Commerce reported third-quarter earnings of $66 million, or 75 cents a share, declining from $70.7 million, or 80 cents a share, in the second quarter, but increasing from $65.4 million, or 72 cents a share, during the third quarter of 2011. The year-over-year earnings improvement reflected a decline in credit expenses.
The sequential earnings decline reflected a decline in net interest income to $153.8 million in the third quarter from $165.1 million in the second quarter, as the company's net interest margin -- the difference between the average yield on loans and investments and the average cost for deposits and borrowings -- narrowed by 25 basis points to 3.30%.
KBW analyst Christopher McGratty said on Oct. 16 after Commerce announced its third-quarter results that "CBSH has strung together consecutive quarters of fairly healthy loan growth (5.5% and 11%, respectively, ann.), which should help to alleviate some, but not all, of the margin pressure it is experiencing."
With so much excess capital "and a strong dividend history (44 straight years of an increase)," and in light of the possible elimination of the 15% cap on federal income taxes on qualified investment dividend income in 2013, McGratty said there was a good possibility for the company to declare a special dividend.Commerce did just that on Nov. 2, declaring a special dividend of $1.50, along with a 5% stock dividend, payable on Dec. 17 to shareholders of record, as of Nov. 30. CBSH data by YCharts
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