Commerce Bancshares, Inc. · NASDAQ:CBSH
Commerce Bancshares — Q4 2021 Earnings Presentation
20 slides from Commerce Bancshares's earnings presentation, Jan 19, 2022
Slide 1: Commerce Bancshares, Inc. Earnings Highlights 4th Quarter 2021
COMMERCE BANCSHARES, INC. EARNINGS HIGHLIGHTS 4th Quarter 2021
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: 4Q2021 Earnings Highlights
$0.94 EPS 3 • Net interest income decreased 3.0% from Q3. • Net interest margin decreased 15 bps from Q3 to 2.43%. • Non-interest income increased 7.4% over Q3. – Non-interest income to total revenue of 41.6%. • Wealth management client assets increased 3.8% over Q3 to $69.3 billion at December 31,
Slide 4: Balance Sheet Highlights
Quarterly Average Balances Change vs. $ in millions 4Q21 3Q21 4Q20 Highlights Commercial1 $9,423.5 $(165.4) $(1,219.5) • Linked quarter (LQ) reflects lower PPP loans (-356MM) offset by higher core business, construction and business real estate Consumer 5,669.6 (0.5) (48.7) • LQ reflects slightly hi
Slide 5: Balance Sheet
$15.3 $16.6 $16.9 $10.3 $11.5 $11.9 $25.6 4Q20 3Q21 4Q21 $28.8$28.1 +13% $10.6 $9.6 $9.4 $5.7 $5.7 $5.7 $16.4 4Q20 3Q21 4Q21 $15.3 $15.1 -8% BALANCE SHEET 5 Loans Consumer Loans Loan Yield Commercial Loans Deposits QTD Average Balances $ billions Non-Interest Bearing Interest Bearing Deposit Interes
Slide 6: Loan Portfolio
LOAN PORTFOLIO 6 $ in 000s 12/31/2021 9/30/2021 12/31/2020 QoQ YoY Business $5,303,535 $5,277,850 $6,546,087 .5% -19.0% Business excl. PPP 5,174,372 4,969,914 5,185,913 4.1% -.2% Construction 1,118,266 1,257,836 1,021,595 -11.1% 9.5% Business Real Estate 3,058,837 2,937,852 3,026,117 4.1% 1.1% Perso
Slide 7: Balance Sheet: Low-Cost Deposits
$10 $5 $0 $15 $20 $25 $30 4Q20 1Q21 2Q21 3Q21 4Q21 0.09% 0.07% 0.06% 0.05% 0.00% 0.05% 0.10% 0.15% 0.12% BALANCE SHEET: LOW-COST DEPOSITS Non Interest-Bearing Deposits (left) Interest-bearing Deposits (left) Av er ag e Ba la nc e $ in b illi on s Cost of Interest-Bearing Deposits (right) 7 – 41% of
Slide 8: Earning Asset Optimization Excluding Loans
EARNING ASSET OPTIMIZATION EXCLUDING LOANS 8 Av er ag e Ba la nc e $ in b illi on s 0.0% 1.0% 2.0% 3.0% 4.0% 5.0% 6.0% 7.0% 8.0% 9.0% $10.0 $15.0 $20.0 $0.0 $5.0 $1.6 $9.5 1Q20 $8.6 4Q19 $0.7 $12.1 $0.3 $0.9 $1.0 1Q19 $0.8 $8.7 $0.7 3Q19 $0.8 $0.3 2Q19 $8.7 2Q21 $0.2 $8.6 $0.4 $10.0 3Q20 $8.5 $0.9 $
Slide 9: Income Statement Highlights
Change vs. $ in millions 4Q21 3Q21 4Q20 Highlights Net Interest Income $207.7 $(6.4) $(2.1) • Linked quarter (LQ) decrease due to lower interest earned on loans and securities purchased under agreements to resell, partially offset by higher income earned on investment securities Non-Interest Income
Slide 10: Non-Interest Income Highlights
Change vs. $ in millions 4Q21 3Q21 4Q20 Highlights Bank Card Transaction Fees $44.8 $2.0 $4.8 • Increase of 12.0% over prior year (PY) driven by growth in net corporate card and net debit card fees Trust Fees $48.9 – $6.9 • Increase of 16.5% over PY resulting mostly from higher private client fee in
Slide 11: Non-Interest Expense Highlights
Change vs. $ in millions 4Q21 3Q21 4Q20 Highlights Salaries and Employee Benefits $132.6 $(.2) $2.7 • Increase of 2.0% over prior year (PY) mostly due to higher full-time salaries and incentive compensation Net Occupancy $12.3 — $.7 Equipment $4.7 $.3 $.1 Supplies $4.4 $(.1) $.2 Data Processing and
Slide 12: Pre-Tax, Pre-Provision Net Revenue (PPNR)
12 PRE-TAX, PRE-PROVISION NET REVENUE (PPNR) $135 $149 $210 $196 4Q2020 $345 $138 $140 $214 $212 3Q2021 $352 $148 $152 $208 $204 4Q2021 $355 Non-Interest Income (+) Net Interest Income (+) Non-Interest Expense (-) Pre-Tax, Pre-Provision Net Revenue (=) 4Q2021 Comparison vs. 4Q2020 2.2% vs. 3Q2021 8.
