Commerce Bancshares, Inc. · NASDAQ:CBSH
Commerce Bancshares — Investor Presentation (May 2017)
27 slides from Commerce Bancshares's investor presentation, May 9, 2017
Slide 1: Commerce Bancshares, Inc. Investor Update
COMMERCE BANCSHARES, INC. Investor Update May 2017 Charles G. Kim Chief Financial Officer Jeffery Aberdeen Controller
Slide 2: Cautionary Statement
CAUTIONARY STATEMENT This presentation may contain “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, projections, estimates and intentions. These forward- looking st
Slide 3: About Commerce Bancshares
FOUNDED IN 1865 AND OVER 150 YEARS OF… ABOUT COMMERCE BANCSHARES Super-Community Bank founded in 1865 6 9 4 5 5 1 38th largest U.S. bank based on 2 4 1 asset size1 6 3 2 8 7 $25.3 billion in assets 3 $21.1 billion in total deposits $44.5 billion in Trust assets Branch Footprint Extended Commercial M
Slide 4: Super-Community Bank Platform
SUPER-COMMUNITY BANK PLATFORM A CONSISTENT STRATEGY WITH A LONG TERM VIEW Community Bank Customer relationship-based Super-Regional Bank We ask, listen and solve. • Responsive to • Sophisticated customer needs High performing teams and payment system and changing engaged workforce capabilities prefe
Slide 5: A Strong Emphasis on Culture
A STRONG EMPHASIS ON CULTURE Giving to our VALUES 2016 Employee Engagement1 We have a 79% • Engaged, long-term long term iew leadership team 74% We • Focus on people and collaborate as talent development ne team • Knowledge of customers Commerce U.S. High Performance Norm We act with and markets nte
Slide 6: Strong Financial Performance in 2016
STRONG FINANCIAL PERFORMANCE IN 2016 1 year TOTAL RETURN ON COMMON STOCK 45% Growth in Earnings per Market capitalization Revenue growth Share 7% $5.9B 7% Deposit growth Growth in loans Net loan charge- $1.1 billion $983 million offs to loans 6% 8% .25% Long term performance remains strong 10 y
Slide 7: Financial Performance vs. Prior Year
FINANCIAL PERFORMANCE VS. PRIOR YEAR YE 2015 YTD 2016 YE 2016 YTD 2017 Net Income Attributable to CBI Earnings per Common Share Return on Total Assets ($ in Millions) Year to date $2.61 Year to date Year to date $275 2016 vs 2017 $2.43 2016 vs 2017 2016 vs 2017 $264 1.15% 1.11% 1.12% 1.07% $65 $72 $
Slide 8: Net Interest Income: YTD – March 31, 2017
NET INTEREST INCOME: YTD – March 31, 2017 Quarterly Net Interest Income • TIPs inflation income was $1.9 million in both the current quarter and prior quarter, Net interest income - $ in millions $200.0 3.20% but negative ($1.5) million last year. 3.10% $190.0 • Net interest income this quarter incl
Slide 9: Growth in Volume Driving $46 Million Increase in NIM
GROWTH IN VOLUME DRIVING $46million INCREASE IN NIM Tax Equivalent Net interest Income: 2010 – 2016 $s in millions $711 $666 $670 $665 $664 $646 $649 2010 2011 2012 2013 2014 2015 2016 Change in NIM due to volume Change in NIM due to rate • Lower rates have been pushing the net interest margin lower
Slide 10: Fee Income Reaches 42% of Total Revenue
FEE INCOME REACHES 42% OF TOTAL REVENUE Balanced mix of interest and non-interest income 9% Net Interest Income 13%14% Wealth Management 11% 3% Deposit Service Charges 4% 2% Commerce 6% Peer 7% Fees And Commissions 6% Bank* 58% 58% Banks* Card Income 70% 9% 11% Other Non-Interest Income Continued fo
Slide 11: Well-Diversified Loan Portfolio
WELL-DIVERSIFIED LOAN PORTFOLIO 6% 1% 19% 32% Business Loans 11% Construction 31% Commerce Business RE 18% Peer Bank* Residential RE Banks* Consumer/HELOCs 5% 17% 6% Credit Card 34% Loans Held for Sale 20% Period End Loan Growth $s in millions Solid loan growth this quarter, 8% 14,000 $13,427 $13,58
Slide 12: Investment Portfolio: High Quality, Diverse, Short Duration
INVESTMENT PORTFOLIO: HIGH QUALITY, DIVERSE, SHORT DURATION Composition of AFS Portfolio AFS Portfolio as of 3/31/17 3% 14% Total investments $9.7 billion Unrealized gain $80 million 24% Treasury & agency 12 month maturities / pay-downs $2.1 billion 19% Municipal Duration MBS December 2014 2.4 years
Slide 13: Strong Capital Position
STRONG CAPITAL POSITION FLEXIBILITY IN CAPITAL PLANNING Cash Dividends & Buy Backs Cash dividend Buy back % Payout $300 160% % to Net Income - combined 140% $250 120% $ in millions $200 100% $150 80% 60% $100 40% $50 20% $0 0% 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Year-end capital ratios
Slide 14: Net Loan Charge-offs YTD – March 31, 2017
NET LOAN CHARGE-OFFS YTD – March 31, 2017 YTD YTD ’17 Loss $ in 000s 2016 2017 $ Chge Rate Business $ 463 $ 97 $ (366) 0.01% • Higher credit card loss rates this year reflect Overdraft 219 435 216 42.15% growing delinquencies Construction (11) (353) (524) -0.26% over the last several Business R/E (2
Slide 15: Maintaining the Balance
MAINTAINING THE BALANCE Strong performance; Disciplined focus on ongoing refinement of priority blue chip the “Core Bank” investments • Super-Community Bank platform Funding Future Growth • Relationship-based banking Expansion Market Growth • High-touch customer service Transform the Retail Model •
Slide 16: Transforming the Retail Model
TRANSFORMING THE RETAIL MODEL Total of Total Branch FTEs Branch Locations branches 212 reduced by Branch staff 28 since 1,800 reduced by 2009 1,634 372 FTE 1,600 since 2009 41 184 1,400 1,262 13 1,200 1,000 800 2009 Branches New 2016 2009 2016 closed Branches Branch expense $s in millions $95.4 $96.
