- Firm hired Boston Consulting to review expenses, revenue
- Comerica has failed to create value for investors, Mayo says
Comerica Inc., the Dallas-based bank that’s helped finance shale drillers, climbed 3.6 percent on news that shareholders are urging the company to explore a sale.
The stock rose to $44.02 at 4:15 p.m. in New York, after reaching $45.09 earlier on Friday. It’s gained about 10 percent since Monday, the day before Comerica said it hired Boston Consulting Group Inc. to help undertake a “comprehensive review” of the company’s expense and revenue base. Investors including Hudson Executive Capital LP are pushing Comerica to sell itself, a person familiar with the matter said, asking not to be identified discussing non-public information.
Chief Executive Officer Ralph Babb has been under pressure after the slump in oil prices drove up bad loans. Comerica, which has a market value of about $7.7 billion, said Tuesday that first-quarter profit dropped 55 percent to $60 million as the bank increased its provision for credit losses more than 10-fold to $148 million, due largely to soured energy loans.
The pressure on Comerica from Hudson and other investors was reported earlier Friday by Dow Jones. Wayne Mielke, a spokesman for Comerica, declined to comment on the sale reports.
The bank had a return on average common shareholders equity of 3.1 percent at the end of March, down from 6 percent as of Dec. 31. The firm should consider selling itself because it hasn’t been able to generate acceptable returns, Mike Mayo, an analyst at CLSA Ltd., said in a Bloomberg Radio interview Friday.
Comerica, Citigroup Inc. and Bank of America Corp. “have failed to create value for every year for the last eight years,” Mayo said. “So our question for the board of directors is, ‘If you’re not getting it done, what is your plan B?’"