Comerica Loses 8% on Deal News
Wednesday was Wall Street’s first chance to vote on Comerica Inc.’s proposed purchase of Imperial Bancorp--and it wasn’t exactly a vote of confidence.
Shares of the Detroit-based banking company tumbled more than 8%, closing down $5.19 at $55.13 in New York Stock Exchange trading. The deal was announced before the market opened Wednesday morning.
Comerica is acquiring Inglewood-based Imperial in a stock swap, and the slide in Comerica’s share price reduced the value of the deal to $1.15 billion from $1.25 billion when announced. Based on Wednesday’s closing prices, the deal values Imperial at $25.38 a share--down from $27.74. Imperial’s stock rose 13 cents to $24.44 in NYSE trading Wednesday.
Investors fretted that Imperial’s poorer loan quality would weigh on the more conservative Comerica’s profit. Imperial Bancorp’s earnings suffered in recent quarters as the slowing U.S. economy made it difficult for some of its customers to pay back loans.
“That’s what makes people nervous,” said Steven Wharton, an analyst at Loomis, Sayles & Co.
Keefe, Bruyette & Woods, a New York securities firm, estimates Imperial Bancorp’s bad loans accounted for about 1.6% of total loans at the end of September. The industry average is about 0.7%, and Comerica’s ratio of bad loans to total loans is 0.59%.
