Commerce Bancshares, Inc. · NASDAQ:CBSH
Commerce Bancshares — Investor Presentation (June 2018)
36 slides from Commerce Bancshares's investor presentation, June 2018
Slide 1: Commerce Bancshares, Inc. Investor Update June 2018
COMMERCE BANCSHARES, INC. INVESTOR UPDATE June 2018 Charles G. Kim Chief Financial Officer Jeffery Aberdeen Controller
Slide 2: 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 3: About Commerce Bancshares
ABOUT COMMERCE 153 BANCSHARES $24.6 YEARS IN BUSINESS BILLION IN $20.5 ASSETS2 45TH 6 LARGEST U.S. BANK BASED ON ASSET SIZE1 BILLION IN TOTAL DEPOSITS2 4 $13.9 5 51 $6.4 9 24 1 6 3 2 8 7 BILLION IN TOTAL LOANS2 BILLION MARKET $7.9 3 CAPITALIZATION2 7 29TH BILLION IN COMMERCIAL LARGEST U.S. BANK 172
Slide 4: Super-Community Bank Platform
SUPER-COMMUNITY BANK PLATFORM A consistent strategy with a long term view Community Bank Super-Regional Bank Customer relationship-based • Quickly adapt to CHALLENGE ACCEPTED • Sophisticated customer needs High performing teams and payment system and changing engaged workforce capabilities preferenc
Slide 5: A Strong Emphasis on Culture
A STRONG EMPHASIS ON CULTURE 2017 Employee Engagement1 Giving to our VALUES 78% • Engaged, long-term 75% We have a 74% leadership team long term We • Focus on people and talent iew collaborate development Commerce U.S. High U.S. Financial as ne • Knowledge of customers Performance Norm Services Norm
Slide 6: Recent Recognition
RECENT RECOGNITION Commerce Bank was recognized with eight Greenwich Excellence Awards in the following categories: Middle Market Banking ($10-500MM) Cash Management - Overall Satisfaction Cash Management - Overall Satisfaction - Midwest Likelihood to Recommend / Net Promoter Score Likelihood to Rec
Slide 7: Strong Financial Performance in 2017
STRONG FINANCIAL PERFORMANCE IN 2017 Growth in ROA ROE Revenue Earnings growth 16% 6% per Share 1.28% 12.5% Net interest Net loan margin Growth charge- growth 3.20% in loans 4% .31% offs to 16 bps loans Long term performance remains strong 10 year TOTAL SHAREHOLDER RETURN @ 10.1% Vs KBW Bank Inde
Slide 8: 1Q18 Financial Performance vs. Prior Year
1Q18 FINANCIAL PERFORMANCE VS. PRIOR YEAR YE 2016 YE 2017 YTD 2017 YTD 2018 Net Income Attributable to Earnings per Common Return on Total Assets CBI ($ in Millions) Share $319 $2.89 1.66% $275 $2.49 1.28% 1.12% 1.15% $101 $0.92 $72 $0.65 2016 2017 YTD 2017 YTD 2018 2016 2017 YTD 2017 YTD 2018 2016
Slide 9: Drivers of 1st Quarter Earnings
DRIVERS OF 1ST QUARTER EARNINGS Net Interest Growth in net interest income of $15 million in current quarter Margin compared to last year was driven by increased loan yields and stable deposit costs; margin increased to 3.37%. Fee Income Fee income grew 9% vs prior year on strength in bankcard, trus
Slide 10: Net Interest Income: YTD March 31, 2018
NET INTEREST INCOME: YTD – March 31, 2018 Quarterly Net Interest Income (Tax Equivalent) • Excluding tax adjustments, net interest income increased $2.9 million over Net interest income - $ in millions $200 3.4% prior quarter due to higher loan yields $190 and continued low funding costs. 3.2% Net Y
Slide 11: Growth in Volume and Rising Rates Driving Increase in NIM
GROWTH IN VOLUME AND RISING RATES DRIVING $54 million INCREASE IN NIM Tax Equivalent Net Interest Income: 2012 – 2017 $s in millions $766 $711 $665 $664 $646 $648 2012 2013 2014 2015 2016 2017 Change in NIM due to volume Change in NIM due to rate • Lower rates had been pushing the net interest margi
Slide 12: Fee Income at 40% of Total Revenue
FEE INCOME AT 40% OF TOTAL REVENUE Balanced mix of interest and non-interest income Non-Interest Income $ millions $474 $487 Net Interest Income $437 $448 8% $400 $419 11% Wealth Management Deposit Service Charges 2% 7% Commerce Fees And Commissions $110 $120 Bank* 61% Card Income 2012 2013 2014 201
