Comerica Inc.'s third-quarter earnings fell 32% on still-climbing credit costs as the regional bank posted better-than-expected results.

Regional banks are more dependent on economic improvement than others because they derive significant loan revenue from small businesses and local building projects. The real-estate crisis really dealt Comerica a blow in the second quarter, when bigger-than-expected write-downs on soured loans combined with timid loan demand. Comerica has particular exposure to commercial real estate and construction loans - and with banking units in Michigan, Arizona, Florida and California, it operates in areas worst hit by the housing bubble.

The company posted a earnings of $19 million, down from $28 million a year earlier. But including preferred-dividend payments, Comerica's per-share loss was 10 cents. Revenue jumped 16% to $700 million.

Analysts surveyed by Thomson Reuters predicted a 53-cent loss on $609 million in revenue.

The Tier 1 capital ratio, a key measure of financial strength, rose to 12.2% from 7.3% a year earlier and 11.6% in the previous quarter. Its tangible common equity ratio, which measures how much of a bank's hard assets its common shareholders actually own, was 7.96%, up from 7.6% and 7.55%, respectively.

Comerica's credit-loss provision was $311 million, jumping 88% from a year earlier but easing by $1 million from the second quarter. Net charge-offs, those the company doesn't expect to collect, were at 2.14%, up from 2.08% in the second quarter and 0.90% a year earlier. Nonperforming assets, those in danger of default, rose to 2.99% from 2.64% and 1.71%, respectively.

Charge-offs are expected to moderate in the fourth quarter.

Comerica's shares closed Monday at $30.37 and weren't active premarket. The stock, which hit an 18-year low in March, is up 53% so far this year.

Subscribe Now

Access to authoritative analysis and perspective and our data-driven report series.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.