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COMMERCE BANCSHARES INC /MO/ (CBSH)·Q3 2025 Earnings Summary

Executive Summary

  • Q3 2025 EPS was $1.06 and total revenue was $441.0M; EPS declined vs Q2 on higher provision and softer non-interest income, while revenue grew 4.6% year over year .
  • Results missed Wall Street consensus: EPS $1.06 vs $1.104* and revenue $441.0M vs $447.6M*; the miss was driven by provisioning ($20.1M) and lower gains on asset sales quarter over quarter .
  • Net interest margin fell 6 bps sequentially to 3.64% as interest-bearing deposit costs rose to 1.71% and borrowings increased; efficiency ratio held at 55.3% .
  • Credit quality remained strong (NALs 0.09% of loans; NCOs 0.23% annualized), but the ACL was increased to 0.99% of loans due to weakness in soft commodity prices affecting certain industries .
  • Shareholder actions: board approved a repurchase authorization up to 5,000,000 shares and declared a $0.275 quarterly cash dividend plus a 5% stock dividend; FineMark acquisition remains on track for January 1, 2026 close .

What Went Well and What Went Wrong

  • What Went Well

    • Diversified fee engine: Non-interest income was $161.5M (+1.6% YoY) with trust fees +$3.7M YoY and deposit/account fees +$2.0M YoY, supporting 36.6% of total revenue .
    • Balance sheet stability: Average loans held flat sequentially at $17.5B (+$468.5M YoY); average deposits modestly lower q/q but stable YoY; book value per share rose to $28.51 (+4% q/q) .
    • Management confidence: “Commerce delivered another strong quarter… steady loan balances, robust fee income, and disciplined expense management” — CEO John Kemper .

  • What Went Wrong

    • Margin pressure: Net yield on interest-earning assets fell to 3.64% (-6 bps q/q) as interest-bearing deposit costs increased to 1.71% and borrowings rose .
    • Earnings miss vs Street: EPS and revenue came in below consensus*, with EPS down from $1.14 in Q2; provision rose to $20.1M (from $5.6M) .
    • Lower non-interest income sequentially (-$4.1M q/q), mainly due to lower gains on asset sales (-$6.5M), partly offset by higher trust fees .

Financial Results

MetricQ3 2024Q1 2025Q2 2025Q3 2025
Total Revenue ($USD Millions)$421.4 $428.1 $445.8 $441.0
Net Interest Income ($USD Millions)$262.4 $269.1 $280.1 $279.5
Non-Interest Income ($USD Millions)$159.0 $158.9 $165.6 $161.5
Diluted EPS ($USD)$1.01 $0.98 $1.14 $1.06
Net Income ($USD Millions)$138.0 $131.6 $152.5 $141.5
Net Interest Margin (%)3.50 3.56 3.70 3.64
Efficiency Ratio (%)56.31 55.61 54.77 55.26
ROAA (%)1.80 1.69 1.95 1.78
ROAE (%)16.81 15.82 17.40 15.26

Segment and Fee Detail (Non-Interest Income)

Component ($USD Millions)Q3 2024Q1 2025Q2 2025Q3 2025
Trust Fees$54.7 $56.6 $55.6 $58.4
Bank Card Transaction Fees$47.6 $45.6 $46.4 $45.6
Deposit Account Charges & Other Fees$25.4 $26.6 $26.2 $27.4
Other$17.3 $16.8 $22.5 $14.8
Total Non-Interest Income$159.0 $158.9 $165.6 $161.5

KPIs and Credit

KPIQ3 2024Q1 2025Q2 2025Q3 2025
Avg Loans ($USD Billions)$17.0 $17.24 $17.50 $17.49
Avg Deposits ($USD Billions)$24.35 $24.86 $24.92 $24.78
Interest-Bearing Deposit Cost (%)2.00 1.72 1.67 1.71
NCOs / Avg Loans (%)0.22 0.25 0.22 0.23
Non-Accrual Loans / Total Loans (%)0.11 0.13 0.11 0.09
ACL / Total Loans (%)0.94 0.96 0.94 0.99
Non-Interest Income / Total Revenue (%)37.7 37.1 37.2 36.6
Non-Interest-Bearing Deposits (% of Avg)—29 30 30

