Commerce Bancshares, Inc. · NASDAQ:CBSH
Commerce Bancshares — Shareholder Meeting (April 2024)
48 slides from Commerce Bancshares's shareholder meeting presentation, Apr 17, 2024
Slide 1: Resilient in Challenging Times: Annual Shareholders' Meeting
RESILIENT IN CHALLENGING TIMES COMMERCE BANCSHARES, INC. ANNUAL SHAREHOLDERS’ MEETING April 17, 2024
Slide 2: CBI Annual Shareholders' Meeting: Agenda
CBI ANNUAL SHAREHOLDERS’ MEETING: AGENDA 1 Call to Order and Welcome 2 Rules of Conduct 3 Secretary’s Report 4 Business Matters 5 Introduction of Public Accountants 6 CEO’s Presentation 7 Adjournment 2
Slide 3: CBI Annual Shareholders' Meeting: Agenda
CBI ANNUAL SHAREHOLDERS’ MEETING: AGENDA 1 Call to Order and Welcome 2 Rules of Conduct 3 Secretary’s Report 4 Business Matters 5 Introduction of Public Accountants 6 CEO’s Presentation 7 Adjournment 3
Slide 4: CBI Annual Shareholders' Meeting: Agenda
CBI ANNUAL SHAREHOLDERS’ MEETING: AGENDA 1 Call to Order and Welcome 2 Rules of Conduct 3 Secretary’s Report 4 Business Matters 5 Introduction of Public Accountants 6 CEO’s Presentation 7 Adjournment 4
Slide 5: CBI Annual Shareholders' Meeting: Agenda
CBI ANNUAL SHAREHOLDERS’ MEETING: AGENDA 1 Call to Order and Welcome 2 Rules of Conduct 3 Secretary’s Report 4 Business Matters 5 Introduction of Public Accountants 6 CEO’s Presentation 7 Adjournment 5
Slide 6: CBI Annual Shareholders' Meeting: Agenda
CBI ANNUAL SHAREHOLDERS’ MEETING: AGENDA 1 Call to Order and Welcome 2 Rules of Conduct 3 Secretary’s Report 4 Business Matters 5 Introduction of Public Accountants 6 CEO’s Presentation 7 Adjournment 6
Slide 7: CBI Annual Shareholders' Meeting: Agenda
CBI ANNUAL SHAREHOLDERS’ MEETING: AGENDA 1 Call to Order and Welcome 2 Rules of Conduct 3 Secretary’s Report 4 Business Matters 5 Introduction of Public Accountants 6 CEO’s Presentation 7 Adjournment 7
Slide 8: Resilient in Challenging Times: CEO Presentation
RESILIENT IN CHALLENGING TIMES COMMERCE BANCSHARES, INC. ANNUAL SHAREHOLDERS’ MEETING John Kemper President and Chief Executive Officer April 17, 2024
Slide 9: Resilient in Challenging Times
RESILIENT IN CHALLENGING TIMES Investor.commercebank.com 2023 Annual Report 9
Slide 10: Cautionary Statement
CAUTIONARY STATEMENT A number of statements we will be making in our presentation and in the accompanying slides are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, such as statements of the Corporation’s plans, goals, objectives, expectations
Slide 11: Today's Discussion
TODAY’S DISCUSSION About Economic Our Built For This: Commerce and Industry Strategic Resilient in Bancshares Themes Position Challenging Times 11
Slide 12: Today's Discussion
TODAY’S DISCUSSION About Economic Our Built For This: Commerce and Industry Strategic Resilient in Bancshares Themes Position Challenging Times 12
Slide 13: 158 Years in Business
COMMERCE BANCSHARES TOTAL ASSETS $31.7 158 YEARS IN BUSINESS BILLION TOTAL DEPOSITS $25.4 BILLION 41st LARGEST U.S. BANK BASED ON ASSET SIZE2 MARKET CAP TOTAL $17.2 LOANS3 BILLION $7.0 BILLION $9.9 COMMERCIAL CARD VOLUME 22ND BILLION AS OF DECEMBER 31, 2023 LARGEST U.S. BANK BASED ON MARKET CAP2 TOT
Slide 14: Super-Community Bank Platform
SUPER-COMMUNITY BANK PLATFORM A consistent strategy with a long-term view Customer relationship-based: Community Bank Challenge Accepted.® Super-Regional Bank • Award-winning High-performing teams and • Sophisticated payment customer service system capabilities engaged workforce • Focus on the full
Slide 15: Track Record of Long-Term Outperformance
