Comerica posts 2nd-quarter profit on improving credit performance, lack of preferred dividends

Comerica posts 2Q profit as loan defaults decline

DALLAS — Continuing improvement in its business and consumer loans helped regional bank Comerica Inc. post a second-quarter profit Wednesday, reversing a year ago loss.

For the three months ended June 30, Comerica reported net income attributable to common shareholders of $69 million, or 39 cents per share, compared with a net loss attributable to common shareholders of $16 million, or 11 cents per share, in the 2009 second quarter.

Last year’s loss was in part due to the bank’s payment of preferred dividends to the U.S. Treasury under TARP. Comerica redeemed the $2.25 billion of preferred stock issued the government in March, and paid no preferred dividends in the recent quarter.

Analysts polled by Thomson Reuters, on average, expected profit of 23 cents per share.

Chairman and CEO Ralph W. Babb Jr. said the results reflect many positive trends seen over several quarters. “This includes three consecutive quarters of broad-based improvement in credit quality, with leading indicators of future credit quality also pointing positive,” he said.

Comerica said net interest income, or money earned from deposits and loans, rose 5 percent to $422 million from $402 million last year.

Noninterest income, or earnings from fees and charges, plunged 35 percent to $194 million from $298 million last year.

The bank cut its provision for loan losses, the money it sets aside to cover souring loans, by 60 percent to $126 million from $312 million a year ago.

Net credit-related charge-offs, or loans written off as uncollectable, fell 41 percent to $146 million from $248 million a year ago. Babb said there was a “notable decrease in commercial real estate charge-offs,” and the pace of improvement in credit “is significant and faster than we had expected.”

The bank operates in Texas, Arizona, California, Florida and Michigan, with select businesses operating in several other states, as well as in Canada and Mexico.

Nonperforming assets, or loans considered past due and in danger of default, decreased to $1.21 billion from $1.23 billion last year.

Comerica shares fell 59 cents to $36.22 as the broader market declined.