Commerce Bancshares, Inc .'s ( CBSH ) first-quarter
2013 earnings of 67 cents per share missed the Zacks Consensus
Estimate by a penny. Further, the earnings were below 72 cents
reported in the prior quarter and 70 cents in the prior-year
quarter.ASSOC BANC CORP (ASBC): Free Stock Analysis
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Marginally lower-than-expected results were attributable to lower
top-line growth, partially offset by fall in operating expenses.
Further, capital and profitability ratios deteriorated. Yet, marked
improvement in credit quality as well as sustained growth in loans
and deposits was the tailwind.
Net income for the quarter was $61.0 million, down 8.7% from $66.6
million in the last quarter.
Performance in Details
Commerce Bancshares' total revenue was $258.6 million, down 5.4%
from the prior quarter. Moreover, total revenue was 0.9%
below the Zacks Consensus Estimate of $261.0 million.
Taxable equivalent net interest income was $156.7 million, down
6.9% sequentially. The decrease was largely attributable to lower
inflation interest on the company's inflation-protected securities
and the absence of a special dividend received on a private equity
investment in the previous quarter.
Non-interest income fell 3.3% from the previous quarter to $99.9
million for Commerce Bancshares. The decline was mainly due to a
decrease in bank card transaction fees as well as reduced deposit
account charges and other fees, partially offset by an increase in
trust fees, capital market fees, consumer brokerage fees as well as
loan fees and sales.
Non-interest expense fell 2.0% from the prior quarter to $155.0
million for Commerce Bancshares. The drop was mainly attributable
to lower salaries and employee benefits costs, supplies and
communication expenses, equipment costs and net occupancy. These
were partly mitigated by higher marketing costs, deposit insurance,
data processing expenses as well as other expenditure.
Commerce Bancshares' efficiency ratio deteriorated to 61.76% from
59.62% in the prior quarter. The increase implies a fall in
Commerce Bancshares witnessed an improvement in credit quality
during the quarter. Total nonperforming assets came in at $58.9
million, down 9.1% sequentially. Further, allowance for loan losses
as a percentage of total loans was 1.68%, down 7 basis points from
the prior quarter.
Moreover, net charge-offs plummeted 27.7% sequentially to $7.8
million for Commerce Bancshares. Likewise, provision for loan
losses fell 60.5% from the previous quarter to $3.3 million, mainly
due to decline in commercial loan losses.
Commerce Bancshares' average loans (excluding loans held for sale)
improved 2.6% from the prior quarter to $9.9 billion. Further,
total deposits inched up 0.9% sequentially to $18.5 billion,
reflecting growth in time open and certificate of deposits
Capital and Profitability Ratios
Commerce Bancshares' capital and profitability ratios continued to
deteriorate in the reported quarter. As of Mar 31, 2013, tier I
leverage ratio came in at 8.92%, down from 9.14% in the prior
quarter. Tangible common equity to assets ratio as of Mar 31, 2013
was 9.26%, up from 9.25% as of Dec 31, 2012.
The company's return on average assets was 1.13% compared with
1.25% as of Dec 31, 2012. Similarly, return on average equity
decreased to 11.38% from 11.62% as of Dec 31, 2012.
However, book value, based on total equity as of Mar 31, 2013, was
$24.02 per share, up from $23.76 as of Dec 31, 2012.
During the quarter, Commerce Bancshares repurchased 808,000 shares
at an average price of $37.13 per share.
With strong capital base and excellent liquidity, Commerce
Bancshares is well- positioned for expansion through acquisitions.
Further, the company's focus on developing in the high-growth areas
and its efforts to contain expenses is expected to prove accretive
to the overall growth going forward.
However, existing low interest rates, declining loan demands
coupled with slow economic recovery are anticipated to hamper the
overall performance of the company in the near term. In addition,
the current financial rules proposed by the Federal Reserve and the
stringent regulatory settings are matters of concern for the
Among other Midwest banks, Huntington Bancshares
Incorporated ( HBAN ) is scheduled to
report on Apr 17, Associated Banc-Corp ( ASBC ) on Apr 18 and
First Interstate Bancsystem Inc . ( FIBK ) on Apr
Commerce Bancshares currently retains a Zacks Rank #3 (Hold).