It has been about a month since the last earnings report for Commerce Bancshares (CBSH). Shares have lost about 3.7% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Commerce due for a breakout? Well, first let's take a quick look at its latest earnings report in order to get a better handle on the recent drivers for Commerce Bancshares, Inc. before we dive into how investors and analysts have reacted as of late.
Commerce Bancshares Q2 Earnings Beat Despite High Expenses, Provisions
Commerce Bancshares’ second-quarter 2025 earnings of $1.14 per share surpassed the Zacks Consensus Estimate of $1.02. The bottom line also jumped 10.7% from the prior-year quarter.
Results benefited from a rise in NII and non-interest income. An increase in loan balances was also a tailwind. However, increased provisions and higher expenses were headwinds.
Net income attributable to common shareholders was $152.5 million, up 9.3% year over year. Our estimate for the metric was $128.5 million.
Revenues Improve, Expenses Rise
Total revenues were $445.8 million, up 7.5% year over year. The top line outpaced the Zacks Consensus Estimate of $430.4 million.
NII was $280.1 million, rising 6.8% from the year-ago quarter. Our estimate for NII was $265.7 million.
Net yield on interest-earning assets expanded 15 basis points (bps) to 3.70%. Our estimate for the metric was 3.59%.
Non-interest income was $165.6 million, up 8.8% year over year. The rise was driven by an increase in almost all components, except for bank card transaction fees, and loan fees and sales. Our estimate for non-interest income was $157.5 million.
Non-interest expenses increased 5.3% year over year to $244.4 million. The rise was due to an increase in almost all cost components except for other expenses. We had projected expenses of $246.2 million.
Investment securities gains were $0.4 million, plummeting from $3.2 million in the prior-year quarter.
The efficiency ratio declined to 54.77% from 55.95% in the year-ago quarter. A fall in the efficiency ratio indicates an improvement in profitability.
Loan Balances Rise, Deposits Decline
As of June 30, 2025, net loans were $17.50 billion, up 1.7% from the prior quarter. Total deposits were $25.49 billion, which declined 1.3%. Our estimates for net loans and total deposits were $17.39 billion and $25.07 billion, respectively.
Asset Quality: A Mixed Bag
Provision for credit losses was $5.6 million, up 2.4% from the prior-year quarter. Our estimate for the metric was $9.6 billion.
The allowance for credit losses on loans to total loans was 0.94%, up 2 bps year over year. The ratio of annualized net loan charge-offs to total average loans was 0.22%, down from 0.23%.
Non-accrual loans to total loans were 0.11%, unchanged from the prior-year quarter.
Capital Ratios Improve, Profitability Ratios Mixed
As of June 30, 2025, the Tier I leverage ratio was 12.75%, up from 12.13% in the year-ago quarter. Tangible common equity to tangible assets ratio increased to 10.86% from the prior-year quarter’s 9.82%.
At the end of the second quarter, the return on total average assets was 1.95%, up from the year-ago period’s 1.86%. Return on average equity was 17.40% compared with 18.52% in the prior-year quarter.
Share Repurchase Update
In the reported quarter, the company repurchased 0.17 million shares at an average price of $60.54.
How Have Estimates Been Moving Since Then?
Since the earnings release, investors have witnessed a upward trend in estimates revision.
The consensus estimate has shifted 7.17% due to these changes.
VGM Scores
Currently, Commerce has a poor Growth Score of F, however its Momentum Score is doing a lot better with a C. Charting a somewhat similar path, the stock has a score of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of F. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Commerce has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.
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Commerce Bancshares, Inc. (CBSH): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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