Commerce Bancshares, Inc. · NASDAQ:CBSH
Commerce Bancshares — Shareholder Meeting (April 2020)
37 slides from Commerce Bancshares's shareholder meeting presentation, Apr 15, 2020
Slide 1: Embracing a Growth Mindset
Embracing a Growth Mindset COMMERCE BANCSHARES, INC. ANNUAL SHAREHOLDERS’ MEETING April 15, 2020 John Kemper President and Chief Executive Officer
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: Today's Discussion
TODAY’S DISCUSSION ABOUT COMMERCE BANCSHARES COMMERCE’S PREPAREDNESS AND RESPONSE TO COVID-19 ECONOMIC AND INDUSTRY THEMES OUR STRATEGIC POSITION OUR PERFORMANCE AND PEER COMPARISONS 3
Slide 4: 154 Years in Business
COMMERCE BANCSHARES $26.1 $20.5 154 YEARS IN BUSINESS BILLION IN ASSETS BILLION IN TOTAL DEPOSITS 47TH LARGEST U.S. BANK BASED ON ASSET SIZE1 $14.8 BILLION IN TOTAL LOANS2 $7.6 BILLION IN MARKET CAPITALIZATION $9.1 BILLION IN COMMERCIAL 18TH CARD VOLUME as of 12/31/19 LARGEST U.S. BANK BASED ON MARK
Slide 5: A consistent strategy with a long-term view
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 6: Our Strong Culture Is the Key Driver to Our Long-Term Success
OUR STRONG CULTURE IS THE KEY A culture DRIVER TO OUR LONG-TERM SUCCESS formed 150+ years ago to be a force for At Commerce, our core values shape the way we live and work. good in our region and in We have a long our industry V term View We are engaged, enabled and effective. Commerce named Outstan
Slide 7: Beyond Financials
BEYOND FINANCIALS Supporting each other, our customers and our communities 2019 Engagement & Enablement1 500 nonprofit organizations supported by “ Consistently scoring above the U.S. High Performance As a socially Commerce team members through volunteer hours and U.S. Financial Services responsible
Slide 8: Recent Recognition
RECENT RECOGNITION Commerce Bank was named a Top Commerce Bank was named among Mid-size Employer by Forbes for the America’s Best Banks 2020 by third consecutive year and ranked in Forbes. the top one-third among a selection Ranked in the top quartile nationally of 500 employers. and 2nd Missouri-ba
Slide 9: Today's Discussion
TODAY’S DISCUSSION ABOUT COMMERCE BANCSHARES COMMERCE’S PREPAREDNESS AND RESPONSE TO COVID-19 ECONOMIC AND INDUSTRY THEMES OUR STRATEGIC POSITION OUR PERFORMANCE AND PEER COMPARISONS 9
Slide 10: Commerce's Preparedness and Response to COVID-19
COMMERCE’S PREPAREDNESS AND RESPONSE TO COVID-19 Taking care of our customers and team members is our top priority. • Activated our Pandemic Preparedness and Response Plan and COVID-19 Task Force. • Validated Business Continuity Plans for all teams, including successful use of remote access. • Built
Slide 11: Key Actions Taken in Response to COVID-19
KEY ACTIONS TAKEN IN RESPONSE TO COVID-19 We continue to monitor the outbreak & implement updates as the situation evolves. 2018-January 2020 February 2020 Early March 2020 Mid-late March 2020 April 2020 ✓ Enhanced cleaning protocols ✓ March 17: Closed branch ✓ Rolled-out SBA Loan ✓ Appointed ✓ Acti
Slide 12: Dispersion of Key Operating Functions
DISPERSION OF KEY OPERATING FUNCTIONS Safeguarding our operational resiliency A/B Implemented March 23 schedule 100% 82% Alternating Escalated branch teams workforce on-site of distributed distribution to all workforce team members Team members working from 93% plans home* IT staff working >800 from
Slide 13: Helping Our Team Focus on What Matters Most
HELPING OUR TEAM FOCUS ON WHAT MATTERS MOST For our Team Members and their Families For our Team Members in their Workplaces • Providing Premium Pay for hourly team • Limited access to the interior of our members working on-site branches to minimize exposure of our customers and teammates • Establis
Slide 14: Helping Our Customers Focus on What Matters Most: Consumer
