Commerce Bancshares, Inc. · NASDAQ:CBSH
Commerce Bancshares — Q2 2022 Earnings Presentation
19 slides from Commerce Bancshares's earnings presentation, Jul 21, 2022
Slide 1: Commerce Bancshares, Inc. Earnings Highlights 2nd Quarter 2022
COMMERCE BANCSHARES, INC. EARNINGS HIGHLIGHTS 2nd Quarter 2022
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: 2Q2022 Earnings Highlights
$0.96 EPS 3 • PPNR1 increased 17.3% over Q1. • Net interest income increased 11.3% over Q1. • Net interest margin increased 34 bps over Q1 to 2.79%. • Non-interest income increased 5.8% over Q1 (37.5% of total revenue). • Wealth management client assets of $58.6 billion at June 30, 2022. • Non-inter
Slide 4: Balance Sheet Highlights
Quarterly Average Balances Change vs. $ in millions 2Q22 1Q22 2Q21 Highlights Commercial1 $9,774.0 $219.8 $(541.0) • Linked quarter (LQ) reflects growth in construction, business real estate and business (offset by a decline in PPP loans of $45.1 million and a decline in seasonal utilization) Consum
Slide 5: Balance Sheet
$16.6 $17.8 $17.5 $11.1 $11.5 $11.2 1Q222Q21 2Q22 $27.7 $29.3 $28.7 +4% $10.3 $9.5 $9.8 $5.7 $5.7 $5.7 1Q22 $16.0 2Q21 2Q22 $15.2 $15.5 -3% BALANCE SHEET 5 Loans Consumer Loans Commercial Loans Loan Yield Deposits QTD Average Balances $ billions Non-Interest Bearing Interest Bearing Deposit Interest
Slide 6: Loan Portfolio
LOAN PORTFOLIO 6 $ in 000s 6/30/2022 3/31/2022 6/30/2021 QoQ YoY Business $5,441,592 $5,508,508 $5,803,760 -1.2% -6.2% Business excl. PPP 5,406,321 5,455,089 4,949,459 -.9% 9.2% Construction 1,266,260 1,144,411 1,103,661 10.6% 14.7% Business Real Estate 3,215,578 3,109,668 3,017,560 3.4% 6.6% Person
Slide 7: Income Statement Highlights
Change vs. $ in millions 2Q22 1Q22 2Q21 Highlights Net Interest Income $232.4 $23.6 $24.4 • Linked quarter (LQ) increase due to higher income earned on investment securities and loans Non-Interest Income $139.4 $7.7 $0.3 • See page 8 Non-Interest Expense $213.5 $7.9 $15.4 • See page 9 Pre-Tax, Pre-P
Slide 8: Non-Interest Income Highlights
Change vs. $ in millions 2Q22 1Q22 2Q21 Highlights Bank Card Transaction Fees $43.9 $1.8 $1.3 • Increase of 3.0% over prior year (PY) driven by growth in net corporate card fees Trust Fees $46.8 $(1.0) $.5 • 2Q2022 reflects lower market values on assets under management Deposit Account Charges and O
Slide 9: Non-Interest Expense Highlights
Change vs. $ in millions 2Q22 1Q22 2Q21 Highlights Salaries and Employee Benefits $142.2 $6.3 $11.5 • Increase of 8.8% over prior year (PY) mostly due to higher full-time salaries of $4.9 million and an accrual of $5.4 million for special bonuses to be paid to non-incentivized part-time and full-tim
Slide 10: Pre-Tax, Pre-Provision Net Revenue (PPNR)
10 PRE-TAX, PRE-PROVISION NET REVENUE (PPNR) $139 $149 $208 $198 $347 2Q2021 $132 $135 $209 $206 1Q2022 $341 $140 $158 $232 $214 2Q2022 $372 Non-Interest Income (+) Net Interest Income (+) Non-Interest Expense (-) Pre-Tax, Pre-Provision Net Revenue (=) 2Q2022 Comparison vs. 2Q2021 6.2% vs. 1Q2022 17
Slide 11: Maintaining Strong Credit Quality
$0.7 $4.6 $4.0 $7.8 $3.3 2Q21 1Q22 2Q22 MAINTAINING STRONG CREDIT QUALITY 11 Net Loan Charge-Offs (NCOs) $ in millions NCOs- CBSH NCOs - Peer Average NCO/Average Loans1 - CBSH $172.4 $134.7 $138.0 $284.2 $265.7 2Q21 1Q22 2Q22 Allowance for Credit Losses on Loans (ACL) $ in millions ACL - CBSH ACL -
Slide 12: Allocation of Allowance
ALLOCATION OF ALLOWANCE 12 CECL allowances reflect the economic and market outlook March 31, 2022 June 30, 2022 $ in millions Allowance for Credit Losses (ACL) % of Outstanding Loans Allowance for Credit Losses (ACL) % of Outstanding Loans Business $ 40.9 .74% $ 41.5 .76% Bus R/E 28.5 .92% 29.9 .93%
Slide 13: Well-Positioned for a Rising Rate Environment
13 WELL-POSITIONED FOR A RISING RATE ENVIRONMENT
Slide 14: Well-Positioned for Higher Rates
0.0% 0.5% 1.0% 1.5% 2.0% 2.5% 3.0% 1Q20173Q2015 4Q2015 1Q2016 2Q2016 3Q2016 1Q20184Q2016 2Q2017 4Q20183Q2017 4Q2017 2Q2018 3Q2018 1Q2019 2Q2019 WELL-POSITIONED FOR HIGHER RATES 14 Opportunities to enhance NII in a rising rate environment. • As of December 31, 2021, 53% of loans were variable rate, (
Slide 15: Summary of Fixed & Floating Loans
Over 50% of total loans are variable; 62% of commercial loans have floating rates SUMMARY OF FIXED & FLOATING LOANS 42% 58% Business Total Loans: $5.3B Fixed Variable C om m er ci al 73% 27% Personal RE Total Loans: $2.8B C on su m er 99% 1% HELOC Total Loans: $0.3B 44% 56% Business RE Total Loans:
Slide 16: Sound Capital and Liquidity Position
Average Loan to Deposit Ratio3 SOUND CAPITAL AND LIQUIDITY POSITION 16 Tier 1 Risk-Based Capital Ratio1 1S&P Global Market Intelligence, Information as of March 31, 2022 2Period-end balances, as of June 30, 2022 3Includes loans held for sale, for the quarter ended June 30, 2022 15.3% 14.4% 13.9% 13.
Slide 17: 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 $909 million in Revenue Over 3,500 Employees Fair Value as of June 30, 2022: $161.8 million Investment Criteria • Manufacturing, distribution and
Slide 18: Non-GAAP Reconciliations
NON-GAAP RECONCILIATIONS 18 For The Three Months Ended (DOLLARS IN THOUSANDS) Jun. 30, 2022 Mar. 31, 2022 Jun. 30, 2021 A Net Interest Income $ 232,385 $ 208,786 $ 207,982 B Non-Interest Income $ 139,427 $ 131,769 $ 139,143 C Non-Interest Expense $ 213,505 $ 205,648 $ 198,126 Pre-Provision Net Reven
Slide 19: Commerce Bancshares, Inc.
\ {37 Commerce Bancshares, Inc.