NEW YORK ( TheStreet) -- Shares of Comerica (CMA - Get Report) of Dallas were up nearly 2% in early trading on Friday, after the bank reported better-than-expected fourth-quarter results.
Comerica reported fourth-quarter net income of $145 million, or 77 cents a share, compared to $147 million, or 78 cents a share, during the third quarter, and $130 million, or 68 cents a share, during the fourth quarter of 2012.
Analysts polled by Thomson Reuters on average had estimated the bank's fourth-quarter EPS would come in at 74 cents.
While the company emphasized that period-end loans had increased $1.3 billion during the fourth quarter from the third quarter, average loans actually declined slightly quarter-over-quarter and year-over-year, to $44.054 billion during the fourth quarter. The strongest category for growth of average loans was real estate construction loans, which were up 9% sequentially and 27% year-over-year to $1.652 billion during the fourth quarter.
A bright spot for Comerica was in increase in net interest income to $430 million during the fourth quarter from $412 million the previous quarter and $424 million a year earlier. The company's net interest margin bucked the industry trend, expanding to 2.86% during the fourth quarter from 2.79% in the third quarter, although it was down slightly from 2.87% a year earlier.
But the main factor in the increase in net interest income was accretion on acquired loans, which had been purchased at discounts. The accretion increased to $23 million during the fourth quarter from $8 million the previous quarter and $13 million a year earlier.
Noninterest income totaled $204 million during the fourth quarter, down from $214 million in the third quarter but unchanged from a year earlier. The sequential decline reflected "decreases of $5 million in customer-driven fee income and $5 million in noncustomer-driven income," the company said.
Noninterest expense totaled $151 million during the fourth quarter, compared to $153 million the previous quarter and $149 million a year earlier.
Jefferies analyst Ken Usdin in a note to clients described Comerica's results as "OK, with fees a little soft and expenses a little higher. The '14 outlook looks decent, as period-end loans were up 3% vs. flat on average and expenses will benefit from a 50%+ reduction in pension costs vs. 2013."
Usdin rates Comerica a "hold," with a $46 price target.
This chart shows the performance of Comerica's stock against the KBW Bank Index (I:BKX) and the S&P 500 (^GSPC) since the end of 2011:
data by YCharts
-- Written by Philip van Doorn in Jupiter, Fla.