merce Bancshares(US:CBSH)2025-05-06 19:00Financial Performance - For the quarter ended March 31, 2025, net income attributable to Commerce Bancshares, Inc. was $131.6 million, an increase of $18.9 million, or 16.8%, compared to the same quarter in 2024[160]. - Net interest income for the first quarter of 2025 was $269.1 million, an increase of $20.1 million, or 8.1%, compared to the first quarter of 2024[160]. - Non-interest income rose by $10.1 million, or 6.8%, compared to the first quarter of 2024, primarily driven by increases in trust fees, deposit account fees, and capital market fees[161]. - The efficiency ratio improved to 55.61% in the first quarter of 2025, down from 61.67% in the same quarter of 2024[155]. - Diluted earnings per common share increased to $0.98, a rise of 19.5% compared to $0.82 in the first quarter of 2024[160]. - The annualized return on average assets was 1.69%, while the annualized return on average equity was 15.82% for the quarter ended March 31, 2025[160]. - Total non-interest income rose by $10.1 million, or 6.8%, to $158.9 million in Q1 2025, mainly due to higher trust fees and deposit account charges[172]. - The Wealth segment's pre-tax profitability increased by $2.9 million, or 6.8%, in Q1 2025 compared to the same period last year[236]. - The Commercial segment's income before income taxes rose by $8.8 million, or 9.8%, in Q1 2025 compared to Q1 2024[234]. Credit Losses and Loan Performance - The provision for credit losses increased by $9.7 million, or 202.6%, compared to the same quarter in the prior year, due to an increase in the estimate of allowance for credit losses on loans[160]. - The allowance for credit losses on loans increased to $167.0 million at March 31, 2025, representing 0.96% of total loans, up from 0.95% at December 31, 2024[183]. - The provision for credit losses on loans was $15.1 million for the first quarter of 2025, an increase of $8.1 million compared to $6.9 million in the same period last year[182]. - Net loan charge-offs totaled $10.8 million in Q1 2025, up from $10.7 million in the previous quarter and $8.9 million in the same quarter last year[180]. - Non-accrual loans increased to $22.6 million at March 31, 2025, up $4.3 million from December 31, 2024, primarily due to increases in business real estate non-accrual loans[188]. - Total non-performing assets were $23.2 million at March 31, 2025, representing 0.13% of total loans, compared to 0.11% at December 31, 2024[188]. - The annualized net charge-offs on average consumer credit card loans were 5.04% in Q1 2025, compared to 4.59% in the previous quarter[181]. - Potential problem loans decreased to $286.9 million at March 31, 2025, a decline of 13.2% from $330.3 million at December 31, 2024[189]. - The company considers the allowance for credit losses and the liability for unfunded commitments adequate to cover expected losses in the loan portfolio as of March 31, 2025[185]. Equity and Capital - Total equity as of March 31, 2025, was $3.5 billion, up from $2.96 billion in the same period of 2024[159]. - The tangible common equity to tangible assets ratio improved to 10.33% as of March 31, 2025, compared to 9.24% a year earlier[159]. - The Company met all capital adequacy requirements with a Tier I common risk-based capital ratio of 16.86% as of March 31, 2025[223]. Deposits and Borrowings - Total average deposits decreased by $83.7 million this quarter, primarily due to declines in demand deposits and certificates of deposit by $165.6 million and $158.2 million, respectively[210]. - Core customer deposits totaled $23.5 billion, representing 90.9% of total deposits, with an increase of $588.3 million compared to December 31, 2024[214]. - The Company has a borrowing capacity of $6.1 billion through advances from the FHLB and the Federal Reserve[214]. - Certificates of deposit of $100,000 or greater totaled $1.4 billion, comprising 5.3% of total deposits[216]. Interest Income and Expense - Total interest income (FTE) decreased by $10.3 million, or 3.9%, to $255.9 million in Q1 2025 compared to the same quarter last year, primarily due to a 25 basis point decrease in the average rate earned[166]. - Interest income on investment securities increased by $10.3 million to $77.0 million in Q1 2025, driven by a $1.7 billion increase in average balances and a 201 basis point increase in the average rate earned[167]. - The average fully taxable-equivalent yield on total interest-earning assets was 4.81% in Q1 2025, up from 4.78% in Q1 2024[169]. - Interest expense decreased by $14.5 million compared to Q1 2024, with a notable decline in interest expense on interest-bearing deposits[170]. - The overall average rate incurred on all interest-bearing liabilities was 1.89% in Q1 2025, down from 2.21% in Q1 2024[171]. - The average rate paid on total interest bearing deposits decreased to 1.72% in Q1 2025 from 1.97% in Q1 2024, indicating a reduction in funding costs[241]. Market and Stock Performance - The market price of common stock increased to $62.23, compared to $50.67 in the same quarter of 2024[155]. - The Company purchased 854,806 shares at an average price of $64.56 during the three months ended March 31, 2025, with 2,076,842 shares remaining available for purchase[225]. Cash Flow and Investments - Cash flows from operating activities provided $138.6 million, while investing activities used $373.4 million, resulting in a net decrease in cash of $102.1 million[221]. - Total investment securities pledged for securing borrowings amounted to $6.3 billion as of March 31, 2025[213]. - The fair value of the available for sale debt portfolio was $9.3 billion at March 31, 2025, with an unrealized net loss of $832.9 million[212]. - The unrealized loss on available for sale debt securities decreased by $157.7 million to $832.9 million at the end of Q1 2025[209]. - The unrealized loss on debt securities improved to $(935,054) thousand in Q1 2025 from $(1,274,125) thousand in Q1 2024, indicating a reduction in market risk exposure[241]. Loan Portfolio Composition - As of March 31, 2025, the company's total loans outstanding amounted to $32.4 billion, with construction and land loans representing 8.2% of this total[192][207]. - The commercial construction loan portfolio increased by $18.6 million during the first quarter of 2025, totaling $1.2 billion, which is 85.7% of the construction and land loans[193]. - Business real estate loans totaled $3.6 billion, accounting for 20.9% of the total loan portfolio, with owner-occupied properties making up 34.5% of these loans[194]. - The company's revolving home equity loans stood at $356.7 million, with 93.3% requiring interest-only monthly payments[197]. - The consumer loan portfolio included $774.3 million in auto loans, which represented 36.6% of the consumer loan portfolio, with new auto loans originated totaling $98.0 million in Q1 2025[199]. - The energy lending portfolio decreased to $322.4 million, or 1.9% of total loans, down by $15.6 million from the previous quarter[203]. - Shared national credits (SNCs) remained stable at $1.6 billion, with additional unfunded commitments of $2.3 billion as of March 31, 2025[205].