Higher interest rates, improved credit quality and expense controls drove a double-digit increase in profits at Comerica in the second quarter — even though its loan growth was modest.

Net income for the $70.5 billion-asset Comerica rose 61% to $326 million in the quarter. Earnings per share were $1.87, beating the median estimate of $1.64, according to analysts polled by FactSet Research Systems.

“We expect to benefit from additional rate increases and economic growth. We remain focused on maintaining momentum and driving shareholder returns,” Chairman and CEO Ralph Babb said in a press release Tuesday.

Comerica benefited from higher interest rates in the second quarter, as net interest income rose 18% to $590 million. The net interest margin expanded 59 basis points to 3.52%. The company said that it expects that higher interest rates will mean a total of $270 million in additional net interest income over the full year, as a majority of its loan book is short-term and floating-rate.

Loans increased 2% to $49.2 billion in the second quarter. The company said it saw increases in its technology and life sciences business lines, while corporate banking and energy loans fell.

Total deposits declined 2% to $55.8 billion. Comerica said this was due to declines in middle-market, municipal and commercial real estate categories, as customers used excess liquidity to invest in their operations.

Compared a year earlier, noninterest income fell 10% to $248 million. The company said this was due largely to the impact of an accounting change this year and that year-over-year, noninterest income would otherwise have been flat. Comerica reported a $6 million increase in card fees and $1 million increase in fiduciary income, though this was offset somewhat by declines in warrant income and service charges and customer derivative income.

The company also reported progress on its cost-cutting initiative, GEAR Up. Noninterest expenses declined 2% to $448 million. Comerica improved its efficiency ratio to 53.24% from 58.7% last year.

Asset quality also improved in the second quarter. Comerica recorded net recoveries of $3 million, compared with $18 million in the year-ago period.

Nonperforming loans fell 47% to $262 million, which drove Comerica to reduce its provision for credit losses by $46 million in the second quarter.

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