Commerce Bancshares, Inc. · NASDAQ:CBSH
Commerce Bancshares — Shareholder Meeting (April 2019)
34 slides from Commerce Bancshares's shareholder meeting presentation, Apr 17, 2019
Slide 1: Commerce Bancshares Annual Shareholders Meeting
innovating for the future COMMERCE BANCSHARES, INC. ANNUAL SHAREHOLDERS MEETING April 17, 2019 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 ECONOMIC AND INDUSTRY THEMES OUR STRATEGIC POSITION OUR PERFORMANCE AND PEER COMPARISONS 3
Slide 4: About Commerce Bancshares
ABOUT COMMERCE 153 BANCSHARES $25.5 YEARS IN BUSINESS BILLION IN ASSETS 42ND $20.3 LARGEST U.S. BANK BILLION IN TOTAL DEPOSITS 6 BASED ON ASSET SIZE1 $6.3 $14.2 4 5 5 1 9 2 4 1 6 3 BILLION IN TOTAL LOANS 8 7 2 BILLION MARKET $8.8 CAPITALIZATION 3 7 20TH BILLION IN COMMERCIAL LARGEST U.S. BANK ⚫ NINE
Slide 5: Super-Community Bank Platform
SUPER-COMMUNITY BANK PLATFORM A consistent strategy with a long-term view Community Bank Super-Regional Bank Customer relationship-based: “CHALLENGE ACCEPTED.®” • Sophisticated • Award winning customer service High performing teams and payment system engaged workforce capabilities • Focus on the ful
Slide 6: A Focus on Customers
A FOCUS ON CUSTOMERS Flexible solutions help Improving cash flow Claims payments, your way a non-profit grow and the patient experience Shelter Insurance Parents as Teachers Nebraska Medicine Columbia, MO St. Louis, MO Omaha, NE 6
Slide 7: A Focus on Customers
A FOCUS ON CUSTOMERS Customized health services A better approach to financing connects with patients Delivering solutions for growth funding senior living Hackensack University Medical Center Precision, Inc. Avanti Senior Living Hackensack, NJ Pella, IA Houston, TX 77
Slide 8: A Strong Emphasis on Culture
A STRONG EMPHASIS ON CULTURE Giving 2018 Employee Engagement1 to our VALUES 78% • Engaged, long-term We have a 75% leadership team 74% long term We • Focus on people and iew collaborate talent development as ne • Deep knowledge of Commerce U.S. High Performance Norm U.S. Financial Services Norm We a
Slide 9: Recent Recognition
RECENT RECOGNITION • Named among • Selected as one of 20 • Received Highly • Named a Top Midsize • Named among America’s Best Banks best-in-class banks Commended status Employer by Forbes Forbes’ first-ever 2019 by Forbes in Bank Director’s 2019 for Best Private Wealth for the second ranking of Best
Slide 10: Today's Discussion
TODAY’S DISCUSSION ABOUT COMMERCE BANCSHARES ECONOMIC AND INDUSTRY THEMES OUR STRATEGIC POSITION OUR PERFORMANCE AND PEER COMPARISONS 10
Slide 11: Macroeconomic Environment
MACROECONOMIC ENVIRONMENT Economic growth expected to be approximately 2% Some key drivers to this growth: • Increasing employment levels that translate into a rise in personal income and steady consumer spending • No acceleration in inflation • Corporate profits, although leveling off, still spurrin
Slide 12: Industry Themes
INDUSTRY THEMES • After years of the regulatory backdrop being cumbersome, some rollback is likely Regulatory • As the backdrop continues to evolve, net impact expected to be positive reform • Heightened scrutiny on biggest banks expected as democrats take House control Accounting • With expected im
Slide 13: Industry Themes
INDUSTRY THEMES • Banks are optimizing distribution models to align with evolving customer Retail behavior distribution • Expect branches to continue to decline, driving efficiency ratio improvement • U.S. bank consolidation viewed as indefinite trend Consolidation • Number of U.S. banks halved in t
Slide 14: Today's Discussion
TODAY’S DISCUSSION ABOUT COMMERCE BANCSHARES ECONOMIC AND INDUSTRY THEMES OUR STRATEGIC POSITION OUR PERFORMANCE AND PEER COMPARISONS 14
Slide 15: 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 16: External Innovation: Consumer Banking
EXTERNAL INNOVATION: CONSUMER BANKING Transforming our Branches – Aligning Consumer Digital – A new mobile Commerce Bank physical presence with customer demand. banking app launched in 2018 offers for iPhone Technology investments more functionality. Challenge Accepted ® and introduction of new Over
Slide 17: External Innovation: Commercial Payments Customers
EXTERNAL INNOVATION: COMMERCIAL PAYMENTS CUSTOMERS CommerceHealthcare™ 370+ $569 Tailored return on investment- based solutions enable healthcare Clients in MILLION Hospitals & 45 providers to enhance the patient Patient Loan experience, improve cash flow, Healthcare Originations* States Systems and
Slide 18: Internal Innovation at Commerce
INTERNAL INNOVATION AT COMMERCE innovating for the future TOOLS Internal software development Commerce’s commitment to As innovation and technology rapidly events to rapidly build, test, and promoting an innovative mindset, drive change, our customers’ needs promote new products or services from eve
Slide 19: Consumer Banking Snapshot
