Comerica Says Interest Rates, Oil Prices Boost Results
January 17 2017 - 08:01AM
Dow Jones News
By Austen Hufford
Comerica Inc. said increased interest rates and stabilizing oil
prices would boost results this year.
The Dallas-based regional bank reported a fourth-quarter profit
of $164 million, up from $116 million in the same period a year
ago. On a per-share basis, earnings grew to 92 cents from 64
cents.
In all, revenue in the fourth quarter, a combination of net
interest income and noninterest income, rose 3.3% to $722 million.
Analysts polled by Thomson Reuters had anticipated 87 cents in
per-share profit and $729.2 million in revenue.
In December, the Federal Reserve approved its second rate
increase in a decade and signaled that interest rates would rise at
a faster pace than previously projected.
The bank said the rate increase would boost revenue and that the
rise in energy prices has assuaged concerns about the bank's energy
loans.
When the recent slide in energy prices began, Comerica had a
relatively high share of loans in the sector and took large
provisions to cover loans potentially going bad. With oil prices up
recently, the bank hasn't had to set aside as much. During the
quarter, it set aside $35 million in its provision for losses, down
from $60 million in the quarter last year but up from $16 million
last quarter.
Comerica, which does a chunk of its business in Texas and lends
to many companies in the energy sector, has continued to reduce its
exposure to energy loans, which are now less than 5% of its total
portfolio. The bank had $2.3 billion in energy business loans
compared with $2.5 billion in the previous quarter.
Comerica had $582 million of nonaccrual loans in the fourth
quarter, meaning there is uncertainty about whether they will be
paid back on time, down from $631 million in nonaccrual loans in
the previous quarter but up from $367 million in the previous
year.
Net interest margin, an important measure of lending
profitability largely tied to interest rates, was 2.65% in the
December quarter, down from 2.66% in the third quarter but up from
2.58% a year prior.
Net interest income grew 5.5% from a year prior on higher yields
on loans and Federal Reserve deposits.
Fee-based income increased 0.4% to $267 million in the quarter
on an increase in card fees and asset management income.
Noninterest expenses fell 4.4% to $461 million on lower
salaries.
Write to Austen Hufford at austen.hufford@wsj.com
(END) Dow Jones Newswires
January 17, 2017 07:46 ET (12:46 GMT)
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