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Commerce Bancshares Inc. CBSH reported its third-quarter 2024 earnings per share of $1.07, which surpassed the Zacks Consensus Estimate of $1. The bottom line also increased 16.3% from the prior-year quarter.
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Results benefited from a rise in net interest income (NII) and non-interest income. Also, lower provisions were a tailwind. The company recorded an increase in capital ratios in the quarter. However, an increase in expenses hurt the results to some extent.
Net income attributable to common shareholders was $138 million, up 14.4% year over year. Our estimate for the metric was $126.5 million.
Revenues Improve, Expenses Rise
Total revenues were $421.4 million, up 7.6% year over year. The top line also beat the Zacks Consensus Estimate of $412.8 million.
NII was $262.4 million, up 5.6% year over year. Our estimate for NII was $258.6 million.
Net yield on interest-earning assets expanded 39 basis points (bps) from the prior-year quarter to 3.50%.
Non-interest income was $159 million, up 11.2% year over year. The rise was driven by an increase in all fee income components. Our estimate for non-interest income was $151.7 million.
Non-interest expenses increased 4.2% year over year to $237.6 million. The rise was due to an increase in almost all cost components, except for net occupancy costs and deposit insurance costs. We had projected expenses of $244.5 million.
Net investment securities gain was $3.9 million, down 9.9% from the prior-year quarter.
The efficiency ratio declined to 56.31% from 58.15% in the year-ago quarter. A fall in the efficiency ratio indicates an improvement in profitability.
As of Sept. 30, 2024, total loans were $17.09 billion, down marginally from the prior-quarter end. Total deposits as of the same date were $25.24 billion, which rose 3.9% from the end of the previous quarter. Our estimates for deposits were $25.79 billion.
Asset Quality Improves
Provision for credit losses was $9.1 million, which decreased 21.5% from the prior-year quarter. Allowance for credit losses on loans to total loans was 0.94%, decreasing 1 bp year over year.
The ratio of annualized net loan charge-offs to total average loans was 0.22%, down from 0.23% in the year-earlier quarter.
However, non-accrual loans to total loans were 0.11%, up 6 bps from the prior-year quarter.
Capital Ratios Improve, Profitability Ratios Mixed
As of Sept. 30, 2024, the Tier I leverage ratio was 12.31%, up from 10.87% in the year-ago quarter. Tangible common equity to tangible assets ratio increased to 10.47% from the prior-year quarter’s 7.78%.