Commerce Bancshares (NASDAQ: CBSH) reported Q1 EPS of $0.68, $0.03 better than the analyst estimate of $0.65.

David W. Kemper, Chairman and CEO, said, "This quarter we continued to experience solid loan demand as average loans grew 8% annualized, with most of this growth occurring in our commercial lending business. Average deposits also grew $373 million, or 7% annualized, this quarter after strong growth in the previous quarter. Net interest income increased $14.5 million this quarter compared to the same period last year while our net interest margin expanded to 3.14%. Growth in earning assets, coupled with an improving rate environment, had a positive impact to our margins. We continue to see good growth in both trust and deposit fees which grew 9% and 6%, respectively, this quarter over the same period last year, while mortgage banking fees continued to reflect solid growth. Non-interest expense grew by $5.6 million over the previous quarter but included seasonally higher benefits costs of $5.1 million which normally occur in the first quarter of each year."

Mr. Kemper added, "The overall credit environment continues to be very favorable as both net loan charge-offs and non-performing loans remain at low levels. For the current quarter, net loan charge-offs totaled $9.2 million, compared to $9.0 million in the previous quarter and $8.8 million in the first quarter of 2016. The ratio of annualized net loan charge-offs to average loans was .28% in both the current quarter and the same period last year. This quarter, net recoveries on commercial loans totaled $477 thousand compared to net recoveries in the prior quarter of $517 thousand. Net loan charge-offs of personal banking loans increased slightly to $9.7 million, mostly the result of higher credit card losses. During the current quarter, the provision for loan losses totaled $11.1 million, or $1.9 million higher than net loan charge-offs. The allowance for loan losses amounted to $157.8 million at March 31, 2017, or 1.16% of period end loans."

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