Commerce Bancshares, Inc. · NASDAQ:CBSH
Commerce Bancshares — Shareholder Meeting (April 2023)
39 slides from Commerce Bancshares's shareholder meeting presentation, Apr 19, 2023
Slide 1: Commerce Bancshares Annual Shareholders' Meeting
PEOPLE, GROWTH & POSSIBILITIES COMMERCE BANCSHARES, INC. ANNUAL SHAREHOLDERS’ MEETING John Kemper President and Chief Executive Officer April 19, 2023
Slide 2: People, Growth and Possibilities
PEOPLE, GROWTH AND POSSIBILITIES investor.commercebank.com 2
Slide 3: 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 4: Today's Discussion
TODAY’S DISCUSSION About Commerce Economic and Our Strategic People, Growth Bancshares Industry Themes Position & Possibilities A Strong Operating Continuous Our 2022 Foundation Environment Improvement Performance for Growth for Banks and Innovation Highlights 4
Slide 5: 157 Years of Strength and Stability
157 YEARS OF STRENGTH AND STABILITY Commerce Bank is One of the Strongest Financial Institutions in the U.S. 1 of 5 Moody’s assigned Commerce an a1 baseline Full-Service Banking Footprint credit assessment. Commerce is 1 of only 5 • Kansas City • Wichita • St. Louis • Tulsa U.S. banks with a credit
Slide 6: 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 • Sophisticated payment customer service system capabilities and engaged workforce • Focus on the full
Slide 7: Track Record of Long-Term Outperformance
TRACK RECORD OF LONG-TERM OUTPERFORMANCE Revenue Deposit Credit Diversification Franchise Quality Balanced earnings profile, fee $25.6 billion in low-cost, Conservative risk profile revenue at 37%1 of total revenue, diverse deposits2 with drives outperformance bolstered by growing wealth peer-leadin
Slide 8: A Strong Culture is the Foundation of Our Success
A STRONG CULTURE IS THE FOUNDATION OF OUR SUCCESS 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
Slide 9: Commerce's Focus Extends Beyond Banking
COMMERCE’S FOCUS EXTENDS BEYOND BANKING Supporting our communities, our customers and our team members “ 2022 Engagement MORE THAN 500 As a socially responsible corporate citizen, we continuously seek “ and Enablement2 Consistently scoring above the U.S. High Performance and U.S. Financial Services
Slide 10: Recent Recognition
RECENT RECOGNITION 2022 BEST 2022 90 2022 Forbes World’s Customer Service, FROM TEMENOS Forbes America’s Human Rights Forbes America’s Best Banks1 Newsweek’s Best Modernized Core Best Banks4 Campaign Best Midsize Banks 2022 List2 Banking Platform to Corporate Equality Employers6 4 consecutive years
Slide 11: Today's Discussion
TODAY’S DISCUSSION About Commerce Economic and Our Strategic People, Growth Bancshares Industry Themes Position & Possibilities A Strong Operating Continuous Our 2022 Foundation Environment Improvement Performance for Growth for Banks and Innovation Highlights 11
Slide 12: Macroeconomic Environment: 2022 in Review
MACROECONOMIC ENVIRONMENT: 2022 IN REVIEW A volatile year with stubborn inflation, rising interest rates and battered financial markets. Expanding job market. Stronger than expected economic growth in 4Q. Question of a recession still looms. GDP Following negative UNEMPLOYMENT Unemployment growth in
Slide 13: Key Themes Driving 2022 Bank Performance
KEY THEMES DRIVING 2022 BANK PERFORMANCE Deposit / • Increasing deposit betas offsetting benefits from rates rising Funding • Banks choosing between alternative funding sources and paying Costs up to maintain deposit levels Earlier • A focus on future benefits from rising rates Expected • Earlier im
Slide 14: Today's Discussion
TODAY’S DISCUSSION About Commerce Economic and Our Strategic People, Growth Bancshares Industry Themes Position & Possibilities A Strong Operating Continuous Our 2022 Foundation Environment Improvement Performance for Growth for Banks and Innovation Highlights 14
