DALLAS ( TheStreet) -- Comerica ( CMA) on Tuesday announced a deal to acquire Sterling Bancshares ( SBIB) of Houston and also announced fourth-quarter earnings that beat analysts' expectations.

Comerica agreed to acquire Sterling in an all-stock transaction valued at just over $1 billion, or $10 per Sterling share, representing a 30% premium over Sterling's closing share price of $7.70 on Friday. The announcement followed reports that Sterling's management was soliciting bids for a sale, with BB&T ( BBT) also listed as a possible acquirer.

Sterling had been included in TheStreet's list of 10 Regional Bank Takeover Targets in December. The deal is a nice fill-in transaction for Comerica, since the company only had a 1% deposit market share in Texas as of June 30, according to the Federal Deposit Insurance Corporation. Comerica relocated its headquarters from Detroit to Dallas in 2007 and its Texas deposit market share will double when it completed the Sterling acquisition.

For the fourth quarter, Comerica reported net income to common shareholders of $95 million, or 53 cents a share, improving from $59 million, or 33 cents a share, the previous quarter and a loss of $62 million, 42 cents a share, in the fourth quarter of 2009.

The fourth-quarter results beat the consensus estimate of fourth quarter earnings of 32 cents a share, among analysts polled by Thomson Reuters.

For all of 2010, Comerica's net income attributable to common shareholders was $153 million, or 88 cents a share, compared to a 2009 net loss of $118 million, or 79 cents a share.

The largest factor in the fourth-quarter earnings improvement was a reduction in the provision for loan loss reserves, which was $57 million during the fourth quarter, declining from $122 million during the third quarter and $256 million during the fourth quarter of 2009. Since net charge-offs - loan losses less recoveries - during the fourth quarter totaled $113 million, Comerica "released" $57 million in loan loss reserves, which directly boosted bottom-line results.

This followed the pattern for large U.S. banks, including JPMorgan Chase ( JPM), which saw a $1.9 billion reduction in loan loss reserves during the fourth quarter and Citigroup ( C), which reported a $3 billion decline in its allowance for loan losses.

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