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Comerica (CMA) Q1 Earnings Beat Estimates, Revenues Fall Y/Y

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Comerica Incorporated (CMA - Free Report) reported first-quarter 2024 adjusted earnings per share of $1.29, beating the Zacks Consensus Estimate of $1.13. However, the bottom line plunged 48% from the prior-year quarter.

Results were affected due to a decline in revenues and higher expenses than the year-ago quarter. A sequential decrease in loan and deposit balances was another headwind. Nonetheless, CMA’s strong capital ratios indicate its availability of adequate capital to use in order to deal with any unexpected losses.

Net income attributable to common shareholders was $131 million, down 58.7% from the year-ago quarter.

Revenues Decline, Expenses Rise

Total quarterly revenues were $784 million, down 20.8% year over year. Also, the top line missed the consensus estimate of $807.57 million.

Quarterly net interest income fell 22.6% on a year-over-year basis to $548 million. The net interest margin contracted 77 basis points year over year to 2.80%.

Total non-interest income was $236 million, down 16.3% on a year-over-year basis. The decrease was primarily due to the risk management hedging loss, partly offset by decreases in fiduciary income, capital markets income and card fees.

Non-interest expenses totaled $603 million, up 9.4% year over year. An increase in salaries and benefits expenses, as well as FDIC insurance expenses, majorly led to the rise.

The efficiency ratio was 76.91% compared with the prior-year quarter’s 55.53%. A rise in this ratio indicates lower profitability.

Total loans declined 2.5% on a sequential basis to $50.8 billion. Also, total deposits decreased 4.8% from the previous quarter to $63.6 billion.

Credit Quality: Mixed Bag

Total non-performing assets decreased 1.8% year over year to $217 million. A provision for credit losses of $14 million was recorded in the reported quarter, up 53.3% from the prior-year quarter.

Further, the allowance for credit losses to total loans ratio was 1.43% as of Mar 31, 2024, up from 1.26% as of Mar 31, 2023. The allowance for credit losses was $728 million, up 5.1% from the year-ago quarter. Also, the company recorded net charge-offs of $14 million for the quarter under review. CMA registered net recoveries of $2 million in the prior-year quarter.

Capital Position Improves

Total capital ratio was 13.98%, up from 12.57% reported in the year-ago quarter. The Common Equity Tier 1 capital ratio was 11.47%, up from 10.12% in the prior-year quarter.

Further, as of Mar 31, 2024, CMA's tangible common equity ratio was 6.36%, up from 5.48% in the prior-year quarter.

Our Viewpoint

Comerica was affected by a decline in revenues as well as higher expenses. Also, decreases in loans and deposit balances are near-term concerns. However, its focus on improving operational efficiency will improve margins in the upcoming period.

Comerica Incorporated Price, Consensus and EPS Surprise


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.

Performances of Other Banks

Citigroup Inc.’s (C - Free Report) first-quarter 2024 net income from continuing operations per share of $1.58 surpassed the Zacks Consensus Estimate of $1.13. However, the metric declined 28% from the year-ago quarter.

Citigroup witnessed declines in total loans and deposits in the quarter. Also, a decline in revenues and deteriorating credit quality are near-term woes.

Wells Fargo & Company’s (WFC - Free Report) first-quarter 2024 adjusted earnings per share of $1.26 surpassed the Zacks Consensus Estimate of $1.10. The adjusted figure excludes the impacts of expenses from the FDIC special assessment. In the prior-year quarter, the company reported earnings per share of $1.23.

WFC’s results benefited from higher non-interest income. An improvement in capital ratios and a decline in provisions were other positives. However, the decrease in net interest income and loan balances and an increase in expenses were the undermining factors.

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