Comerica: Commercial Loan Interest Picking Up, Rates Remain A Key Factor

Summary

• The large majority of Comerica's second quarter earnings beat was fueled by lower provision expense (reserve releases), but there was some fee-driven pre-provision income upside.
• There was a little loan growth on an adjusted basis, and it seems like activity is picking up, with a stronger pipeline and improved activity in middle market and CRE.
• Higher rates remain a huge source of upside, as Comerica is one of the most rate-sensitive banks out there.
• With my current expectations, Comerica looks fairly valued to slightly undervalued, but a stronger economy that drives more loan growth and higher rates would lead to meaningful upside.

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Comerica (NYSE:CMA) has made some real progress since my last update on the company, with credit quality in particular improving noticeably faster than I (or the Street) expected. Weak near-term spread leverage remains a real challenge, but Comerica is one of the

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