Commerce Bancshares, Inc. · NASDAQ:CBSH
Commerce Bancshares — Q4 2023 Earnings Presentation
26 slides from Commerce Bancshares's earnings presentation, 2024
Slide 1: Commerce Bancshares, Inc. Earnings Highlights 4th Quarter 2023
PEOPLE, GROWTH AND POSSIBILITIES COMMERCE BANCSHARES, INC. EARNINGS HIGHLIGHTS 4th Quarter 2023
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 at a glance
COMMERCE BANCSHARES TOTAL ASSETS $31.7 158 YEARS IN BUSINESS BILLION TOTAL DEPOSITS $25.4 BILLION 41st LARGEST U.S. BANK BASED ON ASSET SIZE1 MARKET CAP TOTAL $17.2 LOANS2 BILLION $7.0 BILLION $9.9 COMMERCIAL CARD VOLUME 19TH BILLION AS OF DECEMBER 31, 2023 LARGEST U.S. BANK BASED ON MARKET CAP1 TOT
Slide 4: Track Record of Long-Term Outperformance
TRACK RECORD OF LONG-TERM OUTPERFORMANCE Revenue Diversification Deposit Franchise Continued Long-Term Investments Balanced earnings profile, fee $23.4 billion in low-cost, diverse revenue at 36%1 of total revenue, deposits2 with peer-leading Core banking system bolstered by growing wealth and histo
Slide 5: 4Q2023 Highlights
4Q2023 HIGHLIGHTS Highlights Well-positioned for current environment PPNR1 • Net interest income flat to Q3 at $248MM. $142 million • Net interest margin increased 6 bps from Q3 to 3.17%. Net Income • Total cost of deposits increased 13 bps to 1.34%, compared to an $109.2 million increase of 34 bps
Slide 6: Balance Sheet Highlights
BALANCE SHEET HIGHLIGHTS Quarterly Average Loans: 7% growth over prior Balances 4Q23 vs. 3Q23 4Q23 vs. 4Q22 year. $ in millions 4Q23 $ Change % Change $ Change % Change Investment securities: Continued portfolio run-off, Commercial $11,029.5 $29.4 0% $981.7 10% funding cash balances and loan growth.
Slide 7: Balance Sheet
BALANCE SHEET Loans Deposits QTD Average Balances QTD Average Balances $ billions $ billions +7% -5% $26.6 $25.6 $25.2 6.15% 6.02% $7.9 $10.4 $7.7 $17.0 $17.1 $15.9 $5.8 $6.0 $6.1 1.93% 1.76% $16.2 $17.7 $17.5 5.03% $10.1 $11.0 $11.0 .40% 4Q22 3Q23 4Q23 4Q22 3Q23 4Q23 Consumer Loans Loan Yield Non-I
Slide 8: Loan Portfolio
LOAN PORTFOLIO Period-End Balances QTD Average Balances $ in 000s 12/31/2023 9/30/2023 12/31/2022 QoQ YoY $ in 000s 12/31/2023 9/30/2023 12/31/2022 QoQ YoY Business $6,019,036 $5,908,330 $5,661,725 1.9% 6.3% Business $5,861,229 $5,849,227 $5,478,241 .2% 7.0% Construction 1,446,764 1,539,566 1,361,09
Slide 9: Commercial Real Estate Breakdown
COMMERCIAL REAL ESTATE BREAKDOWN Real Estate - Business Loans: Office Outstanding Balances by Geography1 Other Real Estate - Business Loans Midwest Other States States Real Estate - % of Total Business Loans Loans $3.7 billion CO OH 7.6% 0.8% IL 5.1% 2.5% Owner – Occupied 6.8% Owner- OK 31.6% occupi
Slide 10: Income Statement Highlights
INCOME STATEMENT HIGHLIGHTS Pre-Tax, Pre-Provision Net Revenue (PPNR) $ in millions Net Interest Income (+) 4Q23 Comparison Non-Interest Income (+) vs. 4Q22 (18.7)% Non-Interest Expense (-) vs. 3Q23 (13.1)% Pre-Tax, Pre-Provision Net Revenue (=) Revenue was up .5% $391 $391 $393 $251 over both 3Q an
Slide 11: Income Statement
INCOME STATEMENT 4Q23 vs. 3Q23 4Q23 vs. 4Q22 $ in millions 4Q23 $ Change % Change $ Change % Change Net Interest Income $248.4 $(0.1) (0)% $(6.2 ) (2)% Non-Interest Income 144.9 1.9 1% 8.1 6% Non-Interest Expense 251.3 23.2 10% 34.5 16% Pre-Tax, Pre-Provision Net Revenue1 $142.0 $(21.4) (13)% $(32.7
Slide 12: Non-Interest Income Highlights
NON-INTEREST INCOME HIGHLIGHTS 4Q23 vs. 3Q23 4Q23 vs. 4Q22 $ in millions 4Q23 $ Change % Change $ Change % Change Bank Card: Bank Card Transaction Fees $47.9 $1.0 2% $3.3 7% Corporate card fees increased over Q3 due to Trust Fees 49.2 (.1) 0% 4.4 10% lower rewards and network expense. Deposit Accoun
Slide 13: Non-Interest Expense Highlights
NON-INTEREST EXPENSE HIGHLIGHTS 4Q23 vs. 3Q23 4Q23 vs. 4Q22 Salaries and employee $ in millions 4Q23 $ Change % Change $ Change % Change benefits: Flat compared to the prior Salaries and Employee quarter; increase over the prior Benefits $147.5 $.7 0% $9.0 6% year was due to higher full-time salarie
