Commerce Bancshares, Inc. · NASDAQ:CBSH
Commerce Bancshares — Q4 2022 Earnings Presentation
21 slides from Commerce Bancshares's earnings presentation, Jan 19, 2023
Slide 1: Commerce Bancshares, Inc. Earnings Highlights 4th Quarter 2022
COMMERCE BANCSHARES, INC. EARNINGS HIGHLIGHTS 4th Quarter 2022
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: Commerce Bancshares: 157 Years in Business
COMMERCE BANCSHARES 157 YEARS IN BUSINESS FULL-SERVICE BANKING FOOTPRINT 148 full-service branches and 293 ATMs St. Louis Kansas City Springfield Central Missouri Central Illinois Wichita Tulsa Oklahoma City Denver COMMERCIAL OFFICES Cincinnati Nashville Dallas Des Moines Indiana
Slide 4: $1.04 EPS Highlights
$1.04 EPS 4 • PPNR1 reached record level of $174.7 million, up 1.6% over Q3. • Net interest income increased 3.4% over Q3. • Net interest margin increased 17 bps over Q3 to 3.18%. • Non-interest income decreased 1.2% from Q3 (35.0% of total revenue). • Wealth management client assets of $60.3 billio
Slide 5: Quarterly Average Balances
Quarterly Average Balances Change vs. $ in millions 4Q22 3Q22 4Q21 Highlights Commercial1 $10,047.8 $183.3 $624.3 • Linked quarter (LQ) reflects growth in business and business real estate, partly offset by a decline in construction loans Consumer 5,837.2 55.8 167.6 Total Loans $15,885.0 $239.0 $791
Slide 6: Balance Sheet: Loans and Deposits
$16.9 $17.0 $16.2 $11.9 $10.8 $10.4 $28.8 4Q21 3Q22 4Q22 $27.8 $26.6 -8% $9.4 $9.9 $10.1 $5.7 $5.8 $5.8 4Q21 3Q22 4Q22 $15.1 $15.6 $15.9 BALANCE SHEET 6 Loans Consumer Loans Loan Yield Commercial Loans Deposits QTD Average Balances $ billions Non-Interest Bearing Interest Bearing Deposit Interest Be
Slide 7: Deposit Balance Trends
$2,502 2022 $10,630 2022 DEPOSIT BALANCE TRENDS Segment view $ in millions 7 $7,848 $9,938 $11,991 $11,941 2019 2020 2021 2022 +15% $10,236 $11,282 $12,839 $13,398 2019 20222020 2021 +9% $1,832 $2,271 $2,966 $2,804 20212019 2020 2022 +15% Commercial Consumer Wealth CAGR CAGR CAGR Average Balance Per
Slide 8: Loan Portfolio
LOAN PORTFOLIO 8 $ in 000s 12/31/2022 9/30/2022 12/31/2021 QoQ YoY Business $5,661,725 $5,528,895 $5,303,535 2.4% 6.8% Business excl. PPP 5,653,659 5,507,081 5,174,372 2.7% 9.3% Construction 1,361,095 1,206,955 1,118,266 12.8% 21.7% Business Real Estate 3,406,981 3,331,627 3,058,837 2.3% 11.4% Perso
Slide 9: Income Statement Highlights
Change vs. $ in millions 4Q22 3Q22 4Q21 Highlights Net Interest Income $254.6 $8.3 $47.0 • Linked quarter (LQ) increase due to higher interest earned on loans, partly offset by lower interest earned on investment securities and higher interest expense Non-Interest Income $136.8 $(1.7) $(10.9) • See
Slide 10: Non-Interest Income Highlights
Change vs. $ in millions 4Q22 3Q22 4Q21 Highlights Bank Card Transaction Fees $44.6 $(1.1) $(.2) • Higher corporate card fees more than offset by higher rewards Trust Fees $44.7 $(.7) $(4.2) • 4Q22 reflects lower market values on assets under management compared to prior year (PY) Deposit Account Ch
Slide 11: Non-Interest Expense Highlights
