Comerica: Financial Loser

NEW YORK ( TheStreet) -- Comerica ( STI) was the loser among the largest U.S. banking names on Wednesday, with shares declining over 4% to close at $29.47.

The broad indexes showed slight declines, despite a report by the National Association of Realtors that existing home sales in January increased 4.3% to an annual rate of 4.57 million, which was the strongest sales growth since May of 2010.

The Consumer Financial Protection Bureau announced an "inquiry into checking account overdraft programs" which may have sent a chill into bank executives and investors, after the huge drops in service charges on deposit accounts from rules implemented in 2010, requiring banks only to offer expensive ATM and debit card overdraft protection to customers who previously opted-in for the service, followed by a vicious hit to revenue from the Durbin Amendment's caps on debit card interchange fees in October of last year.

The The KBW Bank Index ( I:BKX) declined 2% to close at 44.62, with all 24 index components showing declines.

In his report highlighting banks growing their commercial and industrial loan portfolios, Jefferies analyst Ken Usdin said that Comerica grew its commercial loan portfolio by 8% during the fourth quarter, to $25.0 billion as of Dec. 30, while the Dallas Lender's totl loans grew 3.5%, to $42.7 billion.

Usdin said that "growth in C&I led the way as CMA experienced a strong quarter in its dealer finance and mortgage banker businesses," but that Comerica's "forward guidance is fairly cautious given the company is only calling for 2%-5% average loan growth in 2012."

The analyst rates Comerica a "Hold," with a $28 price target, and estimates the company will earn $2.40 a share in 2012, followed by EPS of $2.50 in 2013.

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Comerica's shares have now returned 14% year-to-date, after a 38% decline in 2011.

Shares of SunTrust ( STI) declined nearly 4% to close at $22.16. The shares have now returned 25% year-to-date, following a 40% decline in 2011.

Jefferies analyst Ken Usdin said the Atlanta lender's overall fourth-quarter loan growth was strong, "partially aided by its acquisition of $1.2B of student loans," and Usdin says the company's loan growth "continues to be fairly deliberate, with areas like C&I and guaranteed loans (both mortgage and student loans) growing at the expense of CRE and home equity."

Usdin rates SunTrust a "Buy," with a $25 price target, and estimates the company will earn $1.05 a share in 2012, followed by EPS of $2.70 in 2013.

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SunTrust's shares trade for 0.9 times their Dec. 30 tangible book value of $25.01, according to HighlineFI, and for 13 times the consensus 2012 earnings estimate of $1.73 a share, among analysts polled by Thomson Reuters.

Interested in more on SunTrust? See TheStreet Ratings' report card for this stock.

Shares of Citigroup ( C) were down 3% to close at 32.36.

The shares have now returned 23% year-to-date, following a decline of 44% in 20111.

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At a presentation by Citigroup at the Credit Suisse Financial Services Forum, CFO John Gerspach said that the company's long-term return of capital to investors through dividends and share buybacks would be supported by $40 billion in deferred tax assets not included in the company's Tier 1 capital, as well as "about $24 billion of our regulatory capital that should be eventually released as Citi Holdings winds down."

Citi Holdings is the subsidiary in which Citigroup has placed noncore assets to wind down, as part of CEO Vikram Pandit's "good bank/bad bank" strategy to trim the company's balance sheet.

Bank of America Merrill Lynch analyst Guy Moszkowski still sees plenty of potential for Citigroup's shares, despite the run-up this yar. He rates the shares a "Buy," with a $44 price objective, and said on Feb. 8 that although the deferred tax asset "realization will take time (contingent on generating higher U.S. taxable earnings) and Holdings wind-down will not be completed for years,:" he expects the company "to be well positioned to support significantly higher payouts" by 2014.

On Wednesday Wall Street Journal reported that Citi valued its 49% portion of the joint Morgan Stanley Smith Barney venture by $5 billion more than Morgan Stanley ( MS) did, and could be forced to take a large write-down, is an example of a news item that could cause a bump in the road for the shares.

The shares trade for 0.7 times their Dec. 30 tangible book value of $50.43, and for eight times the consensus 2012 EPS estimate of $3.98. The 2013 EPS estimate is $4.76, underlining Citigroup's attractive multiple to forward earnings.

Interested in more on Citigroup? See TheStreet Ratings' report card for this stock.

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-- Written by Philip van Doorn in Jupiter, Fla.

To contact the writer, click here: Philip van Doorn.

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Philip W. van Doorn is a member of TheStreet's banking and finance team, commenting on industry and regulatory trends. He previously served as the senior analyst for TheStreet.com Ratings, responsible for assigning financial strength ratings to banks and savings and loan institutions. Mr. van Doorn previously served as a loan operations officer at Riverside National Bank in Fort Pierce, Fla., and as a credit analyst at the Federal Home Loan Bank of New York, where he monitored banks in New York, New Jersey and Puerto Rico. Mr. van Doorn has additional experience in the mutual fund and computer software industries. He holds a bachelor of science in business administration from Long Island University.

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