Comerica Inc. advanced 3.8 percent, the most since March, after posting a second-quarter profit that exceeded analysts’ estimates as fewer borrowers defaulted.
Net income climbed 50 percent to $144 million, or 73 cents a share, from $96 million, or 53 cents, a year earlier, the Dallas-based lender said today in a statement. That beat the average estimate of 60 cents by analysts in a Bloomberg survey.
Write-offs for soured loans in the three months ended June 30 plunged 50 percent to $45 million from a year earlier and nonperforming loans declined 23 percent to $747 million, the company said. Provision for loan losses, funds set aside to cover future defaults, dropped 83 percent to $8 million, the company said.
“Credit quality continued to be strong,” Chief Executive Officer Ralph W. Babb Jr., 63, said in the statement. “We will continue to see the provision and net charge-offs at or near these levels for the remainder of the year.”
Comerica spent $88 million to repurchase 2.9 million shares in the second quarter. The company said it would buy back as much as $375 million of stock through the first quarter of next year after announcing in March that the Federal Reserve had approved the firm’s capital plan. In April, the lender raised the quarterly payout by 50 percent to 15 cents a share.
“With very strong fundamentals, an active share buyback and an increased dividend, Comerica is the best-positioned regional bank in the U.S.,” Kevin Reynolds, an analyst at Memphis, Tennessee-based Wunderlich Securities Inc., said today in a note to clients.
Comerica, the best performer today in the KBW Bank Index of 24 U.S. lenders, advanced $1.18 to $31.99 in New York, the biggest gain since March 15. The shares have climbed 24 percent this year.