Commerce Bancshares, Inc. · NASDAQ:CBSH
Commerce Bancshares — Q1 2022 Earnings Presentation
21 slides from Commerce Bancshares's earnings presentation, 2022
Slide 1: Commerce Bancshares Earnings Highlights 1st Quarter 2022
COMMERCE BANCSHARES, INC. EARNINGS HIGHLIGHTS 1st 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: 1Q2022 Earnings Highlights
1Q2022 EARNINGS HIGHLIGHTS Highlights Well-positioned for growth PPNR1 • Net interest income increased .5% over Q4. $134.9 million • Net interest margin increased 2 bps over Q4 to 2.45%. Net Income $118.2 million • Non-interest income to total revenue of 38.7%. • Wealth management client assets of $
Slide 4: Balance Sheet Highlights
BALANCE SHEET HIGHLIGHTS Quarterly Average Balances Change vs. $ in millions 1Q22 4Q21 1Q21 Highlights • Linked quarter (LQ) reflects lower PPP loans (-132MM) offset by higher seasonal business, construction and business real Commercial1 $9,554.1 $130.6 $(1,093.7) estate Consumer 5,669.1 (0.5) (16.0
Slide 5: Balance Sheet: Loans and Deposits
BALANCE SHEET Loans Deposits QTD Average Balances QTD Average Balances $ billions $ billions +11% $28.8 $29.3 $26.5 -7% $11.9 $11.5 $16.3 $10.4 $15.1 $15.2 $5.7 $5.7 $10.6 3.66% 3.62% $16.1 $16.9 $17.8 3.54% $9.4 $9.5 $5.7 .09% .05% .05% 1Q21 4Q21 1Q22 1Q21 4Q21 1Q22 Consumer Loans Loan Yield Non-In
Slide 6: Loan Portfolio
LOAN PORTFOLIO Period-End Balances QTD Average Balances $ in 000s 3/31/2022 12/31/2021 3/31/2021 QoQ YoY $ in 000s 3/31/2022 12/31/2021 3/31/2021 QoQ YoY Business $5,508,508 $5,303,535 $6,624,209 3.9% -16.8% Business $5,324,172 $5,191,844 $6,532,921 2.5% -18.5% Business excl. Business excl. 5,455,08
Slide 7: Income Statement Highlights
INCOME STATEMENT HIGHLIGHTS Change vs. $ in millions 1Q22 4Q21 1Q21 Highlights • Linked quarter (LQ) increase due to higher income earned Net Interest Income $208.8 $1.1 $3.0 on investment securities, partially offset by lower income earned on loans and securities purchased under agreements to resel
Slide 8: Non-Interest Income Highlights
NON-INTEREST INCOME HIGHLIGHTS Change vs. $ in millions 1Q22 4Q21 1Q21 Highlights Bank Card Transaction Fees $42.0 $(2.7) $4.4 • Increase of 11.5% over prior year (PY) driven by growth in net corporate card fees • Increase of 8.3% over PY resulting mostly from higher private client fee income Trust
Slide 9: Non-Interest Expense Highlights
NON-INTEREST EXPENSE HIGHLIGHTS Change vs. $ in millions 1Q22 4Q21 1Q21 Highlights Salaries and Employee Benefits $136.0 $3.3 $6.9 • Increase of 5.4% over prior year (PY) mostly due to higher full-time salaries Net Occupancy $12.3 — $.3 Equipment $4.6 $(.1) $.2 Supplies $4.7 $.3 $.6 • Increase of 6.
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 (=) $355 $342 $341 1Q2022 Comparison vs. 1Q2021 (11.1%) $204 vs. 4Q2021 (9.6%) $193 $208 $206 $209 $206 $149 $152 $135 $136 $148 $132 1Q2021 4Q2021 1Q
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 $10.0 $302.0 $261.2 $7.9 $200.5 $4.6 1.39% $150.0 $134.7 .25% $4.3 1.22% $3.4 1.22% .14% .12% .99% .87% .11% .07% 1Q21 4Q21 1Q22 1Q21 4Q21 1Q22 NCOs- CBSH NCO/Average
Slide 12: Allocation of Allowance
ALLOCATION OF ALLOWANCE CECL allowances reflect the economic and market outlook Allowance for Credit Losses (ACL) on Loans December 31, 2021 March 31, 2022 $ in millions Allowance Allowance $250 1.60% for Credit % of for Credit % of Losses Outstanding Losses Outstanding 1.47% 1.44% $ in millions (AC
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% Effective Fed Funds Rate 1.0% 0.5% 0.0% 3Q2015 4Q2015 1Q2016 2Q2016 3Q2016 4Q2016
Slide 15: Balance Sheet: Low-Cost Deposits
BALANCE SHEET: LOW-COST DEPOSITS – 39% of Q1 average deposits were non-interest bearing. – Cost of interest-bearing deposits remains low. $30 0.10% 0.09% $25 0.07% Average Balance $20 0.06% $ in billions 0.05% 0.05% $15 0.05% $10 $5 $0 0.00% 1Q21 2Q21 3Q21 4Q21 1Q22 Non Interest-Bearing Deposits (le
Slide 16: Earning Asset Optimization
EARNING ASSET OPTIMIZATION 1Q 2022 Period-end FRB3 balance EXCLUDING LOANS $1.3 Billion Prudently deploying excess deposits into higher-yielding assets $20.0 $19.1 $19.3 9.0% $18.0 $2.9 $2.6 8.0% $16.5 $2.6 $15.0 $1.7 7.0% $2.7 $1.7 $15.0 $1.6 $14.0 $1.5 $13.1 $1.1 $0.9 6.0% $0.8 $12.2 $1.0 $0.8 Ave
Slide 17: 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 18: Sound Capital and Liquidity Position
SOUND CAPITAL AND LIQUIDITY POSITION Tier 1 Risk-Based Capital Ratio1 Loan to Deposit Ratio Peer Median: 11.7% Large, stable deposit base OZK 15.3% 52% PB 15.1% Core Deposits Average Loan to CBSH 14.3% Deposit Ratio3 SFNC 13.8% $28.2 Commerce 77% Average CFR 13.7% Loan to UBSI 13.4% Billion2 Deposit
Slide 19: 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 20: Non-GAAP Reconciliations
NON-GAAP RECONCILIATIONS Pre-tax, Pre-provision Net Revenue For The Three Months Ended (DOLLARS IN THOUSANDS) Mar. 31, 2022 Dec. 31, 2021 Mar. 31, 2021 A Net Interest Income $ 208,786 $ 207,657 $ 205,748 B Non-Interest Income $ 131,769 $ 147,699 $ 136,045 C Non-Interest Expense $ 205,648 $ 203,582 $
Slide 21: Commerce Bancshares, Inc.
] Commerce Bancshares, Inc.