America (NYSE:CMA) shares rose 8% on Thursday after the company’s financial results post Q4 results up slightly above estimates, driven by higher interest income and stronger loan growth.
The company reported Q4 EPS of $2.58 vs. $ 1.66 in Q4 2021, as revenue increased 36% Y/Y to $1.02B. Interest income grew ~61% to $742M, based on higher short-term rates. Interest rates rose 24 bps sequentially to 3.74%.
Total loans increased 9.5% to $52.38B and total deposits decreased 15.6% to $71.36B. Allowance for bad debts increased to $33M, compared to $28M in Q3 and a benefit of $25M in Q4 2021.
America (CMA) expects FY23 interest income to grow at 17%-20% Y/Y and average loans to grow at 7%-8%. Standard deposits are projected to fall 7%-8% as consumers continue to use higher interest rates.
“CMA’s Q4 core was stronger than we and the market expected, as higher NII and fees overwhelmed spending more than we forecast,” he said. a Piper Sandler researcher Scott Siefers. “The CMA offered Q1/FY23 guidance. According to the consensus, it seems that the NII could be worse, the fees could be higher, but the expenses could be better the bad.”
Piper Sandler rates Comerica (CMA) Overweight, with a price of $85.
Earlier, Odeon Capital upgraded Comerica (CMA) to Buy from Hold.