Comerica in Dallas retroactively cut its fourth-quarter profit by $14 million after discovering that a single borrower — an Arizona company the bank did not identify — was unlikely to repay its loan.
The $72 billion-asset Comerica lowered its fourth-quarter net income 11% to $115 million from the previously reported figure of $129 million. It also reduced earnings per share 10% to 64 cents.
Comerica also recorded a $26 million chargeoff on the loan; and it decreased incentive compensation expense, which cut noninterest expense 0.6% to $486 million.
The bank said it recently discovered irregularities at the borrower, which it described as an Arizona sales and appraisal company. The customer had a $26 million outstanding loan balance, Comerica said.
"Our investigation is ongoing and we are assessing all circumstances surrounding this matter," Comerica Chairman and Chief Executive Ralph Babb said in a Tuesday news release. "We remain confident in our systems and processes and will vigorously prosecute all legal options available to us to recover on this isolated loss."