U.S. Markets closed
  • S&P 500

    4,202.23
    -30.37 (-0.72%)
     
  • Dow 30

    34,859.56
    +81.80 (+0.24%)
     
  • Nasdaq

    13,443.47
    -308.77 (-2.25%)
     
  • Russell 2000

    2,226.75
    -44.88 (-1.98%)
     
  • Crude Oil

    64.82
    -0.08 (-0.12%)
     
  • Gold

    1,837.10
    +5.80 (+0.32%)
     
  • Silver

    27.45
    -0.01 (-0.04%)
     
  • EUR/USD

    1.2149
    -0.0019 (-0.1579%)
     
  • 10-Yr Bond

    1.6020
    +0.0250 (+1.59%)
     
  • Vix

    18.59
    +1.90 (+11.38%)
     
  • GBP/USD

    1.4135
    +0.0146 (+1.0418%)
     
  • USD/JPY

    108.7920
    +0.2100 (+0.1934%)
     
  • BTC-USD

    54,887.60
    -2,744.08 (-4.76%)
     
  • CMC Crypto 200

    1,516.30
    -44.99 (-2.88%)
     
  • FTSE 100

    7,123.68
    -6.03 (-0.08%)
     
  • Nikkei 225

    29,518.34
    +160.52 (+0.55%)
     

Commerce Bancshares (CBSH) Stock Up 4% on Q3 Earnings Beat

  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.
Zacks Equity Research
·4 min read
  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.

Commerce Bancshares Inc.’s CBSH third-quarter 2020 earnings per share of $1.11 surpassed the Zacks Consensus Estimate of 70 cents. Also, the bottom line came in 19.4% higher than the prior-year quarter reported figure.

Results benefited from improvement in net-interest income, and fall in expenses and provisions. Moreover, the company’s balance-sheet position remained strong in the quarter. These positives most likely drove the share-price rally of 4%, following the earnings release. However, lower non- interest income is a concern for the company.

Net income attributable to common shareholders was $125 million, up 16.8% from the prior-year quarter.

Revenues Climb, Expenses Decline

Total revenues were $345.5 million, up 2.8% from the prior-year quarter. Moreover, the top line outpaced the Zacks Consensus Estimate of $326.6 million.

Net interest income came in at $216 million, up 6.1% year over year. Net yield on interest-earning assets contracted 46 basis points (bps) to 2.97% from the prior-year quarter.

Non-interest income was $129.6 million, reflecting a decline of 2.4% year over year. This was mainly due to fall in almost all fee income components, except for loan fees and sales, trust fees and capital market fees.

Non-interest expenses marginally dropped year over year to $190.9 million, primarily on lower marketing, supplies and communication, net occupancy, equipment and other costs. This was partially offset by increase in salaries and employee benefit expenses and data processing and software costs.

The efficiency ratio decreased to 55% from 56.66% reported in the year-ago quarter. A fall in efficiency ratio indicates higher profitability.

Balance Sheet: A Mixed bag

As of Sep 30, 2020, total loans were $16.4 billion, flat quarter on quarter. Total deposits as of the same date were $25.7 billion, up 4.8% sequentially.

Total stockholders’ equity was $3.3 billion as of Sep 30, 2020, reflecting a fall of 1.6% from the prior quarter’s end.

Credit Quality Improves

Provision for credit losses for the reported quarter came in at $3.1 million, slumping 71.2% from the $11 million recorded in the prior-year quarter.

The ratio of annualized net loan charge-offs to total average loans was 0.18%, down from the prior-year quarter’s 0.32%.

Capital & Profitability Ratios Deteriorate

As of Sep 30, 2020, Tier I leverage ratio was 9.39%, down from the 11.32% recorded in the year-ago quarter. Also, tangible common equity to tangible assets ratio declined to 10.11% from the prior-year quarter’s 10.95%.

At the end of the third quarter, return on average assets was 1.71%, down from the year-ago period’s 1.72%. Return on average common equity was 15.21%, down from the 14.21% recorded in the prior-year quarter.

Our Viewpoint

Commerce Bancshares’ revenues are likely to benefit from a rise in deposits balance, and a fall in expenses and provisions. Nevertheless, the economic slowdown will likely hurt its financials.

Commerce Bancshares, Inc. Price, Consensus and EPS Surprise

Commerce Bancshares, Inc. Price, Consensus and EPS Surprise
Commerce Bancshares, Inc. Price, Consensus and EPS Surprise

Commerce Bancshares, Inc. price-consensus-eps-surprise-chart | Commerce Bancshares, Inc. Quote

Currently, Commerce Bancshares carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Earnings Results of Other Banks

BancorpSouth Bank BXS delivered an earnings surprise of 32.7% in third-quarter 2020 on higher interest income. Net operating earnings of 69 cents per share beat the Zacks Consensus Estimate of 52 cents. The bottom line, however, was flat year over year.

Zions Bancorporation’s ZION net earnings per share of $1.01 surpassed the Zacks Consensus Estimate of 86 cents in the September-end quarter. However, the bottom line compared unfavorably with the year-ago quarter’s $1.17.

Regions Financial RF reported third-quarter adjusted earnings of 49 cents per share, outpacing the Zacks Consensus Estimate of 34 cents. Also, results compared favorably with the prior-year period earnings of 39 cents.

5 Stocks Set to Double

Each was hand-picked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2020. Each comes from a different sector and has unique qualities and catalysts that could fuel exceptional growth.

Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.

Today, See These 5 Potential Home Runs >>


Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
 
Regions Financial Corporation (RF) : Free Stock Analysis Report
 
Commerce Bancshares, Inc. (CBSH) : Free Stock Analysis Report
 
Zions Bancorporation, N.A. (ZION) : Free Stock Analysis Report
 
BancorpSouth Bank (BXS) : Free Stock Analysis Report
 
To read this article on Zacks.com click here.
 
Zacks Investment Research