Commerce Bancshares third-quarter profit rises to $155.0 million from $141.5 million

Commerce Bancshares, Inc. (CBSH) said Tuesday that third-quarter net income rose to $155.0 million, or $1.08 per share, from $141.5 million, or $1.01 per share, a year earlier, according to a regulatory filing.

The Kansas City-based bank holding company made the results public in a press release furnished with a Form 8-K. An earnings slide presentation was furnished with it.

For the nine months ended Sept. 30, net income was $456.4 million, or $3.14 per share, compared with $425.6 million, or $3.03 per share, a year earlier.

Here's how the company did:

• Earnings per share: $1.08 vs. $1.01 a year earlier
• Net income: $155.0 million vs. $141.5 million a year earlier
• Total revenue: $494.3 million vs. $441.0 million a year earlier
• Net interest income: $308.9 million vs. $279.5 million a year earlier
• Non-interest income: $185.5 million vs. $161.5 million a year earlier
• Non-interest expense: $285.9 million vs. $244.0 million a year earlier

Net income was down from the second quarter, when the company reported $159.8 million, or $1.10 per share. The company said the decrease from the prior quarter was primarily the result of lower net interest income and net securities gains, partly offset by lower non-interest expense.

Net interest income was $308.9 million, down $6.2 million from the prior quarter. The net yield on interest earning assets fell six basis points to 3.71%, from 3.77%.

The company sold its portfolio of Treasury inflation-protected securities, or TIPS, in the previous quarter. Excluding TIPS inflation income, the net yield was 3.66% in the prior quarter compared with 3.71% in the current quarter.

Non-interest income totaled $185.5 million, up $24.0 million, or 14.8%, from a year earlier and up $1.6 million, or 0.9%, from the prior quarter. Trust fees rose $15.0 million, or 25.7%, from a year earlier, and bank card fees increased $3.6 million, or 8.0%.

Chief Executive Officer John Kemper said, “Commerce delivered another solid quarter, with strong profitability, broad-based loan growth, continued momentum across our fee businesses and excellent credit quality.” Ending loan balances grew at an annualized rate of more than 7% during the quarter, the company said.

Average loans were $20.7 billion, up $172.3 million from the prior quarter and $3.2 billion from a year earlier. The company said the year-over-year increase was primarily due to its acquisition of FineMark, which added $2.7 billion in loan balances on Jan. 1, 2026.

Average deposits were $27.2 billion, down $361.6 million, or 1.3%, from the prior quarter and up $2.4 billion from a year earlier. The sequential decline was primarily due to a $283.3 million drop in interest checking and money market deposits, the company said.

On the revenue mix, Kemper said, “This balanced revenue mix remains an important source of strength for Commerce and supports consistent performance over time.”

Non-interest expense was $285.9 million, down $11.1 million, or 3.7%, from the prior quarter and up from $244.0 million a year earlier. Salaries and employee benefits rose $24.1 million, or 15.3%, from a year earlier, mostly due to onboarding FineMark team members at the start of 2026.

The efficiency ratio was 56.69%, compared with 58.40% in the prior quarter and 55.26% a year earlier. Acquisition-related salaries and benefits totaled $3.3 million in the quarter.

The provision for credit losses was $10.0 million, compared with $8.7 million in the prior quarter and $20.1 million a year earlier. Net loan charge-offs were $10.6 million, or 0.20% of average loans annualized, compared with 0.19% in the prior quarter.

The allowance for credit losses on loans was $197.8 million, or 0.93% of total loans, compared with 0.94% at June 30. Non-accrual loans totaled $11.5 million, or 0.05% of loans.

Total assets were $34.8 billion at Sept. 30, down $445.8 million from the prior quarter. The unrealized loss on available for sale debt securities increased $228.8 million to $847.4 million at period end. Net securities gains were $4.1 million, compared with $12.8 million in the prior quarter and $7.9 million a year earlier.

The company bought back approximately 1.9 million shares of common stock during the quarter at an average price of $58.84. It paid a quarterly cash dividend of 27.5 cents per share, a 5% increase from 26.2 cents a year earlier.

The company said it completed the acquisition of investment banking firm Nolan & Associates on Oct. 1, 2026. It also said the FineMark systems conversion is scheduled for February 2027 to allow more time for testing and team readiness, and that financial expectations and synergy targets for the FineMark deal remain unchanged.

The release did not include new full-year guidance. Full-time equivalent employees totaled 4,969 at Sept. 30, compared with 4,976 at June 30 and 4,666 a year earlier. For the nine months, return on average assets was 1.75% and return on average equity was 14.03%, compared with 1.81% and 16.15% a year earlier.