Comerica Q1 earnings miss as Mortgage Banker Finance business faces big hit (NYSE: CMA)

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Comerica (NYSE: CMA) Q1 results came in worse-than-expected as the regional bank’s Mortgage Banker Finance unit got hit with an $ 852M drawdown over the prior quarter.

Also, net interest income of $ 456M in the first quarter slipped from $ 461M in Q4 2021 but elevated from $ 443M in the year-ago quarter. Net interest margin of 2.19% rose from 2.04% in Q4 of last year vs. 2.29% in Q1 2021.

EPS of $ 1.37 missed the consensus of $ 1.38 and fell from $ 1.66 in Q4 2021 and $ 2.43 in Q1 2021.

Q1 noninterest income was $ 473M compared to $ 486M in Q4 2021 and $ 447M in Q1 2021, primarily due to “seasonality and warrant-related activity,” said Curt C. Farmer, chairman and CEO.

Q1 average loans of $ 48.27B rose slightly from $ 47.82B in the previous quarter, though down from $ 50.58B in Q1 2021. On the other hand, Q1 average deposits were $ 79.10B, down from $ 84.53B in Q4 2021 but higher from $ 71.39B in Q1 of last year. “Deposits were impacted by seasonality and customers using balances to fund business activity,” Farmer said.

Furthermore, “We expect fee income to be more robust as we move through the year. Customer sentiment remains good with cautious optimism regarding the economy, which is reflected in our strong pipeline and growing loan commitment levels,” Farmer highlighted.

Earlier this week, Comerica got upgraded to Neutral at Baird.

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