Slide 13: Well-Diversified Loan Portfolio
WELL-DIVERSIFIED LOAN PORTFOLIO Period End Loan Growth $s in millions Business Loans $14,005 $13,910 5 Yr. $13,427 5% Construction CAGR +7.3% $12,444 Business RE 19% 32% $11,469 Residential RE $10,957 Commerce Consumer/HELOCs $9,840 Credit Card Bank* 2012 2013 2014 2015 2016 2017 1Q18 17% Loans Held
Slide 14: Summary of Fixed & Floating Loans
SUMMARY OF FIXED & FLOATING LOANS 56% of total loans are variable; 52% of floating rate commercial loans are tied to LIBOR Fixed Variable Business Construction Business RE Commercial Total Loans: $5.0B Total Loans: $1.0B Total Loans: $2.7B 7% 35% 47% 53% 65% 93% Personal RE Consumer HELOC Consumer C
Slide 15: Investment Portfolio: High Quality, Diverse, Short Duration
INVESTMENT PORTFOLIO: HIGH QUALITY, DIVERSE, SHORT DURATION Composition of AFS Portfolio AFS Portfolio as of 3/31/18 4% Total investments $8.4 billion 16% Treasury & agency 17% Unrealized gain $88 million Municipal 12 month maturities / pay-downs $1.3 billion 17% MBS Duration Other asset backed Dece
Slide 16: Strong Capital Position
STRONG CAPITAL POSITION FLEXIBILITY IN CAPITAL PLANNING Cash Dividends & Buy Backs $300 Cash dividend Buy back % Payout 160% % to Net Income - combined 140% $250 120% $ in millions $200 100% $150 80% 60% $100 40% $50 20% $0 0% 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Year-end capital ratios
Slide 17: Net Loan Charge-Offs: YTD March 31, 2018
NET LOAN CHARGE-OFFS: YTD – March 31, 2018 '18 YTD YTD Actual Loss $ in 000s 2017 2018 $ Chge Rate • Recorded net recoveries of $255k on Business $ 97 $ (14) $ (111) (0.00)% commercial loans. Overdraft 435 444 9 38.91 % Construction (535) (36) 499 (0.02)% • Consumer losses up $528k while credit Busi
Slide 18: Maintaining the Balance
MAINTAINING THE BALANCE STRONG PERFORMANCE with Disciplined focus on PRIORITY ongoing refinement of the “Core BLUE CHIP investments Bank” • Super-Community Bank platform • Funding Future Growth • Relationship-based banking • Expansion Market Growth • High-touch customer service • Transform the Retai
Slide 19: Consumer Banking
CONSUMER BANKING 2009 $10.3 $2.5 $1.0 $113.5 MILLION BILLION BILLION BILLION $15 MILLION Consumer Consumer Consumer Branch Deposits Loans Auto Loans Expense 2016 2016 Average Reduction $10.2 $2.5 FICO since 2009 BILLION BILLION 750 Banking Channel Preferences Continue Expanding Digital Capabilities
Slide 20: Retail Priorities
RETAIL PRIORITIES Grow Revenue Maintain/Leverage High Maintain/Leverage Optimize Cost to Serve Customer Satisfaction Employee Engagement Core Expand Digital Transformation Capabilities Talent Efficiently Deliver Management New Products and Programs RETAIL Cost Effectively PRIORITIES Retain the Depos
Slide 21: Expand Digital Capabilities
EXPAND DIGITAL CAPABILITIES Deliver Strategic Deliver Solutions to Drive Digital Differentiators Enhance the Experience Engagement • Align digital strategies and • Increase cadence of digital • Monitor and continue to priorities across the delivery to every 6 weeks improve engagement Consumer Bank –
Slide 22: The Commerce Trust Company wealth management
For high net worth individuals who are looking to simplify their complex financial life, The Commerce Trust Company provides a full-service approach to wealth management. $48.7 20TH $30.0 13% BILLION Largest Among Bank-Owned BILLION Record Asset Assets Under Management Total Client Trust Company2 M
Slide 23: Key Priorities
KEY PRIORITIES: • Enhanced Private Client Model ̶ Scenario Plans ̶ Modular Solutions ̶ Topical Tools and Information • Asset Management Sales Growth • Institutional Trust Asset Management Sales Growth • Long Term Marketing Strategies • Enhanced Sales Partnerships from Commercial and Retail Channels
Slide 24: Why Choose Commerce Trust?
