Commerce Bancshares, Inc. · NASDAQ:CBSH
Commerce Bancshares — Q3 2023 Earnings Presentation
25 slides from Commerce Bancshares's earnings presentation, Oct 18, 2023
Slide 1: Commerce Bancshares, Inc. Earnings Highlights 3rd Quarter 2023
COMMERCE BANCSHARES, INC. EARNINGS HIGHLIGHTS 3rd Quarter 2023 PEOPLE, GROWTH AND POSSIBILITIES
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: 158 Years in Business
COMMERCE BANCSHARES 158 YEARS IN BUSINESS FULL-SERVICE BANKING FOOTPRINT 143 full-service branches and 279 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: Track Record of Long-Term Outperformance
4 TRACK RECORD OF LONG-TERM OUTPERFORMANCE Revenue Diversification Balanced earnings profile, fee revenue at 36%1 of total revenue, bolstered by growing wealth and national payments businesses Deposit Franchise $23.3 billion in low-cost, diverse deposits2 with peer-leading historical deposit betas C
Slide 5: 3Q2023 Highlights
$.96 EPS 5 • Average loans up 1.8% over Q2. • Total average assets declined $755MM from Q2, driven by $1B of wholesale funding maturities. • Period end non-interest bearing deposits to total deposits was flat compared to Q2 at 31.7%. • Net interest margin decreased 1 bp from Q2. • Net interest incom
Slide 6: Balance Sheet Highlights
Quarterly Average Balances 3Q23 vs. 2Q23 3Q23 vs. 3Q22 $ in millions 3Q23 $ Change % Change $ Change % Change Commercial $11,000.1 $251.7 2% $1,135.5 12% Consumer 5,968.2 47.6 1% 186.8 3% Total Loans $16,968.3 $299.3 2% $1,322.3 8% Investment Securities $10,489.8 $(799.6) (7)% $(3,226.8) (24)% Inter
Slide 7: Balance Sheet
$17.0 $17.7 $10.8 $8.2 $7.9 $25.6 2Q233Q22 $17.0 3Q23 $25.2 $27.8 -8% $9.8 $10.8 $11.0 $5.8 $5.9 $6.0 2Q233Q22 3Q23 $15.6 $16.7 $17.0 BALANCE SHEET 7 Loans Loan YieldConsumer Loans Commercial Loans Deposits QTD Average Balances $ billions Interest-Bearing Deposit CostNon-Interest Bearing Interest-Be
Slide 8: Loan Portfolio
LOAN PORTFOLIO 8 $ in 000s 9/30/2023 6/30/2023 9/30/2022 QoQ YoY Business $5,908,330 $5,906,493 $5,528,895 0.0% 6.9% Construction 1,539,566 1,451,783 1,206,955 6.0% 27.6% Business Real Estate 3,647,168 3,621,222 3,331,627 0.7% 9.5% Personal Real Estate 3,024,639 2,980,599 2,862,519 1.5% 5.7% Consume
Slide 9: Commercial Real Estate Breakdown
Real Estate - Business Loans: Office Outstanding Balances by Geography1 Real Estate - Business Loans % of Total Loans Owner – Occupied 6.6% Industrial 3.4% Office 3.0% Retail 2.1% Multi-family 1.6% Hotels 1.7% Farm 1.2% Senior living 1.0% Other .7% Total 21.3% COMMERCIAL REAL ESTATE BREAKDOWN 9 31.0
Slide 10: Income Statement Highlights
10 INCOME STATEMENT HIGHLIGHTS $139 $172 $246 $213 $385 3Q22 $148 $170 $250 $228 2Q23 $398 $143 $163 $248 $228 3Q23 $391 Non-Interest Income (+) Net Interest Income (+) Non-Interest Expense (-) Pre-Tax, Pre-Provision Net Revenue (=) 3Q23 Comparison vs. 3Q22 (5.0)% vs. 2Q23 (3.6)% Pre-Tax, Pre-Provis
Slide 11: Income Statement
3Q23 vs. 2Q23 3Q23 vs. 3Q22 $ in millions 3Q23 $ Change % Change $ Change % Change Net Interest Income $248.5 $(1.0) (0)% $2.2 1% Non-Interest Income 142.9 (4.7) (3)% 4.4 3% Non-Interest Expense 228.0 .4 0% 15.1 7% Pre-Tax, Pre-Provision Net Revenue1 $163.4 $(6.0) (4)% $(8.5) (5)% Investment Securit
Slide 12: Non-Interest Income Highlights
NON-INTEREST INCOME HIGHLIGHTS 12 3Q23 vs. 2Q23 3Q23 vs. 3Q22 $ in millions 3Q23 $ Change % Change $ Change % Change Bank Card Transaction Fees $46.9 $(2.8) (6)% $1.3 3% Trust Fees 49.2 1.9 4% 3.8 8% Deposit Account Charges and Other Fees 23.1 .5 2% (1.4) (6)% Capital Market Fees 2.4 (.1) (5)% (1.0)
Slide 13: Non-Interest Expense Highlights
NON-INTEREST EXPENSE HIGHLIGHTS 13 3Q23 vs. 2Q23 3Q23 vs. 3Q22 $ in millions 3Q23 $ Change % Change $ Change % Change Salaries and Employee Benefits $146.8 $1.4 1% $9.4 7% Net Occupancy 13.9 1.0 7% 1.4 11% Equipment 4.7 (.1) (3)% (.3) (7)% Supplies and Communication 5.0 .3 7% .4 8% Data Processing a
Slide 14: Liquidity and Capital
LIQUIDITY AND CAPITAL & commerce Bancshares, Inc.
