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Comerica's (CMA) Q4 Earnings Beat Estimates, NII Declines Y/Y
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Comerica Incorporated (CMA - Free Report) reported fourth-quarter adjusted earnings per share of $1.46, beating the Zacks Consensus Estimate of $1.38. The bottom line reflected a fall of 43.4% from the prior-year quarter.
A decline in revenues and higher expenses compared with the prior-yearquarter primarily affected the results. A sequential decrease in loan and deposit balances was another headwind. Nonetheless, a fall in provisions on a year-over-year basis offered some support.
Net income attributable to common shares was $27 million compared to $342 million in the prior-year quarter.
Adjusted earnings per share for 2023 were $7.75, which surpassed the Zacks Consensus Estimate of $7.65. The bottom line reflected a fall of 10.8% from the prior year. Net income attributable to common shares was $854 million, down 23.9% year over year.
Revenues Decline, Expenses Rise
Total quarterly revenues were $782 million, down 23.3% year over year. Also, the top line missed the consensus estimate of $826.1 million.
Revenues for 2023 were $3.59 billion, up 1.6% year over year. However, the top line lagged the consensus estimate of $3.64 billion.
Quarterly net interest income fell 21.3% on a year-over-year basis to $584 million. The net interest margin contracted 83 basis points year over year to 2.91%.
Total non-interest income was $198 million, down 28.8% on a year-over-year basis. The decrease was primarily due to the risk management hedging loss.
Non-interest expenses totaled $718 million, up 32.7% year over year. An increase in salaries and benefits expenses as well as FDIC insurance expense majorly led to the rise.
The efficiency ratio was 91.86% compared with the prior-year quarter’s 53%. A rise in this ratio indicates lower profitability.
Total loans declined 2.4% on a sequential basis to $52.1 billion. Also, total deposits decreased 1% from the prior quarter to $66.8 billion.
Credit Quality – Mixed Bag
Total non-performing assets decreased 27% year over year to $178 million. A provision for credit losses of $12 million was recorded in the reported quarter compared with $33 million in the prior-year quarter.
However, the allowance for credit losses to total loans ratio was 1.40% as of Dec 31, 2023, up from 1.24% as of Dec 31, 2022. The allowance for credit losses was $728 million, up from the prior-year quarter’s $661 million. Also, the company recorded net charge-offs of $20 million for the quarter under review. CMA registered recoveries of $4 million in the prior year.
Capital Position Improves
Total capital ratio was 13.53%, up from 12.45% in the year-ago quarter. The Common Equity Tier 1 capital ratio was 11.09%, up from 10% in the prior-year quarter.
Further, as of Dec 31, 2023, CMA's tangible common equity ratio was 6.3%, up from 4.89% in the prior-year quarter.
Our Viewpoint
Comerica was affected by a decline in revenues as well as higher expenses. Nonetheless, a fall in provisions on a year-over-year basis offered some cushion. Moreover, its focus on improving operational efficiency will improve margins in the upcoming period.
Comerica Incorporated Price, Consensus and EPS Surprise
Bank of Hawaii Corporation (BOH - Free Report) is slated to announce fourth-quarter 2023 results on Jan 22.
Over the past month, the Zacks Consensus Estimate for BOH’s quarterly earnings has moved 2.3% up to 89 cents per share. The estimate indicates a 40.7% decrease from the prior-year quarter.
East West Bancorp (EWBC - Free Report) is scheduled to release fourth-quarter 2023 numbers on Jan 23.
Over the past 30 days, the Zacks Consensus Estimate for EWBC’s quarterly earnings has moved 1.6% down to $1.89 per share. The figure implies a 20.3% decline from the prior-year quarter.
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Comerica's (CMA) Q4 Earnings Beat Estimates, NII Declines Y/Y
Comerica Incorporated (CMA - Free Report) reported fourth-quarter adjusted earnings per share of $1.46, beating the Zacks Consensus Estimate of $1.38. The bottom line reflected a fall of 43.4% from the prior-year quarter.
A decline in revenues and higher expenses compared with the prior-yearquarter primarily affected the results. A sequential decrease in loan and deposit balances was another headwind. Nonetheless, a fall in provisions on a year-over-year basis offered some support.
Net income attributable to common shares was $27 million compared to $342 million in the prior-year quarter.
Adjusted earnings per share for 2023 were $7.75, which surpassed the Zacks Consensus Estimate of $7.65. The bottom line reflected a fall of 10.8% from the prior year. Net income attributable to common shares was $854 million, down 23.9% year over year.
Revenues Decline, Expenses Rise
Total quarterly revenues were $782 million, down 23.3% year over year. Also, the top line missed the consensus estimate of $826.1 million.
Revenues for 2023 were $3.59 billion, up 1.6% year over year. However, the top line lagged the consensus estimate of $3.64 billion.
Quarterly net interest income fell 21.3% on a year-over-year basis to $584 million. The net interest margin contracted 83 basis points year over year to 2.91%.
Total non-interest income was $198 million, down 28.8% on a year-over-year basis. The decrease was primarily due to the risk management hedging loss.
Non-interest expenses totaled $718 million, up 32.7% year over year. An increase in salaries and benefits expenses as well as FDIC insurance expense majorly led to the rise.
The efficiency ratio was 91.86% compared with the prior-year quarter’s 53%. A rise in this ratio indicates lower profitability.
Total loans declined 2.4% on a sequential basis to $52.1 billion. Also, total deposits decreased 1% from the prior quarter to $66.8 billion.
Credit Quality – Mixed Bag
Total non-performing assets decreased 27% year over year to $178 million. A provision for credit losses of $12 million was recorded in the reported quarter compared with $33 million in the prior-year quarter.
However, the allowance for credit losses to total loans ratio was 1.40% as of Dec 31, 2023, up from 1.24% as of Dec 31, 2022. The allowance for credit losses was $728 million, up from the prior-year quarter’s $661 million. Also, the company recorded net charge-offs of $20 million for the quarter under review. CMA registered recoveries of $4 million in the prior year.
Capital Position Improves
Total capital ratio was 13.53%, up from 12.45% in the year-ago quarter. The Common Equity Tier 1 capital ratio was 11.09%, up from 10% in the prior-year quarter.
Further, as of Dec 31, 2023, CMA's tangible common equity ratio was 6.3%, up from 4.89% in the prior-year quarter.
Our Viewpoint
Comerica was affected by a decline in revenues as well as higher expenses. Nonetheless, a fall in provisions on a year-over-year basis offered some cushion. Moreover, its focus on improving operational efficiency will improve margins in the upcoming period.
Comerica Incorporated Price, Consensus and EPS Surprise
Currently, Comerica carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Earnings Release Dates of Other Banks
Bank of Hawaii Corporation (BOH - Free Report) is slated to announce fourth-quarter 2023 results on Jan 22.
Over the past month, the Zacks Consensus Estimate for BOH’s quarterly earnings has moved 2.3% up to 89 cents per share. The estimate indicates a 40.7% decrease from the prior-year quarter.
East West Bancorp (EWBC - Free Report) is scheduled to release fourth-quarter 2023 numbers on Jan 23.
Over the past 30 days, the Zacks Consensus Estimate for EWBC’s quarterly earnings has moved 1.6% down to $1.89 per share. The figure implies a 20.3% decline from the prior-year quarter.