Slide 13: Sound Capital and Liquidity Position
Average Loan to Deposit Ratio3 SOUND CAPITAL AND LIQUIDITY POSITION 13 Tier 1 Risk-Based Capital Ratio1 1S&P Global Market Intelligence, Information as of September 30, 2021 2Period-end balances, as of December 31, 2021 3Includes loans held for sale, for the quarter ended December 31, 2021 14.6% 14.
Slide 14: Maintaining Strong Credit Quality
$8.0 $3.7 $4.3 $11.2 $2.5 3Q214Q20 4Q21 MAINTAINING STRONG CREDIT QUALITY 14 Net Loan Charge-Offs (NCOs) $ in millions NCOs- CBSH NCOs - Peer Average NCO/Average Loans1 - CBSH $220.8 $162.8 $150.0 $306.1 $261.1 3Q21 4Q214Q20 Allowance for Credit Losses on Loans (ACL) $ in millions ACL - CBSH ACL - P
Slide 15: Paycheck Protection Program Impact and Update
PAYCHECK PROTECTION PROGRAM IMPACT AND UPDATE 15 Yield and Interest Income2 Q4 2021, $ in millions 3.16% 10.80% 2.83% Yield Business Loans PPP Yield and Fee Recognition Business Loans (ex PPP) $41.4 $6.0 $35.4 Interest Income Total Loan Originations1: $1.9 Billion Total SBA Fees: $60.4 Million 1Incl
Slide 16: Paycheck Protection Program Impact and Update: Loan Portfolio Impact
PAYCHECK PROTECTION PROGRAM IMPACT AND UPDATE 16 Loan Portfolio Impact QTD Average Balances, $ in millions $5,494 $5,517 $5,203 $5,104 $5,159 $4,947 $4,863 $4,973 $1,244 $1,506 $1,476 $1,374 $1,264 1Q20 $6,211$6,709 4Q202Q20 3Q20 $6,533 1Q21 2Q21 $575 4Q213Q21 $219 $5,494 $6,761 $6,580 $5,437 $5,192
Slide 17: Allocation of Allowance
ALLOCATION OF ALLOWANCE 17 CECL allowances reflect the economic and market outlook September 30, 2021 December 31, 2021 $ in millions Allowance for Credit Losses (ACL) % of Outstanding Loans Allowance for Credit Losses (ACL) % of Outstanding Loans Business $ 41.0 .78% $ 43.9 .83% Bus R/E 32.3 1.10%
Slide 18: Quick Facts: Capital for Business
Quick Facts: Small Business Investment Company (SBIC) founded in 1959 Nationwide footprint with Greater Midwest Focus 37 Portfolio Companies Representing $807 million in Revenue Over 3,300 Employees Fair Value as of December 31, 2021: $147.4 million Investment Criteria • Manufacturing, distribution
Slide 19: Non-GAAP Reconciliations
NON-GAAP RECONCILIATIONS 19 For The Three Months Ended (DOLLARS IN THOUSANDS) Dec. 31, 2021 Sept. 30, 2021 Dec. 31, 2020 A Net Interest Income $ 207,657 $ 214,037 $ 209,763 B Non-Interest Income $ 147,699 $ 137,506 $ 135,117 C Non-Interest Expense $ 203,582 $ 211,620 $ 196,310 Pre-Provision Net Reve
Slide 20: Commerce Bancshares, Inc.
Commerce Bancshares, Inc.