Comerica Incorporated CMA is scheduled to report fourth-quarter 2024 results on Jan. 22, before the opening bell. The bank’s revenues are expected to increase while earnings are likely to decline from the year-ago quarter’s reported figures.
Find the latest EPS estimates and surprises on Zacks Earnings Calendar.
The bank’s earnings for the third quarter of 2024 surpassed the Zacks Consensus Estimate by 16.1%. Results benefited from a rise in the deposit balance and a strong capital position. However, a decline in net interest income (NII) and fee income, along with increased expenses, was a major headwind.
CMA has an impressive surprise history. Its earnings surpassed estimates in the trailing four quarters, the surprise being 16.16%, on average.
Comerica Incorporated Price and EPS Surprise
Comerica Incorporated price-eps-surprise | Comerica Incorporated Quote
The Zacks Consensus Estimate for fourth-quarter earnings of $1.25 per share has been unchanged over the past seven days. This indicates a 14.4% decline from the year-ago quarter’s reported figure.
The consensus estimate for fourth-quarter 2024 revenues is pegged at $834.6 million, implying an increase of 6.7% from the year-ago reported figure.
Factors to Influence CMA’s Q4 Earnings
Loans & NII: The clarity on the Fed’s rate cut path and the stabilizing macroeconomic backdrop are likely to have supported the lending scenario. Per the Fed’s latest data, the demand for overall loans was solid in the fourth quarter.
Given this, the company’s loan demand is likely to have witnessed growth in the quarter to be reported. The Zacks Consensus Estimate of $73.9 billion for average earning assets indicates a marginal sequential increase.
From the end of the third quarter of 2024 until the end of November, the company’s average loans were relatively flat with the third quarter of 2024 figure. The company expects the fourth-quarter average loan balance to be slightly below the third-quarter 2024 reported level.
Average deposits (excluding brokered time deposits) increased $500 million to $63.2 billion from the end of the third quarter of 2024 until the end of November.
The Federal Reserve cut interest rates by 50 basis points to 4.25-4.5% in the fourth quarter. This, along with the rate cut in September, led the funding/deposit costs to stabilize. This is likely to have offered some support to CMA’s NII in the fourth quarter.
The consensus estimate for NII is pegged at $557.7 million, indicating a 4.4% increase from the prior quarter's reported figure. Management expects fourth-quarter NII to increase 1.2% from the $534 million recorded in the prior quarter.
Non-Interest Income: Global mergers and acquisitions (M&As) in the fourth quarter witnessed marked improvement after weakness in 2023 and 2022. Both deal value and volume were solid in the quarter, driven by solid financial performance, buoyant markets, interest rate cuts and a strong U.S. economy.
The IPO market saw signs of cautious optimism, given market volatility, geopolitical challenges and global monetary easing, while bond issuance volumes were decent on favorable economic conditions and corporate spreads at near historical lows despite seasonally slow volumes in December. However, tough scrutiny by antitrust regulators and ongoing geopolitical issues posed challenges.
Thus, the company’s capital market fees are likely to have been negatively impacted in the quarter to be reported. The Zacks Consensus Estimate for capital markets income is pegged at $37.5 million, indicating a sequential fall of 3.7%.
The Zacks Consensus Estimate for service charge on deposit is pegged at $45.7 million, indicating a decline of 0.5% from the prior quarter.
The Zacks Consensus Estimate for card fees is pegged at $63.9 million, indicating a marginal decline from the prior quarter.
The Zacks Consensus Estimate for overall fee income is pinned at $275.7 million, indicating a decline of 2.8% from the previous quarter.
Expenses: The company is expected to have incurred higher expenses due to a rise in salaries and benefits expenditure. Such rising expenses are estimated to have weighed on its expense base to some extent in the quarter under review and hindered bottom-line growth.
Management projects non-interest expense to increase 3% in the fourth quarter of 2024 from the $562 million reported in the third quarter of 2024
Asset Quality: The company is likely to have set aside a substantial amount of money for potential bad loans, given the expectations of higher for longer interest rate backdrop.
The Zacks Consensus Estimate for non-performing loans is pegged at $250.1 million, indicating a marginal rise from the prior quarter's reported figure.
Comerica’s 2024 Outlook
Management expects NII to decrease 13-14% from $2.45 billion in 2023.
The company anticipates non-interest income to be flat year over year at $1.1 billion.
Non-interest expenses are likely to decline 2-3% from the $2.4 billion reported in 2023. On an adjusted basis, the metric is projected to increase 4%.
Average loans are projected to decline 5% from the $53.9 billion reported in 2023.
The average deposits are projected to decline 3-4% from the $66 million recorded in 2023.
Management expects net charge-offs to be below the target of 20-40 basis points.
What Does Our Model Unveil for CMA?
Per our proven model, the chances of Comerica beating estimates this time are low. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. That is not the case here, as you can see below. You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.
Earnings ESP: Comerica has an Earnings ESP of -0.30%.
Zacks Rank: CMA currently carries a Zacks Rank of 3.
Stocks to Consider
Here are a couple of bank stocks that you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat this time:
Hilltop Holdings Inc. HTH is scheduled to release fourth-quarter and 2024 results on Jan. 30. The company, which carries a Zacks Rank of 3 at present, has an Earnings ESP of +33.73%. You can see the complete list of today’s Zacks #1 Rank stocks here.
Quarterly earnings estimates for HTH have been unchanged over the past week at 28 cents.
The Earnings ESP for Zions Bancorporation ZION is +0.66% and it carries a Zacks Rank of 3 at present. The company is slated to report fourth-quarter and 2024 results on Jan. 21.
Over the past seven days, the Zacks Consensus Estimate for ZION’s quarterly earnings has been unchanged at $1.26.
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Today, See These 5 Potential Home Runs >>Comerica Incorporated (CMA) : Free Stock Analysis Report
Zions Bancorporation, N.A. (ZION) : Free Stock Analysis Report
Hilltop Holdings Inc. (HTH) : Free Stock Analysis Report
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