Comerica Q1 Profit Meets View, But Revenues Top; Backs 2015 Outlook

(RTTNews) - Financial services company Comerica, Inc. (CMA) reported Friday a profit for the first quarter that declined three percent from last year, reflecting higher noninterest expenses and increased loan loss provisions. Earnings per share matched analysts' expectations, while quarterly revenues topped their estimates.

Looking ahead, the company backed its average loan growth, net interest income, noninterest income, noninterest expense and provision for credit losses outlook for the full-year 2015.

The company noted that the results primarily reflect revenue increases offset by higher outside processing expenses related to revenue generating activities and increases in the provision for credit losses and technology-related contract labor expenses.

"Our first quarter results reflect our strong focus on relationships and ability to generate loans in a highly competitive environment as we maintain our pricing and credit discipline," Chairman and CEO Ralph Babb Jr. said in a statement.

The Dallas, Texas-based company reported net income attributable to common shares of $132 million for the first quarter, lower than $137 million in the prior-year quarter, while earnings per share remained flat with last year at $0.73 per share.

On average, 30 analysts polled by Thomson Reuters expected the company to report earnings of $0.73 per share for the quarter. Analysts' estimates typically exclude special items.

Net interest income for the quarter grew to $413 million, from $410 million a year ago, and non-interest income increased to $256 million from $208 million in the prior-year quarter. Twenty-four Wall Street analysts had a consensus revenue estimate of $626.35 million for the quarter.

Net interest margin for the quarter was down to 2.64 percent from 2.77 percent last year.

Noninterest expenses increased 13 percent to $460 million from $406 million a year ago. Provision for credit losses increased 52 percent to $14 million from last year's $9 million.

However, the company noted that credit quality continued to be strong, with net loan charge-offs declining to $8 million or 0.07 percent from $12 million or 0.10 percent last year.

Average total loans grew 7 percent, primarily reflecting reflecting increases in almost all lines of business.

Average total deposits increased 8 percent, primarily reflecting an increase in noninterest-bearing deposits of $3.5 billion, or 15 percent, and reflecting increases in all major lines of business.

Looking ahead to fiscal 2015, Comerica continues to expect net interest income and noninterest income to be relatively stable with last year, while provision for credit losses is still estimated to be higher, consistent with modest net charge-offs and continued loan growth.

"We remain focused on the long term and carrying out our relationship banking strategy, which has served us well over many cycles, and we continue to believe we are positioned to benefit from a rising rate environment," Babb Jr. added.

As previously announced, the Federal Reserve completed its 2015 CCAR review in March 2015 and did not object to Comerica's capital plan and capital distributions contemplated in the plan.

Comerica's capital plan provides for up to $393 million in equity repurchases for the five-quarter period ending June 30, 2016. Comerica's capital plan further contemplates a 1-cent increase in the quarterly dividend to $0.21 per common share. The dividend proposal will be considered by Comerica's Board of Directors at its next scheduled meeting on April 28, 2015.

In Friday's regular trading session, CMA is currently trading at $46.54, up $0.34 or 0.74% on a volume of 0.31 million shares.