Core Insights - The article emphasizes the importance of efficiency ratios as indicators of a company's financial health and operational efficiency [1][2][3][4][5]. Efficiency Ratios - **Receivables Turnover**: This ratio measures a company's ability to extend credit and collect debts, with a higher ratio indicating better performance [2]. - **Asset Utilization**: This ratio assesses how effectively a company converts its assets into sales, with higher values suggesting greater efficiency [3]. - **Inventory Turnover**: This ratio indicates a company's ability to manage inventory relative to its cost of goods sold, with higher values reflecting better inventory management [4]. - **Operating Margin**: This ratio measures the efficiency of a company in controlling operating expenses relative to sales, with higher values indicating better expense management [5]. Screening Process - A screening process was applied using the aforementioned efficiency ratios along with a favorable Zacks Rank (Zacks Rank 1) to identify potential investment opportunities [6]. - The screening narrowed down over 7,906 stocks to 10, focusing on those with efficiency ratios above industry averages [7]. Selected Companies - **Vital Farms (VITL)**: Offers pasture-raised foods and has a four-quarter average positive earnings surprise of 45.3% [8][7]. - **Acushnet (GOLF)**: Designs and distributes golf products, also reporting a four-quarter average positive earnings surprise of 45.3% [9][8]. - **Texas Capital Bancshares (TCBI)**: Focuses on local business ties in Texas and has a four-quarter average positive earnings surprise of 30.2% [10][8]. - **Commerce Bancshares (CBSH)**: Engages in general banking services with a four-quarter average positive earnings surprise of 7.9% [11][8].

Core Viewpoint - Commerce Bancshares reported strong second-quarter results for 2025, with GAAP EPS of $1.14 and revenue of $445.8 million, both exceeding analyst estimates and showing year-over-year growth [1][2]. Financial Performance - GAAP EPS for Q2 2025 was $1.14, surpassing the estimate of $1.04 and up 10.7% from $1.03 in Q2 2024 [2] - Revenue for Q2 2025 reached $445.8 million, exceeding the consensus estimate of $434.4 million and reflecting a 7.6% increase from $414.5 million in Q2 2024 [2] - Net interest income hit a record high of $280.1 million, a 6.8% increase from $262.2 million in the previous year [2][5] - Non-interest income grew by 8.8% to $165.6 million, with notable increases in trust fees (up 6.3%) and capital market fees (up 29.7%) [2][5] Strategic Initiatives - The company announced the acquisition of FineMark, which has $2.6 billion in loans and $3.1 billion in deposits, aimed at expanding its presence in Florida, Arizona, and South Carolina [10] - The quarterly dividend was increased by 7.0% to $0.275 per share, and the company repurchased 171,899 shares at an average price of $60.54 [11] Operational Metrics - Average total loans reached $17.5 billion, showing growth both sequentially and year-over-year, primarily driven by business and consumer loans [6] - Average deposits grew modestly to $24.9 billion, with a significant proportion of non-interest-bearing deposits [6] - Non-interest expenses increased by 5.3% to $244.4 million, influenced by higher salary and benefit costs, while the efficiency ratio improved to 54.8% from 55.95% a year ago [7] Risk and Credit Quality - Net loan charge-offs remained low at 0.22% of average loans, and non-accrual loans were only 0.11% of total loans [8][9] - The allowance for credit losses was $165.3 million, representing 0.94% of all outstanding loans [9] Future Outlook - Management emphasized priorities such as disciplined expense management, loan growth, and maintaining strengths in capital and customer service, without providing explicit financial guidance for the upcoming quarters [12]