TRACK RECORD OF LONG-TERM OUTPERFORMANCE Revenue Diversification Deposit Franchise Balanced earnings profile, fee $23.4 billion in low-cost, diverse revenue at 36%1 of total revenue, deposits2 with peer-leading bolstered by growing wealth and historical deposit betas national payments businesses Cre
Slide 16: Our Core Values
At Commerce, our core values shape the way we live and work: We have a We collaborate We act with We are We strive for long-term as one team integrity customer- excellence view focused How we put our culture into practice: What defines us, ultimately, is our culture. It's how we communicate and how
Slide 17: Commerce's Focus Extends Beyond Banking
COMMERCE’S FOCUS EXTENDS BEYOND BANKING Supporting our communities, our customers and our team members “ “ 2023 Engagement We seek opportunities and Enablement2 MORE THAN 500 to help make our communities and our Consistently scoring above the company a better U.S. High Performance and U.S. place to
Slide 18: Recent Recognition
RECENT RECOGNITION 2024 2023 2023 BEST 2023 2023 90 Newsweek Forbes S&P Global Market U.S. News & Forbes Newsweek Human Rights Intelligence World Report Campaign America’s Best World’s Best America’s America’s Regional Banks1 Banks2 Top 50 Best Companies Best Midsize Greatest Corporate Public Banks3
Slide 19: Today's Discussion
TODAY’S DISCUSSION About Economic Our Built For This: Commerce and Industry Strategic Resilient in Bancshares Themes Position Challenging Times 19
Slide 20: Macroeconomic Environment: 2023 in Review
MACROECONOMIC ENVIRONMENT: 2023 IN REVIEW Evolving economic landscape presents challenges and opportunities GROWTH JOBS INTEREST RATES MARKETS OUTLOOK • U.S. GDP grew by • Unemployment hit a • Interest rates • The S&P 500 rallied • Ongoing positive 2.5% in 2023, up from 54-year low of 3.4% plateaued
Slide 21: Key Themes Driving 2023 Bank Performance
KEY THEMES DRIVING 2023 BANK PERFORMANCE Banks ended 2023 with momentum driven by an improving rate outlook; that momentum VALUATION has faded Valuations remain near historic lows relative to the broader market Rising funding costs have constrained net interest margins OPERATING PERFORMANCE Operatin
Slide 22: Today's Discussion
TODAY’S DISCUSSION About Economic Our Built For This: Commerce and Industry Strategic Resilient in Bancshares Themes Position Challenging Times 22
Slide 23: Strategic Posture: Maintaining the Balance
STRATEGIC POSTURE: MAINTAINING THE BALANCE STRONG PERFORMANCE with Disciplined focus on PRIORITY ongoing refinement of the BLUE CHIP investments “Core Bank” • Enhancing our People • Super-Community Bank Leadership platform • Relationship-based banking • Workplace Optimization • High-touch customer s
Slide 24: Enterprise Digital Strategy
MEETING OUR CUSTOMERS WHERE THEY ARE: ENTERPRISE DIGITAL STRATEGY Our Vision Creates a Committed to Investing in unified Digital delivering technology Transform the digital experience by staying Strategy customer to drive current on digital trends and creating expanding digital efficiencies seamless
Slide 25: Digital Technology: Application Modernization
DIGITAL TECHNOLOGY: APPLICATION MODERNIZATION Application Modernization is the focused effort to re-platform, replace, or significantly improve application platforms for the express purpose of modernizing features and capabilities, improving total cost of ownership, and/or reducing operating risk. B
Slide 26: Consumer Banking Snapshot
CONSUMER BANKING SNAPSHOT Consumer Segment 141 Branches 272 ATMs $12.4 $3.9 810 BILLION BILLION THOUSAND Consumer Consumer Consumer Deposits1 Loans1 Households2 Focus on Digital 4.7 4.6 68.2% $77,251 27.7% Commerce Bank Digital HH Digital Loan Mobile App Rating Penetration Sales (000s) Deposit Use P
