Comerica reported strong profits in the third quarter as higher yields on loans and improved cost control more than offset slight declines in loan balances and earning assets.

The Dallas company said Tuesday that it earned $226 million in the quarter that ended Sept. 30, an increase of nearly 52% from the same period last year. Its earnings per diluted share of $1.26 came in seven cents above consensus estimates of analysts surveyed by FactSet Research Systems.

The $72 billion-asset company, which lends primarily to middle-market businesses, has benefited greatly from recent increases in interest rates. Net interest income increased 21% year over year, to $546 million, and its net interest margin climbed 63 basis points, to 3.29%, even as loan demand slowed in the quarter.

Chairman and CEO Ralph Babb said that Comerica has identified millions of dollars in additional cost cuts that should further improve its bottom line.

Results were also aided by significant declines in nonperforming loans and interest gains on recovered loans, though the company did increase its provision for loan losses by 50% year over year, to $24 million, out of concern that some borrowers in areas hit hard by hurricanes could struggle to repay loans.

Noninterest income increased by just 1.1% year over year to $275 million as higher card fees were partially offset by declines in commercial lending fees.

The company also continues to make significant strides in reducing its overhead. Noninterest expenses declined 6% year over year, to $463 million, and Chairman and CEO Ralph Babb said that the company has identified millions of dollars in additional cost savings that should further improve results.

The cost cuts helped to reduce Comerica’s efficiency ratio from 68.15% in last year’s third quarter to 56.24% in the most recent quarter. They also led to significant improvements in returns on assets and equity.

In a news release, the company said it expects loan demand to pick up slightly in the fourth quarter due to seasonal increases in loans to middle-market and technology and life sciences firms.

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