Comerica's Q1 Earnings to be Hurt by High Expenses, Muted Loan Demand

Core Viewpoint - Comerica Incorporated (CMA) is expected to report an increase in revenues but a decline in earnings for the first quarter of 2025 compared to the previous year [1][3]. Financial Performance - The earnings for the fourth quarter of 2024 missed the Zacks Consensus Estimate, primarily due to a decline in net interest income (NII) and weak asset quality, although a rise in deposit balance and solid fee income growth provided some support [2]. - The Zacks Consensus Estimate for first-quarter 2025 earnings is $1.14 per share, reflecting an 11.6$829.6 million, indicating a 5.9% increase from the previous year [3]. Loan and Asset Quality - The lending environment was not favorable in the first quarter, with modest demand for loans due to market uncertainties stemming from tariff plans [4]. - Average loans were marginally down sequentially, with management expecting them to remain flat compared to the fourth quarter of 2024 [4]. - The Zacks Consensus Estimate for average earning assets is $71.2 billion, indicating a 1.2$566.9 million, reflecting a 1.4% decline from the prior quarter [6]. - Management anticipates a decline of 1-2% in NII from the previous quarter [6]. Non-Interest Income - Global M&A activities showed modest growth, primarily in the Asia Pacific region, but overall market volatility and economic uncertainty led to cautious behavior among companies regarding M&A [7]. - The Zacks Consensus Estimate for capital markets income is $36.7 million, indicating a marginal sequential rise [8]. - The overall fee income estimate is$266.3 million, reflecting a 1% decline from the previous quarter [11]. Deposits and Service Charges - Average deposits (excluding brokered time deposits) declined 2.3% to $61.9 billion from the end of the fourth quarter of 2024 [9]. - The Zacks Consensus Estimate for service charges on deposits is$46.1 million, indicating a 2% decline from the prior quarter [10]. Expenses and Asset Quality - The company is expected to incur higher expenses due to seasonally higher compensation costs and lower gains on real estate sales, with non-interest expenses projected to increase by 2% from the fourth quarter of 2024 [12]. - The Zacks Consensus Estimate for non-performing loans is $317.1 million, indicating a 3% rise from the prior quarter [13]. Earnings Outlook - The likelihood of Comerica beating earnings estimates is low, with an Earnings ESP of -0.21% and a Zacks Rank of 3 [14].