Comerica Inc. (CMA) filed Quarterly Report for the period ended 2009-09-30.
Comerica Inc. is a registered bank holding company. Its operations made up of three lines of business: Business Bank Individual Bank and Investment Bank. The Business Bank is comprised of middle market lending asset-based lending large corporate banking treasury management and international financial services. The Individual Bank includes consumer lending consumer deposit gathering mortgage loan origination and servicing small business banking and private banking. The Investment Bank is responsible for the sale of mutual fund and annuity products. Comerica Inc. has a market cap of $4.31 billion; its shares were traded at around $28.5 with and P/S ratio of 1.1. The dividend yield of Comerica Inc. stocks is 0.7%. Comerica Inc. had an annual average earning growth of 14.7% over the past 5 years.
Highlight of Business Operations:
Net income for the three months ended September 30, 2009 was $19 million, a decrease of $9 million, or 37 percent, from $28 million reported for the three months ended September 30, 2008. The decrease in net income in the third quarter 2009 from the comparable prior year quarter resulted primarily from an increase of $139 million in the provision for credit losses ($146 million increase in the provision for loan losses, $7 million decrease in the provision for credit losses on lending-related commitments), and an $81 million decline in net interest income, partially offset by a third quarter 2008 charge of $96 million related to the repurchase of auction-rate securities from certain customers (included in “litigation and operational losses” on the consolidated statements of income) and an $80 million increase in net securities gains. After preferred dividends of $34 million, the net loss applicable to common stock was $15 million for the third quarter 2009, compared to net income applicable to common stock of $28 million in the same period a year ago. The diluted net loss per common share was $0.10 in the third quarter 2009, compared to diluted net income per common share of $0.19 for the same period a year ago.
Net income for the first nine months of 2009 was $46 million, a decrease of $147 million, or 76 percent, from $193 million reported for the nine months ended September 30, 2008. The decrease in net income in the nine months ended September 30, 2009 from the comparable period last year resulted primarily from a $309 million increase in the provision for credit losses ($332 million increase in the provision for loan losses, $23 million decrease in the provision for credit losses on lending-related commitments), a $213 million decline in net interest income and a $66 million increase in Federal Deposit Insurance Corporation (FDIC) insurance expense, partially offset by a $170 million increase in net securities gains, the $96 million third quarter 2008 auction-rate securities charge discussed above and a $63 million decrease in salaries and employee benefits expense. After preferred dividends of $101 million, the net loss applicable to common stock was $55 million for the first nine months of 2009, compared to net income applicable to common stock of $193 million in the same period a year ago. The diluted net loss per common share was $0.36 for the first nine months of 2009, compared to diluted net income per common share of $1.28 for the comparable period last year.
Net interest income was $385 million for the three months ended September 30, 2009, a decrease of $81 million compared to $466 million for the same period in 2008. The decrease in net interest income in the third quarter 2009, compared to the same period in 2008, resulted primarily from a decrease in earning assets (primarily loans), the reduced contribution of noninterest-bearing funds in a significantly lower rate environment and the impact of a higher level of nonaccrual loans. The rate-volume analysis in Table I of this financial review details the components of the change in net interest income on a fully taxable equivalent (FTE) basis for the three months ended September 30, 2009, compared to the same period in the prior year. On a FTE basis, net interest income decreased $80 million to $387 million for the three months ended September 30, 2009, from $467 million for the comparable period in 2008. Average earning assets decreased $2.4 billion, or four percent, to $57.5 billion in the third quarter 2009, compared to the third quarter 2008, primarily due to a $6.7 billion, or 13 percent, decrease in average loans to $44.8 billion, partially offset by increases of $3.5 billion in average interest-bearing deposits with the Federal Reserve Bank and $924 million in average investment securities available-for-sale. The net interest margin (FTE) for the three months ended September 30, 2009 decreased 43 basis points to 2.68 percent, from 3.11 percent for the comparable period in 2008, primarily due to the reasons cited for the decrease in net interest income discussed above. In addition, the net interest margin was reduced by approximately 16 basis points in the third quarter 2009 from excess liquidity, represented by $3.5 billion of average balances deposited with the Federal Reserve Bank. The excess liquidity resulted from strong core deposit growth and sales of mortgage-backed government agency securities at a time when loan demand remained weak.
Net interest income was $1.2 billion for the nine months ended September 30, 2009, a decrease of $213 million compared to $1.4 billion for the same period in 2008. The decrease in net interest income in the nine months ended September 30, 2009, compared to the same period in 2008, was primarily due to the same reasons cited in the quarterly discussion above, partially offset by $38 million tax-related non-cash charges to lease income in the nine months ended September 30, 2008. Table II provides an analysis of net interest income for the first nine months of 2009 on a FTE basis compared to the same period in the prior year. On a FTE basis, net interest income for the nine months ended September 30, 2009 was $1.2 billion, compared to $1.4 billion for the same period in 2008, a decrease of $210 million. Average earning assets decreased $603 million, or one percent, to $59.6 billion for the nine months ended September 30, 2009, compared to $60.2 billion for the same period in the prior year, primarily due to a $4.6 billion, or nine percent, decrease in average loans to $47.3 billion, partially offset by increases of $2.4 billion in average interest-bearing deposits with the Federal Reserve Bank and $1.8 billion in average investment securities
CMA is in the portfolios of Richard Pzena of Pzena Investment Management LLC, HOTCHKIS & WILEY of HOTCHKIS & WILEY Capital Management LLC, David Dreman of Dreman Value Management.
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