Commerce Bancshares, Inc. · NASDAQ:CBSH
Commerce Bancshares — Q3 2024 Earnings Presentation
26 slides from Commerce Bancshares's earnings presentation, Oct 17, 2024
Slide 1: Earnings Highlights 3rd Quarter 2024
COMMERCE BANCSHARES, INC. EARNINGS HIGHLIGHTS 3rd Quarter 2024
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
COMMERCE BANCSHARES 159 YEARS IN BUSINESS 142 branches and 253 ATMs across 7 states CORE BANKING FOOTPRINT COMMERCIAL | CONSUMER | WEALTH MANAGEMENT St. Louis • Kansas City • Springfield Central Missouri • Central Illinois • Wichita Tulsa • Oklahoma City • Denver COMMERCIAL OFFICES Cincinnati • Nash
Slide 4: Track Record of Long-Term Outperformance
TRACK RECORD OF LONG-TERM OUTPERFORMANCE Revenue Diversification Balanced earnings profile, fee revenue at 37%1 of total revenue, bolstered by growing wealth and national payments businesses Deposit Franchise $23.7 billion in low-cost, diverse deposits2 with peer-leading historical deposit betas Cre
Slide 5: 3Q2024 Highlights
$138.0 million Net Income $183.8 million PPNR1 3Q2024 HIGHLIGHTS Highlights $1.07 EPS 1.80% ROAA 16.81% ROACE • Net interest income was flat compared to Q2 at $262MM. • Net interest margin declined 5 bps from Q2 to 3.50%; excluding TIPs inflation income, Q3 net interest margin of 3.49%, up 4 bps ove
Slide 6: Balance Sheet Highlights
BALANCE SHEET HIGHLIGHTS 3Q24 vs. 3Q23 3Q24 vs. 2Q24 Quarterly Average Balances % Change$ Change% Change$ Change3Q24$ in millions 0%$-52.0-2%$-169.8$10,948.1Commercial 2%109.50%21.26,077.7Consumer 0%$57.6-1%$-148.6$17,025.9Total Loans -14%$-1,468.2-2%$-140.4$9,021.6Investment Securities1 10%$227.422
Slide 7: Balance Sheet
$17.7 $17.0 $17.1 $7.9 $7.3 $7.3 3Q23 2Q24 3Q24 $25.6 $24.3 $24.4 -5% $11.0 $11.1 $10.9 $6.0 $6.1 $6.1 3Q23 2Q24 3Q24 $17.0 $17.2 $17.0 BALANCE SHEET 7 Loans Consumer Loans Commercial Loans Loan Yield1 Deposits QTD Average Balances $ billions Non-Interest Bearing Interest-Bearing Deposits Interest-B
Slide 8: Loan Portfolio
LOAN PORTFOLIO 8 YoYQoQ9/30/20236/30/20249/30/2024$ in 000s 2.4%-.7%$5,908,330 $6,090,724$6,048,328Business -10.3%-1.1%1,539,5661,396,5151,381,607Construction -1.6%.4%3,647,1683,572,5393,586,999Business Real Estate .6%-.4%3,024,6393,055,1823,043,391Personal Real Estate -.8%-1.7%2,125,8042,145,6092,1
Slide 9: Commercial Real Estate Breakdown
33.4% 14.6% 12.9% 8.7% 8.6% 8.6% 5.3% 5.2% Owner- occupied Office Industrial Retail Multi-family Hotels Farm Senior living 2.7% Other Real Estate - Business Loans: Office Outstanding Balances by Geography1 % of Total Loans Real Estate - Business Loans 7.0%Owner – Occupied 3.1%Office 2.7%Industrial 1
Slide 10: Income Statement Highlights
$152 $182 $262 $232 2Q24 $414 10 INCOME STATEMENT HIGHLIGHTS $143 $163 $249 $228 3Q23 $391 $159 $184 $262 $237 3Q24 $421 Non-Interest Income (+) Net Interest Income (+) Non-Interest Expense (-) Pre-Tax, Pre-Provision Net Revenue (=) 3Q24 Comparison 12.4%vs. 3Q23 .8%vs. 2Q24 Pre-Tax, Pre-Provision Ne
Slide 11: Income Statement Highlights
3Q24 vs. 3Q23 3Q24 vs. 2Q24 % Change$ Change% Change$ Change3Q24$ in millions 6%$13.80%$.1$262.4Net Interest Income 11%$16.14%$6.8$159.0Non-Interest Income 4%$9.62%$5.4$237.6Non-Interest Expense 12%$20.31%$1.5$183.8Pre-Tax, Pre-Provision Net Revenue1 -10%-$.420%$.6$3.9Investment Securities Gains, Ne
Slide 12: Non-Interest Income Highlights
NON-INTEREST INCOME HIGHLIGHTS 12 3Q24 vs. 3Q23 3Q24 vs. 2Q24 % Change$ Change% Change$ Change3Q24$ in millions 11%$5.55%$2.4$54.7Trust Fees 1%.70%.147.6Bank Card Transaction Fees 10%2.30%.125.4Deposit Account Charges and Other Fees 70%2.526%1.26.0Capital Market Fees 21%.83%.14.6Consumer Brokerage S
Slide 13: Non-Interest Expense Highlights
NON-INTEREST EXPENSE HIGHLIGHTS 13 3Q24 vs. 3Q23 3Q24 vs. 2Q24 % Change$ Change% Change$ Change3Q24$ in millions 4%$6.33%$4.0$153.1Salaries and Employee Benefits 5%1.52%.732.2Data Processing and Software -4%-.57%.913.4Net Occupancy 6%.52%.28.8Professional and other services 18%1.136%1.97.3Marketing
Slide 14: Liquidity and Capital
LIQUIDITY AND CAPITAL & commerce Bancshares, Inc.