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
FineMark Holdings acquisition closeJan 1, 2026Announced June 16, 2025 close expected Regulatory approvals received; expected close Jan 1, 2026 Maintained timeline
Investment portfolio cash flowsNext 12 months~$1.3B expected in prior disclosures ~$1.3B maturities/paydowns expected over next 12 months Maintained
Net interest income protection floorsOngoing4 floor contracts in place Four SOFR-indexed floors: 3.5%, 3.25%, 3.0%, 2.75% each $500M notional Maintained
Quarterly cash dividendQ4 2025$0.275/share $0.275/share payable Dec 15, 2025 Maintained
Stock dividendDec 16, 20255% stock dividend was a practice in prior year (Dec 2024) Board approved 5% stock dividend payable Dec 16, 2025 Reaffirmed
Share repurchase programOpen-endedPrior authorization (remaining) Up to 5,000,000 total shares authorized (including prior remaining) Increased capacity

Earnings Call Themes & Trends

TopicPrevious Mentions (Q1 2025 and Q2 2025)Current Period (Q3 2025)Trend
Net interest margin and deposit costsNIM rose to 3.56%; deposit costs down to 1.72% (Q1). NIM up to 3.70%; deposit costs down to 1.67% (Q2) NIM fell to 3.64%; deposit costs up to 1.71%; borrowings increased Softer NIM on rising funding costs
Fee income mixTrust and deposit/account fees strength; “Other” boosted by asset sale gains in Q1/Q2 Fee income steady YoY, down q/q on lower gains on asset sales Stable but less “Other”
Credit qualityNALs ~0.11%; NCOs ~0.22–0.25%; ACL ~0.94–0.96% NALs 0.09%; NCOs 0.23%; ACL 0.99% (raised due to soft commodity pressure) Strong quality; higher reserves
CRE office exposureNo NALs; criticized office loans ~11%; LTV ~64.8% (Q2) Office NALs zero; criticized office 15.7%; LTV 64.4% Slightly higher criticized but no losses
AFS portfolio & AOCIDuration ~4.1–4.2 yrs; AOCI improved Q1→Q2 Duration ~4.4 yrs; AOCI loss improved to $(534)M from $(581)M Gradual AOCI improvement
M&A (FineMark)Announced, strategic rationale outlined (Q2) All approvals received; close expected Jan 1, 2026 On track

Note: An earnings call transcript for CBSH was not available in our document set; themes reflect management discussion in the 8-K and press releases .

Management Commentary

  • “Commerce delivered another strong quarter, underscoring the resilience of our diversified operating model… steady loan balances, robust fee income, and disciplined expense management, all of which contributed to another period of high profitability” — CEO John Kemper .
  • “We maintained excellent credit quality, with non-accrual loans at just .09% of total loans, and added a modest reserve to the allowance for credit losses” — CEO John Kemper .
  • “We look forward to welcoming FineMark’s team… on January 1, 2026, our expected close date” — CEO John Kemper .
  • Management noted lower gains on asset sales ($6.5M) driving sequential non-interest income declines, and higher deposit/borrowing rates pressuring NIM .

Q&A Highlights

  • No Q&A transcript was available in the sourced filings/press releases; management commentary clarified quarterly drivers: higher provision for credit losses (to $20.1M), lower gains on asset sales, and modestly higher funding costs offsetting higher loan interest income .

Estimates Context

MetricQ3 2025 ConsensusReportedSurprise
Primary EPS$1.1038*$1.06 -$0.0438*
Revenue ($USD)$447.6M*$441.0M -$6.6M*
EPS – # of Estimates8*——
Revenue – # of Estimates6*——

Values retrieved from S&P Global.*
Press coverage corroborated a miss vs estimates with rising expenses and provisions cited as drivers .

Key Takeaways for Investors

  • EPS and revenue missed consensus*, with EPS down q/q; margin compression from higher deposit/borrowing costs merits monitoring into Q4 .
  • Fee income diversification continues to underpin returns (36.6% of revenue), reducing earnings volatility from NIM shifts .
  • Credit remains a differentiator (NALs 0.09%; NCOs 0.23%); reserve build to 0.99% of loans reflects proactive stance amid soft commodity exposure .
  • AFS portfolio duration 4.4 years and improving AOCI could provide OCI tailwinds if rates stabilize; ~$1.3B expected cash flows over 12 months support reinvestment/NII protection .
  • Shareholder returns enhanced: repurchase authorization up to 5,000,000 shares and a 5% stock dividend alongside a $0.275 quarterly dividend .
  • FineMark acquisition on track (close Jan 1, 2026) adds wealth/private banking scale; expect medium-term EPS accretion per prior framework if integration executes as planned .
  • Near-term trading: potential pressure from NIM headwinds and the Q3 miss narrative; medium-term thesis supported by fee mix, strong capital, and disciplined credit .

Sourced Documents: Q3 2025 8-K and press release ; Q2 2025 8-K ; Q1 2025 8-K ; Other press releases (dividend/buyback) . External coverage: Nasdaq and Seeking Alpha .