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Commerce Bancshares sees decline in Q3 net income, NIM

Kansas City, Mo.-based Commerce Bancshares Inc. reported third-quarter net income available to common shareholders of $107.0 million, or 98 cents per share, a decrease from $110.3 million, or 98 cents per share, in the year-ago period.

The S&P Global Market Intelligence consensus GAAP EPS estimate for the quarter was 92 cents.

Total revenue for the quarter was $336.3 million, an increase from $331.5 million in the third quarter of 2018.

Net interest income for the quarter was $203.5 million, a decrease from $207.8 million in the same period last year. The company attributed the decrease on lower inflation income from its inflation-protected securities and less interest on floating rate commercial loans that are indexed to LIBOR.

"While the recent drop in interest rates has started to impact net interest income, the strength of our fee-based businesses, disciplined approach to credit, and focus on expense management are mitigating some of the adverse effects of the declining interest rate environment," Commerce Bancshares CEO John Kemper said in the company's earnings release.

Non-interest income increased on a year-over-year basis to $132.7 million from $123.7 million. The bank attributed the year-over-year increase to growth in net bank card, trust, loan fees and sales, and swap fees, coupled with gains on sales of assets.

Net yield on interest-earning assets for the third quarter stood at 3.43%, both representing decreases from 3.61% in the previous quarter and 3.52% in the year-ago period. Net interest margin declined to 3.40% due to lower rates on interest-earning assets.

Provision for loan losses was $11.0 million, compared with $10.0 million in the year-ago period. Total net loan charge-offs increased on a year-over-year basis to $11.5 million from $9.8 million.

Total loans at the end of the third quarter were $14.46 billion, compared with $14.26 billion at the end of the previous quarter and $13.96 billion at the end of the year-ago period.

Total deposits at the end of the third quarter were $20.31 billion, compared with $19.83 billion at the end of the previous quarter and $20.13 billion at the end of the year-ago period.