Why Is Commerce (CBSH) Down 3.7% Since Last Earnings Report?

Core Viewpoint - Commerce Bancshares reported strong second-quarter earnings, surpassing estimates despite facing high expenses and provisions, indicating potential for future growth [2][3][4]. Financial Performance - Earnings per share for Q2 2025 were $1.14, exceeding the Zacks Consensus Estimate of $1.02, and reflecting a 10.7% increase year-over-year [2]. - Net income attributable to common shareholders rose to $152.5 million, a 9.3% increase from the previous year [3]. - Total revenues reached $445.8 million, up 7.5% year-over-year, surpassing the consensus estimate of $430.4 million [4]. Income and Expenses - Net interest income (NII) was $280.1 million, a 6.8% increase from the prior year, with a net yield on interest-earning assets expanding to 3.70% [4]. - Non-interest income increased to $165.6 million, up 8.8% year-over-year, driven by growth in most components [5]. - Non-interest expenses rose by 5.3% year-over-year to $244.4 million, influenced by increases in nearly all cost components [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 by 1.3% to $25.49 billion [7]. Asset Quality - Provision for credit losses was $5.6 million, a 2.4% increase from the prior year [8]. - The allowance for credit losses on loans to total loans was 0.94%, up 2 basis points year-over-year [8]. Capital and Profitability Ratios - The Tier I leverage ratio improved to 12.75%, up from 12.13% in the previous year [9]. - Return on total average assets was 1.95%, an increase from 1.86% year-over-year, while return on average equity decreased to 17.40% from 18.52% [9]. Share Repurchase Activity - The company repurchased 0.17 million shares at an average price of $60.54 during the reported quarter [10]. Market Sentiment and Outlook - Following the earnings release, there has been an upward trend in estimates revision, with a consensus estimate shift of 7.17% [11]. - The stock currently holds a Zacks Rank 2 (Buy), indicating expectations for above-average returns in the coming months [13].