Slide 15: Liquidity and Capital Highlights
LIQUIDITY AND CAPITAL HIGHLIGHTS 15 • $2.6B in cash at Federal Reserve Bank (FRB) at Q3. • QTD average loan to deposit ratio of 70%. • AFS debt securities portfolio duration of 4.0 years. • Investment securities purchases in Q3 totaled $976MM at a weighted average yield of approximately 3.87%. • Cas
Slide 16: Deposit Balance Trends
2020 2021 2022 4Q23 2Q24 3Q24 $2.3 $3.0 $2.8 $2.3 $2.4 $2.3 DEPOSIT BALANCE TRENDS Segment view $ in billions 16 2020 2021 2022 4Q23 2Q24 3Q24 $9.9 $12.0 $11.9 $10.6 $9.5 $9.8 2020 2021 2022 4Q23 2Q24 3Q24 $11.3 $12.8 $13.4 $12.1 $12.4 $12.3 Commercial Consumer Wealth Average Balance 4Q23 2Q24 3Q24
Slide 17: Opportunities to Enhance and Protect Net Interest Income
3.55% 3.45% 3.50% 3.49% Net Yield Net Yield, Excluding TIPs Inflation Income 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
Slide 18: Summary of Fixed & Floating Loans
Over 57% of total loans are variable; 65% of commercial loans have floating rates SUMMARY OF FIXED & FLOATING LOANS 40% 60% Business Total Loans: $6.0B Fixed Variable C om m er ci al 61% 39% Personal RE Total Loans: $3.0B C on su m er 100% HELOC Total Loans: $0.3B 41% 59% Business RE Total Loans: $3
Slide 19: High Quality, Highly Liquid and Diverse Investment Portfolio
20% 9% 53% 16% 2% Composition of AFS Portfolio Treasury & agency Municipal MBS Asset-backed Other debt HIGH QUALITY, HIGHLY LIQUID AND DIVERSE INVESTMENT PORTFOLIO 1Excludes inflation effect on TIPs; 2Tax equivalent yield Duration (yrs)Avg RateQTD – Sept. 30, 2024 3.23.40%Treasury & agency1 4.82.00%
Slide 20: Sound Capital and Liquidity Position
Average Loan to Deposit Ratio3 SOUND CAPITAL AND LIQUIDITY POSITION 20 Tier 1 Risk-Based Capital Ratio1 1S&P Global Market Intelligence, Information as of June 30, 2024 2Period-end balances, as of September 30, 2024 3Includes loans held for sale, for the quarter ended September 30, 2024 16.2% 15.4%
Slide 21: Maintaining Strong Credit Quality
$8.2 $19.3 $18.4 $105.8 $132.2 3Q23 2Q24 3Q24 $9.8 $9.8 $9.6 $14.2 $10.2 3Q23 2Q24 3Q24 MAINTAINING STRONG CREDIT QUALITY Net Loan Charge-Offs (NCOs) $ in millions NCOs- CBSH NCOs - Peer Average NCO/Average Loans1 - CBSH $162.2 $158.6 $160.8 $303.1 $330.7 3Q23 2Q24 3Q24 Allowance for Credit Losses o
Slide 22: Allocation of Allowance
ALLOCATION OF ALLOWANCE 22 CECL allowances reflect the economic and market outlook September 30, 2024June 30, 2024 % of Outstanding Loans Allowance for Credit Losses (ACL) % of Outstanding Loans Allowance for Credit Losses (ACL)$ in millions .72%$ 43.7.74%$ 45.1Business .94%33.6 .90%32.2 Bus R/E 2.1
Slide 23: Capital for Business Quick Facts
Quick Facts: Small Business Investment Company (SBIC) founded in 1959 Nationwide footprint with Greater Midwest Focus 34 Portfolio Companies Representing $945.9 million in Revenue Over 3,000 Employees Fair Value as of September 30, 2024: $171.0 million Investment Criteria • Manufacturing, distributi
Slide 24: Non-GAAP Reconciliations
NON-GAAP RECONCILIATIONS 24 For The Three Months Ended Sept. 30, 2023June 30, 2024Sept. 30, 2024(DOLLARS IN THOUSANDS) 248,547$262,249$262,351$Net Interest IncomeA 142,949$152,244$159,025$Non-Interest IncomeB 228,010$232,214$237,600$Non-Interest ExpenseC 163,486$182,279$183,776$Pre-Provision Net Rev
Slide 25: Contact Information
Contact Information: Matt Burkemper Senior Vice President, Commerce Bank Corporate Development and Investor Relations 314.746.7485 Matthew.Burkemper@commercebank.com Commerce Bancshares, Inc. Investor Relations website: http://investor.commercebank.com/ 25
Slide 26: Commerce Bancshares, Inc.
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