Commerce Bancshares (NASDAQ:CBSH) reported second-quarter results that exceeded Wall Street expectations, with both earnings and revenue coming in above analyst forecasts as higher net interest income and steady loan growth supported performance.
Adjusted earnings reached $1.10 per share, ahead of the consensus estimate of $1.06, while quarterly revenue totaled $498.91 million, surpassing expectations of $493.46 million.
Following the results, the bank’s shares rose about 1.8% in premarket trading.
Revenue and lending activity continue to improve
Revenue increased 4.8% from the same quarter a year earlier, when Commerce Bancshares generated $445.76 million.
The bank also expanded its net interest margin to 3.77%, up from 3.59% in the previous quarter, benefiting from stronger income generated by loans and investment securities as well as lower funding costs.
Average loan balances climbed by $176.6 million, or 0.9%, during the quarter to reach $20.5 billion.
“Commerce delivered a strong quarter, with expanding net interest margin, solid loan growth, lower funding costs and excellent credit quality,” said Chief Executive Officer John Kemper.
“These results drove a return on average assets of 1.84% and reflect the strength of our business model, our diversified revenue streams and our team’s continued focus on long-standing customer relationships.”
Fee income and investment gains support results
Non-interest income rose 4.5% from the prior quarter to $183.8 million.
Growth was driven by trust fees of $71.5 million and bank card fees of $48.1 million, while the company also recorded net investment securities gains of $12.8 million.
The investment gains included a $105.4 million profit related to Visa Inc. shares, partially offset by a $97.7 million loss resulting from the repositioning of the bank’s available-for-sale debt securities portfolio.
Operating expenses edge higher
Non-interest expenses increased to $297.1 million during the quarter, compared with $291.1 million in the previous quarter.
Despite the higher operating costs, Commerce Bancshares delivered stronger profitability as improving margins, healthy lending activity and diversified fee income helped offset the increase in expenses.
Commerce Bancshares stock price
