Comerica's Q3 Earnings to be Hurt by Higher Expenses & Lower NII

Comerica Incorporated CMA is scheduled to report third-quarter 2025 results on Oct. 17, before the opening bell. The bank’s revenues are expected to have increased, while earnings are likely to have declined from the year-ago quarter’s reported figures.

The bank’s earnings for the second quarter of 2025 beat the Zacks Consensus Estimate. Results benefited from higher net interest income (NII) growth, partially offset by lower non-interest income and higher expenses.

CMA has a decent earnings surprise history. Its earnings surpassed estimates in three of the trailing four quarters and missed once, the surprise being 9.30%, on average.

Comerica Incorporated Price and EPS Surprise

Comerica Incorporated price-eps-surprise | Comerica Incorporated Quote

The Zacks Consensus Estimate for third-quarter 2025 earnings of $1.28 per share has remained unchanged over the past seven days. This indicates a 6.6% decline from the year-ago quarter’s reported figure.

The consensus estimate for third-quarter 2025 revenues is pegged at $843.6 million, implying a 4% increase from the year-ago reported figure.

Factors to Influence CMA’s Q3 Earnings

Loans & NII: Despite uncertainties surrounding tariff policies, lending activity remained decent in the third quarter, supported by improving macroeconomic clarity. Per the Fed’s latest data, the demand for overall loans was modest in the quarter.
 
From the end of the second quarter of 2025 through August 2025, the company’s average loans remained relatively flat on a sequential basis. Management expects seasonality to exert slight pressure on its earlier guidance that average loans would exceed the second-quarter 2025 level of $50.7 billion.
 
Given this, CMA’s average earning assets are likely to have witnessed modest growth in the quarter to be reported. The Zacks Consensus Estimate of $71.1 billion for average earning assets indicates a 1% increase on a sequential basis.

The Federal Reserve reduced interest rates to 4-4.25% near the end of the third quarter. This is unlikely to have a negative impact on CMA’s NII as the yields remained high for most of the quarter, while funding costs are likely to have stabilized.

The consensus estimate for NII is pegged at $569.4 million, indicating a 1% decline from the prior quarter's reported figure. Management expects third-quarter NII to be slightly down from the prior quarter’s figure of $575 million.

Non-Interest Income: Global mergers and acquisitions (M&As) in the third quarter of 2025 were impressive. Markets plunged in early April and May after Trump announced sweeping tariffs, rattling business confidence. As corporates adapted to the rapidly evolving geopolitical and macroeconomic scenarios, deal-making activity picked up.

The IPO market in the third quarter performed impressively, with a significant increase in both the number of IPOs and the amount of capital raised. This was driven by several factors, including strategic tariff pauses and positive economic data, which fueled the rise. Further, global bond issuance volume was decent.
 
Thus, the company’s capital market fees are likely to have witnessed decent growth in the quarter to be reported. The Zacks Consensus Estimate for capital markets income is pegged at $44.1 million, indicating a 5% sequential rise.

Average deposits (excluding brokered time deposits) rose 2.3% to $62.6 billion from the end of the second quarter through August 2025. Management now expects average deposits to exceed its earlier guidance of being modestly higher than the second-quarter 2025 level of $61.3 billion. As such, the company’s service charges on deposits are likely to have risen. The Zacks Consensus Estimate for service charge on deposit is pegged at $47.3 million, indicating an increase of 0.7% from the prior quarter’s actual.

The Zacks Consensus Estimate for card fees is pegged at $61.1 million, indicating a 3.5% rise from the prior quarter.

The Zacks Consensus Estimate for overall fee income is pinned at $274.2 million, indicating a marginal increase from the previous quarter’s actual. Management expects non-interest income to be relatively flat from the prior quarter’s actual of $274 million.

Expenses: The company is expected to have incurred higher expenses due to higher compensation expenses and lower gains on the sale of real estate. Such rising expenses are estimated to have weighed on its expense base to some extent in the quarter under review and hindered bottom-line growth.

Management projects non-interest expenses to increase slightly from the second-quarter 2025 reported level of $561 million as the company continues to balance strategic and risk management investments with the drive toward efficiency.

Asset Quality: The company is unlikely to have set aside a significant amount of money for potential bad loans, given the expectations of potential interest rate cuts as signaled by the Fed alongside improving macroeconomic clarity.

The Zacks Consensus Estimate for non-performing loans is pegged at $249 million, indicating a marginal rise from the prior quarter's reported figure.

What Does Our Model Unveil for CMA?

Per our proven model, the chances of Comerica beating estimates this time are low. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. That is not the case here, as you can see below. You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.

Earnings ESP: Comerica has an Earnings ESP of -1.92%.

Zacks Rank: CMA currently carries a Zacks Rank of 3.

Stocks to Consider

Here are some bank stocks that you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat this time around.

The Earnings ESP for First Horizon Corporation FHN is +1.20% and it carries a Zacks Rank #2 at present. The company is slated to report third-quarter 2025 results on Oct. 15.

Over the past seven days, the Zacks Consensus Estimate for FHN’s quarterly earnings has been unchanged at 45 cents per share.

Truist Financial TFC is scheduled to announce third-quarter 2025 results on Oct. 17. The company has a Zacks Rank #3 at present and an Earnings ESP of +0.68%.

Quarterly earnings estimates for TFC have remained unchanged at 98 cents per share over the past week.

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This article originally published on Zacks Investment Research (zacks.com).

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