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Mar 31, 2020
Comerica Q1 2020 Earnings Report
Reported a net loss due to large credit reserves and, to a lesser degree, the net impact of the decline in interest rates.
Key Takeaways
Comerica reported a net loss of $65 million for Q1 2020, primarily due to a substantial increase in credit reserves and the impact of declining interest rates. Loans increased by over $3 billion in late March, supporting customer borrowing needs, and average deposits rose by $2.8 billion year-over-year.
Net loss of $65 million, or $0.46 per share
Record $53.5 billion in period-end loans, up $3.1 billion
Allowance for loan losses of $916 million, or 1.71% of total loans
Efficiency ratio of under 57 percent.
Comerica
Comerica
Comerica Revenue by Segment
Comerica Revenue by Geographic Location
Revenue by Segment
Commercial Bank Revenue
CapyFin.comRetail Bank Revenue
CapyFin.comWealth Management Revenue
CapyFin.comFinance/Other Revenue
CapyFin.comRevenue by Geographic Location
Michigan Deposits Revenue
CapyFin.comCalifornia Deposits Revenue
CapyFin.comTexas Deposits Revenue
CapyFin.comOther Markets Deposits Revenue
CapyFin.com Forward Guidance
Based on management expectations for recessionary conditions, Comerica anticipates growth in average loans and deposits, a decrease in net interest income, and stable noninterest income. Provision for credit losses is highly uncertain and will reflect the economic environment. Noninterest expenses are expected to increase, and capital will reflect the suspension of the share repurchase program.
Positive Outlook
- Growth in average loans, reflecting an increase in Mortgage Banker Finance and support of customers' liquidity needs, including through the Paycheck Protection Program, partly offset by customers' reduced working capital and capital expenditure needs.
- Growth in average deposits as customers conserve liquidity and receive benefits of economic stimulus programs, partly offset by customers using cash to meet operating needs.
- Capital to reflect suspension of share repurchase program and focus on supporting customers' financing needs as well as providing an attractive dividend.
- Stable noninterest income with increase in card fees offset by reduced economic activity and lower market-based fees.
- Current reserve is appropriate based on expected recessionary conditions as of March 31, 2020.
Challenges Ahead
- Decrease in net interest income due to the net impact of lower interest rates, partially offset by loan growth.
- Estimated $55 million net reduction from lower interest rates.
- Provision for credit losses highly uncertain, reflective of economic environment, including the effects resulting from the duration and severity of the COVID-19 pandemic.
- Increase in noninterest expenses from higher outside processing expenses and costs related to the COVID-19 pandemic as well as the impact of merit increases, partially offset by continued expense discipline.
Revenue & Expenses
Visualization of income flow from segment revenue to net income