revenues and efficiency initiatives are likely to keep boosting its financials. Strong loan growth and robust fee income are expected to continue supporting revenues in the near term. However, a rising expense base might hinder bottom-line growth.
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
U.S. Bancorp’s (USB - Free Report) first-quarter 2023 earnings per share (excluding merger and integration-related charges) of $1.16 handily beat the Zacks Consensus Estimate of $1.13 per share and improved 17.2% from the prior-year quarter.
USB’s results were benefited from an increase in NII, supported by higher interest rates. However, a decline in non-interest income (largely on lower mortgage banking income) and higher expenses were concerns. Also, USB’s credit quality deteriorated in the reported quarter.
Citizens Financial Group (CFG - Free Report) reported first-quarter 2023 earnings per share of $1, missing the Zacks Consensus Estimate of $1.11. Nonetheless, the bottom line rose from 93 cents in the year-ago quarter.
CFG’s results reflected NII growth on a rise in interest-earning assets. However, an escalation in expenses, lower non-interest income and a rise in provisions were dampeners.