Comerica to Redeem $24M TruPS - Analyst Blog
November 09 2011 - 12:15PM
Zacks
Comerica Incorporated (CMA) has announced to
fully redeem about $24 million in trust preferred securities
(TruPS). These include redemption of floating rate TruPS of $20
million, issued by Sterling Bancshares Statutory Trust One and $4
million of TruPS issued by BOTH Capital Trust I.
Comerica stated that both these TruPS will be redeemed at par,
coupled with accrued and unpaid distributions until the redemption
date. The company further stated that Sterling Bancshares Statutory
Trust One I TruPS will be redeemed on December 31, 2011 while BOTH
Capital Trust I will be redeemed on January 7, 2012. The company
has mentioned that it will use existing available cash to fund the
redemptions.
Last month, Comerica had fully redeemed about $31.25 million in
TruPS. These included redemption of 8.30% TruPS issued by Sterling
Bancshares Capital Trust III (SBIBN) at par, coupled with accrued
and unpaid distributions until the redemption date.
Estimate Revision Trends
Over the last 30 days, 15 out of the 23 analysts covering
Comerica have lowered their estimates for the fourth quarter, while
3 of them moved north. Moreover, for fiscal 2011, 12 out of the 24
analysts have trimmed their estimates, while 7 upward revisions
were witnessed over the last 30 days.
Currently, the Zacks Consensus Estimate for the fourth quarter
is operating earnings of 49 cents per share, down 7.96% from the
prior-year quarter.
Our Take
It can be assumed that Comerica will be able to reduce interest
costs by redeeming TruPS as these securities demand higher rates
than other securities. According to Dodd-Frank Act, from 2013,
banks will no longer be able to include these securities as
regulatory capital.
Comerica currently retains a Zacks #3 Rank, which translates
into a short-term Hold rating. Also, one of the peers of the
company, M&T Bank Corp. (MTB) retains a Zacks
#3 Rank.
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