Slide 27: We're Built for You: Commercial Banking
WE’RE BUILT FOR YOU: COMMERCIAL BANKING Commercial Segment Revenue Growth Opportunities Financing solutions and deposit capabilities customized for your business • Working Capital Line of Credit • Commercial Real Estate • Full suite of cash management solutions • Term Loans • ESOP Loans • Robust Car
Slide 28: Industry-Leading Commercial Payments Capabilities
INDUSTRY-LEADING COMMERCIAL PAYMENTS CAPABILITIES Innovative payments solutions to manage payables and receivables that enhance cash flow, streamline processing and increase efficiencies Treasury Commercial Payments Merchant Management Card Revenue Volume Revenue Volume $212 $65 $9.9 $8.3 MILLION MI
Slide 29: Healthcare industry specialty
We don’t just serve the healthcare industry. It’s our specialty. 500+ hospitals in all 48 contiguous states 100+ entities and over 75 million patient transactions annually Patient Engagement Receivables Accounts Payable Traditional Banking Solutions Management Solutions Solutions Services • Treasury
Slide 30: Expansion Markets Offer Growth Opportunities
EXPANSION MARKETS OFFER GROWTH OPPORTUNITIES Expansion Markets Fee Income Team Overview 2023 Expansion Market Loan Growth Growth # of team members per market 66% $ in millions Expansion (includes open positions) $3,547 Market Loan 42 Growth $3,280 since 2018 Oklahoma 61% 44 $2,615 since 2018 $2,46
Slide 31: Advice You Can Trust: Wealth Segment
ADVICE YOU CAN TRUST Wealth Segment For high-net-worth individuals who are looking to simplify their complex financial life, Commerce Trust provides a full-service approach to wealth management. 20th $69 $41 Largest Among Bank-Managed BILLION BILLION Trust Total Client Assets Under 2 Companies1 Asse
Slide 32: Wealth Segment Key Growth Initiatives
Wealth Segment WealthKey Wealth KeyGrowth Growth Initiatives Initiatives Strengthening Our Wealth Brands • Utilize new private banking loan and deposit system to offer special products, services and automation • Continued expansion into new concentrated wealth markets through de novo and acquisition
Slide 33: Today's Discussion
TODAY’S DISCUSSION About Economic Our Built For This: Commerce and Industry Strategic Resilient in Bancshares Themes Position Challenging Times 33
Slide 34: 2023 Financial Performance vs. Prior Year
2023 FINANCIAL PERFORMANCE VS. PRIOR YEAR ROAA ROAE Net Earnings income $477 per $3.64 attributable to CBI million 1.49% 17.9% share Net Deposits 3% Dividend period end 7% Interest 6% growth Income Loans period end 6% Long-term outperformance relative to the industry 20-year TOTAL ANNUALIZED SHA
Slide 35: 2023 Year End Earnings
2023 YEAR END EARNINGS % $ in millions 2022 2023 change RETURN ON AVERAGE ASSETS Net interest income $ 942 $ 998 6% CASH 1.45% 1.49% DIVIDENDS Non-interest income 547 573 5% 2022 2023 $0.96 Total revenue 1,489 1,571 6% 2022 Securities gains 21 15 -27% $1.03 Non-interest expense (849) (931) 10% RETUR
Slide 36: A Full-Service, Diversified Operating Model
A FULL-SERVICE, DIVERSIFIED OPERATING MODEL Card, Wealth & Deposit fees provide stable, growing revenue source Revenue Source Diversification Non-Interest Income Compared to Peers $ in millions $560 $573 $547 2% 5% $525 $506 6% 3% 5% 3% 11% 3% 6% Commerce 2019 2020 2021 2022 2023 Bank Peers 12% 63%
Slide 37: Credit Performance Over Time
CREDIT PERFORMANCE OVER TIME Non-Performing Loans to Total Loans (%) 3.0% CBSH Peer Average Recession 2.5 2.0 1.5 1.0 0.5 0.0 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 Peer Banks include: ABCB, ASB, BOKF, CADE, CFR, FIBK, FNB, FULT, HWC, ONB, OZK, PB,
