Commerce Bancshares (CBSH) reported a 53% jump in earnings in the third quarter driven by a strong economy, higher interest rates and growth in its fee-based businesses. The top line growth was aided by higher loan rates, stable funding costs and increase in bank card, trust and deposit fee income. The bottom line exceeded analysts’ expectations.
Net income available to common shareholders for the quarter climbed 53% to $110.3 million and earnings jumped 54% to $1.03 per share. Total revenue increased 11% to $331.5 million, helped by higher net interest income and a rise in non-interest income.
Net interest income, excluding non-recurring equity dividends, grew 14% helped by higher loan rates and stable funding costs. Non-interest income rose 5.8% driven mainly by increases in bank card, trust and deposit fee income.
Total bank card fees grew by 8.3% helped by growth in corporate card interchange income. Corporate card net fees increased by 14.7% on growth in interchange income from customer spend, and lower network expense. Debit card net fees rose 7.4% on higher fees and lower network processing costs.
Net loan charge-offs declined to $9.8 million from $10.7 million last year, due to the result of lower consumer credit card losses. The company said the credit quality remains very strong as net loan charge-offs remained low, non-accrual loans declined and overall delinquencies have improved.
Average loans rose 2.2% year-over-year helped by increases in average construction, personal real estate, and consumer card loans. However, compared to the previous quarter, average loans declined slightly on the decline in business and auto lending activities.
Total average deposits for the third quarter decreased by $135.6 million from the previous quarter, due to lower balances of personal and government demand, money market, and certificates of deposit. The average loans-to-deposits ratio rose to 69.3% from 68.9% in the prior quarter.
Shares of Commerce Bancshares ended Wednesday’s regular session down 0.35% at $65.09 on the Nasdaq. The stock had risen over 11% in the past year and more than 16% for the year so far.