Slide 15: Strategic Posture: Maintaining the Balance
STRATEGIC POSTURE: MAINTAINING THE BALANCE Disciplined focus on PRIORITY STRONG PERFORMANCE with BLUE CHIP investments ongoing refinement of the “Core Bank” • Diversity, Equity and Inclusion • Super-Community Bank platform • Enhancing our People • Relationship-based banking Leadership • High-touch c
Slide 16: Enterprise Digital Strategy
MEETING OUR CUSTOMERS WHERE THEY ARE: ENTERPRISE DIGITAL STRATEGY Our Vision • Creates a single Digital Strategy expanding across all segments of the bank Transform the digital experience by staying • Committed to delivering customer digital current on digital trends and creating solutions rapidly s
Slide 17: Digital Technology: Application Modernization
DIGITAL TECHNOLOGY: APPLICATION MODERNIZATION Payments BUSINESS DRIVERS • Instant Payments (RTP, FedNow) • New Capabilities • Wires System Refresh • Improved User Experience • Flexibility • ACH System Refresh • Reduced Operational Expense Lending • Risk Management • Private Banking Loan Origination
Slide 18: Consumer Banking Snapshot
Consumer Segment CONSUMER BANKING SNAPSHOT 148 Full-service branches 293 ATMs $13.0 $1.9 812 BILLION BILLION THOUSAND Consumer Consumer Consumer Deposits1 Loans2 Households1 Focus on Digital 4.7 4.7 68.6% $73,345 28.2% Commerce Bank Digital HH Digital Loan Mobile App Rating Penetration Sales (000s)
Slide 19: Distinctive Digital Offerings
DISTINCTIVE DIGITAL OFFERINGS Consumer Segment Commerce Bank CONNECT® Mobile App Personalized experience allowing customers to engage with a banker they choose, right from their smartphone • First in the region to introduce this innovation, enabling high-touch 98% customer service through a digital
Slide 20: We're Built for You: Commercial Banking
WE’RE BUILT FOR YOU: COMMERCIAL BANKING Commercial Segment 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 Card and Merchant acceptance • E
Slide 21: Expansion Markets Offer Growth
EXPANSION MARKETS OFFER GROWTH Commercial Segment OPPORTUNITIES Team Overview for Expansion Markets 2022 Fee Income Expansion Market Loan Growth Growth # of team members per market (includes open positions) 102% $ in millions Expansion 44 Market Loan $3,280 Growth Oklahoma since 2017 72% 47 $2,615
Slide 22: Industry-Leading Commercial Payments Capabilities
INDUSTRY-LEADING COMMERCIAL Commercial Segment PAYMENTS CAPABILITIES Innovative payments solutions to manage payables and receivables to streamline cash flow $200 $63 $10.4 $7.7 MILLION MILLION BILLION BILLION Payments Treasury Commercial Merchant Revenue Management Card Volume Revenue Volume Inform
Slide 23: Healthcare Specialty Banking
Commercial Segment We don’t just serve the healthcare industry. It’s our specialty. Partner to 3,000+ healthcare providers and 500+ hospitals in all 48 contiguous states 100+ entities and over 42 million patient transactions annually Patient Engagement Receivables Accounts Payable Traditional Bankin
Slide 24: Advice You Can Trust
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. 18TH $60 $37 $618 Largest Among Bank-Managed BILLION BILLION MILLION Trust Total Client Assets Under Mana
Slide 25: Wealth Key Growth Initiatives
Wealth Segment Wealth Key Growth 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 efforts • Expand our integr
Slide 26: Today's Discussion
TODAY’S DISCUSSION About Commerce Economic and Our Strategic People, Growth Bancshares Industry Themes Position & Possibilities A Strong Operating Continuous Our 2022 Foundation Environment Improvement Performance for Growth for Banks and Innovation Highlights 26
Slide 27: 2022 Financial Performance vs. Prior Year
