Canadian Imperial Bank of Commerce’s shares surged after third-quarter results showed its U.S. operations and higher revenue lifted profit above analysts’ estimates.

The company’s commercial-banking and wealth-management division in the U.S., which includes the PrivateBank operations CIBC acquired two years ago, was the quarter’s best-performer, with a profit jump of 6.2 per cent. Earnings from Canadian personal and small-business banking, the largest division, climbed less than half as much.

“The company’s U.S. segment continues to drive above-average growth,” Scott Chan, an analyst at Canaccord Genuity, said in a note to clients.

Shares of the company surged the most in more than 20 months after the report, which showed overall profit rising 2.1 per cent. Chief Executive Officer Victor Dodig told investors in May that earnings this year would be “relatively flat” partly due to higher spending. The positive results out of the U.S. helped counter a 13 per cent decline in CIBC’s capital-markets business and a one per cent drop in Canadian commercial banking and wealth management.

“Our commercial banks continue to perform exceptionally well,” Chief Financial Officer Kevin Glass said in a phone interview. “Their loan and deposit growth is very strong and they continue to be very well managed.”

Profit at Canada’s fifth-largest lender was $1.4 billion for the period ended July 31, with adjusted earnings of $3.10 a share, the Toronto-based lender said Thursday in a statement, beating analysts’ estimates by four cents. CIBC raised its quarterly dividend 2.9% to $1.44 a share.

Shares of the bank rose as much as 3.3 per cent to $102.74 in trading in Toronto.

Loan Provisions

Still, CIBC saw continued weakness in its domestic mortgages and rising loan-loss provisions even as larger rival Royal Bank of Canada posted improvements in those areas for the three-month period.

CIBC once had enviable mortgage growth, trouncing other banks with 12 per cent year-over-year gains through 2017 -- until the pendulum started to swing the other way at the end of last year. The domestic mortgage book contracted for the third straight quarter with $201 billion in balances, down one per cent from a year earlier.

Investors and analysts have been watching for signs of deteriorating loans since short sellers earlier this year said that CIBC and other banks are ill-prepared for worsening credit conditions. CIBC set aside $291 million for soured loans in the quarter, up from C$255 million in the previous three months and 21 per cent more than a year earlier -- and higher than analysts expected.

“We’re comfortable with our portfolios and think that they’re performing extremely well,” Glass said. “There’s nothing from a systemic basis that gives us pause.”

James Shanahan, an analyst with Edward Jones & Co., said he sees “broader concerns” about credit quality. “Elevated credit costs and increased impairments in the business-loan portfolio are more concerning and offset what is a modest beat,” Shanahan said in an interview.

Other key takeaways:

-CIBC defied analysts’ pessimistic expectations quarter after quarter for almost four years, until missing estimates in the fourth quarter of 2018 -- and subsequent periods since. CIBC broke that streak in the quarter ended July 31.

-Net interest income was $2.69 billion, up 4.5 per cent and rebounding from a slowdown earlier in the year.

-The bank also announced that CFO Glass will step down Oct. 31 to be replaced by Hratch Panossian, currently executive vice president, global controller and investor relations.