October 8, 2024
Shares of Comerica ( CMA ) tumbled Friday despite second-quarter results beating estimates, as the regional bank said it has been informed by the U.S. Treasury that it likely won’t be selected to continue exclusively providing the Direct Express card.
Comerica’s quarterly earnings surpassed analysts’ expectations, but profits and net interest income (NII ) fell year-over-year, as greater deposit costs have offset the benefits of higher interest rates for both regional and big banks .
Comerica’s net income fell to $206 million from $273 million in the same quarter last year, but topped the $165.4 million consensus estimate of analysts compiled by Visible Alpha.
The bank provided an update on its partnership with the U.S. Treasury , which it has worked with since 2008 to provide the Direct Express card, a way to distribute federal benefits to those who may not have a bank account. Comerica said the card had “approximately 4.5 million federal benefit recipients as of June 30, 2024.”
The Treasury has given Comerica preliminary notice that it likely won’t be chosen to continue offering the card, after being selected to support the program in 2008, 2014, and 2020. Comerica said its contract with the Treasury expires early next year.
Comerica shares sank 12% to $49.50 as of 11:10 a.m. ET Friday to fall into negative territory for the year.
