Comerica Q1 Earnings Top Estimates on Y/Y Rise in NII, Fee Income

Core Viewpoint - Comerica Incorporated (CMA) reported first-quarter 2025 adjusted earnings per share (EPS) of $1.25, exceeding the Zacks Consensus Estimate of$ 1.14, but down from $1.29 in the prior-year quarter [1] Financial Performance - Net income attributable to common shareholders was$ 165 million, reflecting a 26% increase from the year-ago quarter [2] - Total quarterly revenues reached $829 million, up 5.7% year over year, although it missed the consensus estimate by 0.4% [3] - Quarterly net interest income (NII) rose 4.9% year over year to$ 575 million, with the net interest margin increasing by 38 basis points to 3.18% [3] - Total non-interest income was $254 million, an 8% increase year over year, driven by higher service charges, capital markets income, and brokerage fees [4] - Non-interest expenses totaled$ 584 million, down 3.2% year over year, primarily due to reduced outside processing fees and FDIC insurance expenses [4] - The efficiency ratio improved to 70.28% from 76.91% in the prior-year quarter, indicating increased profitability [4] Loan and Deposit Trends - Total loans declined 1.2% sequentially to $49.9 billion as of March 31, 2025 [5] - Total deposits decreased by 3.6% from the previous quarter to$ 61.5 billion [5] Credit Quality - The company recorded a provision for credit loss of $20 million, a 42.9% increase year over year [6] - The allowance for credit losses was$ 719 million, down 1.2% year over year [6] - Total non-performing assets rose 38.7% year over year to $301 million [6] - The allowance for credit losses to total loans ratio was 1.44%, up from 1.43% a year ago, with net charge-offs of$ 26 million, an 85.7% increase year over year [7] Capital Position - Total capital ratio improved to 14.39% from 13.98% in the year-ago quarter [8] - The Common Equity Tier 1 capital ratio increased to 12.05% from 11.48% in the prior-year quarter [8] - The tangible common equity ratio was 7.82%, up from 6.36% in the prior-year quarter [8] Capital Distribution Activities - The company repurchased $50 million of common stock under its share repurchase program [9] Outlook - The company's solid capital position is expected to support capital distribution activities, enhancing investor confidence [10] - Focus on improving operational efficiency is anticipated to bolster financial performance [10] - While the rise in NII and decline in expenses are positive, weak asset quality and declining loan and deposit balances remain concerns [10]