Profits soar but lending flat at Comerica
Quarterly profits at Comerica soared as higher rates and an ongoing effort to cut costs offset a stagnating loan book and a sharp decline in fee income.
The Dallas company reported a 41% year-over-year gain in earnings to $318 million. Its earnings per share were $1.89, or 14 cents higher than an estimate of analysts compiled by FactSet Research Systems.
Net interest income climbed 10% to $599 million, and the net interest margin rose 32 basis points to 3.60%. However, total average loans were virtually flat at $48.6 billion on tepid commercial, residential mortgage and consumer lending.
Yet chairman and CEO Ralph Babb said he remains optimistic about the prospect for stronger loan growth in the months ahead.
“With increased loan commitments and seasonal factors, we expect loan growth to trend positive into the end of the year,” Babb said in a news release Tuesday announcing the results. “We remain well positioned to meaningfully benefit from rising rates as we judiciously manage loan and deposit pricing.”
Total average deposits also declined by just under 1% to $56.1 billion. The company attributed the decrease to lower deposits from middle-market commercial customers.
Noninterest income fell 15% to $234 million on lower card fees and service charges, as well as a $20 million securities loss stemming from a remixing of the company's portfolio.
Noninterest expenses declined 2% to $452 million, largely from lower outside processing fees. The efficiency ratio — a closely watched metric in Comerica’s turnaround — was 52.9%, compared with 56.3% a year earlier.