It has been about a month since the last earnings report for Commerce Bancshares (CBSH). Shares have added about 3.3% in that time frame, underperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Commerce due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its latest earnings report in order to get a better handle on the important drivers.
Commerce Bancshares’ Q1 Earnings Beat as Revenues Rise Y/Y
Commerce Bancshares’ first-quarter 2026 earnings of 96 cents per share surpassed the Zacks Consensus Estimate of 94 cents. The bottom line reflected a rise of 3.2% from the prior-year quarter.
Results benefited from higher net interest income (NII), a rise in non-interest income and lower provisions. The sequential rise in loans and deposits acted as a tailwind. However, higher expenses hurt the results to some extent. Probably because of this, CBSH shares fell 1.6% following the earnings release.
Net income attributable to Commerce Bancshares was $141.6 million, up 7.6% year over year. Our estimate for the metric was $132 million.
Revenues Improve, Expenses Rise
Total revenues were $475.7 million, up 11.1% year over year. The top line outpaced the Zacks Consensus Estimate of $473.6 million.
NII was $299.8 million, rising 11.4% from the year-ago quarter. Net yield on interest-earning assets was 3.59%, increasing 3 basis points (bps) year over year. Our estimates for NII and net yield on interest-earning assets were $288 million and 3.60%, respectively.
Non-interest income was $175.9 million, up 10.6% year over year. The rise was mainly driven by higher trust fees, deposit account charges and other fees, consumer brokerage services fees, and capital market fees. Our estimate for non-interest income was $175.2 million.
Non-interest expenses increased 22.1% year over year to $291.1 million. The rise was due to improvements in all cost components. We had projected expenses of $272.8 million.
Investment securities gains were $11.6 million against losses of $7.6 million in the prior-year quarter.
The efficiency ratio increased to 60% from 55.61% in the year-ago quarter. A rise in the efficiency ratio indicates a deterioration in profitability.
Loans & Deposits Rise
As of March 31, 2026, net loans were $20.26 billion, up from $17.59 billion as of Dec. 31, 2025. Total deposits were $28.38 billion, up from $25.64 billion at the end of the previous quarter. Our estimates for net loans and total deposits were $20.38 billion and $29.22 billion, respectively.
Asset Quality: A Mixed Bag
Provision for credit losses was $11 million, down 24.3% from the prior-year quarter. Our estimate for the metric was $20.6 million. Non-accrual loans to total loans were 0.05% at the quarter-end, down from 0.13% in the year-ago quarter.
However, the allowance for credit losses on loans to total loans was 0.97% on March 31, 2026, increasing 1 bp year over year. The ratio of annualized net loan charge-offs to average loans was 0.30%, up from 0.25% in the prior-year quarter.
Capital Ratios Improve, Profitability Ratios Decline
As of March 31, 2026, the Tier I leverage ratio was 12.60%, up from 12.29% in the year-ago quarter. Tangible common equity to tangible assets ratio increased to 11.07% from 10.33% in the prior-year quarter.
In the reported quarter, return on total average assets was 1.62%, down from 1.69% in the year-ago quarter. Return on average equity was 13.22% compared with 15.82% in the prior-year quarter.
Share Repurchase Update
In the reported quarter, the company purchased 1.6 million shares of treasury stock at an average price of $51.57.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended upward during the past month.
VGM Scores
Currently, Commerce has a average Growth Score of C, a score with the same score on the momentum front. Charting a somewhat similar path, the stock has a grade of B on the value side, putting it in the second quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Commerce has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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Commerce Bancshares, Inc. (CBSH): Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).