Core Viewpoint Commerce Bancshares Inc. (CBSH) reported strong second-quarter 2025 earnings, driven by increased net interest income and non-interest income, despite facing higher expenses and provisions for credit losses. Financial Performance - Earnings per share (EPS) for Q2 2025 was $1.14, exceeding the Zacks Consensus Estimate of $1.02, and reflecting a 10.7% increase year over year [1][9] - Net income attributable to common shareholders was $152.5 million, up 9.3% from the previous year, surpassing the estimate of $128.5 million [2] Revenue and Income Breakdown - Total revenues reached $445.8 million, a 7.5% increase year over year, exceeding the Zacks Consensus Estimate of $430.4 million [3] - Net interest income (NII) was $280.1 million, up 6.8% from the prior year, also surpassing the estimate of $265.7 million [3] - Non-interest income increased to $165.6 million, an 8.8% rise year over year, driven by growth in most components except for bank card transaction fees and loan fees [4] Expense Analysis - Non-interest expenses rose 5.3% year over year to $244.4 million, attributed to increases in nearly all cost components [4] - The efficiency ratio improved to 54.77% from 55.95% in the previous year, indicating enhanced profitability [5] Loan and Deposit Trends - As of June 30, 2025, net loans were $17.50 billion, a 1.7% increase from the prior quarter, while total deposits declined 1.3% to $25.49 billion [6] Asset Quality - Provision for credit losses was $5.6 million, a 2.4% increase year over year, with the allowance for credit losses on loans to total loans at 0.94% [7] - The ratio of annualized net loan charge-offs to total average loans decreased to 0.22% from 0.23% [7] Capital Ratios and Profitability - The Tier I leverage ratio improved to 12.75% from 12.13% year over year, and the tangible common equity to tangible assets ratio increased to 10.86% from 9.82% [10] - Return on total average assets was 1.95%, up from 1.86% in the prior year, while return on average equity decreased to 17.40% from 18.52% [10] Share Repurchase Activity - In the reported quarter, the company repurchased 0.17 million shares at an average price of $60.54 [11] Strategic Developments - Commerce Bancshares announced an agreement to acquire FineMark Holdings for $585 million, expected to close on January 1, 2026, subject to regulatory approval [12] - The acquisition is projected to be 6% accretive to CBSH's 2026 GAAP earnings, with anticipated cost savings of 15% of FineMark's non-interest expenses [13]

Core Viewpoint - Commerce Bancshares is set to enhance its wealth management business through the acquisition of FineMark National Bank & Trust, which is valued at approximately $585 million and expected to close on January 1, 2026 [4][3]. Group 1: Acquisition Details - The acquisition will expand Commerce Bancshares' presence in Florida, Arizona, and South Carolina, and will incorporate FineMark's niche wealth management services, particularly for sports professionals [2][4]. - FineMark will operate as a division of Commerce Bank, allowing for growth by integrating Commerce's broader product offerings [3]. Group 2: Financial Impact - Commerce Bancshares currently manages over $76 billion in total wealth assets, with a focus on expanding its wealth management services into new markets [6]. - In the second quarter of 2025, trust fees increased by $3.3 million, or 6.3%, primarily due to higher private client fees, indicating a positive trend in non-interest income [8][7]. Group 3: Strategic Goals - The bank aims to leverage its new private banking loan and deposit system to offer specialized products and services, targeting markets with concentrated wealth [7]. - CEO John Kemper emphasized that the acquisition will provide new capabilities and enhance operational stability, contributing to long-term growth [4].

For the quarter ended June 2025, Commerce Bancshares (CBSH) reported revenue of $445.76 million, up 7.5% over the same period last year. EPS came in at $1.14, compared to $1.07 in the year-ago quarter.The reported revenue represents a surprise of +3.58% over the Zacks Consensus Estimate of $430.36 million. With the consensus EPS estimate being $1.02, the EPS surprise was +11.76%.While investors closely watch year-over-year changes in headline numbers -- revenue and earnings -- and how they compare to Wall S ...

