Magazine article American Banker

With Lending Up, Comerica Beats Wall Street Target

Magazine article American Banker

With Lending Up, Comerica Beats Wall Street Target

Article excerpt

Comerica Inc. reported first-quarter results Wednesday that put it in the company of those that benefited from a strong pickup in commercial demand.

The $50.8 billion-asset Detroit company said it earned $1.16 a share, which beat analysts' average estimate by 6 cents. Net income rose 23% from a year earlier but fell 4% from the fourth quarter, to $199 million.

Though many regional banking companies reported a contraction in their net interest margin, Comerica's rose 17 basis points from a year earlier and 4 basis points from the fourth quarter, to 4%. Comerica said the improvement was mostly because of growth in noninterest-bearing deposits and the sale of some short-term investments to fund loans.

Comerica, a predominantly commercial lender, said its average loan balances rose 4% from a year earlier and 2.4% from the fourth quarter, to $42.2 billion.

"The pace of loan growth has accelerated," Elizabeth Acton, its chief financial officer, said in an interview. "It grew by $500 million in the fourth quarter and by $1 billion in the first quarter."

Because of that increase, Ms. Action said, Comerica has revised its estimates for full-year lending growth to the mid-single digits, from the low-to-mid-single digits.

"We feel good about the fact that it was not a little here and a little there," she said. Almost all regions and businesses grew.

Commercial real estate was an exception. Average loans in that area fell 8% from a year earlier, to $5.2 billion, as construction slowed in western, midwestern, and other markets.

Ms. Acton said some commercial real estate borrowers chose to refinance in the capital markets, while others paid down debt.

Jeff Davis, an analyst with First Horizon National Corp.'s FTN Midwest Research, said, "It was a good quarter for Comerica. …

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