Slide 15: Liquidity and Capital Highlights
LIQUIDITY AND CAPITAL HIGHLIGHTS 15 • $1.8B of cash at Federal Reserve Bank (FRB) at Q3. • Average FHLB advances declined $932MM. • AFS debt securities portfolio duration of 3.9 years. • Cash flows from maturities and paydowns of investments and resale agreements of approximately $2.4B expected over
Slide 16: Deposit Balance Trends
$2.3 20212019 $1.8 20222020 2Q23 3Q23 $3.0 $2.8 $2.4 $2.3 $2.3 2Q23 3Q23 $2.3 DEPOSIT BALANCE TRENDS Segment view $ in billions 16 3Q23 $10.5 $11.9 $7.8 2Q232019 2020 $9.9 2021 2022 $12.0 $10.1 $12.8 $11.3 2Q232019 2020 2021 2022 $10.2 3Q23 $13.4 $12.3 $12.1 Commercial Consumer Wealth Average Balanc
Slide 17: Deposit Portfolio Characteristics
DEPOSIT PORTFOLIO CHARACTERISTICS 17 Percent of accounts under $250,000 Percent of deposits ($) uninsured1 Average balance of accounts <$250,000 Average balance of accounts 99% 32% $13,169 $25,479 Uninsured Deposit Analysis $ in billions 9/30/2023 Uninsured Deposits $ 10.2 Less: Affiliate Deposits $
Slide 18: FHLB Advances & Brokered CDs
FHLB ADVANCES & BROKERED CDS $1,000MM $500MM $904MM $401MM 6/30/2023 9/30/2023 $0MM $1,904MM 12/31/2023 $901MM FHLB AdvanceBrokered CDs Weighted average rate 5.21% 5.21% 0.00% 18 • Short-term, wholesale funding decreased as short-term brokered CDs and FHLB advances matured • Remaining FHLB advances
Slide 19: Well-Positioned for Multiple Rate Environments
Hedging Structures: Four 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. • 3.5% floor contract with a notional value of $500 million. The contract begins 7/2024. • 3.25% floor contract wi
Slide 20: High Quality, Highly Liquid and Diverse Investment Portfolio
9% 12% 53% 22% 4% Composition of AFS Portfolio Treasury & agency Municipal MBS Other asset backed Corporate HIGH QUALITY, HIGHLY LIQUID AND DIVERSE INVESTMENT PORTFOLIO 1Excludes inflation effect on TIPs; 2Tax equivalent yield QTD – Sept. 30, 2023 Avg Rate Duration (yrs) Treasury & agency1 1.04% 2.0
Slide 21: Sound Capital and Liquidity Position
Average Loan to Deposit Ratio3 SOUND CAPITAL AND LIQUIDITY POSITION 21 Tier 1 Risk-Based Capital Ratio1 1S&P Global Market Intelligence, Information as of June 30, 2023 2Period-end balances, as of September 30, 2023 3Includes loans held for sale, for the quarter ended September 30, 2023 14.7% 14.5%
Slide 22: Maintaining Strong Credit Quality
$4.8 $6.5 $9.8 $3.4 $8.2 3Q233Q22 2Q23 MAINTAINING STRONG CREDIT QUALITY 22 Net Loan Charge-Offs (NCOs) $ in millions NCOs- CBSH NCOs - Peer Average NCO/Average Loans1 - CBSH $143.4 $158.7 $162.2 $260.6 $298.0 2Q233Q22 3Q23 Allowance for Credit Losses on Loans (ACL) $ in millions ACL - CBSH ACL - Pe
Slide 23: Allocation of Allowance
ALLOCATION OF ALLOWANCE 23 CECL allowances reflect the economic and market outlook June 30, 2023 Sept. 30, 2023 $ in millions Allowance for Credit Losses (ACL) % of Outstanding Loans Allowance for Credit Losses (ACL) % of Outstanding Loans Business $ 47.1 .80% $ 48.0 .81% Bus R/E 29.9 .83% 30.2 .83%
Slide 24: Non-GAAP Reconciliations
NON-GAAP RECONCILIATIONS 24 For The Three Months Ended (DOLLARS IN THOUSANDS) Sep. 30, 2023 Jun. 30, 2023 Sep. 30, 2022 A Net Interest Income $ 248,547 $ 249,538 $ 246,373 B Non-Interest Income $ 142,949 $ 147,605 $ 138,514 C Non-Interest Expense $ 228,010 $ 227,611 $ 212,884 Pre-Provision Net Reven
Slide 25: Commerce Bancshares, Inc.
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