WHY CHOOSE COMMERCE TRUST? Investment Financial Private Management Trust Banking Family Advisory Services Services Services Office Services • Highly personalized approach getting to know our clients and helping define their long-term goals. • Comprehensive range of investment and wealth management s
Slide 25: Trends in Trust Revenue and Sales
TRENDS IN TRUST REVENUE AND SALES Asset Management Revenues Asset Management Sales (In Millions) (In Millions) $160 $14 $13 $143 $12 $140 $11 $11 $129 $122 $10 $10 $120 $115 $8 $100 $6 $80 $4 2014 2015 2016 2017 2014 2015 2016 2017 • Solid growth in fee continues; profit margins reach 43% in 2017 up
Slide 26: Commercial Banking: Revenue Growth Opportunities
COMMERCIAL BANKING Revenue growth opportunities $8.9 $7.9 BILLION $523 MILLION BILLION Commercial Commercial Commercial Loans Deposits 5 Yr. Revenue 5 Yr. 5 Yr. CAGR CAGR CAGR +9.3% +3.0% +2.1% Commercial Loans Commercial Deposits Commercial Revenue $ in billions $ in billions $ in millions $523.0 $
Slide 27: Adding Value Through Specialized Products & Services
ADDING VALUE THROUGH SPECIALIZED PRODUCTS & SERVICES Key Build out capabilities Refine Healthcare Embrace innovation Execute deposit in the Payments Priorities: in Expansion Markets Banking strategy Systems retention strategies PRODUCT Healthcare Suite INDUSTRY Healthcare Tax-Exempt Finance Senior L
Slide 28: Commercial Payments
COMMERCIAL PAYMENTS $194 MILLION $7.9 BILLION $145 MILLION Payments Commercial Health Services Revenue Card Volume Financing Loans EMBRACING INNOVATION IN THE PAYMENTS SYSTEMS Our full suite of products and services brings real value to client relationships Information as of December 31, 2017 28
Slide 29: Growth in the Commercial Footprint
GROWTH IN THE COMMERCIAL FOOTPRINT 2007 Branch Footprint Extended Footprint 8 5 1 Commercial Payment Services 2 4 1 6 3 7 2 2018 6 4 8 5 5 1 Significant Markets Commercial Offices 2 4 1 6 1. St. Louis 1. Cincinnati 3 2 7 2. Kansas City 2. Nashville 9 3. Springfield 3. Dallas 4. Central Missouri 4. D
Slide 30: Commercial Banking – Expansion Markets Offering Growth Opportunities
COMMERCIAL BANKING – EXPANSION MARKETS OFFERING GROWTH OPPORTUNITIES Nashville Cincinnati Oklahoma Denver Dallas Expansion Market Loan Growth $1,793 Expansion $s in millions $1,542 Market $1,338 Growth $1,091 195% $962 $608 since 2012 2012 2013 2014 2015 2016 2017 Personnel Overview for Expansion Ma
Slide 31: Loan Growth Remains Strong in Expansion Markets
LOAN GROWTH REMAINS STRONG IN EXPANSION MARKETS $s in millions • Strongest loan growth $3,500 +2% 2016 2017 experienced in Dallas, Denver, +4% Wichita and Cincinnati. $3,000 • Expansion markets of Dallas, $2,500 Cincinnati and Denver showing some of the fastest growth. $2,000 $1,500 $1,000 -3% -1% -
Slide 32: Card Products – A Leader Amongst Top U.S. Banks
CARD PRODUCTS – A LEADER AMONGST TOP 50 U.S. BANKS Consistently ranked among the top issuers in the Nilson Report #12 #7 #11 #14 #20 Debit #16 Commercial Purchasing Bank Consumer Prepaid Card Issuer Card Issuer Acquirer Card Card Card A full suite of innovative card and payment product offerings Sup
Slide 33: Commerce Bank Maintains Solid Performance Over Time
COMMERCE BANK MAINTAINS SOLID PERFORMANCE OVER TIME Commerce Bank Peer Banks Large Banks Return on Assets 2.0% 1.5% ROA 10-yr average 1.0% CBSH: 1.18% 0.5% Peers: 0.75% 0.0% -0.5% 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 1Q2018 Return on Average Common Equity 20.0% 15.0% ROACE 10-yr average
Slide 34: Long Term View: Net Income and Earnings per Share
LONG TERM VIEW: NET INCOME AND EARNINGS PER SHARE Earnings Per Share Net Income $350 $3.00 300 Earnings per Share $2.50 250 Net Income 200 $2.00 $ 000s 150 $1.50 100 50 $1.00 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Dividends $0.61 $0.62 $0.64 $0.65 $0.69* $0.71 $0.74 $0.78 $0.82 $0.86 per
Slide 35: Steady Shareholder Returns
STEADY SHAREHOLDER RETURNS as of March 31, 2018 Annualized Comparison Total Shareholder Returns Total Shareholder Returns Indexed, 03/31/2008 = $100 Percent CBSH NASDAQ Banks $300 25% S&P 500 KBW Bank Index COMMERCE KBW BANK $250 BANK INDEX 20% NASDAQ S&P 15% $200 BANK INDEX 10% $150 5% $100 0% 1 Ye
Slide 36: Challenge Accepted
Challenge Accepted: & Commerce Bancshares, Inc.
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