Commerce Bancshares Inc.’s ( CBSH Quick Quote CBSH - Free Report) first-quarter 2021 earnings per share of $1.11 surpassed the Zacks Consensus Estimate of 96 cents. Also, the bottom line surged significantly from the 42 cents earned in the prior-year quarter.
Results were supported by improvement in net interest income and provision benefits. Further, higher non-interest income and a modest decline in expenses acted as tailwinds. In addition, the company witnessed a rise in deposits and modestly higher loan balance during the quarter. However, low interest rates and weak lending scenario remain concerns.
Net income attributable to common shareholders was $131million, up significantly from the year-ago quarter’s $49.6 million.
Revenues Up, Expenses Decline
Total revenues were $341.8 million, up 5.3% year over year. Further, the top line outpaced the Zacks Consensus Estimate of $338.7 million.
Net interest income came in at $205.7 million, up 2.3% year over year. Yet, net yield on interest-earning assets contracted 62 basis points (bps) to 2.71%.
Non-interest income was $136 million, reflecting a rise of 10%. This upswing was mainly driven by increase in almost all fee income components, except for bank card transaction fees, and deposit account charges and other fees.
Non-interest expenses slightly declined to $192.6 million, primarily due to fall in salaries and employee benefits, equipment, supplies and communication, and other costs.
The efficiency ratio decreased to 56.37% from the 59.17% reported in the year-ago quarter. A fall in efficiency ratio indicates improvement in profitability.
As of Mar 31, 2021, total loans were $16.4 billion, up marginally from the prior quarter. Total deposits as of the same date were $27.4 billion, up 1.8%. Total stockholders’ equity was $3.3 billion as of Mar 31, 2020, reflecting a fall 2.5% sequentially.
Credit Quality: Mixed Bag
Provision for credit losses was a benefit of $6.2 million against the provision of $58 million witnessed in the prior-year quarter. The ratio of annualized net loan charge-offs to total average loans were 0.25%, down 5 bps from the year-earlier quarter.
However, total non-performing assets as of Mar 31, 2021 were $23.7 million, up significantly from $11.1 million as of Mar 31, 2020.
Capital Ratios Deteriorate & Profitability Ratios Improve
As of Mar 31, 2021, Tier I leverage ratio was 9.38%, down from the 11.13% recorded in the year-ago quarter. Additionally, tangible common equity to tangible assets ratio declined to 9.57% from the prior-year quarter’s 11.13%.
At the end of the first quarter, return on average assets was 1.63%, up from the year-ago period’s 0.80%. Return on average common equity was 15.69%, up from the 6.48% in the prior-year quarter.
Commerce Bancshares’ revenues are likely to benefit from a rise in deposits balance, and gradual increase in loan demand. Nevertheless, low interest rates continue to hurt its financials.
Currently, Commerce Bancshares carries a Zacks Rank #2 (Buy). You can see
. the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here Performance of Other Banks First Republic Bank ( FRC Quick Quote FRC - Free Report) registered an earnings surprise of 16.2% in first-quarter 2021 on solid top-line strength. Earnings per share of $1.79 surpassed the Zacks Consensus Estimate of $1.54. Additionally, the bottom line climbed 53.1% from the year-ago quarter. Citigroup ( C Quick Quote C - Free Report) delivered a positive earnings surprise of 1.4% in the first quarter on significant reserve releases. Income from continuing operations per share of $3.62 handily outpaced the Zacks Consensus Estimate of $2.56. Also, results compared favorably with $1.06 in the prior-year quarter. U.S. Bancorp ( USB Quick Quote USB - Free Report) reported earnings per share of $1.45 for the January-March quarter, topping the Zacks Consensus Estimate of 95 cents. The bottom line compared favorably with the prior-year quarter’s 72 cents. Infrastructure Stock Boom to Sweep America
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