Profits fell at Commerce Bancshares in Kansas City, Mo., in the third quarter, as expenses rose and income from fees and certain securities holdings declined.
The $24 billion-asset company reported a 6% year-over-year shrinkage in earnings, to $62.4 million. Its 66 cents per share were well short of the consensus estimate of 71 cents.
Noninterest expense increased 5.8%, to $171.3 million, because of personnel and technology investments such as salary increases. Salaries and employee benefits increased 5.7% to $100.9 million, while data-processing and software costs rose $5.8% to $21.1 million.
The bank’s loan-loss provisions also increased 9.3%, to $8.4 million.
Noninterest income dropped 1% to $111 million, a result the bank attributed to a decline in credit card fees in the third quarter and branch sales in the year-earlier period that inflated the past figure.
Bank card transaction fees dropped from $44.8 million to $44.6 million
Meanwhile, revenue from investment securities reversed from a net $2.9 million gain to a $378,000 loss.
Still, buoyed by loan growth of 5.3%, Commerce's net interest income rose 4.7%, to $162 million.
The fee-income drop and rising expenses “will likely have a modest ongoing negative impact on our earnings expectations into 2016,” Morgan Stanley’s Ken A. Zerbe wrote in a research report Wednesday.