Comerica to Trim 9% of Workforce by 2017 in Cost-Cutting Effortby
Business lender seeks savings of $160 million by end of 2018
Second-quarter net income falls 23 percent to $104 million
Comerica also will close or consolidate about 40 branches and outsource some functions, the business lender said Tuesday in a statement that also included second-quarter results. The company said it expects to reduce expenses $110 million by the end of 2017, and $160 million by year-end 2018. Comerica had 8,533 full-time employees as of Dec. 31.
“This initiative fundamentally transforms the way we operate to drive further efficiency and revenue growth,” Chief Executive Officer Ralph W. Babb Jr. said in the statement. “We are confident the initiative will improve profitability, despite current market conditions and a tough banking environment."
Comerica hired Boston Consulting Group in April to review its expense and revenue base after investors urged the company to explore a sale. The company decided not to sellamid concerns over Wall Street’s negative reaction to recent bank deals and government aversion to big bank mergers, people familiar with the matter said at the time.
“You need to stop and re-look at and challenge and that’s one of the reasons that we did it,” Babb said on a call with analysts.
Second-quarter net income fell 23 percent to $104 million, or 58 cents a share, from $135 million, or 73 cents, a year earlier, according to the statement. Profit excluding a $34 million restructuring charge tied to job cuts was 77 cents a share, beating the 69-cent average estimate of 30 analysts surveyed by Bloomberg.
Revenue climbed 5.2 percent to $714 million, according to the statement, falling short of analysts’ estimates of $715.4 million. The lender said its efficiency program should increase revenue by about $30 million by the end of 2017, and about $70 million by year-end 2018.
Comerica shares gained 0.6 percent to $43.98 at 9:32 a.m. in New York. The stock gained 5.6 percent this year, the second-best performance in the 24-company KBW Bank Index.