Slide 17: Transforming the Retail Model: Banking Channel Preferences
TRANSFORMING THE RETAIL MODEL Banking channel preferences Mobile Online Banking Branch #s in thousands 5,000 Monthly Banking Sessions 4,000 Customer channel 3,000 preference 2,000 shifting to mobile 1,000 0 2009 2010 2011 2012 2013 2014 2015 2016 • Grow priority segments Key • Invest in digital chan
Slide 18: Commerce Trust Company Wealth Management
For high net worth individuals who are looking to simplify their complex financial life, The Commerce Trust Company provides a full-service approach to wealth management. • $44.5 billion in total client assets1 • $26.7 billion in assets under management • 22nd largest bank-owned Trust Company in the
Slide 19: A Full Spectrum of Planning Solutions
A Full Spectrum of Planning Solutions Core Private Client Commerce Family Office New Private Client Financial Advisory Family Wealth Delivery Model Services Stewardship • Scenario Plans • Comprehensive & • Family Mission • Modular Solutions Continuous Financial Statement • Topical tools and Planning
Slide 20: Trends in Trust Revenue and Sales
TRENDS IN TRUST REVENUE AND SALES Asset Management Revenues $s in millions $140 • Solid growth in fee +8% continues; profit 120 margins reach 40% 100 $129 in 2016. $115 $122 80 $96 $104 • Attrition rates remain 60 below industry 2012 2013 2014 2015 2016 results. • Demand continues Asset Management S
Slide 21: Commercial – Revenue Growth Opportunities
COMMERCIAL – REVENUE GROWTH OPPORTUNITIES Commercial Banking - Total Loans and Deposits Commercial Banking Revenue $s in billions Loans Deposits $s in millions $9.0 $8.5 $520 $511 $8.1 $8.2 $8.0 $7.4 $7.6 $7.5 $500 $491 $6.8 $6.8 $478 $7.0 $6.5 $480 $471 $467 $6.0 $5.7 $460 $5.0 $440 $4.0 $420 2012
Slide 22: Commercial Banking – Expansion Markets
COMMERCIAL BANKING – EXPANSION MARKETS Nashville Cincinnati Oklahoma Denver Dallas Loan Growth 2016 vs 2015 $s in billions 15.3% 7.8% Expansion Market Total Company Expansion Loan Growth Markets $s in billions $2,000 $1,542 $1,500 $1,338 $962 $1,091 $1,000 $608 $500 $0 2012 2013 2014 2015 2016 EXPAN
Slide 23: Loan Growth Remains Strong in Most Markets
LOAN GROWTH REMAINS STRONG IN MOST MARKETS $s in millions • Experienced solid loan growth in most $3,500 +12% 2015 2016 markets; especially in Kansas City and +14% St. Louis. $3,000 • Expansion markets of Dallas, Cincinnati, $2,500 Denver and Oklahoma showing some of the fastest growth. $2,000 $1,50
Slide 24: Card Products – A Leader Amongst U.S. Banks
CARD PRODUCTS – A LEADER AMONGST U.S.BANKS CONSISTENTLY RANKED AMONG THE TOP ISSUERS IN THE NILSON REPORT Commercial Purchasing Bank Consumer Debit Card Prepaid Card Card Issuer Card Issuer Acquirer Card #11 #7 #10 #13 #19 #13 A FULL SUITE OF INNOVATIVE CARD AND PAYMENT PRODUCT OFFERINGS Supply Heal
Slide 25: Commerce Bank Maintains Solid Performance Over Time
COMMERCE BANK MAINTAINS SOLID PERFORMANCE Peer Banks Large Banks OVER TIME Commerce Bank Return on Assets ROA 10-yr average CBSH: 1.19% Peers: 0.64% 1.5% 1.0% 0.5% 0.0% 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Return on Equity ROE 10-yr average 15.0% CBSH: 11.73% Peers: 5.66% 10.0% 5.0% 0.0
Slide 26: Long Term View: Net Income and Earnings per Share
LONG TERM VIEW: NET INCOME AND EARNINGS PER SHARE Earnings Per Share Net Income $350 2.80 2.60 300 Earnings per Share 2.40 250 2.20 Net Income 2.00 $ 000s 200 1.80 150 1.60 1.40 100 1.20 50 1.00 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Dividends per share $0.61 $0.65 $0.65 $0.67 $0.69 $0.72
Slide 27: Steady Shareholder Returns
STEADY SHAREHOLDER RETURNS (as of March 31, 2017) Total Shareholder Returns Annualized Comparison Indexed, 03/31/2007 = 100 Total Shareholder Returns Percent 300 50% COMMERCE KBW BANK CBSH NASDAQ Banks BANK INDEX S&P 500 KBW Bank Index 250 NASDAQ S&P 40% BANK INDEX 200 30% 20% 150 10% 100 0% 1 Year
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