[Earnings Release and Highlights](index=1&type=section&id=FOR%20IMMEDIATE%20RELEASE%3A) Commerce Bancshares reported strong Q2 2025 financial results, highlighted by increased earnings and the strategic acquisition of FineMark Holdings [Performance Summary](index=1&type=section&id=Second%20Quarter%202025%20Performance%20Summary) Commerce Bancshares reported strong Q2 2025 financial results with diluted earnings per share of $1.14 and net income of $152.5 million, showing significant growth from prior periods Q2 2025 Earnings Summary | Metric | Q2 2025 | Q1 2025 | Q2 2024 | | :--- | :--- | :--- | :--- | | **Earnings Per Share (Diluted)** | $1.14 | $0.98 | $1.03 | | **Net Income** | $152.5M | $131.6M | $139.6M | First Half 2025 Performance Summary | Metric | H1 2025 | H1 2024 | | :--- | :--- | :--- | | **Earnings Per Share** | $2.12 | $1.85 | | **Net Income** | $284.1M | $252.2M | - CEO John Kemper attributed the strong performance to the company's diversified operating model, highlighting loan growth, strong fee income, low credit costs, and disciplined expense management as key drivers of steady profit growth[3](index=3&type=chunk) [Key Financial Highlights (Q2 2025)](index=1&type=section&id=Second%20Quarter%202025%20Financial%20Highlights%3A) Q2 2025 saw record net interest income of $280.1 million, a 14 basis point increase in net yield to 3.70%, and 8.8% non-interest income growth, alongside strong credit quality and capital levels Q2 2025 Key Metrics vs. Prior Periods | Metric | Q2 2025 | Change vs. Q1 2025 | Change vs. Q2 2024 | | :--- | :--- | :--- | :--- | | **Net Interest Income** | $280.1M | +$11.0M | N/A | | **Net Yield on Earning Assets** | 3.70% | +14 bps | N/A | | **Non-Interest Income** | $165.6M | N/A | +8.8% | | **Average Loans** | $17.5B | +1.5% | N/A | | **Net Loan Charge-off Ratio** | 0.22% | -3 bps | N/A | | **Return on Average Assets** | 1.95% | N/A | N/A | | **Efficiency Ratio** | 54.8% | N/A | N/A | - Trust fees grew by **$3.3 million**, or **6.3%**, compared to the same period last year, mainly due to higher private client fees[7](index=7&type=chunk) - The allowance for credit losses on loans to total loans ratio was **0.94%** at the end of the quarter, down slightly from **0.96%** at the end of Q1 2025[7](index=7&type=chunk) [Strategic Developments: FineMark Acquisition](index=1&type=section&id=FineMark%20Announcement) Commerce announced its strategic plan to acquire FineMark Holdings, Inc., expanding capabilities, specialized services, and market reach - The company announced plans to acquire FineMark Holdings, a bank and trust company based in Fort Myers, Florida[3](index=3&type=chunk) - The acquisition is expected to add new capabilities, specialized client services, and extend market reach for Commerce, while Commerce will provide scale, capital, and operational infrastructure to FineMark[3](index=3&type=chunk) [Financial Statements](index=3&type=section&id=FINANCIAL%20HIGHLIGHTS) This section presents Commerce Bancshares' detailed financial statements, including income, balance sheets, and credit quality, demonstrating overall financial health and performance [Financial Highlights Summary](index=3&type=section&id=FINANCIAL%20SUMMARY) The financial highlights table provides a comprehensive overview of Q2 2025 key performance indicators, showing improvements in revenue, net income, EPS, efficiency ratio, and net yield on earning assets Key Financial Metrics (Q2 2025 vs. Prior Periods) | Metric | Q2 2025 | Q1 2025 | Q2 2024 | | :--- | :--- | :--- | :--- | | **Total Revenue** | $445.8M | $428.1M | $414.5M | | **Net Income (attributable to CBSH)** | $152.5M | $131.6M | $139.6M | | **Diluted EPS** | $1.14 | $0.98 | $1.03 | | **Return on Average Assets** | 1.95% | 1.69% | 1.86% | | **Return on Average Equity** | 17.40% | 15.82% | 18.52% | | **Efficiency Ratio** | 54.77% | 55.61% | 55.95% | | **Net Yield on Interest