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Commerce Bancshares (CBSH) Stock Down Despite Q4 Earnings Beat
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Commerce Bancshares Inc.’s (CBSH - Free Report) fourth-quarter 2020 earnings per share of $1.11 surpassed the Zacks Consensus Estimate of 95 cents. Also, the bottom line came in 26.1% higher than the prior-year quarter.
Results benefited from improvement in net interest income and provision benefits. Also, the company recorded a rise in deposit balance. However, decline in non-interest income, a modest rise in expenses and lower loan balance, along with lower rates, acted as headwinds. Perhaps these concerns weighed on investor sentiments as the company’s shares declined 3.2% following the earnings release.
Net income attributable to common shareholders was $129.9 million, up 24.1% from the prior-year quarter.
In 2020, earnings of $2.91 per share beat the consensus estimate of $2.78 but fell 14.7% year over year. Net attributable to common shareholders of $342.1 million declined 17% from 2019.
Revenues Down, Expenses Rise
Total revenues for the reported quarter were $344.9 million, down marginally from the prior-year quarter. However, the top line outpaced the Zacks Consensus Estimate of $341.6 million.
In 2020, total revenues declined nearly 1% year over year to $1.34 billion. The top line marginally missed the consensus estimate.
Net interest income came in at $209.8 million, up 3.5% year over year. However, net yield on interest-earning assets contracted 56 basis points (bps) to 2.80%.
Non-interest income was $135.1 million, reflecting a decline of 5.8%. This was mainly due to fall in almost all fee income components, except for loan fees and sales, trust fees and capital market fees.
Non-interest expenses slightly increased to $196.3 million, primarily on higher marketing, salaries and employee benefit, and data processing and software costs.
The efficiency ratio increased to 56.68% from 56.29% reported in the year-ago quarter. A rise in efficiency ratio indicates deterioration in profitability.
As of Dec 31, 2020, total loans were $16.3 billion, down marginally from the prior quarter. Total deposits as of the same date were $26.9 billion, up 4.8%. Total stockholders’ equity was $3.4 billion as of Dec 31, 2020, reflecting a rise 2.8% sequentially.
Credit Quality: Mixed Bag
Provision for credit losses was a benefit of $4.4 million compared with provision of $15.2 million recorded in the prior year quarter. The ratio of annualized net loan charge-offs to total average loans was 0.19%, down from the prior-year quarter’s 0.42%.
However, total non-performing assets as of Dec 31, 2020 were $26.6 million, up significantly from $10.6 million on Dec 31, 2019.
Capital & Profitability Ratios Deteriorate
As of Dec 31, 2020, Tier I leverage ratio was 9.45%, down from the 11.38% recorded in the year-ago quarter. Also, tangible common equity to tangible assets ratio declined to 9.92% from the prior-year quarter’s 10.99%.
At the end of the fourth quarter, return on average assets was 1.63%, down from the year-ago period’s 1.65%. Return on average common equity was 15.49%, up from the 13.90% in the prior-year quarter.
Our Take
Commerce Bancshares’ revenues are likely to benefit from a rise in deposits balance, and gradual rise in demand for loans. However, the economic slowdown and low interest rates continue to hurt its financials.
Commerce Bancshares, Inc. Price, Consensus and EPS Surprise
Comerica (CMA - Free Report) delivered a fourth-quarter 2020 positive earnings surprise of 23.1%. Earnings per share of $1.49 easily surpassed the Zacks Consensus Estimate of $1.21. However, bottom line came in lower than the prior-year quarter figure of $1.85.
Aided by higher revenues, Citizens Financial Group (CFG - Free Report) pulled off fourth-quarter 2020 positive earnings surprise of 39.4%. Adjusted earnings per share of $1.04 surpassed the Zacks Consensus Estimate of 91 cents. Also, the bottom line compares favorably with 99 cents in the year-ago quarter.
Zions Bancorporation’s (ZION - Free Report) fourth-quarter 2020 net earnings per share of $1.66 surpassed the Zacks Consensus Estimate of $1.01. Moreover, the reported figure represents a rise of 71.1% from the year-ago quarter’s number.
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A select few stocks could skyrocket the most as rollout accelerates for this new tech. Early investors could see gains similar to buying Microsoft in the 1990s. Zacks’ just-released special report reveals 8 stocks to watch. The report is only available for a limited time.
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Commerce Bancshares (CBSH) Stock Down Despite Q4 Earnings Beat
Commerce Bancshares Inc.’s (CBSH - Free Report) fourth-quarter 2020 earnings per share of $1.11 surpassed the Zacks Consensus Estimate of 95 cents. Also, the bottom line came in 26.1% higher than the prior-year quarter.
