Comerica quarterly net drops nearly 43 pct

Plymouth, ENGLAND (Reuters) - U.S. regional bank Comerica Inc (CMA.N) said on Thursday quarterly earnings fell nearly 43 percent, hurt by weakness in the California residential real estate market and the need to set aside more funds for potential loan losses.

Comerica shares were down 3.9 percent, or $1.35, to $33.20 in early trading on the New York Stock Exchange, making it the second-largest drag on the KBW Banks index .BKX.

First-quarter net income fell to $109 million, or 73 cents per share, from $190 million, or $1.19 per share, a year earlier.

The bank recorded a $159 million provision for loan losses, up from $108 million in the fourth quarter of 2007 and $23 million in the first quarter of 2007.

Earnings from continuing operations were $110 million, or 73 cents a share, compared with $189 million, or $1.19 a share, in the year-ago period.

Analysts on average had forecast earnings of 79 cents a share, according to Reuters Estimates.

Chief Executive Ralph Babb said deterioration in the California market had hampered the bank's overall results but the company was taking steps to lessen its exposure there.

"We are aggressively addressing the situation as the market has continued to deteriorate," he said in a statement accompanying the earnings report.

Comerica's first-quarter net interest income fell to $476 million from $502 million a year earlier.

Net credit-related charge-offs were $110 million, up sharply from $16 million a year earlier.

(Reporting by Lilla Zuill; editing by Mark Porter and John Wallace)