UPDATE 2-Comerica profit trails Wall Street view; shares fall

* Sees FY net charge offs lower the prior expectation

* Sees Q4 NIM between 3.30-3.35 pct

* Q3 EPS $0.33 vs est. $0.41

* Q3 non-interest income down 41 pct to $186 mln

* Shares fall 10 percent.
(Adds conference call details, analyst comments, updates share
movement)

By Jochelle Mendonca and Tenzin Dekeva

BANGALORE, Oct 20 (BestGrowthStock) – U.S. regional bank Comerica
Inc (CMA.N: ) posted a quarterly profit that missed Wall Street
estimates as it earned less from fees and services, and saw a
sequential drop in margins, triggering a 10 percent fall in its
shares.

However, on a post-earnings conference call, the lender
said it expected its net interest margin to grow in the fourth
quarter and stabilize into 2011.

“They are expecting the margin to be between 3.30-3.35
percent and then be stable. That’s a good sign, with interest
rates being low, that’s good guidance,” Raymond James analyst
Michael Rose said.

Comerica, which has branches in California, Florida,
Arizona, Michigan and Texas, is also showing signs of improving
credit quality and sees charge-offs for the year to be lower
than it had previously forecast

It also expects loan-loss provision to be at a lower level
than charge-offs going forward. For the third quarter, Comerica
charged off $132 million of loans and set aside $122 million to
cover bad loans.

Comerica is one of the few regional banks that has paid off
the funds it received from the Troubled Asset Relief Program
(TARP) and redeemed its trust preferred securities (TRuPs).

“With no TARP and no TRuPs, I certainly think they’re going
to be on the prowl for acquisitions,” analyst Rose said.

SHRINKING MARGINS, REGULATIONS HURT Q3

Non-interest income, which fell 41 percent to $186 million
in the latest quarter, is expected to see a sequential low
single-digit fall in the fourth quarter.

U.S. financial regulations limit banks’ abilities to charge
fees on overdraft protection, and credit and debit card
transactions, hurting fee income.

“Revenues are going to be hard to come by. I think it will
be tough to grow top-line revenue from here,” Rose said.

Net interest margin, the difference between the interest a
bank earns on loans and pays out on deposits, fell 5 basis
points to 3.23 percent from the prior quarter.

Third-quarter net income attributable to common shares was
$59 million, or 33 cents a share, compared with a loss of $16
million, or 10 cents a share, last year.

Analysts expected the company to earn 41 cents a share,
according to Thomson Reuters I/B/E/S.

Quarterly provisions for bad loans fell 61 percent.

As of Sept 30, Comerica had total assets of $55 billion.

Dallas-based Comerica’s shares, which have rallied 31
percent in the past year, fell 10 percent to $34.62 in early
trade. They pared some loss to trade down 8 percent at $35.51
in morning trade Wednesday on the New York Stock Exchange.

The KBW regional bank index (.KRX: ) was down 1.18 pct.
(Reporting by Tenzin Dekeva and Jochelle Mendonca in
Bangalore; Editing by Anil D’Silva, Jarshad Kakkrakandy)

UPDATE 2-Comerica profit trails Wall Street view; shares fall