Earning Assets** | 3.70% | 3.56% | 3.55% | [Consolidated Statements of Income](index=4&type=section&id=CONSOLIDATED%20STATEMENTS%20OF%20INCOME) The Q2 2025 consolidated income statement shows net interest income of $280.1 million and non-interest income of $165.6 million, contributing to a net income of $152.5 million Income Statement Highlights (in thousands) | Item | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | **Net Interest Income** | $280,147 | $262,249 | | **Total Non-Interest Income** | $165,613 | $152,244 | | **Total Non-Interest Expense** | $244,437 | $232,214 | | **Net Income Attributable to CBSH** | $152,479 | $139,553 | [Consolidated Balance Sheets](index=5&type=section&id=CONSOLIDATED%20BALANCE%20SHEETS%20-%20PERIOD%20END) As of June 30, 2025, total assets were $32.3 billion, with total loans at $17.7 billion, total deposits at $25.5 billion, and stockholders' equity at $3.64 billion Balance Sheet Highlights (in thousands) | Item | Jun. 30, 2025 | Mar. 31, 2025 | Jun. 30, 2024 | | :--- | :--- | :--- | :--- | | **Total Loans** | $17,665,468 | $17,379,421 | $17,163,065 | | **Total Investment Securities** | $9,236,826 | $9,601,068 | $8,917,152 | | **Total Assets** | $32,284,247 | $32,364,964 | $30,569,358 | | **Total Deposits** | $25,494,028 | $25,841,797 | $24,279,260 | | **Total Stockholders' Equity** | $3,640,572 | $3,477,787 | $3,137,735 | [Average Balance Sheets](index=6&type=section&id=AVERAGE%20BALANCE%20SHEETS) For Q2 2025, average total loans increased to $17.5 billion, average total deposits rose slightly to $24.92 billion, while average total assets decreased to $31.3 billion Average Balances (in thousands) | Item | Q2 2025 | Q1 2025 | Q2 2024 | | :--- | :--- | :--- | :--- | | **Total Loans** | $17,495,809 | $17,242,681 | $17,174,474 | | **Total Investment Securities** | $9,407,176 | $9,542,309 | $9,162,029 | | **Total Assets** | $31,297,059 | $31,502,166 | $30,235,950 | | **Total Deposits** | $24,918,180 | $24,855,168 | $24,285,452 | [Credit Quality](index=8&type=section&id=CREDIT%20QUALITY) Credit quality remained strong in Q2 2025, with annualized net loan charge-offs at 0.22%, non-accrual loans at 0.11%, and allowance for credit losses at 0.94% of total loans Key Credit Quality Ratios | Metric | Q2 2025 | Q1 2025 | Q2 2024 | | :--- | :--- | :--- | :--- | | **Total Net Loan Charge-offs Ratio** | 0.22% | 0.25% | 0.23% | | **Non-accrual Loans to Total Loans** | 0.11% | 0.13% | 0.11% | | **Allowance for Credit Losses to Total Loans** | 0.94% | 0.96% | 0.92% | - Total net loan charge-offs for Q2 2025 were **$9.7 million**, down from **$10.8 million** in the prior quarter[23](index=23&type=chunk) [Management's Discussion and Analysis (MD&A)](index=9&type=section&id=Management%20Discussion%20of%20Second%20Quarter%20Results) This section provides management's detailed analysis of Q2 2025 results, covering balance sheet changes, income and expense drivers, credit quality, and corporate actions [Balance Sheet Analysis](index=9&type=section&id=Balance%20Sheet%20Review) In Q2 2025, average loans grew to $17.5 billion, average available for sale debt securities decreased to $9.1 billion, and average deposits increased modestly to $63.0 million - Average loans increased by **$253.1 million** over the prior quarter to **$17.5 billion**, with growth in business loans (**+$141.1M**) and consumer loans (**+$66.3M**)[26](index=26&type=chunk) - Total average available for sale debt securities decreased by **$128.5 million** to **$9.1 billion**, with approximately **$1.3 billion** in maturities and pay downs expected in the next 12 months[27](index=27&type=chunk) - Total average deposits increased by **$63.0 million** compared to the previous quarter, driven by a **$58.2 million** increase in average demand deposits[28](index=28&type=chunk) [Net Interest Income Analysis](index=9&type=section&id=Net%20Interest%20Income) Net interest