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Comerica Leads Bank-Stock Fall as Margins Shrink

Wednesday, 19 Oct 2011 05:30 PM

 Comerica Inc. fell the most in the Standard & Poor’s 500 Financials Index after reporting that net interest margin declined in the third quarter.

Comerica slumped as much as 12 percent, the most since 2009, after the Dallas-based company said its margin slid to 3.18 percent in the quarter from 3.23 percent in the same period a year earlier. M&T Bank Corp., the index’s third-worst performer, dropped as much as 8.9 percent, the most since May, as margin declined to 3.68 percent from 3.87 percent.

The slide in net interest margin, which is the difference between what banks pay to borrow money and what they get for loans and on securities, have squeezed profit at U.S. lenders as interest rates remain near record lows. JPMorgan Chase Co., the biggest U.S. bank by assets, said last week that its margin narrowed to 2.66 percent from 3.01 percent in the third quarter of 2010.

“Comerica was disappointing,” Brian Foran, an analyst at Nomura Holdings Inc. in New York, said Wednesday in a note to clients. “A lot of investors were getting more positive on Comerica into the quarter on the dual thesis of commercial loan growth and rising Libor benefiting net interest margin,” he wrote, referring to the London interbank offered rate.

M&T’s net income declined 7 percent to $164.7 million, the Buffalo, New York-based bank said in a statement. Operating earnings per share, excluding one-time items, were $1.53, compared with the average estimate of $1.71 by 25 analysts in a Bloomberg survey.

Net income at Comerica climbed 66 percent to $98 million, or 51 cents a diluted share, which included a merger and restructuring charge of 11 cents. The average estimate of 30 analysts, excluding one-time items, was 53 cents.

Comerica slid $2.72, or 11 percent, to close at $23.13 in New York and earlier touched $22.85. M&T dropped 5.6 percent to $72.79 after falling as low as $70.21.

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