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Comerica (CMA) Gains 6.5% on Q2 Earnings Beat, NII Growth
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Comerica Incorporated (CMA - Free Report) reported second-quarter earnings per share of $2.01, beating the Zacks Consensus Estimate of $1.89. The bottom line reflected a rise of 4.7% from the prior-year quarter.
Shares of CMA have gained 6.5% in pre-market trading following better-than-expected results. A full-day trading session will depict a clearer picture.
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 $266 million, up 4.3% year over year.
Revenues Improve, Expenses Rise
Total quarterly revenues were $924 million, up 11.5% year over year. The top line beat the consensus estimate of $904.8 million.
Quarterly NII increased 10.7% on a year-over-year basis to $621 million. Net interest margin rose 23 basis points year over year to 2.93%.
Total non-interest income was $303 million, up 13.1% on a year-over-year basis. The increase was due to a rise in almost all the non-interest income components, partially offset by a decline in service charges on deposit accounts and capital markets income.
Non-interest expenses totaled $535 million, up 11% year over year. An increase in almost all components of cost resulted in this upsurge, except equipment expense.
The efficiency ratio was 57.70% compared with the prior-year quarter’s 58.03%. A decrease in this ratio indicates higher profitability.
Balance Sheet Position Mixed
As of Jun 30, 2023, total assets and shareholders' equity were $90.76 billion and $5.60 billion, respectively, compared with $91.13 billion and $5.99 billion, as of Mar 31, 2023.
Total loans increased 1.5% on a sequential basis to $55.76 billion. Total deposits increased 2% from the prior quarter to $66.02 billion.
Credit Quality Deteriorates
Total non-performing assets decreased 30.1% year over year to $186 million. The company recorded net credit-related recoveries of $2 million for the quarter under review. In the prior-year quarter, the company did not record any net credit-related charge-offs or recoveries.
However, the allowance for credit losses to total loans ratio was 1.31% as of Jun 30, 2023, up from 1.18% as of Jun 30, 2022. The allowance for credit losses was $728 million, up 19.5% from the prior-year quarter. A provision for credit losses of $33 million was recorded in the reported quarter compared with $10 million in the prior-year quarter.
Capital Position Improves
As of Jun 30, 2023, CMA's tangible common equity ratio was 5.06%, down from 6.26% in the prior-year quarter.
Total capital ratio was 12.79%, up from 11.75% in the year-ago quarter. Common Equity Tier 1 capital ratio was 10.31%, up from 9.72% 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 is likely to hinder bottom-line growth.
Comerica Incorporated Price, Consensus and EPS Surprise
Zions Bancorporation’s (ZION - Free Report) second-quarter 2023 net earnings per share of $1.11 lagged the Zacks Consensus Estimate of $1.13. The bottom line decreased 14% from the year-ago quarter.
Results of ZION were adversely impacted by a decline in NII, a rise in non-interest expenses and higher provisions. However, higher rates, decent loan demand and a rise in deposit balances were the major positives. Non-interest income also increased for the quarter.
KeyCorp’s (KEY - Free Report) second-quarter 2023 earnings from continuing operations of 27 cents per share missed the Zacks Consensus Estimate of 29 cents. The bottom line declined 50% from the prior-year quarter.
KEY's results have been primarily hurt by declines in NII and fee income. A significant increase in provisions was another negative. However, marginally lower expenses aided its results to some extent.
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Comerica (CMA) Gains 6.5% on Q2 Earnings Beat, NII Growth
Comerica Incorporated (CMA - Free Report) reported second-quarter earnings per share of $2.01, beating the Zacks Consensus Estimate of $1.89. The bottom line reflected a rise of 4.7% from the prior-year quarter.
Shares of CMA have gained 6.5% in pre-market trading following better-than-expected results. A full-day trading session will depict a clearer picture.
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 $266 million, up 4.3% year over year.
Revenues Improve, Expenses Rise
Total quarterly revenues were $924 million, up 11.5% year over year. The top line beat the consensus estimate of $904.8 million.
Quarterly NII increased 10.7% on a year-over-year basis to $621 million. Net interest margin rose 23 basis points year over year to 2.93%.
Total non-interest income was $303 million, up 13.1% on a year-over-year basis. The increase was due to a rise in almost all the non-interest income components, partially offset by a decline in service charges on deposit accounts and capital markets income.
Non-interest expenses totaled $535 million, up 11% year over year. An increase in almost all components of cost resulted in this upsurge, except equipment expense.
The efficiency ratio was 57.70% compared with the prior-year quarter’s 58.03%. A decrease in this ratio indicates higher profitability.
Balance Sheet Position Mixed
As of Jun 30, 2023, total assets and shareholders' equity were $90.76 billion and $5.60 billion, respectively, compared with $91.13 billion and $5.99 billion, as of Mar 31, 2023.
Total loans increased 1.5% on a sequential basis to $55.76 billion. Total deposits increased 2% from the prior quarter to $66.02 billion.
Credit Quality Deteriorates
Total non-performing assets decreased 30.1% year over year to $186 million. The company recorded net credit-related recoveries of $2 million for the quarter under review. In the prior-year quarter, the company did not record any net credit-related charge-offs or recoveries.
However, the allowance for credit losses to total loans ratio was 1.31% as of Jun 30, 2023, up from 1.18% as of Jun 30, 2022. The allowance for credit losses was $728 million, up 19.5% from the prior-year quarter. A provision for credit losses of $33 million was recorded in the reported quarter compared with $10 million in the prior-year quarter.
Capital Position Improves
As of Jun 30, 2023, CMA's tangible common equity ratio was 5.06%, down from 6.26% in the prior-year quarter.
Total capital ratio was 12.79%, up from 11.75% in the year-ago quarter. Common Equity Tier 1 capital ratio was 10.31%, up from 9.72% 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 is likely to 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 #5 (Strong Sell).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performance of Other Banks
Zions Bancorporation’s (ZION - Free Report) second-quarter 2023 net earnings per share of $1.11 lagged the Zacks Consensus Estimate of $1.13. The bottom line decreased 14% from the year-ago quarter.
Results of ZION were adversely impacted by a decline in NII, a rise in non-interest expenses and higher provisions. However, higher rates, decent loan demand and a rise in deposit balances were the major positives. Non-interest income also increased for the quarter.
KeyCorp’s (KEY - Free Report) second-quarter 2023 earnings from continuing operations of 27 cents per share missed the Zacks Consensus Estimate of 29 cents. The bottom line declined 50% from the prior-year quarter.
KEY's results have been primarily hurt by declines in NII and fee income. A significant increase in provisions was another negative. However, marginally lower expenses aided its results to some extent.