Commerce Bancshares, Inc. · NASDAQ:CBSH
Commerce Bancshares — Q2 2024 Earnings Presentation
26 slides from Commerce Bancshares's earnings presentation, Jul 18, 2024
Slide 1: Commerce Bancshares, Inc. Earnings Highlights 2nd Quarter 2024
COMMERCE BANCSHARES, INC. EARNINGS HIGHLIGHTS 2nd 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 158 YEARS IN BUSINESS 142 branches and 257 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 $22.9 billion in low-cost, diverse deposits2 with peer-leading historical deposit betas Cre
Slide 5: 2Q2024 Highlights
2Q2024 HIGHLIGHTS Highlights $182.3 million PPNR1 $139.6 million Net Income $1.07 EPS 1.86% ROAA 18.52% ROACE • Net interest income increased 5% over Q1 to $262MM. • Net interest margin expanded 22 bps over Q1 to 3.55%. • Total cost of deposits increased 2 bps to 1.40%, compared to an increase of 4
Slide 6: Balance Sheet Highlights
BALANCE SHEET HIGHLIGHTS 2Q24 vs. 2Q23 2Q24 vs. 1Q24 Quarterly Average Balances % Change$ Change% Change$ Change2Q24$ in millions 3%$369.50%$44.2$11,117.9Commercial 2%135.91%50.26,056.5Consumer 3%$505.41%$94.4$17,174.5Total Loans -19%$-2,127.4-6%$-567.5$9,162.0Investment Securities1 -8%$-184.48%$161
Slide 7: Balance Sheet
$17.0 $17.1 $17.0 $8.2 $7.3 $7.3 2Q23 1Q24 2Q24 $25.2 $24.4 $24.3 -4% $10.8 $11.1 $11.1 $5.9 $6.0 $6.1 2Q23 1Q24 2Q24 $16.7 $17.1 $17.2 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 YoYQoQ6/30/20233/31/20246/30/2024$ in 000s 3.1%1.6%$5,906,493 $5,994,974$6,090,724Business -3.8%-6.8%1,451,7831,497,6471,396,515Construction -1.3%-3.7%3,621,2223,711,6023,572,539Business Real Estate 2.5%.5%2,980,5993,039,8853,055,182Personal Real Estate 1.7%1.2%2,110,6052,119,3082,1
Slide 9: Commercial Real Estate Breakdown
33.1% 14.7% 13.0% 9.0% 8.2% 8.4% 5.5% 5.3% Owner- occupied Office Industrial Retail Multi-family Hotels Farm Senior living 2.8% Other Real Estate - Business Loans: Office Outstanding Balances by Geography1 % of Total Loans Real Estate - Business Loans 6.9%Owner – Occupied 2.7%Industrial 3.1%Office 1
Slide 10: Income Statement Highlights
$149 $152 $249 $246 1Q24 $398 10 INCOME STATEMENT HIGHLIGHTS $148 $170 $250 $228 2Q23 $398 $152 $182 $262 $232 2Q24 $414 Non-Interest Income (+) Net Interest Income (+) Non-Interest Expense (-) Pre-Tax, Pre-Provision Net Revenue (=) 2Q24 Comparison 7.5%vs. 2Q23 19.8%vs. 1Q24 Pre-Tax, Pre-Provision N
Slide 11: Income Statement Highlights
2Q24 vs. 2Q23 2Q24 vs. 1Q24 % Change$ Change% Change$ Change2Q24$ in millions 5%$12.75%$13.3$262.3Net Interest Income 3%$4.62%$3.4$152.2Non-Interest Income 2%$4.6-5%$-13.5$232.2Non-Interest Expense 8%$12.720%$30.1$182.3Pre-Tax, Pre-Provision Net Revenue1 -5%$-.2NM$3.5$3.2Investment Securities Gains,
Slide 12: Non-Interest Income Highlights
NON-INTEREST INCOME HIGHLIGHTS 12 2Q24 vs. 2Q23 2Q24 vs. 1Q24 % Change$ Change% Change$ Change2Q24$ in millions -5%$-2.31%$.5$47.5Bank Card Transaction Fees 11%5.02%1.252.3Trust Fees 12%2.75%1.225.3Deposit Account Charges and Other Fees 62%1.822%.94.8Capital Market Fees -4%-.22%.14.5Consumer Brokera
Slide 13: Non-Interest Expense Highlights
NON-INTEREST EXPENSE HIGHLIGHTS 13 2Q24 vs. 2Q23 2Q24 vs. 1Q24 % Change$ Change% Change$ Change2Q24$ in millions 3%$3.7-2%$-2.7$149.1Salaries and Employee Benefits 10%2.81%.431.5Data Processing and Software -3%-.5-8%-1.012.5Net Occupancy -44%-1.8-71%-5.72.4Deposit Insurance 5%.22%.15.1Equipment -16%
Slide 14: Liquidity and Capital
LIQUIDITY AND CAPITAL & commerce Bancshares, Inc.
