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The results of new stress tests on the nation's largest banks set the financial world abuzz Thursday. But lost in the shuffle were announcements from several smaller institutions, which underwent their own round of stress testing.
March 15 -
Ralph Babb, the chief executive of Comerica in Dallas, tells a research analyst the company may consider in-market and out-of-market deals — its first since taking over Sterling Bancshares last year.
September 7
Comerica Bank (CMA) is generating enough loan growth in its key markets that it feels no pressure to expand through acquisitions, Chairman and Chief Executive Ralph Babb says.
In Texas, where the economy is adding roughly 1,000 new jobs a day, average loan balances increased by 8% over the past year, to $10.1 billion, Comerica said in its first-quarter earnings announcement Tuesday.
Meanwhile, in California, loan balances climbed by more than 13% year over year, to $13.5 billion, aided largely by the strength of the technology sector in Northern California and the rebounding housing market in Southern California.
"We are very comfortable with our footprint today," Babb said in a
Loan growth, combined with improved credit quality and lower overhead, helped boost Comerica's profits by 3% year over year, to $134 million. Its earnings per share of 70 cents were 2 cents better than estimates of analysts polled by Bloomberg.
Following the earnings announcement, Sandler O'Neill & Partners raised its 2013 earnings estimates by 15 cents, to $2.83 per share, and bumped up its 2014 estimates by 30 cents, to $2.80 per share.
In a research note, Sandler O'Neill credited management with continuing "to find ways to maintain earnings in an environment that is not ideal."
Sandler O'Neill gave Comerica high marks for its commitment to cost-cutting. Comerica's noninterest expenses fell 7% year over year, to $416 million, as the company lowered its expenses for salaries and benefits, real estate, advertising and Federal Deposit Insurance Corp. insurance.
Business lending was also a bright spot. Average commercial and industrial loans climbed 13% year over year, to $28 billion, which helped to offset a slowdown in mortgage banking.
Still, Lars Anderson, the vice chairman of the business bank, warned that the pace of commercial lending could slow as competition for loans heats up. In last quarter's conference call Anderson said banks are engaged in a "fistfight" every day for quality loans and he said Tuesday that the lending climate remains "very, very competitive."
But even with organic growth hard to come by, CEO Babb said he expects merger-and-acquisition activity to remain tepid until regulators give banks more clarity on capital requirements.
Banks are "focusing on being conservative …until they get a better feel for where they can go from a leverage standpoint," Babb said on the call.
As for Comerica, Babb is still open to doing a deal, but only if it meshes with the bank's urban focus. In Texas, for example, it operates in and around Austin, Dallas, Houston and San Antonio.
"Our list of strategic options is shorter than it was," Babb said.
