Comerica Lowers Q2 Deposit Outlook, Expects Loans to Exceed Forecasts

Comerica (CMA) revised its Q2 2025 outlook, now anticipating a decline in average deposits due to weakness in middle market and corporate banking, with quarter-to-date deposits down $0.6 billion from Q1. However, loan balances are expected to outperform previous guidance, with quarter-to-date loans up $200 million driven by corporate and private banking growth; the bank previously expected a slight decline. Comerica's net interest income is projected to be relatively flat compared to Q1, while non-interest income is expected to register stronger growth.

Analysis

Comerica Incorporated (CMA) has issued a revised outlook for its second-quarter 2025, indicating a divergence in its core balance sheet components: average deposits are now expected to decline, a shift from previous guidance of relatively flat performance compared to the first quarter's $61.9 billion, with a $0.6 billion decrease observed quarter-to-date through May 31, 2025, primarily due to softness in middle market, retail, and corporate banking. Conversely, average loan balances are projected to outperform earlier forecasts of a slight decline from the first-quarter balance of $50.2 billion, having increased by $200 million quarter-to-date, driven by growth in corporate and private banking, partially offset by dips in equity fund services and national dealer services. Despite these mixed signals on the balance sheet, Comerica's guidance for second-quarter net interest income (NII) remains relatively flat compared to the $575 million in Q1, and the full-year 2025 NII growth forecast of 5-7% is unchanged. Non-interest income is anticipated to show stronger growth in Q2 from Q1's $254 million, with a 2% year-over-year increase projected for 2025, while non-interest expenses are expected to rise slightly in Q2 and by 2-3% for the full year. This update comes as CMA shares have underperformed the industry, declining 7% year-to-date versus the industry's 2.7% fall, and against a backdrop where larger banks like Bank of America and JPMorgan project declining investment banking fees but stronger trading revenues for Q2.

Key Decisions for Investors

• Investors should carefully scrutinize Comerica's ability to stabilize deposit outflows in the coming months, as sustained pressure could impact net interest margins despite the currently stable NII outlook for Q2.
• The outperformance in loan growth, particularly within corporate and private banking, warrants attention for its potential to offset deposit challenges and contribute to earnings, though the sustainability of this loan demand should be assessed.
• Considering CMA's year-to-date stock underperformance and the mixed operational revisions, a re-evaluation of positions may be warranted, weighing the negative deposit trends against the positive loan momentum and maintained profitability guidance for Q2 and the full year.