HELPING OUR CUSTOMERS FOCUS ON WHAT MATTERS MOST Relief programs for our consumer customers Loans Credit Cards Deposit Accounts • Payment deferments • Opportunity to skip • Refund requests can be payments and with made for overdraft fees or • Unsecured installment loan refunded or waived late fees a
Slide 15: Helping Our Customers Focus on What Matters Most: Commercial
HELPING OUR CUSTOMERS FOCUS ON WHAT MATTERS MOST Relief programs for our commercial customers Loans Deposit Accounts Prepaid Cards • Payment deferments for • Requests can be made to • Implementation fees existing clients have overdraft fees waived for DirectCheck refunded Card solution, an alternati
Slide 16: What Our Customers Are Saying
WHAT OUR CUSTOMERS ARE SAYING “ “ I wanted to let you know what a huge help your team has been this Thank you for all your efforts to Branch week/weekend in helping us apply secure the SBA loan for us. It will Customer ” for paycheck relief. This would be a support jobs for over 200 Relationship ” H
Slide 17: Sound Capital and Liquidity Position
SOUND CAPITAL AND LIQUIDITY POSITION Total Risk-Based Capital Ratio Loan to Deposit Ratio Peer Median: 13.6% Large, stable deposit base and low OZK 15.6% CBSH 15.5% loan to deposit ratio 72% UBSI 14.7% Core Deposits Average Loan to CFR 14.6% Deposit Ratio 2 FINN 14.3% $18.5 Commerce 14.2% 90% BXS Av
Slide 18: Loan Portfolio: Limited Exposure to Pandemic-Sensitive Industries
LOAN PORTFOLIO: LIMITED EXPOSURE TO PANDEMIC-SENSITIVE INDUSTRIES While we expect nearly every industry to be impacted to some degree by Coronavirus-related disruptions, we have identified nine industries that will be most impacted. Loan Portfolio Highest Impacted $ in % of Loan Outstandings Industr
Slide 19: Today's Discussion
TODAY’S DISCUSSION ABOUT COMMERCE BANCSHARES COMMERCE’S PREPAREDNESS AND RESPONSE TO COVID-19 ECONOMIC AND INDUSTRY THEMES OUR STRATEGIC POSITION OUR PERFORMANCE AND PEER COMPARISONS 19
Slide 20: Macroeconomic Environment
MACROECONOMIC ENVIRONMENT Original forecast of economic growth at 2%, but with the current global pandemic, a recession is imminent. • GDP forecast - continued downward provisions • Unemployment rate potential forecasted to peak at 15%; with market fears well in excess given recent D.C. comments - h
Slide 21: Impact on the Banking Industry
IMPACT ON THE BANKING INDUSTRY Operating • Banks have shifted from growth and sales to preservation and service. Performance • 0% rates, low oil prices, and virus impacts are forcing banks to shift focus to capital stewardship and continuity of business. • Lenders are working to implement processes
Slide 22: Today's Discussion
TODAY’S DISCUSSION ABOUT COMMERCE BANCSHARES COMMERCE’S PREPAREDNESS AND RESPONSE TO COVID-19 ECONOMIC AND INDUSTRY THEMES OUR STRATEGIC POSITION OUR PERFORMANCE AND PEER COMPARISONS 22
Slide 23: Strategic Posture: Maintaining the Balance
STRATEGIC POSTURE: MAINTAINING THE BALANCE STRONG PERFORMANCE with Disciplined focus on PRIORITY ongoing refinement of the BLUE CHIP investments “Core Bank” • Develop Claims Payment • Super-Community Bank platform • Commerce Bank Mortgage • Relationship-based banking • Accelerate Growth in Healthcar
Slide 24: Growth Mindset: Consumer Banking
GROWTH MINDSET: CONSUMER BANKING Enhancing the Customer Experience Engaging with customers through the channels they prefer. CommercePremier Branch Design Advanced ATMs • Technology investments • New engagement programs • Enhanced product offerings • Improved operating model Video Advisors Explorati
Slide 25: Blending technology, community and relationships
Blending technology, community and relationships Four main goals: • Grow relationships. • Enhance engagements. • Strengthen brand awareness. • Drive innovation through research and development. 25