Results benefited from improvement in net interest income and provision benefits. Also, the company recorded a rise in deposit balance. However, decline in non-interest income, a modest rise in expenses and lower loan balance, along with lower rates, acted as headwinds. Perhaps these concerns weighed on investor sentiments as the company’s shares declined 3.2% following the earnings release.
Net income attributable to common shareholders was $129.9 million, up 24.1% from the prior-year quarter.
In 2020, earnings of $2.91 per share beat the consensus estimate of $2.78 but fell 14.7% year over year. Net attributable to common shareholders of $342.1 million declined 17% from 2019.
Revenues Down, Expenses Rise
Total revenues for the reported quarter were $344.9 million, down marginally from the prior-year quarter. However, the top line outpaced the Zacks Consensus Estimate of $341.6 million.
In 2020, total revenues declined nearly 1% year over year to $1.34 billion. The top line marginally missed the consensus estimate.
Net interest income came in at $209.8 million, up 3.5% year over year. However, net yield on interest-earning assets contracted 56 basis points (bps) to 2.80%.
Non-interest income was $135.1 million, reflecting a decline of 5.8%. This was mainly due to fall in almost all fee income components, except for loan fees and sales, trust fees and capital market fees.
Non-interest expenses slightly increased to $196.3 million, primarily on higher marketing, salaries and employee benefit, and data processing and software costs.
The efficiency ratio increased to 56.68% from 56.29% reported in the year-ago quarter. A rise in efficiency ratio indicates deterioration in profitability.
As of Dec 31, 2020, total loans were $16.3 billion, down marginally from the prior quarter. Total deposits as of the same date were $26.9 billion, up 4.8%. Total stockholders’ equity was $3.4 billion as of Dec 31, 2020, reflecting a rise 2.8% sequentially.
Credit Quality: Mixed Bag
Provision for credit losses was a benefit of $4.4 million compared with provision of $15.2 million recorded in the prior year quarter. The ratio of annualized net loan charge-offs to total average loans was 0.19%, down from the prior-year quarter’s 0.42%.
However, total non-performing assets as of Dec 31, 2020 were $26.6 million, up significantly from $10.6 million on Dec 31, 2019.
Capital & Profitability Ratios Deteriorate
As of Dec 31, 2020, Tier I leverage ratio was 9.45%, down from the 11.38% recorded in the year-ago quarter. Also, tangible common equity to tangible assets ratio declined to 9.92% from the prior-year quarter’s 10.99%.
At the end of the fourth quarter, return on average assets was 1.63%, down from the year-ago period’s 1.65%. Return on average common equity was 15.49%, up from the 13.90% in the prior-year quarter.
Our Take
Commerce Bancshares’ revenues are likely to benefit from a rise in deposits balance, and gradual rise in demand for loans. However, the economic slowdown and low interest rates continue to hurt its financials.
Commerce Bancshares, Inc. Price, Consensus and EPS Surprise
Commerce Bancshares, Inc. price-consensus-eps-surprise-chart | Commerce Bancshares, Inc. Quote
Currently, Commerce Bancshares carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performance of Other Banks
Comerica (CMA - Free Report) delivered a fourth-quarter 2020 positive earnings surprise of 23.1%. Earnings per share of $1.49 easily surpassed the Zacks Consensus Estimate of $1.21. However, bottom line came in lower than the prior-year quarter figure of $1.85.
Aided by higher revenues, Citizens Financial Group (CFG - Free Report) pulled off fourth-quarter 2020 positive earnings surprise of 39.4%. Adjusted earnings per share of $1.04 surpassed the Zacks Consensus Estimate of 91 cents. Also, the bottom line compares favorably with 99 cents in the year-ago quarter.
Zions Bancorporation’s (ZION - Free Report) fourth-quarter 2020 net earnings per share of $1.66 surpassed the Zacks Consensus Estimate of $1.01. Moreover, the reported figure represents a rise of 71.1% from the year-ago quarter’s number.
Biggest Tech Breakthrough in a Generation
Be among the early investors in the new type of device that experts say could impact society as much as the discovery of electricity. Current technology will soon be outdated and replaced by these new devices. In the process, it’s expected to create 22 million jobs and generate $12.3 trillion in activity.
A select few stocks could skyrocket the most as rollout accelerates for this new tech. Early investors could see gains similar to buying Microsoft in the 1990s. Zacks’ just-released special report reveals 8 stocks to watch. The report is only available for a limited time.
See 8 breakthrough stocks now>>