On Feb 26, 2014, we issued an updated research report on
Commerce Bancshares, Inc.
). This Midwest bank recently reported dismal fourth-quarter 2013
results with higher operating expenses, which were partially
offset by increased non-interest income and lower provision for
credit losses. Though the company's strong capital base and solid
liquidity position are encouraging, we remain cautious due to the
macroeconomic headwinds across the industry.
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Commerce Bancshares reported earnings of 69 cents per share,
lagging the Zacks Consensus Estimate of 71 cents. However, this
was in line with earnings posted in the year-ago quarter.
With this, the company missed the Zacks Consensus Estimate in two
quarters while it delivered positive earnings surprises in the
remaining quarters of 2013.
Total revenue was down nearly 1.0% year over year to $271.7
million. A lower net return on interest earning assets led to
3.7% decline in taxable equivalent net interest income to $162.2
million. Further, non-interest expense rose 1.9% to $161.3
However, driven by a rise in bank card and trust fees,
non-interest income was $109.5 million, up 6.0% on a
year-over-year basis. Further, as of Dec 31, 2013, total loans
improved 11.4% year over year to $11.0 billion while total
deposits rose 3.8% year over year to $19.0 billion.
Commerce Bancshares looks promising owing to its strong balance
sheet, strategic acquisitions and efficient capital deployment
activities. However, we believe that mounting expenses, decline
in net interest margin and the stringent regulatory landscape may
pose threats to the company's financials in the near term.
Following the results, analysts' mixed opinions are evident from
the movement of the Zacks Consensus Estimate over the past 60
days. The Estimate for 2014 advanced 0.4% to $2.84 per share. For
2015, it remained stable at $3.08 per share.
Commerce Bancshares currently carries a Zacks Rank #3 (Hold).
Stocks That Warrant a Look
Some other stocks that are worth considering in the sector
First Citizens Banc Corp.
First Financial Corp.
First Merchants Corp.
). All of these have a Zacks Rank #1 (Strong Buy).