Comerica Announced Profitable Quarter

Comerica Inc. (NYSE: CMA), the financial services company has posted higher third quarter profits.

The rise in the profits is mainly due to the lower credit costs in addition to Comerica Inc.’s recent acquisition of a smaller, Texas based bank, Sterling Bancshares. Despite of higher profit margins, the forecast for its net interest margin may still go down this quarter.

Due to the economic slowdown and the Federal Reserve’s move to keep the interest rates low in order to stimulate the weak economy has affected the financial institutions. Many banks across the United States including giants like the Bank of America Corp. (NYSE:BAC), Wells Fargo (NYSE: WFC) and other smaller banks are in a tight spot due to this move by the Federal Reserve.

The net interest margin for Comerica Inc. rose by about 4 basis points to 3.18 percent compared to the previous quarter. The company expects the basis points to drop by 3 in the current quarter. The earnings for common share holders saw an increase in July to September period t about $ 97 million at 51 cents per share from the previous $ 59 million at 33 cents a share in the previous year. According to the estimates, the average earnings is expected to be around 54 cents a share.

The Chief Executive Officer, Ralph Babb said in a statement that the acquisition of Sterling was the driving factor behind the company’s $2 billion increase in period end loans in the previous quarter. Comerica Inc. had closed the Sterling Bancshares Inc. deal for a sum of $ 803 billion earlier this year as per the latest SEC filings ad this stock based deal with Sterling Bancshares Inc. was worth more than $ 1billion when it was initially announced.

Dallas based Comerica Inc. founded in 1849 has been expanding its small business segment along with its wealth management services in order to offset the margin pressure. The company has also waived fees on accounts meant for small businesses in order to attract new clients.

The business bank segment saw an increase in its net interest income by more than 30 percent to reach $179 million and even the company’s wealth management segment also made some profits in the third quarter. The net interest income of Comerica Inc. rose by 5 percent to $ 423 million from the previous year. The company’s shares have witnesses a 40 percent fall until now in the current year.

Post Written By: Ed Liston Ed Liston is a senior contributing editor at TheStockMarketWatch.com. An active market watcher and investor, Ed guides an independent team of experienced analysts and writes for multiple stock trader publications. He is widely quoted in various financial publications on the Internet. When Ed is not writing about stocks, investing in stocks, talking about stocks, or otherwise doing something stock related, he likes to go sailing and fishing in his yacht.