Comerica Q3 Profit Rises, Tops Estimates

(RTTNews) - Comerica Inc. (CMA) reported that its net income attributable to common shares for the third-quarter increased to $148 million or $0.84 per share from $134 million or $0.74 per share in the same quarter last year. Analysts polled by Thomson Reuters expected the company to report earnings of $0.74 per share for the quarter. Analysts' estimates typically exclude special items.

Net interest income was $450 million, up from $422 million in the previous year. Total noninterest income grew to $272 million from $260 million in the prior year.

Comerica also continued the implementation of its efficiency and revenue initiative or "GEAR Up", which is expected to drive additional annual pre-tax income of approximately $180 million by year-end 2017 and $270 million by year-end 2018.

The GEAR Up initiative now includes expected pre-tax benefits of approximately $180 million in full-year 2017 and approximately $270 million in full-year 2018. Additional initiatives include a new retirement program that will replace the current pension plan and retirement account plan for most employees effective January 1, 2017.

Active pension plan participants age 60 or older as of December 31, 2016 and current retirees will not be impacted. This initiative is expected to result in annual savings of approximately $35 million in full-year 2017 . The initiative is also expected to reduce full-year 2016 pension expense to $7 million, resulting in a $4 million credit in the fourth quarter. In addition, streamlining additional operations and administrative support functions is expected to add about $5 million to the initial target.

Expense reduction targets have been increased to approximately $150 million for full-year 2017, which increases to approximately $200 million for full-year 2018. This is to be achieved through the additional actions identified above as well as the previously announced reduction in workforce, streamlining operational processes, real estate optimization including consolidating 38 banking centers, selective outsourcing of technology functions and reduction of technology system applications. Approximately two-thirds of the workforce reduction target will be completed by year-end 2016.

Revenue enhancements are unchanged and are expected to be approximately $30 million for full-year 2017, which increase to approximately $70 million for full-year 2018, through expanded product offerings, enhanced sales tools and training and improved customer analytics to drive opportunities.

Total expected pre-tax restructuring charges of $140 million to $160 million to be incurred through 2018 are unchanged.

For fourth quarter 2016 compared to third quarter 2016, the company expects net interest income to be slightly higher, reflecting benefits from a decline in wholesale funding costs and an increase in LIBOR. Noninterest income relatively stable, excluding income from bank-owned life insurance and deferred compensation asset returns, with fee income expected to remain strong at third quarter 2016 levels.