Commerce Bancshares Reports 3% YOY Growth in Loan Balances

Commerce Bancshares saw its net income increase 9% year over year, driven in part by expanding net interest margin.

For the quarter ended June 30, the Missouri-based regional bank holding company with 142 branches in seven states posted a net income of $139.6 million, up from $127.8 million in the same quarter last year, according to a second-quarter earnings highlights presentation issued Thursday (July 18).

“Our earnings remained strong this quarter, driven by an expanding net interest margin, solid fee income and well-controlled expenses,” John Kemper, president and CEO of Commerce Bancshares, said in a Thursday earnings release.

Kemper added that the bank’s net interest margin expansion of 22 basis points was due to a repositioning of some of its available for sale securities, asset repricing and inflation income on treasury bonds.

Commerce Bancshares reported that average loan balances in the second quarter totaled $17.2 billion, showing 3% growth over the previous year.

Commercial loan balances increased 3%, while consumer loan balances were up 2%. The bank saw a 0.5% dip in consumer credit card average balances compared to a year earlier. It recorded increases in all other categories, with business loans seeing the biggest dollar increase and revolving home equity loans having the largest percentage rise.

Non-accrual loans constituted 0.11% of total loans, up from 0.04% in the second quarter of 2023. The bank said in the presentation that its conservative risk profile drove outperformance across credit cycles.

“Credit quality across our entire loan portfolio remains excellent, with non-accrual loans at just 11 basis points of total loans,” Kemper said.

Commerce Bancshares’ non-interest income for the quarter was $152.2 million, up by 3% from last year. Trust fees accounted for the biggest growth in terms of dollars, increasing by $5.0 million from the previous year, an 11% increase. The bank attributed this growth to higher private client fees.

Non-interest expenses rose to $232.2 million, a 2% increase from the same quarter last year. This total included a $5.0 million donation to a related charitable foundation, the Commerce Bancshares Foundation; otherwise, non-interest expenses were flat compared with the second quarter of 2023.