Commerce Bancshares, Inc. · NASDAQ:CBSH
Commerce Bancshares — Q1 2019 Earnings Presentation
32 slides from Commerce Bancshares's earnings presentation, 2019
Slide 1: Commerce Bancshares, Inc. Investor Update 1st Quarter 2019
innovating for the future COMMERCE BANCSHARES, INC. INVESTOR UPDATE 1st Quarter 2019
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: 153 Years in Business
COMMERCE BANCSHARES $25.0 $20.0 153 YEARS IN BUSINESS BILLION IN ASSETS BILLION IN TOTAL DEPOSITS 44TH LARGEST U.S. BANK $14.1 BASED ON ASSET SIZE1 BILLION IN TOTAL LOANS $6.4 BILLION MARKET CAPITALIZATION $8.8 BILLION IN COMMERCIAL 21ST CARD VOLUME as of 12/31/18 LARGEST U.S. BANK BASED ON MARKET C
Slide 4: Super-Community Bank Platform
SUPER-COMMUNITY BANK PLATFORM A consistent strategy with a long-term view Community Bank Super-Regional Bank Customer relationship-based: “CHALLENGE ACCEPTED.®” • Sophisticated • Award winning customer service High performing teams and payment system engaged workforce capabilities • Focus on the ful
Slide 5: Our Culture Is Our Competitive Advantage
OUR CULTURE IS OUR COMPETITIVE ADVANTAGE We help you focus on what matters most. Our purpose is the foundation of our culture. It We are engaged, enabled and effective. shapes our daily interactions 2018 Employee Engagement1 and guides our strategy. Consistently scoring above 78% the U.S. High Perfo
Slide 6: Recent Recognition
RECENT RECOGNITION • Named among • Selected as one of 20 • Received Highly • Named a Top Midsize • Named among America’s Best Banks best-in-class banks Commended status Employer by Forbes Forbes’ first-ever 2019 by Forbes in Bank Director’s 2019 for Best Private Wealth for the third ranking of Best
Slide 7: Strong Financial Performance in 2018
STRONG FINANCIAL PERFORMANCE IN 2018 ROA ROE Growth in Revenue Earnings 37% 11% 1.76% 16.2% growth per Share Net interest Net loan Growth in margin charge- 3.53% average 2% .30% growth offs to loans 34 bps loans Long-term performance remains strong 15-year TOTAL SHAREHOLDER RETURN @ 8.4% Vs KBW B
Slide 8: Financial Performance vs. Prior Year
FINANCIAL PERFORMANCE VS. PRIOR YEAR Net Income Attributable to Earnings per Common Return on Total Assets CBI ($ in Millions) Share As of March 31 $434 As of March 31 $3.79 1.76% As of March 31 1.66% 1.58% $319 $2.77 1.28% $101 $97 $0.88 $0.85 YE 2017 YE 2018 YTD 2018 YTD 2019 YE 2017 YE 2018 YTD 2
Slide 9: Drivers of 1st Quarter 2019 Earnings
DRIVERS OF 1st QUARTER 2019 EARNINGS Net Interest Core NIM increased by 5 bps to 3.55% from 3.50% in Q4 2018, driven primarily by higher loan rates (up 13 bps), Margin offset by modestly higher deposit costs (up 10 bps). Fee Income 1% fee income growth vs prior year, driven by higher trust, cash swe
Slide 10: Net Interest Income: YTD March 31, 2019
NET INTEREST INCOME: YTD – March 31, 2019 Net interest income - $ in millions Quarterly Net Interest Income • Net interest income declined $8.7 million from $230 (Tax Equivalent) 3.8% the prior quarter but the prior quarter included $220 3.6% non-recurring equity dividend and interest of $210 3.4% $
Slide 11: Growth in Deposit Rates
GROWTH IN DEPOSIT RATES – March 31, 2019 Deposit beta still low but increasing • Deposit beta Beta Analysis measures the growth in deposit rates as a % 6% Monthly FFS Rate Loan Rate of growth in short term Monthly Deposit Costs Borrowings rates (fed funds) 5% • Over the last 18 months, deposit rates
Slide 12: Fee Income at 37% of Total Revenue
FEE INCOME AT 37% OF TOTAL REVENUE Card, Wealth & Deposit fees provide stable, growing revenue source Non-Interest Income 6% Net Interest Income $ in millions 11% Wealth Management $410 $422 $447 $461 $501 1% Deposit Service Charges 7% Commerce Fees and Commissions $120 $121 Bank* Card Income 12% 63
Slide 13: Well-Diversified Loan Portfolio
