A mixed earnings report sent shares of Comerica (CMA -4.28%) downward on Monday. By mid-afternoon, the financial services company’s shares were down by more than 5%, a steeper decline than the 3.2% fall of the S&P 500 index at that point in the trading session.
A revenue miss, but a bottom-line beat
In the first quarter, Comerica booked $829 million in total revenue. Although that was up 6% compared to the prior-year period, it didn’t quite meet the analysts’ consensus estimate for revenue of slightly more than $831 million.
The picture was brighter on the bottom line, where the company’s GAAP net income rocketed 25% higher year over year to land at $172 million, or $1.25 per share. The average analyst’s projection was for $1.16.
However, other line items in the report raised concerns. Comerica’s tallies for both its average loan total and average deposit total both fell compared to the first quarter of 2024. The former slipped to $50.2 billion from the year-ago figure of almost $51.4 billion, while the latter dropped to $61.9 billion from $65.3 billion.
Not a good time to mention softness in loans
In the earnings release, CEO Curtis Farmer explained that in the quarter, “Stronger than expected noninterest-bearing balances and proactive deposit pricing strategies offset the impact of muted loan demand.”
During a generally gloomy day for the stock market, investors chose to focus more on the negatives — in this case, putting more weight on the last part of that statement. Particularly given the rising tensions between President Donald Trump and the Federal Reserve — and the consequent uncertainty about interest rates — talk of weakening loan demand is not the sort of thing that the market wants to hear now.
Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