Slide 26: Industry-Leading Commercial Payments Capabilities
INDUSTRY-LEADING COMMERCIAL PAYMENTS CAPABILITIES Innovative payments solutions to manage payables and receivables to streamline cash flow Key Verticals $177 Payments MILLION Revenue Tailored return on investment-based solutions Treasury $47.7 Management enable healthcare providers to enhance the MI
Slide 27: Commercial Banking – Expansion Markets Offer Growth Opportunities
COMMERCIAL BANKING – EXPANSION MARKETS OFFER GROWTH OPPORTUNITIES Expansion Market Loan Growth Team Overview for Expansion $ in millions Market Loan Fee Income Expansion Markets Growth $2,316 Growth # of team members per market $2,200 98% 89% (includes open positions) $1,913 since 2015 since 2015
Slide 28: Commerce Trust Company wealth management
For high net worth individuals who are looking to simplify their complex financial life, Commerce Trust Company provides a full-service approach to wealth management. Key Growth Initiatives 20TH $57 $34 $539 • Implement new Private Banking Lending Program Largest Among Bank-Managed BILLION BILLION M
Slide 29: Today's Discussion
TODAY’S DISCUSSION ABOUT COMMERCE BANCSHARES COMMERCE’S PREPAREDNESS AND RESPONSE TO COVID-19 ECONOMIC AND INDUSTRY THEMES OUR STRATEGIC POSITION OUR PERFORMANCE AND PEER COMPARISONS 29
Slide 30: Financial Performance in 2019
FINANCIAL PERFORMANCE IN 2019 ROA ROE Fee Dividend growth 16% 1.67% 14.1% income 5% growth Net loan Net Growth in charge- interest 3.36% loans 4% offs to .35% margin period end loans Long-term performance remains strong 15-year TOTAL ANNUALIZED SHAREHOLDER RETURN of 9.6% compared to KBW Bank Inde
Slide 31: 2019 Year End Earnings
2019 YEAR END EARNINGS % $ in millions 2018 2019 Increase Return on Net interest income $ 824 $ 821 -0.3% Assets Non-interest income 501 525 5% 2018: 1.8% Total revenue 1,325 1,346 2% 2019: 1.7% Cash Dividends Securities gains/(losses) - 3 NM 2018: $0.85 Non-interest expense (738) (767) 4% Return on
Slide 32: A Full-Service, Diversified Operating Model
A FULL-SERVICE, DIVERSIFIED OPERATING MODEL Card, Wealth & Deposit fees provide stable, growing revenue source Net Interest Income Non-Interest Income 8% $ in millions $501 $525 Wealth Management $447 $461 $410 $422 11% Deposit Service Charges 1% 7% Commerce Fees and Commissions Bank1 Card Income 61
Slide 33: Return Comparisons – Peer Banks, YTD Dec 2019
RETURN COMPARISONS – PEER BANKS, YTD Dec 2019 $20-35 billion in assets PROFITABILITY STRENGTH Return on Assets Return on Equity Capital Troubled Loans/Assets CBSH 14.06% CBSH 14.66% CBSH 0.04% CBSH 1.67% 2nd highest Highest return Highest Lowest level of return on assets on equity capital ratio trou
Slide 34: Performance Through Downturns
PERFORMANCE THROUGH DOWNTURNS Return on Average Assets CBSH Peer Average Recession 2.0% 25-year average CBSH: 1.37% Peers: 1.00% 1.5 1.0 0.5 0.0 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015 2017 2019 Source: S&P Global Market Intelligence, data as of 12/31/2019 Peer Banks include: BXS, CFR
Slide 35: Long-Term View: Net Income and Earnings Per Share
LONG-TERM VIEW: NET INCOME AND EARNINGS PER SHARE 450 $4.00 400 Earnings Per Share Net Income 3.50 Earnings per Share 350 Net Income 3.00 300 $ 000s 250 2.50 200 2.00 150 1.50 100 50 1.00 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Dividends $0.58 $0.59 $0.62* $0.64 $0.67 $0.71 $0.74 $0.78 $0.
Slide 36: Steady Shareholder Returns
STEADY SHAREHOLDER RETURNS as of March 31, 2020 Annualized Comparison Total Shareholder Returns Total Shareholder Returns Indexed, 03/31/2005 = $100 Percent 350 20% CBSH NASDAQ Bank COMMERCE S&P 500 KBW Bank 10% 300 S&P 500 0% 250 -10% 200 -20% 150 -30% NASDAQ 1 Year 3 Year 5 Year 10 Year 15 Year BA
Slide 37: Embracing a Growth Mindset
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