Commerce Bancshares Earnings: Here’s Why Investors are Dumping Shares

Commerce Bancshares Inc. (NASDAQ:CBSH) delivered a profit and met Wall Street’s expectations, however investors are selling shares. Shares are down 1.27%.

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Commerce Bancshares Inc. Earnings Cheat Sheet

Results: Net income increased 8.62% to $66.8 million (72 cents per diluted share) in the quarter versus a net gain of $61.5 million in the year-earlier quarter.

For the quarter, the return on average assets totaled 1.25%, the return on average equity was 11.6% and the efficiency ratio was 59.6%.

Actual vs. Wall St. Expectations: Commerce Bancshares Inc. reported adjusted net income of 72 cents per share. By that measure, the company met the mean analyst estimate of $0.72.

Quoting Management: David W. Kemper, Chairman and CEO, said, “We were pleased to report record earnings in 2012 of over $269 million, which represents an increase of 5%. Current quarter results compared to the previous quarter reflected growth in net interest income, low credit costs and solid growth in both trust and bankcard fees. Strong growth in deposits coupled with continued new loan volumes and higher interest on inflation-protected securities enabled our net interest income to increase this quarter. Non-interest income increased $2.4 million this quarter compared to the previous quarter, and was up 10% compared to last year as a result of growth in commercial card fees of 25% and double digit growth in credit card and trust fee income. Expense growth this quarter was mainly centered in salaries and technology costs where we continued to make investments in our fee businesses. Average loans grew $174.5 million, or 2%, this quarter over the previous quarter from growth in both consumer and commercial lending activities while average deposits increased $720.7 million, or 4%. Record earnings over the last two years have strengthened our capital and liquidity and allowed us to pay a special dividend in December of $1.50 per share in advance of the higher tax rates now in effect.”

Key Stats:

Net income increased 1.2% from $66.01 million in the previous quarter.

Looking Forward: Analysts have a more negative outlook for the company’s next-quarter performance. Over the past three months, the average estimate for next quarter’s earnings has fallen from a profit of $0.72 to a profit $0.66. For the current year, the average estimate has moved down from a profit of $3.1 to a profit of $2.9 over the last ninety days.

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(Company fundamentals provided by Xignite Financials.)