2022 FINANCIAL PERFORMANCE VS. PRIOR YEAR ROAA ROAE Net Earnings income $488 per $3.85 attributable to CBI million 1.45% 17.3% share Net Deposits 12% Dividend period end 6% Interest 13% growth Income Loans period end 7% Long-term outperformance relative to the industry 15-year TOTAL ANNUALIZED S
Slide 28: 2022 Year End Earnings
2022 YEAR END EARNINGS % $ in millions 2021 2022 change RETURN ON AVERAGE ASSETS Net interest income $ 835 $ 942 13% CASH Non-interest income 560 547 -2% 1.6% 1.5% DIVIDENDS 2021 2022 $0.95 Total revenue 1,395 1,489 7% 2021 Securities gains 30 21 NM $1.01 Non-interest expense (806) (849) 5% RETURN O
Slide 29: 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 Peers1 $ in millions $560 $547 $501 $525 $506 2% 5% 7% 5% 4% 10% 4% 4% 6% 2018 2019 2020 2021 2022 Commerce Bank Peers 12% 63%
Slide 30: 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 Peer Banks include: ABCB, ASB, BOKF, CFR, FNB, FULT, HWC, ONB, OZK, PB, PNFP, SFNC,
Slide 31: Sustained Outperformance Relative to Peers
SUSTAINED OUTPERFORMANCE RELATIVE TO PEERS, THROUGH ECONOMIC CYCLES Return on Average Assets ROAA 25-yr average CBSH Peer Average Recession CBSH: 1.38% 2.0% Peers: 1.03% 1.5% 1.0% 0.5% 0.0% 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022 Source: S&P Global Market Intelligence, data
Slide 32: Sound Capital and Liquidity Position
SOUND CAPITAL AND LIQUIDITY POSITION Tier 1 Risk-Based Capital Ratio1 Loan to Deposit Ratio Peer Median: 10.9% Large, stable deposit base 15.9% CBSH 60% 14.1% Core Deposits Average Loan to 13.4% Deposit Ratio3 12.9% $25.2 Commerce 83% Average 12.6% Loan to 12.3% Billion2 Deposit Ratio 1 Peer Average
Slide 33: Comparisons vs. Peers YTD Dec 2022
COMPARISONS VS. PEERS YTD Dec 2022 Return on Return on Average Troubled Loans / Average Assets Common Equity Capital Total Loans Commerce 0.05% Commerce 17.31% Commerce 14.13% Commerce 1.45% 4th highest 2nd highest 2nd highest Lowest level of return on assets return on equity capital ratio troubled
Slide 34: Financial Highlights QTD March 31, 2023
FINANCIAL HIGHLIGHTS QTD MARCH 31, 2023 $ millions (except EPS) 1Q2022 1Q2023 % change Net Income attributed to Commerce $118 $120 1% Return on Average Assets 1.33% 1.54% 16% Return on Average Equity 14.4% 18.8% 31% Efficiency Ratio 60.3% 57.5% 5% Average Loans $15,223 $16,404 8% Average Deposits $2
Slide 35: Liquidity and Capital Highlights
LIQUIDITY AND CAPITAL HIGHLIGHTS Liquidity / Borrowing Deposits • $1.3B of cash at Federal Reserve Bank (FRB) at Q1. • Average loan to deposit ratio of 65%. • $1.5B in Federal Home Loan Bank (FHLB) advances • Seasonal deposit runoff in January occurred in line at Q1. with expectations. • No borrowin
Slide 36: Deposit Trends – YTD 2023
DEPOSIT TRENDS – YTD 2023 January 1, 2023 – April 10, 2023 7-Day Moving Average $ in millions 3/8 $30,000 Seasonal runoff early in the first quarter was in line with expectations. $28,000 -3% $26,000 0% Z $24,000 Deposit balances declined slightly after March 8, but $22,000 have been rebounding in A
Slide 37: Long-Term View: Net Income and Earnings per Share
LONG-TERM VIEW: NET INCOME AND EARNINGS PER SHARE $600 $4.50 Earnings Per Share Earnings per Share (EPS) $550 $4.00 $500 Net Income $450 $3.50 Net Income $ in millions $400 $3.00 $350 $2.50 $300 $250 $2.00 $200 $1.50 $150 $100 $1.00 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 Dividends $0.55 $
Slide 38: Steady Shareholder Returns
STEADY SHAREHOLDER RETURNS as of December 31, 2022 Total Shareholder Returns Annualized Comparison Indexed, 12/31/2007 = $100 Total Shareholder Returns $500 30% CBSH KBW Bank COMMERCE 20 KBW Regional S&P 500 400 10 S&P 500 0 300 -10 KBW -20 200 REGIONAL -30 KBW BANK 1 Year 3 Year 5 Year 10 Year 15 Y
Slide 39: Commerce Bancshares, Inc.
] Commerce Bancshares, Inc.
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