Comerica, Bracing for Lower Interest Rates, Names Interim CFO -- Update
September 13 2019 - 5:16PM
Dow Jones News
By Ezequiel Minaya and Chris Wack
Comerica Inc. disclosed Friday that its finance chief is leaving
and treasurer James Herzog has been named interim CFO, a move that
comes as the regional lender braces for lower interest rates that
could cut into its bottom line.
The Dallas-based company said in a regulatory filing that
Muneera Carr stopped serving as CFO on Wednesday and Mr. Herzog has
taken over. Ms. Carr, who assumed the role early last year, joined
the company in 2010 as chief accounting officer and controller. She
is expected to leave the company next month, Comerica said.
The departure wasn't linked to "any issue, concern or
disagreement" with accounting, financial reporting or internal
controls, Comerica said in a filing with the Securities and
Exchange Commission. "Muneera has made many valuable contributions
to Comerica, both as chief financial officer and while she served
as chief accounting officer," Chief Executive Curtis C. Farmer said
in a statement.
An abrupt change in the CFO post could weigh on share prices in
the near term, analysts for SunTrust Robinson Humphrey said in a
research note Friday. Comerica's shares rose 1.3% to $65.60
Friday.
Mr. Herzog joined Comerica in 1984. He was named treasurer in
2011, steering the lender's liquidity and interest rate risks.
Comerica said it has launched a search for a permanent CFO.
The company's next finance chief will have to navigate a lower
interest rate environment. The Federal Reserve cut interest rates
by one-quarter of a percentage point in July. President Trump has
pressured for further cuts in hopes of inoculating the economy from
a downturn. Economists expect another quarter-point retreat
following meetings next week of Federal Reserve officials.
Comerica is among the lenders most sensitive to lower interest
rates because of its heavy concentration of commercial and
industrial loans, which produce less income for the lender when
interest rates are cut. Commercial loans made up 64% of Comerica's
total loans as of June 30, according to regulatory filings.
Comerica, with main operations in Michigan, California and
Texas, in August estimated that a quarter-point rate cut by the Fed
would lower its annual net interest income by $60 million to $90
million.
"Our asset sensitivity enhanced our performance as rates
increased," Wendy Bridges, a Comerica spokesperson, said in an
interview. "In addition, over the past few years we have
significantly improved our efficiency, actively managed our capital
levels and maintained our underwriting discipline. These actions
have produced strong results and better positioned us to weather a
lower rate environment."
In the quarter ended June 30, Comerica's net interest income
rose 2.2% to $603 million compared with the same period a year
earlier. Net income, however, slipped 8.3% to $297 million.
Comerica posted earnings per share of $1.94 during the quarter,
below the expectations of analysts surveyed by FactSet who forecast
$2 a share.
--Aaron Back contributed to this article.
Write to Ezequiel Minaya at Ezequiel.Minaya@wsj.com and Chris
Wack at chris.wack@wsj.com
(END) Dow Jones Newswires
September 13, 2019 17:01 ET (21:01 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.
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