Comerica added $13 million to loan loss reserves during the second quarter, down from $16 million the previous quarter and $19 million a year earlier, as credit quality continued to improve. Nonperforming assets, including loans in nonaccrual status and repossessed property totaled $500 million as of June 30, declining from $555 million in March and $814 million in June 2012.
Certain changes in the Federal Reserve's finalized capital rules on July 2, along with the bank's earnings, helped boost Comerica's estimated Basel III Tier 1 common equity ratio to a very strong 10.04% as of June 30, increasing from 9.86% at the end of the first quarter.
While Comerica's net income was flat year over year, earnings-per-share rose because of a lower share count. During the second quarter, the company bought back 1.9 million shares. Comerica in March was approved by the Federal Reserve for up to $288 million in common share repurchases through the first quarter of 2014.
The company said that during the second quarter, 72% of earnings were returned to investors through dividends and share buybacks.Comerica's shares were down 2% in early trading Tuesday to $40.82. "2Q results beat consensus due to lower provision expense, better core fees, and continued tight expense controls," wrote Jefferies analyst Ken Usdin in a note to clients Monday. "We believe estimates should have a slight upward bias as these items modestly reset in our model." Usdin rates Comerica a "hold," with a $41 price target, estimating the company will earn $2.80 a share this year, with EPS climbing to $2.85 in 2014. The analyst called the company's loan growth "somewhat soft," but noted that "average mortgage banker
Interested in more on Comerica? See TheStreet Ratings' report card for this stock.
Email. Follow @PhilipvanDoorn