income increased by $11.0 million to $280.1 million in Q2 2025, driven by higher interest income and lower interest expense, expanding net yield to 3.70% - Net interest income rose **$11.0 million** from the previous quarter, driven by higher income on loans and securities and lower interest expense on borrowings and deposits[29](index=29&type=chunk) - The net yield on earning assets (FTE) increased to **3.70%** from **3.56%** in the prior quarter[29](index=29&type=chunk) - Interest expense decreased by **$3.8 million** QoQ, mainly due to lower average rates paid on deposits (**1.67%** vs **1.72%** in Q1) and lower average balances of borrowings[33](index=33&type=chunk) [Non-Interest Income Analysis](index=10&type=section&id=Non-Interest%20Income) Total non-interest income for Q2 2025 reached $165.6 million, an 8.8% year-over-year increase, primarily driven by higher trust fees and gains on asset sales - Non-interest income increased by **$13.4 million** (**8.8%**) compared to the same period last year, reaching **$165.6 million**[34](index=34&type=chunk) - Trust fees grew by **$3.3 million** (**6.3%**) over the same period last year, primarily from higher private client fees[36](index=36&type=chunk) - Other non-interest income increased YoY due to higher gains on asset sales (**+$5.5M**) and higher tax credit sales income (**+$956k**)[37](index=37&type=chunk) [Non-Interest Expense Analysis](index=10&type=section&id=Non-Interest%20Expense) Non-interest expense increased to $244.4 million in Q2 2025, primarily due to higher salaries, data processing, and professional services, including $1.9 million in acquisition costs - Non-interest expense increased to **$244.4 million**, up from **$232.2 million** in the same period last year[39](index=39&type=chunk) - The YoY increase was mainly due to higher salaries and employee benefits (**+$5.9M**), data processing and software (**+$1.4M**), and professional and other services (**+$4.4M**)[39](index=39&type=chunk)[40](index=40&type=chunk)[41](index=41&type=chunk) - Professional and other services expense included **$1.9 million** of acquisition-related legal and professional services costs[41](index=41&type=chunk) [Credit Quality Analysis](index=10&type=section&id=Credit%20Quality) Credit quality remained excellent in Q2 2025, with net loan charge-offs at 0.22%, allowance for credit losses at 0.94%, and non-accrual loans at 0.11% of total loans - The ratio of annualized net loan charge-offs to total average loans was **.22%** in Q2 2025, compared to **.25%** in the prior quarter and **.23%** in Q2 2024[43](index=43&type=chunk) - The allowance for credit losses on loans was **$165.3 million**, or **.94%** of total loans, a decrease of **$1.8 million** from the prior quarter[45](index=45&type=chunk) - Total non-accrual loans decreased by **$3.7 million** from the previous quarter to **$18.9 million**, representing **0.11%** of loans outstanding[46](index=46&type=chunk) [Other Corporate Actions](index=11&type=section&id=Other) In Q2 2025, Commerce Bancshares increased its cash dividend by 7.0% to $0.275 per share and repurchased 171,899 shares of treasury stock - The company paid a cash dividend of **$.275** per common share, a **7.0%** increase over the same period last year[47](index=47&type=chunk) - During the quarter, the company purchased **171,899 shares** of treasury stock at an average price of **$60.54**[47](index=47&type=chunk)

