Will Commerce Bancshares (CBSH) Disappoint Again? - Analyst Blog

Commerce Bancshares, Inc. CBSH is slated to release first-quarter 2014 results on Apr 10, before the opening bell.

In fourth-quarter 2013, Commerce Bancshares had missed the Zacks Consensus estimate by 2.82%. Results suffered due to a fall in net interest income and higher operating expenses. Nevertheless, lower provision for loan losses and rise in non-interest income partially offset the negatives.

Can the Kansas, MO-based bank deliver earnings beat this quarter? Or will it disappoint again? Let us see how things have shaped up for this announcement.

Factors to Affect Q1 Results

The overall market condition will play a major role in driving Commerce Bancshares' results in the first quarter. The interest rate scenario remained practically unchanged and the pressure on net interest income (NII) continued. Therefore, we anticipate Commerce Bancshares to report subdued NII growth for the quarter.

Moreover, we do not expect any substantial fall in expenses for Commerce Bancshares. During the quarter, the company did not announce any cost control program to reduce expenses. Nevertheless, absence of acquisition and merger deals narrows down the chances of a further increase in expenses.

On the flip side, with the Federal Reserve initiating tapering earlier this year, long-term rates are expected to improve. Though the effect of the same will not be felt any time soon, it is a sign of economic recovery. Revival of investors' confidence in the market is likely to have supported Commerce Bancshares's fee income during the said quarter.

Moreover, toward the end of January, Commerce Bancshares declared a 5% hike in its regular dividend payout to 22.5 cents per share. This reflects a strong balance position, which will back the company's first-quarter earnings.

Nevertheless, the initiatives by Commerce Bancshares to improve profitability have failed to impress analysts. As a result, the Zacks Consensus Estimate for the quarter remained stable at 68 cents per share over the last 7 days.

Earnings Whispers

Our proven model does not conclusively show Commerce Bancshares as likely to beat the Zacks Consensus Estimate in the first quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. Unfortunately, this is not the case here as elaborated below.

Zacks ESP: The Earnings ESP for Commerce Bancshares is 0.00%. This is because the Most Accurate estimate and the Zacks Consensus Estimate stand at 68 cents.

Zacks Rank: Commerce Bancshares' Zacks Rank #2 increases the predictive power of ESP. However, we also need to have a positive ESP to be confident of an earnings surprise call.  

Stocks to Consider

Here are some banking stocks that you may want to consider as our model shows that these have the right combination of elements to post an earnings beat this quarter.

First Interstate Bancsystem Inc. FIBK has an earnings ESP of +2.27% and a Zacks Rank #3. It is scheduled to report first-quarter results on Apr 23.

The earnings ESP for Wintrust Financial Corporation WTFC is +1.49% and it carries a Zacks Rank #2. The company is expected to release first-quarter results on Apr 15.

The PNC Financial Services Group, Inc. PNC has an earnings ESP of +1.21% and a Zacks Rank #3. It is slated to report first-quarter results on Apr 16.