Shares of Commerce Bancshares, Inc. CBSH gained nearly 3% following its first-quarter 2016 earnings release, on improved performance backed by strong growth in loans and deposits. The company reported earnings per share of 65 cents, which surpassed the Zacks Consensus Estimate of 63 cents. Moreover, the bottom line was up 12% from the year-ago tally. Commerce Bancshares Inc. (CBSH) EPS BNRI & Surprise Percent - Last 5 Quarters | FindTheCompany Better-than-expected results were driven by growth in revenues, partially mitigated by higher expenses and a substantial rise in provisions. Further, profitability ratios improved during the quarter, while asset quality and capital ratios depicted a mixed bag.Net income available to common shareholders in the reported quarter was $63.1 million, up 7% year over year.Performance in DetailCommerce Bancshares’ net revenue increased 12% year over year to $282.8 million. Moreover, the figure outpaced the Zacks Consensus Estimate of $279.6 million.Net interest income summed $163.8 million, up 12% year over year. The rise reflected higher interest income, partly offset by an increase in interest expense.Non-interest income grew 12% year over year to $119.0 million. The increase was driven by improvement in all fee income components except capital market fees.Non-interest expenses rose 8% year over year to $177.5 million. A rise in all expense components, except net occupancy, equipment as well as marketing costs, triggered the increase.Efficiency ratio for the quarter fell to 62.62% from 64.65% in the prior-year quarter. A fall in efficiency ratio implies an improvement in profitability.As of Mar 31, 2016, total loans summed $12.7 billion, up 8% year over year; while total deposits came in at $20.7 billion, up 6% year over year.Credit QualityCredit quality represented a mixed bag. Allowance for loan losses, as a percentage of total loans, was 1.20%, down 11 basis points (bps) year over year.However, provision for loan losses surged significantly year over year to $9.4 million. Also, net charge-offs to average loan ratio (annualized) inched up 2 bps year over year to 0.28%.Capital and Profitability RatiosCommerce Bancshares’ capital ratios displayed a mixed picture, while profitability ratios reflected improvement in the quarter.As of Mar 31, 2016, Tier I leverage ratio declined to 9.11% from 9.31% at the end of the prior-year quarter. However, tangible common equity to assets ratio inched up to 8.84% from 8.83% as of Mar 31, 2015.Further, the company’s return on average assets ascended 2 bps year over year to 1.07% as of Mar 31, 2016; while return on average equity climbed 51 bps year over year to 11.20%.Also, book value per common share came in at $23.85 as of Mar 31, 2016, up from $22.30 at the end of the year-ago quarter.Our ViewpointCommerce Bancshares is well positioned to capitalize on inorganic growth opportunities, given a strong capital base and healthy liquidity level. Also, the company’s initiatives in the mortgage banking area are expected to boost fee generation going forward.Though the company’s steady capital deployment activities continue to boost shareholders’ value, we remain concerned about the impact of elevated costs, stringent regulations and margin compression on its near-term profitability.Commerce Bancshares currently carries a Zacks Rank #3 (Hold).Among other Midwest banks, TCF Financial Corporation TCB and PrivateBancorp, Inc. PVTB will announce results on Apr 21; while Old National Bancorp. ONB is slated to report results on May 2.Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report TCF FINL CORP (TCB): Free Stock Analysis Report COMMERCE BANCSH (CBSH): Free Stock Analysis Report OLD NATL BCP (ONB): Free Stock Analysis Report PRIVATEBANCORP (PVTB): Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research