Commerce Bancshares, Inc. · NASDAQ:CBSH
Commerce Bancshares — Q2 2022 Earnings Presentation
19 slides from Commerce Bancshares's earnings presentation, 2022
Slide 1: Earnings Highlights 2nd Quarter 2022
COMMERCE BANCSHARES, INC. EARNINGS HIGHLIGHTS 2nd 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: 2Q2022 Earnings Highlights
2Q2022 EARNINGS HIGHLIGHTS Highlights Well-positioned for growth PPNR1 • PPNR1 increased 17.3% over Q1. $158.3 million • Net interest income increased 11.3% over Q1. Net Income $115.8 million • Net interest margin increased 34 bps over Q1 to 2.79%. • Non-interest income increased 5.8% over Q1 (37.5%
Slide 4: Balance Sheet Highlights
BALANCE SHEET HIGHLIGHTS Quarterly Average Balances Change vs. $ in millions 2Q22 1Q22 2Q21 Highlights • Linked quarter (LQ) reflects growth in construction, business real estate and business (offset by a decline in PPP loans of $45.1 million and a decline in seasonal Commercial1 $9,774.0 $219.8 $(5
Slide 5: Balance Sheet
BALANCE SHEET Loans Deposits QTD Average Balances QTD Average Balances $ billions $ billions +4% $29.3 $28.7 $27.7 -3% $11.5 $11.2 $11.1 $16.0 $15.2 $15.5 $5.7 $5.7 $5.7 3.65% 3.72% $17.8 $17.5 3.54% $16.6 $10.3 $9.5 $9.8 .07% .05% .07% 2Q21 1Q22 2Q22 2Q21 1Q22 2Q22 Consumer Loans Loan Yield Non-Int
Slide 6: Loan Portfolio
LOAN PORTFOLIO Period-End Balances QTD Average Balances $ in 000s 6/30/2022 3/31/2022 6/30/2021 QoQ YoY $ in 000s 6/30/2022 3/31/2022 6/30/2021 QoQ YoY Business $5,441,592 $5,508,508 $5,803,760 -1.2% -6.2% Business $5,385,181 $5,324,172 $6,211,610 1.1% -13.3% Business excl. Business excl. 5,406,321
Slide 7: Income Statement Highlights
INCOME STATEMENT HIGHLIGHTS Change vs. $ in millions 2Q22 1Q22 2Q21 Highlights Net Interest Income $232.4 $23.6 $24.4 • Linked quarter (LQ) increase due to higher income earned on investment securities and loans Non-Interest Income $139.4 $7.7 $0.3 • See page 8 Non-Interest Expense $213.5 $7.9 $15.4
Slide 8: Non-Interest Income Highlights
NON-INTEREST INCOME HIGHLIGHTS Change vs. $ in millions 2Q22 1Q22 2Q21 Highlights Bank Card Transaction Fees $43.9 $1.8 $1.3 • Increase of 3.0% over prior year (PY) driven by growth in net corporate card fees • 2Q2022 reflects lower market values on assets Trust Fees $46.8 $(1.0) $.5 under managemen
Slide 9: Non-Interest Expense Highlights
NON-INTEREST EXPENSE HIGHLIGHTS Change vs. $ in millions 2Q22 1Q22 2Q21 Highlights • Increase of 8.8% over prior year (PY) mostly due to higher full-time salaries of $4.9 million and an Salaries and Employee Benefits $142.2 $6.3 $11.5 accrual of $5.4 million for special bonuses to be paid to non-inc
Slide 10: Pre-Tax, Pre-Provision Net Revenue (PPNR)
PRE-TAX, PRE-PROVISION NET REVENUE (PPNR) Net Interest Income (+) Non-Interest Expense (-) Non-Interest Income (+) Pre-Tax, Pre-Provision Net Revenue (=) $372 $347 $341 2Q2022 Comparison vs. 2Q2021 6.2% $214 vs. 1Q2022 17.3% $232 $208 $198 $209 $206 $149 $158 $135 $139 $132 $140 2Q2021 1Q2022 2Q2022
Slide 11: Maintaining Strong Credit Quality
MAINTAINING STRONG CREDIT QUALITY Net Loan Charge-Offs (NCOs) Allowance for Credit $ in millions Losses on Loans (ACL) $ in millions $7.8 $284.2 $265.7 $4.6 $172.4 $4.0 1.34% $134.7 $138.0 $0.7 $3.3 .14% 1.18% .12% 1.10% .02% $0.7 .06% .10% .87% .88% 2Q21 1Q22 2Q22 2Q21 1Q22 2Q22 NCOs- CBSH NCO/Aver
Slide 12: Allocation of Allowance
ALLOCATION OF ALLOWANCE CECL allowances reflect the economic and market outlook Allowance for Credit Losses (ACL) on Loans March 31, 2022 June 30, 2022 $ in millions Allowance Allowance $250 1.60% for Credit % of for Credit % of 1.47% Losses Outstanding Losses Outstanding 1.44% $ in millions (ACL) L
Slide 13: Well-Positioned for a Rising Rate Environment
WELL-POSITIONED FOR A RISING RATE ENVIRONMENT 13
Slide 14: Well-Positioned for Higher Rates
WELL-POSITIONED FOR HIGHER RATES Previous Cycle Deposit Beta 3.0% Cost of Total Deposits Deposit Beta 2.5% As of As of Prior Fed Cycle 3Q2015 2Q2019 (+225 bps) 2.0% Commerce .12% .38% 12% 1.5% Peer Median .23% .85% 27% 1.0% Effective Fed Funds Rate 0.5% 0.0% 3Q2015 4Q2015 1Q2016 2Q2016 3Q2016 4Q2016
Slide 15: Summary of Fixed & Floating Loans
SUMMARY OF FIXED & FLOATING LOANS Over 50% of total loans are variable; 62% of commercial loans have floating rates Fixed Variable Business Construction Business RE Commercial Total Loans: $5.3B Total Loans: $1.1B Total Loans: $3.1B 4% 42% 44% 58% 56% 96% Personal RE Consumer HELOC Consumer Card Tot
Slide 16: Sound Capital and Liquidity Position
SOUND CAPITAL AND LIQUIDITY POSITION Tier 1 Risk-Based Capital Ratio1 Loan to Deposit Ratio Peer Median: 11.3% Large, stable deposit base PB 15.3% 54% OZK 14.4% Core Deposits Average Loan to CBSH 13.9% Deposit Ratio3 SFNC 13.5% $27.2 Commerce 74% Average CFR 13.3% Loan to UBSI 13.0% Billion2 Deposit
Slide 17: Capital for Business
CAPITAL FOR BUSINESS ® A middle-market private equity firm focused on the success of industrial growth companies Transaction Types Quick Facts: Investment Criteria Management buyouts • Manufacturing, distribution and Leveraged buyouts Small Business Investment Succession plans certain service compan
Slide 18: Non-GAAP Reconciliations
NON-GAAP RECONCILIATIONS Pre-tax, Pre-provision Net Revenue For The Three Months Ended (DOLLARS IN THOUSANDS) Jun. 30, 2022 Mar. 31, 2022 Jun. 30, 2021 A Net Interest Income $ 232,385 $ 208,786 $ 207,982 B Non-Interest Income $ 139,427 $ 131,769 $ 139,143 C Non-Interest Expense $ 213,505 $ 205,648 $
Slide 19: Commerce Bancshares, Inc.
] Commerce Bancshares, Inc.