WELL-DIVERSIFIED LOAN PORTFOLIO Business Loans YTD Average Loans $s in millions 6% Construction $13,629 $13,946 $14,079 Business RE 18% 33% $12,953 Residential RE Commerce Consumer/HELOCs $11,873 $11,260 Credit Card Bank* 17% Loans Held for Sale 6% 2014 2015 2016 2017 2018 1Q2019 2019 Loan Growth by
Slide 14: Summary of Fixed & Floating Loans
SUMMARY OF FIXED & FLOATING LOANS 57% of total loans are variable; 65% of commercial loans have floating rates; mostly tied to a LIBOR index Fixed Variable Business Construction Business RE Commercial Total Loans: $5.1B Total Loans: $0.9B Total Loans: $2.9B 5% 36% 43% 57% 64% 95% Personal RE Consume
Slide 15: Investment Portfolio: High Quality, Diverse, Short Duration
INVESTMENT PORTFOLIO: HIGH QUALITY, DIVERSE, SHORT DURATION Composition of AFS Portfolio AFS Portfolio as of 3/31/19 4% 13% Total investments $8.6 billion Treasury & agency 18% Unrealized loss $49 million Municipal 12 month maturities / pay-downs $1.0 billion 15% MBS Duration Other asset backed Dece
Slide 16: Strong Capital Position - Flexibility in Capital Planning
STRONG CAPITAL POSITION – FLEXIBILITY IN CAPITAL PLANNING 51 consecutive years of regular common cash dividend increases* Cash Dividends & Buy Backs $300 Cash dividend 200 % to Net Income – combined Buy back 250 % Payout 150 200 $ in millions 150 100 100 50 50 0 0 2009 2010 2011 2012 2013 2014 2015
Slide 17: Net Loan Charge-Offs: YTD March 31, 2019
NET LOAN CHARGE-OFFS: YTD – March 31, 2019 '19 • Bulk of business loan net charge- YTD YTD Actual Loss offs related to fraud on one $ in 000s 2018 2019 $ Chge Rate business card account this Business $ (14) $ 447 $ 461 0.04 % quarter. Overdraft 444 317 (127) 30.57 % • Loss rate on credit card loans
Slide 18: 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 19: 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 Challenge Accepted ® more functionality. Technology investments and introduction of new Over
Slide 20: External Innovation: Commercial Payments Customers
EXTERNAL INNOVATION: COMMERCIAL PAYMENTS CUSTOMERS CommerceHealthcare™ 370+ $569 Tailored return on investment-based solutions enable healthcare Clients in MILLION 45 providers to enhance the patient Hospitals & Patient Loan experience, improve cash flow, and Healthcare Originations* States Systems
Slide 21: 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 22: 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 8,000 Mobile Online Branch
Slide 23: 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. 18TH $50 BILLION $30 $447 MILLION Largest Among BILLION Bank-Owned Total Client Assets Under Managed Trust Assets2 Management Brokera
Slide 24: 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 25: Commercial Banking Expansion: Markets Offer Growth Opportunities
COMMERCIAL BANKING – EXPANSION MARKETS OFFER GROWTH OPPORTUNITIES Expansion Market Loan Growth Expansion $ in millions Market Loan Fee Income Team Overview for $2,200 Growth Growth Expansion Markets $1,913 64% 92% # of team members per market (includes open positions) since 2015 $1,619 since 2015
Slide 26: 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 27: 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 28: 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 29: 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 30: Long-Term Shareholder Returns
LONG-TERM SHAREHOLDER RETURNS as of March 31, 2019 Annualized Comparison Total Shareholder Returns Total Shareholder Returns Indexed, 03/31/2004 = $100 Percent 400 30 COMMERCE KBW BANK CBSH NASDAQ Banks 350 BANK INDEX 20 S&P 500 KBW Bank Index 300 NASDAQ S&P 10 BANK INDEX 250 0 200 -10 150 -20 1 Yea
Slide 31: Investor Relations
INVESTOR RELATIONS Contact Information: Matthew Burkemper Senior Vice President, Commerce Bank Manager of Corporate Development 314.746.7485 Matthew.Burkemper@commercebank.com Commerce Bancshares, Inc. Investor Relations website: http://investor.commercebank.com/ 31
Slide 32: innovating for the future
© innovating for the future i \X ie Commerce Bancshares, Inc.