Comerica Inc. (CMA:US) advanced as much as 3.5 percent, the most since April, after the lender posted a second-quarter profit that exceeded analysts’ estimates as fewer borrowers defaulted.
Net income climbed 50 percent to $144 million, or 73 cents a share, from $96 million, or 53 cents, a year earlier, the Dallas-based lender said today in a statement. That beat the average estimate (CMA:US) of 60 cents by analysts in a Bloomberg survey.
Write-offs for soured loans in the three months ended June 30 plunged 50 percent to $45 million from a year earlier and nonperforming loans declined 23 percent to $747 million, the company said. Provision for loan losses, funds set aside to cover future defaults, dropped 83 percent from a year earlier to $8 million, according to the statement.
“Credit quality continued to be strong,” Chief Executive Officer Ralph W. Babb Jr., 63, said in the statement. “We will continue to see the provision and net charge-offs at or near these levels for the remainder of the year.”
Comerica spent $88 million to repurchase 2.9 million shares in the second quarter. The company said it would buy back as much as $375 million of stock through the first quarter of next year after announcing in March that the Federal Reserve had approved the company’s capital plan. In April, the firm raised the quarterly payout (CMA:US) by 50 percent to 15 cents a share.
“With very strong fundamentals, an active share buyback and an increased dividend, Comerica is the best-positioned regional bank in the U.S.,” Kevin Reynolds, an analyst at Memphis, Tennessee-based Wunderlich Securities Inc., said today in a note to clients.
Comerica, the best performer today in the 24-company KBW Bank Index (BKX), climbed 95 cents to $31.76 at 1:54 p.m. in New York and earlier touched $31.89, the biggest advance since (CMA:US) April 17. The shares had gained 19 percent this year through yesterday.
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