Slide 15: Visa Stock & Securities Portfolio Repositioning Update
VISA STOCK & SECURITIES PORTFOLIO REPOSITIONING UPDATE 15 • $177.0 million gain related to Visa shares. • Sold two thirds of Visa Class C shares (converted to Class A) resulting in proceeds of $119.8 million. • Sold $1.2 billion (amortized cost) of AFS debt securities at a $179.1 million loss. • Pur
Slide 16: Liquidity and Capital Highlights
LIQUIDITY AND CAPITAL HIGHLIGHTS 16 • $2.2B in cash at Federal Reserve Bank (FRB) at Q2. • AFS debt securities portfolio duration of 4.0 years. • Investment securities purchases in Q2 totaled $928.8MM at a weighted average yield of approximately 4.60%. • Cash flows from maturities and paydowns of in
Slide 17: Deposit Balance Trends
2021 2022 4Q23 1Q24 2Q24 $3.0 $2.8 $2.3 $2.4 $2.4 2020 $2.3 DEPOSIT BALANCE TRENDS Segment view $ in billions 17 2021 2022 4Q23 1Q24 2Q24 $12.0 $11.9 $10.6 $9.9 $9.5 2020 $9.9 2021 2022 4Q23 1Q24 2Q24 $12.8 $13.4 $12.1 $12.2 $12.4 2020 $11.3 Commercial Consumer Wealth Average Balance 4Q23 1Q24 2Q24
Slide 18: Well-Positioned for Multiple Rate Environments
0.0% 1.0% 2.0% 3.0% 4.0% 5.0% 6.0% 0 1 2 3 4 5 6 7 8 9 10 Quarter in the Fed Cycle 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 no
Slide 19: 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 20: High Quality, Highly Liquid and Diverse Investment Portfolio
13% 11% 55% 18% 4% 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 – June 30, 2024 3.02.74%Treasury & agency1 4.82.00%
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 March 31, 2024 2Period-end balances, as of June 30, 2024 3Includes loans held for sale, for the quarter ended June 30, 2024 15.8% 15.4% 14.3% 13.
Slide 22: Maintaining Strong Credit Quality
$6.2 $5.8 $19.3 $105.4 $130.7 2Q23 1Q24 2Q24 $6.5 $8.9 $9.8 $7.5 $9.2 2Q23 1Q24 2Q24 MAINTAINING STRONG CREDIT QUALITY 22 Net Loan Charge-Offs (NCOs) $ in millions NCOs- CBSH NCOs - Peer Average NCO/Average Loans1 - CBSH $158.7 $160.5 $158.6 $297.1 $315.8 2Q23 1Q24 2Q24 Allowance for Credit Losses o
Slide 23: Allocation of Allowance
ALLOCATION OF ALLOWANCE 23 CECL allowances reflect the economic and market outlook June 30, 2024March 31, 2024 % of Outstanding Loans Allowance for Credit Losses (ACL) % of Outstanding Loans Allowance for Credit Losses (ACL)$ in millions .74%$ 45.1.73%$ 43.8Business .90%32.2 .81%30.2 Bus R/E 2.14%29
Slide 24: Capital for Business Quick Facts
Quick Facts: Small Business Investment Company (SBIC) founded in 1959 Nationwide footprint with Greater Midwest Focus 35 Portfolio Companies Representing $966.5 million in Revenue Over 3,100 Employees Fair Value as of June 30, 2024: $178.3 million Investment Criteria • Manufacturing, distribution an
Slide 25: Non-GAAP Reconciliations
NON-GAAP RECONCILIATIONS 25 For The Three Months Ended June 30, 2023Mar. 31, 2024June 30, 2024(DOLLARS IN THOUSANDS) 249,538$248,999$262,249$Net Interest IncomeA 147,605$148,848$152,244$Non-Interest IncomeB 227,611$245,697$232,214$Non-Interest ExpenseC 169,532$152,150$182,279$Pre-Provision Net Reven
Slide 26: Commerce Bancshares, Inc.
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