CMA Comerica Inc

Comerica posted revenue and profit increases in its latest quarter and said a cost-cutting plan would save more than previously estimated.

Comerica Inc. said a previously announced plan to cut about 9% of its workforce and close about 8% of its bank network would increase profit by $40 million more than expected, driving pretax benefits of about $180 million in 2017 and about $270 million in 2018. Around two-thirds of the workforce reduction will be completed by year's end. In the quarter, Comerica took a $20 million restructuring charge.

In all, the regional bank reported a profit of $149 million, up from $136 million in the same period a year ago. On a per-share basis, earnings grew to 84 cents from 74 cents.

Revenue in the third-quarter, a combination of net interest income and noninterest income, rose 5.9% to $722 million. Analysts polled by FactSet had anticipated 74 cents in per-share profit and $720.9 million in revenue.

Comerica, which does a chunk of its business in Texas and lends to many companies in the energy sector, has continued to reduce its exposure to energy loans, which are now 5% of its total portfolio, even as they have stabilized. The bank had $2.5 billion in energy business loans compared with $2.7 billion in the previous quarter. The company took Energy net charge-offs of $6 million in the quarter, compared with $32 million in the previous quarter.

Comerica had $631 million of nonaccrual loans in the third quarter, meaning there is uncertainty about whether they will be paid back on time. The bank reported $357 million in nonaccrual loans in the year prior and $605 million in the previous quarter.

Net interest margin, an important measure of lending profitability largely tied to interest rates, was 2.66% in the Sept. quarter, down from 2.74% in the quarter before and up from 2.54% a year prior.

Net interest income increased 6.6% from the same quarter a year before on higher yields on loans and Federal Reserve deposits and earning asset growth.

Fee-based income increased 4.6% to $272 million in the third quarter on an increase in deferred compensation asset returns, card fees and commercial lending fees.

Noninterest expenses rose 7.9% to $493 million on the restructuring and increases in deferred compensation, software expenses and FDIC insurance premiums.

For the fourth current, Comerica said it expects lower noninterest expenses, excluding an estimated $30 million to $35 million in restructuring charges.

Write to Austen Hufford at austen.hufford@wsj.com

(END) Dow Jones Newswires

October 18, 2016 10:05 ET (14:05 GMT)

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