With some economists predicting a slower economy by yearend, Comerica Inc. is attracting attention as a bank whose stock could do well when others stumble.
Comerica "may not be the sexiest banking story around," said analyst Anthony Polini, of the Advest Group, but it is a "company that manages well during tough economic times and rising interest rates."
Mr. Polini pointed out that the Detroit-based bank already has a track record of performing well. When Michigan and the rest of the country were in the throes of the recession between 1989 and 1992, "Comerica grew its portfolio between 4% and 8%" annually, he said.
He added that during boom periods the bank tends to rank 14th or 15th in middle market lending, but during weak economic times, the bank can move as high as ninth.
Mr. Polini attributed the bank's resiliency to its above average loan growth, its solid core deposits, and the use of medium- and longer-term debt.
Checking and savings accounts make up two-thirds of Comerica's accounts, Mr. Polini said. "They exclude CDs, which means that they have lower cost and a deposit mix less sensitive to interest rates."
Mr. Polini said investors should be wary of banks that have a strong retail focus, that have experienced recent substantial growth, and that have some sort of revolving credit product.
"A company that has had tremendous growth period in unsecured consumer debt is a company with a very high risk profile," he said. "We are in a recovery period which will eventually slow down, and we will enter a recession in the not to distance future."
In trading Monday, Comerica's shares fell 12.5 cents, to close at $42.125, while the S&P Bank index fell 0.89%.
In general bank "stocks were still reacting to the government unemployment and payroll numbers that were released on Thursday and Friday," said Scott Brown, an economist with Raymond James & Associates based in St. Petersburg, Fla.
