The good news for soon-to-be-Texas-based Comerica
Comerica, which was founded in Detroit back in 1849, has been working very actively to diversify its business outside its Michigan home market. As the auto industry continues to struggle, the region has been experiencing not only slow growth, but also lousy loan performance.
Moving the headquarters to Texas is part of the bank's effort to reinvigorate itself, though even after the move, the vast majority of its banking centers will still be in Michigan. New location openings are focused primarily on Comerica's high-growth regions, specifically California and Texas.
So far this year, it has opened three new branches in California and four in Texas, and for the full year it expects to open 14 and nine new locations in the two states, respectively. While these markets have a heck of a lot more action than Michigan, they're also being targeted by some of Comerica's larger competitors, like Wells Fargo
Metrics-wise, at the end of the quarter, Comerica's loan balance was up about 5% year over year, which is slightly better than the average growth rate it's seen over the past four years. The net interest margin was also up year over year, though the bank expects it to end 2007 somewhat lower. Notably, non-interest-bearing assets have continued to fall, a trend that I'm sure the bank would like to reverse.
Overall, it wasn't a terribly notable quarter for Comerica in either direction. The company continues to trudge through a purgatory of sorts as it tries to revive its business, and the stock is, not surprisingly, acting similarly. For investors, the key will be to watch for continued improvements and more geographic diversification -- success or failure is not going to come in just a couple quarters. Meanwhile, Comerica's dividend yield of 4.3% makes the wait a bit more comfortable.
- No More Surprises From M&T
- The Most Unlikely Growth Stocks
- Many Moving Parts at KeyCorp: Fool by Numbers
- Diversification Pays at Wachovia: Fool by Numbers
Bank of America is a Motley Fool Income Investor recommendation. Find more dividend superstars with a free 30-day trial of James Early's low-risk, high-reward newsletter service.