Comerica Lowers Q2 Deposit Outlook, Expects Loans to Exceed Forecasts

Comerica (CMA) has revised its Q2 2025 outlook, noting that average deposits through May 31 are down $0.6 billion from Q1, driven by declines in middle market, retail, and corporate banking, which will pressure previous deposit guidance. However, average loans are up $200 million quarter-to-date, led by growth in corporate and private banking, leading the bank to expect loan balances to outperform prior estimates. The bank's guidance for net interest income, non-interest income and expenses remain largely unchanged.

Analysis

Comerica Incorporated (CMA) has updated its second-quarter 2025 outlook, revealing a nuanced financial trajectory. Quarter-to-date through May 31, 2025, average deposits have decreased by $0.6 billion compared to the first quarter, with notable declines in middle market, retail, and corporate banking; this trend is expected to exert pressure on the prior guidance which anticipated average deposits to be relatively flat from the first quarter's $61.9 billion. Conversely, CMA's average loans for the same period have risen by $200 million, propelled by growth in corporate and private banking, leading the bank to forecast an outperformance against its earlier guidance of slightly lower average loans than the first quarter's $50.2 billion. Despite these mixed movements in core balance sheet items, Comerica's other key guidance for the second quarter of 2025 remains largely unchanged: net interest income (NII) is projected to be relatively flat from the $575 million recorded in the first quarter, non-interest income is expected to show stronger growth from $254 million in Q1, and non-interest expenses are anticipated to be slightly higher than Q1's $584 million. Furthermore, the full-year 2025 outlooks for NII (a 5-7% increase from 2024), non-interest income (a 2% year-over-year increase), and non-interest expenses (a 2-3% rise from 2024) are reaffirmed. Year-to-date, CMA shares have declined 7%, underperforming the industry's 2.7% decrease, and the stock currently holds a Zacks Rank #3 (Hold). This specific outlook contrasts with peer updates, such as Bank of America and JPMorgan, which are forecasting significant declines in investment banking fees but growth in trading revenues for their respective second quarters.

Key Decisions for Investors

• Investors should closely monitor Comerica's subsequent reports for evidence of stabilization in deposit levels, as the $0.6 billion quarter-to-date decline poses a headwind, despite the offsetting $200 million growth in average loans.
• Assess the extent to which the outperformance in loan growth and guided stronger non-interest income can counteract the impact of deposit outflows on overall profitability and net interest income, particularly in light of the stock's 7% year-to-date underperformance against the industry.
• Given the mixed operational signals—pressure on deposits versus loan growth and largely unchanged NII guidance—and the current Zacks Rank #3 (Hold), maintaining a neutral stance while awaiting further clarity on balance sheet dynamics and margin trends may be prudent before adjusting portfolio allocations.