Comerica Q1 Profit Impacted By Oil And Gas Cycle, Falls Shy Of Estimates

Comerica Incorporation CMA reported 55.2 percent drop in its net income to $60 million for the first quarter from $134 million in the year-ago quarter. Similarly, earnings plunged 53.4 percent to $0.34 from $0.73 in the same period last year.

Comerica's total revenue dipped 2.5 percent to $693 million from $711 million in the previous year quarter. This consisted of net interest income of $447 million and non-interest income of $246 million compared to $433 million and $268 million respectively in the comparable period. Street analysts expected the company to earn $0.45 on revenue of $708.94 million.

Reacting to the lower profit, the company's Chairman and CEO, Ralph Babb, said "Our first quarter results were impacted by the current oil and gas cycle, as we significantly increased our reserve for loan losses. We continue to be prudent in our reserving approach. While this approach resulted in a higher provision this quarter, our fundamental view of the energy sector has not changed significantly. Additionally, during the quarter we benefited from the December short-term rate increase, with loan yields increasing and helping to drive a $14 million increase in net interest income."

Moving ahead, Comerica said it unveiled a thorough review of its expense and revenue base to enhance profitability. The review is currently underway and would include the assistance of the Boston Consulting Group. The company expects to provide more information around the opportunities identified by the next quarterly earnings announcement.

Babb said further, "We operate Comerica for the ultimate benefit of our shareholders, and all of our actions will be directed to maximize value, while not compromising our commitment to our clients, culture, regulatory standing, responsible underwriting and strong risk management." He concluded by saying that "We have been undertaking a process through which we are identifying meaningful opportunities to enhance revenue, operate more efficiently and lower expenses, with the goal of building a more profitable organization that is better able to drive enhanced long-term value for shareholders. We are going to pursue our cost and revenue initiative with the urgency it deserves and continue to utilize our strengths and competitive position to improve our results."

On Monday, the stock closed with a gain of 1.42 percent.