CONSUMER BANKING SNAPSHOT $10.2 $4.1 1.1 169 Full-service BILLION BILLION MILLION branches Consumer Consumer Consumer 151 Deposits Loans* Households* stand alone ATMs Banking Channel Preferences Mobile Mobile Monthly Banking Sessions (in thousands) Penetration Deposit Use Mobile Online Branch 8,000
Slide 20: 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. 18 TH Largest Among $50 BILLION $30 BILLION $447 MILLION Bank-Owned Total Client Assets Under Managed Trust Assets2 Management Broker
Slide 21: Commercial Banking: Revenue Growth Opportunities
COMMERCIAL BANKING Revenue growth opportunities Financing solutions – options for all sizes and types of businesses • Equipment Financing • Working Capital Lines of Credit • Government Lending Programs • International Financing • Term Financing • Interest Rate Swaps • Employee Stock & Ownership Fina
Slide 22: Commercial Banking Expansion: Markets Offer Growth Opportunities
COMMERCIAL BANKING – EXPANSION MARKETS OFFER GROWTH OPPORTUNITIES Expansion Market Loan Growth Team Overview for $ in millions Expansion Expansion Markets Fee Income $2,200 Market Loan Growth # of team members per market Growth 92% (includes open positions) $1,913 64% 2012 2018 $1,619 since 2015 s
Slide 23: Industry-Leading Commercial Payments Capabilities
INDUSTRY-LEADING COMMERCIAL PAYMENTS CAPABILITIES Innovative payments solutions to manage payables and receivables to streamline cash flow Commercial $179 Payments $8.8 Card MILLION Revenue BILLION Volume Treasury $5.9 Merchant $38.5 Management BILLION Volume MILLION Revenue Information as of Decemb
Slide 24: Card Products: A Leader Amongst Top U.S. Banks
CARD PRODUCTS – A LEADER AMONGST TOP 50 U.S. BANKS Consistently ranked among the top issuers in the Nilson Report #11 #7 #11 #14 #20 Debit #13 Commercial Purchasing Bank Consumer Prepaid Card Issuer Card Issuer Acquirer Card Card Card A full suite of innovative card and payment product offerings Hea
Slide 25: Today's Discussion
TODAY’S DISCUSSION ABOUT COMMERCE BANCSHARES ECONOMIC AND INDUSTRY THEMES OUR STRATEGIC POSITION OUR PERFORMANCE AND PEER COMPARISONS 25
Slide 26: 2018 Year End Earnings
2018 YEAR END EARNINGS % $ in millions 2017 2018 Increase Net interest income $ 734 $ 824 12% ROAA Non-interest income 461 501 9% 2017: 1.28% Total revenue 1,195 1,325 11% 2018: 1.76% Cash Securities gains/(losses) 25 - NM Dividends Non-interest expense (744) (738) -1% 2017: $0.82 Provision for loan
Slide 27: Fee Income at 39% of Total Revenue
FEE INCOME AT 39% OF TOTAL REVENUE Card, Wealth & Deposit fees provide stable, growing revenue source Non-Interest Income Net Interest Income 9% $ in millions $461 $501 Wealth Management $422 $447 11% $410 Deposit Service Charges 1% 7% Commerce Fees and Commissions Bank Card Income 61% 2014 2015 201
Slide 28: Peer Comparisons
PEER COMPARISONS ROAA YTD Dec 2018 ROACE YTD Dec 2018 Bank OZK 1.90% Commerce 16.16% Commerce 1.76% Cullen/Frost 14.07% Pinnacle Fin 1.53% 1st Nat’l Nebraska 13.67% Cullen/Frost 1.44% Webster Fin 13.34% Prosperity 1.42% First Horizon 12.75% First Horizon 1.38% TCF 12.42% 1st Nat’l Nebraska 1.38% Ban
Slide 29: Commerce Bank Maintains Solid Performance Over Time
COMMERCE BANK MAINTAINS SOLID PERFORMANCE OVER TIME Return on Average Assets 2.0% 1.5% ROAA 10-yr average 1.0% CBSH: 1.2% 0.5% Peers: 0.8% 0.0% 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Peers Large Banks Commerce Return on Average Common Equity 20.0% 15.0% ROACE 10-yr average 10.0% CBSH: 12.
Slide 30: Commerce Stock Performance vs. Peers
COMMERCE STOCK PERFORMANCE VS. PEERS 10% 6.0% Peer Bank Stock Price Performance - 2018 0 -4.9% -10 -7.1% -9.4% -11.1% -12.2% -13.3% -13.9% -20 -16.8% -17.3% Peer Average: -21% -18.4% -22.1% -23.6% -25.1% -30 -26.5% -30.1% -30.8% -34.2% -40 -50 -52.9% -60 CBSH TCF CFR MBFI PB WBS FULT UMBF IBKC VLY W
Slide 31: Financial Highlights QTD March 31, 2019
FINANCIAL HIGHLIGHTS QTD MARCH 31, 2019 $ millions (except EPS) 1Q2018 1Q2019 % change Net Income attributed to Commerce $101 $97 -4.0% Return on Average Assets 1.66% 1.58% -4.8% Return on Average Common Equity 15.6% 13.6% -12.8% Efficiency Ratio 58.2% 58.8% 1.0% Average Loans $13,929 $14,079 1.1% A
Slide 32: 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 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Dividends $0.59 $0.61 $0.62 $0.65* $0.67 $0.71 $0.74 $0.78 $0
Slide 33: Long-Term Shareholder Returns
LONG-TERM SHAREHOLDER RETURNS as of December 31, 2018 Annualized Comparison Total Shareholder Returns Total Shareholder Returns Indexed, 12/31/2003 = $100 Percent CBSH NASDAQ Bank 350 30 COMMERCE S&P KBW Bank 300 S&P 20 10 250 0 200 NASDAQ -10 150 BANK -20 KBW BANK 100 1 Year 3 Year 5 Year 10 Year 1
Slide 34: Innovating for the Future
© innovating for the future OY {ss Commerce Bancshares, Inc.
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