Commerce Bancshares, Inc. · NASDAQ:CBSH
Commerce Bancshares — Non-Deal Roadshow (January 2005)
30 slides from Commerce Bancshares's roadshow presentation, Jan 24, 2005
Slide 1: New York Investor Meetings January 24-27, 2005
A. Bayard Clark, EVP - CFO Jeff Aberdeen, Controller New York Investor Meetings January 24 - 27, 2005 Commerce Bancshares, Inc.
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: Largest Independent Bank in the Lower Midwest
Commerce Bancshares, Inc. Largest Independent Bank in the Lower Midwest $14 billion in assets - 4,821 FTEs Super-Community Bank -327 locations Attractive H/H wealth demographics 89% of 2004 profits from five key markets Commerce Bancshares, Inc. St. Louis Kansas City St. Louis & Kansas City Deposit
Slide 4: Super-Community Bank Platform Creates Advantages
Super-Community Bank Platform Creates Advantages Community Bank Front End Employees embrace strong culture Solid customer relationships Based on transaction accounts High retention and cross-sales Knowledge of customers and markets reduces risk In-market lending Credit committee Super-Regional Back
Slide 5: Commerce Employees: The Key to Success
Commerce Employees The Key to Success Seasoned, Aligned Management Team 100 most senior managers average 14 years with Commerce Performance compensation tied to budgeted growth in EPS Human Capital Commerce is the "employer of choice" Focus on succession planning and development of high-potential em
Slide 6: Our Strategy to Build Results for Tomorrow
Our Strategy to Build Results for Tomorrow Focus on sales/sales management. Differentiate by service level and ability to sell across LOBs. Invest heavily in people development and training. Continue investment in discretionary technology - capital budget for discretionary technology for 2005 is $27
Slide 7: Balanced Customer Solutions Across Diverse Lines of Business
Balanced Customer Solutions Across Diverse Lines of Business Pre-tax Profit* Trust & Capital Mkts. $30 Commercial $126 Consumer $155 Money Mgmt./ Trust $29 Lending & Risk Mgmt. $136 Payment Systems $146 LINES OF BUSINESS CUSTOMER SOLUTIONS *$ in Millions includes overhead allocations of $30 million
Slide 8: Components of Fee/Spread Income
Components of Fee/Spread Income Spread Inc Svc Chrgs Fees & Comm Card Inc Wealth Mgt Mortgage Bkg Other 0.57 0.1 0.06 0.07 0.08 0.03 0.09 Spread Inc Svc Chrgs Fees & Comm Card Inc Wealth Mgt Mortgage Bkg Other 0.6 0.14 0.02 0.09 0.08 0 0.07 2003 50 Largest Banks* 43% Fee Income Ratio 2004 Commerce 4
Slide 9: Fee Business Continues to Expand
Fee Business Continues to Expand Increased 8% in 2004 Revenue 1999 2000 2001 2002 2003 2004 5 yr % Chg Pymt Sys $148 $158 $166 $178 $193 $212 43% Trust 58 59 62 61 61 64 10% Lending 11 10 15 12 22 20 82% Capital Mkts 14 14 21 22 20 16 14% Other Fees 5 12 14 9 6 15 200% Total Fees $236 $253 $278 $282
Slide 10: Key Driver of Fee Growth
Key Driver of Fee Growth $ in Millions Pymt Sys Rev 2000 2001 2002 2003 2004 5yr CAGR Retail $111 $115 $121 $129 $140 6% Commercial $47 $51 $57 $64 $72 11% Total $158 $166 $178 $193 $212 7% Driven by Change in Customer Channel Usage* ACH Debit Merchant Cks Deposited Cks Written YTD July 2003 22000 3
Slide 11: Consumer Transaction Account Base & Retail Fee Growth
Year # Accts. (000) Average DDA Bal Trans Acct Fees Other Retail Fees 1996* 490 $442 $31 $40 2004 639 $2,337 $60 $98 % Chg 32% 429% 94% 145% Consumer Transaction Account Base & Retail Fee Growth Payment Systems - Retail.... Commerce Bancshares, Inc. *Boatmens, Mercantile, Magna, Mark Twain, and Roos
Slide 12: More Than Free Early Returns
Net consumer checking sales up 17% 21% improvement in attrition Increased profit, cross-sell and activation compared to previous checking product Average annual profit is 71% higher 10% higher debit ownership; 17% higher transactions 69% greater ownership of Online Account Access Sevenfold increase
Slide 13: Daily Deposit Builder
Daily Deposit Builder Leading edge event-based marketing program that analyzes transactions, generates and distributes leads 2004 Results 43,120 contacts made 30% better balance retention Evolution of sales culture Positive customer reaction Embraced by sales force Embraced by sales force Embraced b
Slide 14: Satisfied Customers Drive Retention & Enhanced Profitability
Satisfied Customers Drive Retention & Enhanced Profitability Payment Systems - Retail.... Very Satisfied Satisfied Somewhat Satisfied Somewhat Dissatisfied Dissatisfied Very Dissatisfied % Satisfied Customer 0.489 0.373 0.086 0.028 0.013 0.011 HH Closure Rate 0.007 0.009 0.015 0.025 0.08 0.139 Sourc
