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Comerica Inc.'s (CMA) first-quarter earnings rose 26% as the financial-services company posted loan growth and a sharp decrease in loan-loss provisions.
April 17 -
Prosperity's agreement to pay $529 million for American State Financial is one of the priciest deals since Comerica agreed to buy Sterling Bancshares more than a year ago, but the reaction to it is much more positive than it was to Comerica's deal.
February 27 -
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April 24
Comerica (CMA) executives were bullish on business lending Tuesday.
"We are seeing a very broad-based kind of lift in (borrowing) activity," Lars Anderson, the vice chairman of Comerica's business bank, said in a conference call with analysts about first-quarter results. "There is no particular business or industry that is carrying the day for us."
Demand for credit is up among energy, technology, life sciences and other types of companies, he said.
Anderson reaffirmed Comerica's forecast that it expects average loan growth of 2% to 5% this year. Lending in the quarter rose nearly 7% to $42.3 billion compared with a year earlier, the Dallas company reported.
Overall lending increased from the fourth quarter in four of the Dallas-based banks' six market areas: the Midwest, West, Texas and international operations. Loans elsewhere in the U.S. were flat, and loans declined modestly in Florida.
Overall, "there is expansion of plants, equipment and we're seeing some hiring going on in particular industries," Anderson said.
Though its commercial lending increased for the fourth consecutive quarter, Comerica's loan utilization rates remained flat at roughly 47%, Chief Executive Ralph W. Babb Jr. said.
Commercial customers — particularly midsize businesses — are flush with liquidity and continuing to save, he said. That was reflected in Comerica's higher business bank deposits, Babb said. Loan demand remains tempered by continued anxiety about the economy.
"People are being more cautious," Babb said.
It aims to use excess capital to repurchase stock, make loans and perhaps increase its dividend to 15 cents a share per quarter from 10 cents a share per quarter, executives said. It will consider the dividend increase during its board meeting next week.
Regulators gave Comerica permission in March to repurchase up to $375 million of shares through the first quarter of 2013. It purchased $33 million of its shares in the first quarter and will likely continue to buy back shares throughout the year as its shares trade at a relatively cheap multiple of one times tangible book, Babb said.
Its shares rose 3.5% to $31.95 on Tuesday.
Comerica
Comerica is primarily a business lender with $62 billion of assets and branches in Arizona, California, Florida and Michigan.
Provisions for loan losses declined 53% to $23 million year over year. Average deposits rose 19%, or $7.7 billion, to $48.3 billion. Net interest income of $443 million was up 12% from a year earlier, while noninterest income was flat at $206 million.
