Comerica reduces 2025 guidance, may scale back investments

Shelby Tauber/Bloomberg

Comerica may adjust the pace of its spending this year, depending on how the economy performs and whether loan demand returns, executives said Monday.

The Dallas-based regional bank doesn't plan to walk away from in-progress investments, but how quickly those investments are made will be based on the company's revenue trajectory, which will be shaped by the broader economy.

"We are very committed to the things that we have in flight — the expansion of many of our businesses, product development technology, expansion into new markets that we've talked about previously," Chairman and CEO Curtis Farmer said during the bank's first-quarter earnings call. "But the pace upon which we are doing some of those things could be calibrated if we really do see a more elongated disruption to the market or certainly if we saw a recession."

On Monday, Comerica became the latest bank to tweak its 2025 guidance, largely in response to widespread economic uncertainty in the wake of President Donald Trump's aggressive tariffs plan, which some fear could lead to a recession. Like many of its peers, Comerica is not currently accounting for a recession in its full-year guidance.

Still, the $77.6 billion-asset bank made downward revisions to its outlook for average loans, net interest income, fee income and expenses. Loan growth, or the lack thereof, is a big part of that story.

Comerica now expects average loans to be down 1% to 2% for the year, versus its January prediction that they would be flat or up 1%. While loan pipelines and activity levels are strong, the bank expects its customers to wait for better visibility into how the economy will shake out before their demand for loans picks up, Chief Financial Officer James Herzog said on the call.

Average loans will likely "move down slightly" compared with the first quarter, but loan growth should resume in the back half of the year, Herzog said. In the first quarter, average loans were $50.2 billion, down 2.3%, compared with $51.4 billion in the year-ago period.

Borrowers in different parts of Comerica's footprint are showing varying degrees of hesitation around lending, said Peter Sefzik, the company's chief banking officer. Markets such as Michigan are showing more concern around middle-market-type lending than markets such as Texas, he said.

"It really kind of depends on the business. It depends on the type of services they do [and] geographically where they are," Sefzik said. "But I think in the near term … there's a lot of folks that are pulling their foot off the accelerator, but they're not necessarily putting the brakes on."

For the full year, Comerica's expenses are now expected to rise 2% to 3%, a slight revision from the 3% growth the bank predicted in January. Expenses in the first quarter fell 3.2% year over year.

Enforcement

CFPB drops lawsuit against Comerica Bank, without prejudice

The Consumer Financial Protection Bureau had accused the Dallas bank of "deliberately disconnecting 24 million customer service calls" among other "unfair" acts. But the motion to dismiss allows the CFPB to refile the case again.

By Kate Berry

April 11

Overall, Comerica reported a solid first quarter. Net income was $172 million, up 25% from $138 million in the year-ago period. Earnings per share were $1.25, beating the $1.17 average estimate of analysts polled by S&P Capital IQ.

Net interest income was $575 million during the first quarter, up about 4.9% year over year. Fee income also rose, coming in at $254 million, up more than 7% from the same quarter last year.

The company is calling for 2025 net interest income to rise 5% to 7% year over year and fee income to rise about 2%. In January, executives were calling for 4% growth in fee income.

Comerica's share price was up about 2% in early morning trading on Monday, but by midday it had fallen by nearly 6%.

U.S. stocks generally fell sharply on Monday after Trump attacked Federal Reserve Chairman Jerome Powell on social media, describing Powell as "a major loser" and calling for "preemptive cuts" in interest rates.

Last week, Trump criticized the central bank's reluctance to lower interest rates and endorsed the "termination" of Powell, saying in a social media post that the Fed chairman's exit "can't come fast enough."