Comerica Q3 Earnings Beat Estimates, NII & Fee Income Decline Y/Y

Comerica Incorporated CMA reported third-quarter 2024 adjusted earnings per share of $1.37, beating the Zacks Consensus Estimate of $1.18. However, the bottom line plunged 25.5% from the prior-year quarter.

Find the latest earnings estimates and surprises on the Zacks Earnings Calendar.

Results benefited from a rise in deposit balance and a strong capital position. However, a decline in net interest income (NII) and fee income, along with increased expenses, was a major headwind. 

Net income attributable to common shareholders (GAAP basis) was $177 million, down 27.5% from the year-ago quarter.

CMA's Revenues Decline, Expenses Rise

Total quarterly revenues were $811 million, down 9.5% year over year. However, the top line surpassed the consensus estimate of $806.5 million.

Quarterly NII fell 11.1% on a year-over-year basis to $534 million. The net interest margin contracted 4 basis points year over year to 2.8%.

Total non-interest income was $277 million, down 6.1% on a year-over-year basis. The decrease was primarily due to a decline in card fees, fiduciary income, service charges on deposit accounts, commercial lending fees, risk management hedging income and other non-interest income.

Non-interest expenses totaled $562 million, up 1.3% year over year. An increase in salaries and benefits expenses, software expense, occupancy expense and equipment expense majorly led to the rise.

The efficiency ratio was 68.80% compared with the prior-year quarter’s 61.86%. A rise in this ratio indicates lower profitability.

CMA’s Loans Decline, Deposits Rise

As of Sept. 30, 2024, total loans decreased 2.6% on a sequential basis to $50.5 billion. However, total deposits increased nearly 1% from the previous quarter to $63.1 billion.

CMA's Credit Quality: Mixed Bag

The company recorded a provision for credit loss of $14 million in the third quarter, which remained stable year over year. 

The allowance for credit losses was $720 million, down 2.2% from the year-ago quarter.

Total non-performing assets surged 62.3% year over year to $250 million. 

Further, the allowance for credit losses to total loans ratio was 1.43% as of Sept. 30, 2024, up from 1.38% as of Sept. 30, 2023. Also, the company recorded net charge-offs of $11 million, which jumped 83.3% year over year.

CMA's Capital Position Improves

Total capital ratio was 14.3%, up from 13.17% reported in the year-ago quarter. The Common Equity Tier 1 capital ratio was 11.97%, up from 10.8% in the prior-year quarter.

Further, as of Sept. 30, 2024, CMA's tangible common equity ratio was 8.01%, up from 4.62% in the prior-year quarter.

Our View on CMA

The company’s solid capital position will aid capital distribution activities in the upcoming period, boosting investors’ confidence in the stock. Also, an increase in deposit balance is likely to support its financials. However, steadily mounting operating expenses and lower revenues remain a major concern. 
 

Currently, Comerica carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Performance of Other Banks

Hancock Whitney Corp.’s HWC third-quarter 2024 earnings per share of $1.33 beat the Zacks Consensus Estimate of $1.31. The bottom line compared favorably with $1.12 registered in the year-ago quarter.

HWC’s results were aided by an increase in non-interest income and NII. Lower expenses and provisions were positives. However, the decline in total loans and deposits affected the results to some extent.

Synovus Financial Corp. SNV reported third-quarter 2024 adjusted earnings per share of $1.23, which surpassed the Zacks Consensus Estimate of $1.09. This compares to earnings of 84 cents a year ago.

SNV’s results benefited from strong growth in non-interest revenues, a fall in expenses and provisions for credit losses. Also, improving loans and deposit balances were tailwinds. However, a decline in NII and a rise in non-performing loans were major headwinds.

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