Group 1 - Commerce Bancshares (CBSH) reported quarterly earnings of $1.14 per share, exceeding the Zacks Consensus Estimate of $1.02 per share, and showing an increase from $1.07 per share a year ago, resulting in an earnings surprise of +11.76% [1] - The company achieved revenues of $445.76 million for the quarter ended June 2025, surpassing the Zacks Consensus Estimate by 3.58%, compared to $414.49 million in the same quarter last year [2] - Over the last four quarters, Commerce has consistently surpassed consensus EPS and revenue estimates [2] Group 2 - The stock has added approximately 1.6% since the beginning of the year, while the S&P 500 has gained 6.2%, indicating underperformance relative to the broader market [3] - The current consensus EPS estimate for the upcoming quarter is $1.01 on revenues of $430.55 million, and for the current fiscal year, it is $4.08 on revenues of $1.72 billion [7] - The Zacks Industry Rank for Banks - Midwest is in the top 34% of over 250 Zacks industries, suggesting a favorable outlook for the industry [8]

Core Viewpoint - Commerce Bancshares reported second-quarter total revenue of $445.8 million, exceeding expectations of $435.6 million [1] Financial Performance - Second-quarter provision for loan losses was $5.6 million, compared to an estimate of $15 million [1] - Earnings per share for the second quarter were $1.14 [1]

Core Viewpoint - Commerce Bancshares (CBSH) is positioned well to potentially beat earnings estimates in its upcoming quarterly report, supported by a history of positive earnings surprises [1][5]. Earnings Performance - For the last reported quarter, Commerce Bancshares achieved earnings of $0.98 per share, exceeding the Zacks Consensus Estimate of $0.93 per share, resulting in a surprise of 5.38% [2]. - In the previous quarter, the company reported earnings of $1.01 per share against an expected $0.94 per share, delivering a surprise of 7.45% [2]. Earnings Estimates - There has been a favorable change in earnings estimates for Commerce Bancshares, with a positive Zacks Earnings ESP (Expected Surprise Prediction) indicating potential for an earnings beat [5][8]. - The current Earnings ESP for Commerce is +1.79%, suggesting analysts are optimistic about its near-term earnings potential [8]. Predictive Metrics - Stocks with a positive Earnings ESP and a Zacks Rank of 3 (Hold) or better have a nearly 70% chance of producing a positive surprise [6]. - The Zacks Earnings ESP compares the Most Accurate Estimate to the Zacks Consensus Estimate, with the Most Accurate Estimate reflecting the latest analyst revisions [7].

Core Insights - Commerce Bancshares (CBSH) is expected to report quarterly earnings of $1.02 per share, reflecting a decline of 4.7% year-over-year, while revenues are forecasted to increase by 3.8% to $430.36 million [1] Earnings Estimates - There has been no revision in the consensus EPS estimate over the last 30 days, indicating stability in analysts' forecasts [1][2] - The consensus estimate for the 'Efficiency Ratio' is 55.9%, slightly improved from 56.0% in the same quarter last year [4] - Analysts predict a 'Net Interest Margin' of 3.6%, unchanged from the previous year [4] Key Financial Metrics - 'Average total interest earning assets' are estimated at $30.64 billion, up from $30.02 billion year-over-year [5] - The estimated 'Book value per share' is $26.85, compared to $24.48 a year ago [5] - The 'Tier I risk-based capital ratio' is expected to be 17.0%, an increase from 16.2% in the previous year [6] - The 'Total risk-based capital ratio' is projected at 17.8%, compared to 17.0% last year [6] Loan and Income Projections - 'Non-accrual loans' are expected to be $21.76 million, up from $19.30 million in the same quarter last year [7] - The forecast for 'Total Non-Interest Income' is $157.57 million, compared to $152.24 million a year ago [8] - 'Fully-taxable equivalent net interest income' is projected to reach $275.75 million, up from $264.58 million last year [8] - 'Trust fees' are expected to be $55.69 million, compared to $52.29 million in the same quarter last year [8] - 'Bank card transaction fees' are forecasted at $47.42 million, slightly down from $47.48 million last year [9] Stock Performance - Commerce shares have increased by 6.5% over the past month, outperforming the Zacks S&P 500 composite's 4.1% increase [9]