Regional bank Comerica Inc. said Tuesday that its first-quarter profit rose 27 percent, as improving credit conditions cut loan losses and lending increased.
The results widely beat Wall Street expectations and Comerica also said its board will consider increasing the company's dividend, by 50 percent to 15 cents, when it meets next week. Shares rose 5 percent in late morning trading.
Comercia said that during the quarter ended March 31, its net income attributable to common shareholders was $129 million, or 66 cents per share, compared with $102 million, or 57 cents per share, in the first three months in 2011.
The results beat analyst expectations for net income of 55 cents per share, according to a survey by FactSet.
Comerica said that the amount of money it sets aside for loan losses dropped by more than half to $23 million in the quarter from $49 million the year before.
The company also grew its loan book, driven in part by an improving commercial loan business. Total loans increased 7 percent to $42.3 billion. Total deposits increased 19 percent to $48.3 million. Net interest income, the money banks make from loans and deposits, grew 12 percent to $443 million.
Noninterest income, money earned from fees and other sources, was nearly unchanged at $206 million.
CEO Ralph Babb Jr. said that the Federal Reserve's approval of the Dallas bank's capital plan has given the company leeway to give more cash back to shareholders. Apart from the proposed dividend increase, the board has already approved plans to buy back up to $375 million in stock through the first quarter of 2013. Babb said the firm bought back $33 million in stock in the January-March quarter.
Shares rose $1.52 to $32.38 in late morning trading. Comerica is up about 20 percent in 2012. Shares have been steadily climbing since early October, when fears of global financial turmoil drove down many banking stocks.