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Comerica Beats Estimates but Loan Growth Slows

Updated from 7:36 a.m. EDT with market reaction, additional detail on credit quality and capital ratios, along with comment from Jefferies analyst Ken Usdin.

  • Second-quarter EPS of 76 cents, compared to 70 cents previous quarter and 73 cents in second quarter of 2012.
  • Earnings beat the consensus estimate of 70 cents.
  • Noninterest income up 4% from first quarter.
  • Average loans grow by 1% from first quarter.

NEW YORK ( TheStreet) -- Comerica (CMA - Get Report) announced a 4% sequential increase in noninterest income, helping the bank beat analysts' second-quarter earnings estimates.

The Dallas lender reported second-quarter earnings of $143 million, or 76 cents a share, compared to $134 million, or 70 cents a share in the first quarter, and $143 million, or 73 cents a share, during the second quarter of 2012.

The second-quarter results soundly beat the consensus estimate of 70 cents, among analysts polled by Thomson Reuters.

"Average loan growth and fee growth, expense control and continued solid credit quality, contributed to our 9 percent increase in earnings per share in the second quarter," said Ralph Babb Jr., Comerica's CEO, in the company's earnings press release. Babb also said, "Our Middle Market business lines across all three of our major geographies were a key contributor to our loan growth in the second quarter. Overall, customers remain cautious, but relatively more positive, in this slow growing economy."

Comerica's average total loans grew by 1% during the second quarter to $44.9 billion as of June 30, while average commercial and industrial loans also grew by 1% to $28.4 billion, slowing from a 2% growth rate during the first quarter.

Net interest income declined to $414 million during the second quarter from $416 million the previous quarter and $435 million a year earlier. The bank's second-quarter net interest margin was 2.83%, narrowing from 2.88% in the first quarter and 3.10% during the second quarter of 2012. The narrowing of the net interest margin was in line with most large U.S. banks, in the low interest rate environment, although the sequential decline mainly reflected lower purchase accounting accretion on acquired loans.

Second-quarter noninterest income totaled $208 million, increasing from $200 million in the first quarter, "reflecting broad-based growth in several categories as well as an annual incentive received from our third-party credit card provider," Comerica said. During the second quarter of 2012, noninterest income totaled $211 million.

Noninterest expense totaled $416 million during the second quarter, unchanged from the first quarter, but down from $434 million during the first quarter of 2012. The company expects lower noninterest expense during 2013, because it incurred $35 million in restructuring charges during 2012.
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