Comerica Incorporated (NYSE:CMA) reported its Q3 earnings per share (EPS) at $1.84 on Friday, surpassing the Zacks Consensus Estimate of $1.70, which led to a 1.2% increase in pre-market trading shares. Despite this, the EPS indicated a 29% decrease from last year's figures, primarily due to higher expenses and an increased allowance for credit losses. The company's net income fell by 29% year over year to $244 million.
The firm's total revenue for the quarter came in at $896 million, down 9.04% from last year but above the consensus estimate of $880.8 million. According to InvestingPro data, the company's revenue for the last twelve months was $3795M, showing a growth of 22.34%. Comerica saw its net interest income (NII) drop by 15% to $601 million year over year, while non-interest income rose by 6% to $295 million. Non-interest expenses surged by 11% to $555 million as a result of increased salaries, benefits, and advertising expenses.
Despite ongoing efficiency initiatives, the efficiency ratio rose to 61.86%, indicating reduced profitability. Total loans decreased by 4.2% sequentially to $53.39 billion, while total deposits grew by 2.4% from the previous quarter to $65.88 billion.
The company reported a significant decrease in non-performing assets, which fell by 41.2% year over year to $154 million, with net charge-offs of $6 million for the quarter, down from $13 million last year.
The allowance for credit losses increased to $736 million from last year's $624 million, with the ratio of allowance for credit losses to total loans at 1.38%, up from 1.21% last year. The total capital ratio improved to 13.16%, and the Common Equity Tier 1 capital ratio rose to 10.79%. However, Comerica's tangible common equity ratio fell to 4.62%.
Despite rising expenses, Comerica’s revenues and efficiency initiatives are expected to continue improving its financials, supported by robust loan growth and fee income. The company currently holds a Zacks Rank #3 (Hold). As per InvestingPro Tips, the company is trading at a low P/E ratio relative to near-term earnings growth, and it has maintained dividend payments for 53 consecutive years, which might interest potential investors.
In comparison, Wells Fargo & Company's Q3 adjusted earnings per share of $1.39 exceeded the Zacks Consensus Estimate of $1.25, improving by 6.9% year over year. Citigroup Inc (NYSE:C).’s Q3 earnings per share of $1.52 beat the Zacks Consensus Estimate of $1.26, supported by higher revenues in its Institutional Clients Group, Personal Banking and Wealth Management segments. For more insights and tips, consider exploring the InvestingPro product that includes additional tips.
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