Slide 15: Growth in Non-Lending Products and Services
Growth in Non-Lending Products and Services Now represents 50% of total LOB contribution** Drivers Revenue Cash sweep: balances up 30% to $1,734 million $ 4 MM* Treasury services: $ 96 MM** Wholesale lockbox volume up 42% ACH volume up 105% Wire volume down 19% International: 59% growth $ 7 MM Loan
Slide 16: Cementing and Deepening the Relationship
Cementing and Deepening the Relationship Payment Systems - Commercial.... Commerce Bancshares, Inc. Payment Systems Services Remittance Processing High-Speed Document Imaging Disbursement Services Automated Accounts Receivables Posting Merchant Credit Card Processing Foreign Currency Exchange Lendin
Slide 17: Lending Strategies
Business Culture: No blind syndications; no excessive concentrations; rigorous focus on RAROC; manage out deteriorating credits Small Business Banking - card based approach/branch oriented Equipment Leasing - $370MM Retail Culture: No out of market residential or home equity loan production offices
Slide 18: Loan Composition for Top Banks
Loan Composition for Top 100 Banks Year-End 2003 Tiered Based On Market Cap Comm'l Comm'l RE Personal RE HELOCS & 2nd Mtg Consumer Cr Card Other Tier 1 - Top 10 Banks 20% 10% 26% 9% 21% 15% Tier 2 - Next 40 Bks 20% 27% 22% 11% 11% 9% Commerce 25% 28% 17% 4% 25% 1% Avg - Top 100 Bks 20% 32% 18% 9% 11
Slide 19: Modest Loan Growth
Modest Loan Growth Last 5 years Commerce Loans 2004 Bal % to Total 5yr CAGR Market Based Business $4,329 53.2% 2.46% Market Based Consumer $2,056 25.3% 1.02% Non Market $1,745 21.5% 4.09% TOTAL $8,130 100% St. Louis & Kansas City Mkt Loans Business $2,706 33.3% 2.28% Consumer $1,078 13.3% 4.60% TOTA
Slide 20: Industry and Commerce C&I Loans by Quarter 2000-2004
Industry and Commerce C&I Loans by Quarter 2000-2004 Commerce Bancshares, Inc. Source: FDIC Lending ....
Slide 21: An Important Part of Our Culture
1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 Non-Perf. Assets/Total Loans 0.0061 0.0042 0.0034 0.0028 0.0039 0.0029 0.0019 0.0027 0.004 0.0038 0.0041 0.0023 NCO/Loan 0.0017 0.0018 0.0031 0.0047 0.0048 0.0048 0.0041 0.0038 0.0048 0.0042 0.0046 0.0041 An Important Part of Our Culture To
Slide 22: Industry Commercial Real Estate & Home Equity Loans
Industry Comm'l Real Estate & Home Equity Loans Substantial growth, especially @ mid sized banks - worrisome! Commercial Real Estate Loans Home Equity Loans Source: OCC data from Financial Information Systems, Inc. Commerce Bancshares, Inc. Risk Management ....
Slide 23: ALM Focus
ALM ALCO Focus: Since 2001, used the balance sheet to hedge against the steep decline in interest rates. Built a laddered, diversified portfolio (AAA) funded by core deposits/short-term borrowings. Created modest net interest income growth as an offset to flat loan growth. Current Profile: Size of t
Slide 24: Balance Sheet Duration as of 12/31/04
Balance Sheet Duration as of 12/31/04 Assets Book ($000s) Duration Bus Loans/Leases $2,085 0.45 Bus RE & Constr 2,170 0.89 Personal RE 1,341 2.12 Pers Bkg & Cr Card 2,558 0.76 Total Loans1 8,154 0.94 Mortg-Backed Bonds/CMOs 1,361 2.47 Other Bonds 3,086 1.86 Total Bonds2 4,447 2.05 Other Assets 1,561
Slide 25: Net Interest Income: 1998-2005F
Net Interest Income: 1998 - 2005F Combating Interest Rate Risk and Slow Loan Growth Risk Management - Interest Rate.... Commerce Bancshares, Inc.
Slide 26: Contributions to Total Net Interest Income 2005 Forecasted
Contributions to Total Net Interest Income 2005 Forecasted Rate and Volume Scenario (F) Risk Management - Interest Rate.... Dec-05 Commerce Bancshares, Inc.
Slide 27: CBSH Benefits from Rising Rates
CBSH Benefits from Rising Rates Notes: Most liabilities reprice within 1 year. Reinvestment of longer, fixed assets (loans & bonds) will push net interest margin higher. Risk Management - Interest Rate....
Slide 28: Rate Shocks: Change in Net Interest Income
Rate Shocks: 12 Month Change in Net Interest Income From Flat Rate Scenario Risk Management - Interest Rate.... Commerce Bancshares, Inc.
Slide 29: Growth in Revenue & Revenue Per Share
Growth in Revenue & Revenue Per Share In Summary... Commerce Bancshares, Inc. Revenue Per Share Total Revenue ($ Millions)
Slide 30: Total Shareholder Return: A Long-Term View
1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 CBSH 100 152 197 307 307 261 351 343 369 492 540 S&P 500 ** 100 138 169 226 292 353 322 284 221 285 305 NASDAQ Financials** 100 146 187 286 278 276 298 328 338 457 524 10-Year CAGR* EPS 10.2% Cash Div 13.0% Stk. Price 16.3% Total Shareholder Ret
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