Comerica Quarter Crimped by Spread Squeeze - TheStreet

Commercial lender


(CMA) - Get Report

said third-quarter earnings were a penny short of analysts' projections, despite a sharp increase in net income from a year ago.

In the quarter ended Sept. 30, the company earned $157 million, or 89 cents a share, compared with analysts expectations of 90 cents a share. The company earned $24 million, or 14 cents a share, in the third quarter 2002, including a charge for provision for credit losses and a goodwill impairment of $293 million.

Net interest fell to $465 million, from $528 million a year ago, and the net interest margin -- the profitability spread in Comerica's lending operation -- was 3.7%, compared with 4.46% last year. Comerica's provision for loan losses, the money it has put aside for bad loans, was $83 million, from $275 million in the same quarter 2002.

"The third quarter was a slow one for many involved in business lending, as we are," said Ralph W. Babb Jr., president and chief executive. "While net charge-offs are down, we remain cautious about the current lending environment as nonperforming assets are up from the prior quarter. The decline in net interest margin was in line with our expectations."

Total assets were $54.8 billion in the quarter, compared with $58.7 billion last year. Nonperforming assets were $627 million in the third quarter compared with $581 million in the second quarter and $640 million in the third quarter last year.

Commercial loans were relatively flat at $24.7 million, from $25.5 million a year ago. Commercial mortgage loans rose, however, to $7.6 million, from $6.9 million in the prior-year quarter.

Shares of Comerica closed at $48.13 Tuesday on the

New York Stock Exchange