What happened
Comerica (CMA +0.00%) saw its stock price surge 22.5% higher this week, as of Friday at 10 a.m. ET, according to S&P Global Market Intelligence. The stock had been up as much as 24.2% during the week.
The stock remains down about 41% year to date as of Friday morning, trading at around $39 per share.
In general, the markets were up this week, as the S&P 500 gained 2.1%, the Dow Jones Industrial Average rose 0.9%, and the Nasdaq Composite jumped 3.4% this week, as of Friday at 10 a.m. ET.
So what
It was a pretty good week for the stock market, particularly beleaguered bank stocks – which got a nice bounce.
There didn't appear to be any company-specific news that drove the stock higher; rather, it was likely developments within the industry that boosted banks, particularly regional names like Comerica.
NYSE: CMA
Key Data Points
Among those developments, the Federal Deposit Insurance Corp. (FDIC) announced a special assessment late last week to recover losses in the Deposit Insurance Fund (DIF) related to protecting uninsured depositors following two major bank collapses in March. While 113 banks would be subject to the special assessment, including Comerica, banks with higher percentages of uninsured deposits would pay more, as they benefited more after the collapses.
At Comerica, 54% of total deposits were uninsured in the first quarter, which ranked about 15th among banks.
This sent bank stocks higher on Monday, and they popped again later in the week after one of those banks that had a high level of uninsured deposits and was hit hard by the bank failures, Western Alliance Bancorp (WAL 0.29%), posted some good news.
Now what
In an update, Western Alliance said total deposits had grown approximately $1.8 billion since March 31 to $47.6 billion. Also, the amount of insured deposits jumped to 79% of total deposits, up from 68% as of March 31.
It was good news, not only for the company, but a welcome sign for investors that smaller regional banks may be turning the corner as depositors return and are not flocking en masse to bigger banks.
As for Comerica, it seems to have navigated the banking crisis in decent shape, as its deposits held up fairly well, its liquidity is good, and it posted year-over-year net income gains in the quarter. The stock is trading at a low valuation, with a price-to-earnings ratio of just 4.83.
There are some economic headwinds to contend with, so monitor and proceed cautiously with regional banks in general -- even solid ones like Comerica.
