Comerica Incorporated (NYSE: CMA) stock rose over 1.3% on 17th July, 2018 as they reported better than expected results. The company’s net interest income increased $41 million to $590 million compared to first quarter primarily due to a net benefit from higher short-term rates, an increase in average loans, higher interest recoveries and one additional day in the second quarter.
CMA in the second quarter of FY 18 has reported the adjusted earnings per share of $1.90, beating the analysts’ estimates for the adjusted earnings per share of $1.62 as per the Zacks Consensus Estimate. The company had reported the adjusted revenue of $838 million in the second quarter of FY 18, beating the analysts’ estimates for revenue of $831.9 million.
Moreover, during the second quarter, CMA has returned $227 million to shareholders, including dividends and the repurchase of $169 million of common stock (1.8 million shares) under the equity repurchase program. The Dividend has increased 13 percent to 34 cents per share.
For the next second half of 2018, the company expects moderate growth in average loans. The growth in most lines of business is expected to be a slower pace in general Middle Market, National Dealer Services and Mortgage Banker Finance due to seasonality. Energy and Corporate Banking is expected to remain stable. The net interest income will be higher, reflecting recent rate increases, loan growth and three additional days. Full-year 2018 net benefit of $70 million from the first quarter 2018 rate increase and $35 million to $40 million from the second quarter 2018 rate increase. The elevated interest recoveries not expected to repeat ($11 million in second quarter 2018). Further, the provision for credit losses of $10 million to $20 million per quarter and net charge-offs is expected to remain low. The noninterest income growth trend to continue benefiting from the execution of GEAR Up initiatives will help drive growth in treasury management income, card fees and fiduciary income. The noninterest expenses modestly higher (excluding restructuring charges) primarily due to additional days. GEAR Up savings is expected to remain on track. Seasonal and typical inflationary pressures will lead to higher occupancy and advertising expenses. Restructuring charges is expected to be in the range of $20 million to $25 million. Income tax expense is expected to be approximately 23 percent of pre-tax income, excluding any tax impact from employee stock transactions.