Change vs. $ in millions 4Q22 3Q22 4Q21 Highlights Salaries and Employee Benefits $138.5 $1.1 $5.8 • Increase of 4.4% over prior year (PY) due to higher full-time salaries and higher employee benefits expense Net Occupancy $11.8 $(.8) $(.5) Equipment $5.0 — $.3 Supplies and Communication $4.4 $(.1)
Slide 12: Pre-Tax, Pre-Provision Net Revenue (PPNR)
12 PRE-TAX, PRE-PROVISION NET REVENUE (PPNR) $148 $152 $208 $204 4Q2021 $355 $139 $172 $246 $213 $385 3Q2022 $137 $175 $255 $217 $391 4Q2022 Non-Interest Income (+) Net Interest Income (+) Non-Interest Expense (-) Pre-Tax, Pre-Provision Net Revenue (=) 4Q2022 Comparison vs. 4Q2021 15.1% vs. 3Q2022 1
Slide 13: Maintaining Strong Credit Quality
$4.3 $4.8 $5.6 $3.4 $2.6 4Q21 3Q22 4Q22 MAINTAINING STRONG CREDIT QUALITY 13 Net Loan Charge-Offs (NCOs) $ in millions NCOs- CBSH NCOs - Peer Average NCO/Average Loans1 - CBSH $150.0 $143.4 $150.1 $261.2 $280.9 4Q224Q21 3Q22 Allowance for Credit Losses on Loans (ACL) $ in millions ACL - Peer Average
Slide 14: Allocation of Allowance
ALLOCATION OF ALLOWANCE 14 CECL allowances reflect the economic and market outlook September 30, 2022 December 31, 2022 $ in millions Allowance for Credit Losses (ACL) % of Outstanding Loans Allowance for Credit Losses (ACL) % of Outstanding Loans Business $ 45.0 .81% $ 46.3 .82% Bus R/E 28.7 .86% 2
Slide 15: Well-Positioned for Current Environment
15 WELL-POSITIONED FOR CURRENT ENVIRONMENT
Slide 16: Well-Positioned for Multiple Rate Environments
0.0% 0.5% 1.0% 1.5% 2.0% 2.5% 3.0% 3.5% 4.0% 4.5% 3Q2022 and 4Q2022 Hedging actions: Entered into two floor contracts (indexed to 1 Month SOFR) to hedge the risk of declining interest rates on floating rate commercial loans. The contracts have a term of 6 years. • 3Q2022: One 2.5% floor contract wit
Slide 17: Summary of Fixed & Floating Loans
Over 55% of total loans are variable; 64% of commercial loans have floating rates SUMMARY OF FIXED & FLOATING LOANS 40% 60% Business Total Loans: $5.7B Fixed Variable C om m er ci al 67% 33% Personal RE Total Loans: $2.9B C on su m er 99% 1% HELOC Total Loans: $0.3B 43% 57% Business RE Total Loans:
Slide 18: Sound Capital and Liquidity Position
Average Loan to Deposit Ratio3 SOUND CAPITAL AND LIQUIDITY POSITION 18 Tier 1 Risk-Based Capital Ratio1 1S&P Global Market Intelligence, Information as of September 30, 2022 2Period-end balances, as of December 31, 2022 3Includes loans held for sale, for the quarter ended December 31, 2022 15.4% 14.
Slide 19: Capital for Business: Quick Facts
Quick Facts: Small Business Investment Company (SBIC) founded in 1959 Nationwide footprint with Greater Midwest Focus 36 Portfolio Companies Representing $875 million in Revenue Over 3,400 Employees Fair Value as of December 31, 2022: $178.1 million Investment Criteria • Manufacturing, distribution
Slide 20: Non-GAAP Reconciliations
NON-GAAP RECONCILIATIONS 20 For The Three Months Ended (DOLLARS IN THOUSANDS) Dec. 31, 2022 Sep. 30, 2022 Dec. 31, 2021 A Net Interest Income $ 254,641 $ 246,373 $ 207,657 B Non-Interest Income $ 136,825 $ 138,514 $ 147,699 C Non-Interest Expense $ 216,740 $ 212,884 $ 203,582 Pre-Provision Net Reven
Slide 21: Commerce Bancshares, Inc.
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