Slide 14: Liquidity and Capital
LIQUIDITY AND CAPITAL 14
Slide 15: Liquidity and Capital Highlights
LIQUIDITY AND CAPITAL HIGHLIGHTS Liquidity / Borrowing Deposits • $2.2B of cash at Federal Reserve Bank (FRB) at • QTD Average loan to deposit ratio of 68%. Q4. • Uninsured deposits1 of 35% of total deposits at Q4. • Final FHLB advances matured as planned. • The remaining brokered deposits of $402MM
Slide 16: Deposit Balance Trends
DEPOSIT BALANCE TRENDS Segment view $ in billions Commercial Consumer Wealth $13.4 $12.8 $12.0 $11.9 $12.1 $12.1 $12.3 $12.4 $11.3 $10.5 $10.6 $9.9 $10.0 $10.4 $10.2 $7.8 $3.0 $2.8 $2.3 $2.3 $2.3 $2.3 $2.5 $1.8 2019 2020 2021 2022 3Q23 4Q23 3Q23 4Q23 2019 2020 2021 2022 3Q23 4Q23 3Q23 4Q23 2019 2020
Slide 17: Deposit Portfolio Characteristics
DEPOSIT PORTFOLIO CHARACTERISTICS Percent of accounts under $250,000 99% Uninsured Deposit Analysis $ in billions 12/31/2023 Uninsured Deposits $ 10.8 Percent of deposits ($) uninsured1 35% Less: Affiliate Deposits $ 0.3 Less: Collateralized Deposits $ 1.7 Average balance of accounts $25,902 Uninsur
Slide 18: Well-Positioned for Multiple Rate Environments
WELL-POSITIONED FOR MULTIPLE RATE ENVIRONMENTS Opportunities to enhance and protect NII in a Cost of Total Deposits & Deposit Beta: Prior & Current Fed Cycle rising rate environment. Cost of Total Deposits • Net yield on interest earning assets increased 6 bps Before Fed Rate End of Fed Rate Deposit
Slide 19: Summary of Fixed & Floating Loans
SUMMARY OF FIXED & FLOATING LOANS Over 57% of total loans are variable; 65% of commercial loans have floating rates Fixed Variable Business Construction Business RE Commercial Total Loans: $6.0B Total Loans: $1.4B Total Loans: $3.7B 3% 40% 41% 60% 59% 97% Personal RE Consumer HELOC Consumer Card Tot
Slide 20: High Quality, Highly Liquid and Diverse Investment Portfolio
HIGH QUALITY, HIGHLY LIQUID AND DIVERSE INVESTMENT PORTFOLIO Composition of AFS Portfolio As of December 31, 2023 Total available for sale securities Average balance: $9.6 billion, at fair value Duration QTD – Dec. 31, 2023 Avg Rate (yrs) Treasury & agency Treasury & agency1 1.12% 2.0 5% 8% Municipa
Slide 21: Sound Capital and Liquidity Position
SOUND CAPITAL AND LIQUIDITY POSITION Tier 1 Risk-Based Capital Ratio1 Loan to Deposit Ratio Peer Median: 11.1% Large, stable deposit base CBSH 15.1% 68% Average Loan to PB 15.0% Core Deposits CFR 13.8% Deposit Ratio3 UBSI 13.0% $22.5 Commerce 84% UCBI 12.6% Average Loan to BOKF 12.1% Billion2 Deposi
Slide 22: Maintaining Strong Credit Quality
MAINTAINING STRONG CREDIT QUALITY Net Loan Charge-Offs (NCOs) Allowance for Credit $ in millions Losses on Loans (ACL) $ in millions $14.5 $9.8 $269.8 $304.6 $8.0 $5.6 $4.5 .23% .22% $150.1 1.15% $162.2 1.22% $162.4 .19% .14% .92% .95% .94% .08% 4Q22 3Q23 4Q23 4Q22 3Q23 4Q23 NCOs- CBSH NCO/Average L
Slide 23: Allocation of Allowance
ALLOCATION OF ALLOWANCE CECL allowances reflect the economic and market outlook Allowance for Credit Losses (ACL) on Loans Sept. 30, 2023 Dec. 31, 2023 $ in millions $250 1.47% 1.60% Allowance for % of Allowance for % of 1.44% Credit Losses Outstanding Credit Losses Outstanding $ in millions (ACL) L
Slide 24: Capital for Business
CAPITAL FOR BUSINESS® A middle-market private equity firm focused on the success of industrial growth companies Transaction Types Quick Facts: Investment Criteria Management buyouts Leveraged buyouts • Manufacturing, distribution and Succession plans Small Business Investment certain service compani
Slide 25: Non-GAAP Reconciliations
NON-GAAP RECONCILIATIONS Pre-tax, Pre-provision Net Revenue For The Three Months Ended (DOLLARS IN THOUSANDS) Dec. 31, 2023 Sep. 30, 2023 Dec. 31, 2022 A Net Interest Income $ 248,421 $ 248,547 $ 254,641 B Non-Interest Income $ 144,879 $ 142,949 $ 136,825 C Non-Interest Expense $ 251,254 $ 228,010 $
Slide 26: Commerce Bancshares, Inc.
] Commerce Bancshares, Inc.