Comerica (CMA) Q3 2024 earnings summary

Executive summary

• Q3 2024 net income was $184 million ($1.33 per share), with adjusted EPS of $1.37, reflecting strong deposit growth, stable net interest income, and robust credit quality despite muted loan demand.

• Average loans declined modestly, while average deposits increased 1.3% sequentially, supporting net interest income outperformance.

• Tangible book value per share grew 23% year-over-year, driven by improved AOCI from a downward rate curve shift.

• Credit quality remained solid, with net charge-offs at 0.08% of average loans and allowance for credit losses at 1.43% of total loans.

• Customers remain cautiously optimistic, awaiting further rate cuts and post-election clarity for more significant reinvestment.

Financial highlights

• Net interest income was $534 million in Q3, stable sequentially; net interest margin declined 6 basis points to 2.80%.

• Noninterest income decreased $14 million to $277 million, mainly due to lower risk management hedging and Visa Class B share-related income.

• Noninterest expenses rose $7 million to $562 million, driven by higher salaries and benefits, partially offset by lower FDIC insurance expense.

• CET1 ratio increased to 11.97%, well above the 10% strategic target.

• Allowance for credit losses as a percentage of loans: 1.43% at September 30, 2024.

Outlook and guidance

• 2024 average loans projected to be 5% lower than 2023 due to muted demand and optimization efforts.

• Full-year average deposits expected to be down 3%-4% from 2023, mainly due to brokered time deposit reductions.

• Full-year 2024 net interest income expected to decline 13%-14% vs. 2023, with Q4 NII projected to grow 6% over Q3.

• CET1 ratio expected to remain well above 10% through year-end, even with resumed share repurchases.

• Management expects credit migration to remain manageable and sees potential for favorable trends if rate declines materialize.