Financial services company Comerica, Inc. (CMA) on Friday reported a 5 percent increase in profit for the third quarter from last year, reflecting a decline in non-interest expenses and a lower provision for credit losses. These were partly offset b a decline in non-interest income. However, adjusted earnings per share for the quarter missed analysts' expectations.
Ralph Babb Jr, chairman and CEO of Comerica said, "The third quarter reflected broad-based average loan growth as well as significant deposit growth across virtually all business lines. We also had solid credit quality and expenses that continue to be well controlled."
For the third quarter, the company's net income attributable to common shares increased to $152 million or $0.82 per share from $145 million or $0.78 per share in the prior-year period.
The latest quarter's results reflected a net benefit of $0.03 per share from certain actions, including a $32 million gain on the early redemption of debt, a $9 million contribution to the Comerica Charitable Foundation and other charges totaling $15 million.
On average, 29 analysts polled by Thomson Reuters expected the company to report earnings of $0.80 per share for the quarter. Analysts' estimates typically exclude special items.
Net interest income for the quarter edged up to $414 million from $412 million in the same quarter last year. However, total non-interest income declined 6 percent to $215 million from $228 million in the prior year. Analysts had a consensus revenue estimate for the quarter of $638.61 million.
Non-interest expenses for the quarter were $397 million, down 5 percent from $417 million in the same period last year.
Provision for credit losses in the quarter was $5 million, lower than $8 million a year earlier.
Average total loans in the quarter rose $3.1 billion or 7 percent from last year, reflecting increases in almost all lines of business. Average total deposits increased $3.3 billion or 6 percent, driven by an increase in noninterest-bearing deposits of $2.9 billion, or 13 percent.
The company recorded Tier 1 common capital ratio of 10.69 percent, compared with 10.72 percent last year.
Looking ahead to the fourth quarter, Comerica forecasts non-interest income to be relatively stable, with stable customer-driven income and lower noncustomer-driven income. The company also forecasts slight growth in average loans.
In addition, the company projects fourth-quarter provision for credit losses to remain low, similar to the provisions in the first half of 2014.
For fiscal 2014, Comerica now forecasts growth in average loans of 5 percent, in the middle of the prior outlook range of 4 percent to 6 percent growth.
Regarding full-year net interest income, the company now forecasts purchase accounting accretion of about $30 million, compared to the prior outlook for purchase accounting accretion of $25 million to $30 million.
CMA is trading at $43.24, down $1.18 or 2.66 percent on a volume of 831,769 shares.
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