Slide 38: Outperformance Relative to Peers Through Economic Cycles
OUTPERFORMANCE RELATIVE TO PEERS, THROUGH ECONOMIC CYCLES ROAA 25-year average Return on Average Assets CBSH: Peers: 2.0% 1.39% 1.04% 1.5 1.0 0.5 1999 2001 2003 2005 2007 2009 2011 2013 2015 2017 2019 2021 2023 CBSH Peer Median Recession Peer Banks include: ABCB, ASB, BOKF, CADE, CFR, FIBK, FNB, FUL
Slide 39: Sound Capital and Liquidity Position
SOUND CAPITAL AND LIQUIDITY POSITION Tier 1 Risk-Based Capital Ratio1 Loan to Deposit Ratio Peer Median: 11.7% Large, stable deposit base PB 15.5% CBSH 15.3% CFR 13.7% Core Deposits 68% Average Loan to Deposit Ratio 3 UBSI 13.1% $22.5 Commerce UCBI HWC 12.6% 12.3% BILLION2 84% Average Loan to Deposi
Slide 40: Comparisons vs. Peers YTD Dec 2023
COMPARISONS VS. PEERS YTD Dec 2023 Return on Return on Average Troubled Loans / Average Assets Common Equity Capital Total Loans Commerce 0.04% Commerce 1.49% Commerce 17.94% Commerce 15.25% 2nd highest 2nd highest 2nd highest Lowest level of return on assets return on equity capital ratio troubled
Slide 41: Financial Highlights QTD: March 31, 2024
FINANCIAL HIGHLIGHTS QTD: MARCH 31, 2024 Highlights Well-positioned for current environment PPNR1 • Net interest income up slightly over Q4 at $249 million. $152.2 million • Net interest margin increased 16 bps over Q4 to 3.33%. Net Income • Total cost of deposits increased 4 bps to 1.38%, compared
Slide 42: Liquidity and Capital Highlights
LIQUIDITY AND CAPITAL HIGHLIGHTS Liquidity Deposits • $1.6 billion in cash at Federal Reserve Bank at • QTD average loan to deposit ratio of 70%. Q1 2024. • Optimizing sources and uses of funding, • Available-for-Sale debt securities portfolio allowing high-cost CDs to mature. duration of 4.2 years.
Slide 43: Deposit Balance Trends by Segment
DEPOSIT BALANCE TRENDS BY SEGMENT Commercial Consumer Wealth $ in billions $13.4 $12.8 $12.6 $12.0 $11.9 $12.1 $12.1 $12.2 $12.3 $12.4 $11.3 $10.5 $10.6 $10.4 $9.9 $9.9 $10.0 $9.3 $3.0 $2.8 $2.3 $2.3 $2.3 $2.4 $2.3 $2.5 $2.4 2020 2021 2022 3Q23 4Q23 1Q24 3Q23 4Q23 1Q24 2020 2021 2022 3Q23 4Q23 1Q24
Slide 44: Long-Term View: Net Income and Earnings per Share
LONG-TERM VIEW: NET INCOME AND EARNINGS PER SHARE $600 $4.00 Earnings Per Share Earnings per Share (EPS) 500 Net Income 3.50 Net Income 3.00 400 $ 000s 2.50 300 2.00 200 1.50 100 1.00 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 Dividends $0.55 $0.58 $0.61 $0.64 $0.70 $0.82 $0.89 $0.91 $0.96 $1
Slide 45: CBSH Shareholder Returns Over Time
CBSH SHAREHOLDER RETURNS OVER TIME Total Shareholder Returns Annualized Comparison Indexed, 12/31/2003 = $100 Total Shareholder Returns $700 30% CBSH KBW Bank S&P 500 25 KBW Regional S&P 500 600 20 15 500 10 5 COMMERCE 0 400 -5 -10 -15 300 -20 KBW 1 Year 2 Year 5 Year 10 Year 20 Year 200 REGIONAL KB
Slide 46: Built For This.
BUILT FOR THIS.
Slide 47: CBI Annual Shareholders' Meeting: Agenda
CBI ANNUAL SHAREHOLDERS’ MEETING: AGENDA 1 Call to Order and Welcome 2 Rules of Conduct 3 Secretary’s Report 4 Business Matters 5 Introduction of Public Accountants 6 CEO’s Presentation 7 Adjournment 47
Slide 48: Appendix: Non-GAAP Reconciliations
APPENDIX: NON-GAAP RECONCILIATIONS Pre-Tax, Pre-Provision Net Revenue For The Three Months Ended ($ in 000s) Mar. 31, 2024 Dec. 31, 2023 Mar. 31, 2023 A Net Interest Income $ 248,999 $ 248,421 $ 251,623 B Non-Interest Income $ 148,848 $ 144,879 $ 137,612 C Non-Interest Expense $ 245,697 $ 251,254 $
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