Commerce Bancshares, Inc. · NASDAQ:CBSH
Commerce Bancshares — Q1 2024 Earnings Presentation
25 slides from Commerce Bancshares's earnings presentation, Apr 16, 2024
Slide 1: Commerce Bancshares, Inc. Earnings Highlights 1st Quarter 2024
COMMERCE BANCSHARES, INC. EARNINGS HIGHLIGHTS 1st Quarter 2024 PEOPLE, GROWTH AND POSSIBILITIES
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: 158 Years in Business
COMMERCE BANCSHARES 158 YEARS IN BUSINESS 1Locations outside the core banking footprint that accept deposits Sources: 2S&P Global Market Intelligence – Regulated U.S. depositories which includes commercial banks, bank holding companies, and credit unions, rankings as of 12/31/2023; 3Includes loans h
Slide 4: Track Record of Long-Term Outperformance
4 TRACK RECORD OF LONG-TERM OUTPERFORMANCE Revenue Diversification Balanced earnings profile, fee revenue at 37%1 of total revenue, bolstered by growing wealth and national payments businesses Deposit Franchise $23.0 billion in low-cost, diverse deposits2 with peer-leading historical deposit betas C
Slide 5: 1Q2024 Highlights
$.86 EPS • Net interest income up slightly over Q4 at $249MM. • Net interest margin increased 16 bps over Q4 to 3.33%. • Total cost of deposits increased 4 bps to 1.38%, compared to an increase of 13 bps in Q4. • Non-interest expense includes a one-time $10MM litigation settlement expense2 and a $4M
Slide 6: Balance Sheet Highlights
1Q24 vs. 1Q23 1Q24 vs. 4Q23 Quarterly Average Balances % Change$ Change% Change$ Change1Q24$ in millions 5%$528.40%$44.2$11,073.7Commercial 3%147.8(0)%(22.2)6,006.3Consumer 4%$676.20%$22.0$17,080.1Total Loans (20)%)$(2,368.4(1)%)$(113.5$9,729.5Investment Securities 139%$1,128.4(19)%$(449.0)$1,938.4
Slide 7: Balance Sheet
$16.1 $17.5 $17.1 $9.1 $7.7 $7.3 1Q23 4Q23 1Q24 $25.2 $25.2 $24.4 -3% $10.5 $11.0 $11.1 $5.9 $6.1 $6.0 1Q23 4Q23 1Q24 $16.4 $17.1 $17.1 BALANCE SHEET 7 Loans Consumer Loans Commercial Loans Loan Yield Deposits QTD Average Balances $ billions Non-Interest Bearing Interest-Bearing Deposits Interest-Be
Slide 8: Loan Portfolio
LOAN PORTFOLIO 8 YoYQoQ3/31/202312/31/20233/31/2024$ in 000s 5.1%-.4%$5,704,467 $6,019,036$5,994,974Business 4.2%3.5%1,437,4191,446,7641,497,647Construction 6.5%-.2%3,486,5433,719,3063,711,602Business Real Estate 3.0%.5%2,952,0423,026,0413,039,885Personal Real Estate 1.2%2.0%2,094,3892,077,7232,119,
Slide 9: Commercial Real Estate Breakdown
32.1% 13.1% 16.3% 9.5% 7.9% 7.9% 5.2% 4.7% Owner- occupied Office Industrial Retail Multi-family Hotels Farm Senior living 3.3% Other Real Estate - Business Loans: Office Outstanding Balances by Geography1 % of Total Loans Real Estate - Business Loans 6.9%Owner – Occupied 3.5%Industrial 2.8%Office 2
Slide 10: Income Statement Highlights
10 INCOME STATEMENT HIGHLIGHTS $137 $165 $252 $224 1Q23 $389 $149 $152 $249 $232 1Q24 $398 Non-Interest Income (+) Net Interest Income (+) Non-Interest Expense (-) Pre-Tax, Pre-Provision Net Revenue (=) 1Q24 Comparison (7.9)%vs. 1Q23 7.1%vs. 4Q23 Pre-Tax, Pre-Provision Net Revenue (PPNR) $ in millio
Slide 11: Income Statement Highlights
1Q24 vs. 1Q23 1Q24 vs. 4Q23 % Change$ Change% Change$ Change1Q24$ in millions (1)%)$(2.60%$.6$249.0Net Interest Income 8%$11.23%$4.0$148.8Non-Interest Income 10%$21.6(2)%)$(5.6$245.7Non-Interest Expense (8)%)$(13.07%$10.1$152.2Pre-Tax, Pre-Provision Net Revenue1 15%$.0(103)%)$(7.9$(.3)Investment Sec
Slide 12: Non-Interest Income Highlights
NON-INTEREST INCOME HIGHLIGHTS 12 1Q24 vs. 1Q23 1Q24 vs. 4Q23 % Change$ Change% Change$ Change1Q24$ in millions 1%$.3(2)%)$(.9$46.9Bank Card Transaction Fees 13%5.84%2.051.1Trust Fees 11%2.43%.624.2Deposit Account Charges and Other Fees 16%.5(9)%)(.43.9Capital Market Fees (13)%)(.721%.84.4Consumer B
Slide 13: Non-Interest Expense Highlights
NON-INTEREST EXPENSE HIGHLIGHTS 13 1Q24 vs. 1Q23 1Q24 vs. 4Q23 % Change$ Change% Change$ Change1Q24$ in millions 5%$7.43%$4.3$151.8Salaries and Employee Benefits 11%3.00%.031.2Data Processing and Software 6%.8-3%-.413.6Net Occupancy 73%3.4-61%-12.38.0Deposit Insurance 3%.2-2%-.15.0Equipment 3%.2-10%
Slide 14: Liquidity and Capital
LIQUIDITY AND CAPITAL & commerce Bancshares, Inc.
Slide 15: Liquidity and Capital Highlights
LIQUIDITY AND CAPITAL HIGHLIGHTS 15 • $1.6B in cash at Federal Reserve Bank (FRB) at Q1. • AFS debt securities portfolio duration of 4.2 years. • Investment securities purchases in Q1 totaled $145.7MM at a weighted average yield of 4.65%. • Cash flows from maturities and paydowns of investments and
Slide 16: Deposit Balance Trends
2020 2021 2022 3Q23 4Q23 1Q24 $2.3 $3.0 $2.8 $2.3 $2.3 $2.4 DEPOSIT BALANCE TRENDS Segment view $ in billions 16 2020 2021 2022 3Q23 4Q23 1Q24 $9.9 $12.0 $11.9 $10.5 $10.6 $9.9 2020 2021 2022 3Q23 4Q23 1Q24 $11.3 $12.8 $13.4 $12.1 $12.1 $12.2 Commercial Consumer Wealth Average Balance 3Q23 4Q23 1Q24
Slide 17: Well-Positioned for Multiple Rate Environments
Hedging Structures: Four floor contracts (indexed to 1 Month SOFR) to hedge the risk of declining interest rates on floating rate commercial loans. The contracts have a term of 6 years. • 3.5% floor contract with a notional value of $500 million. The contract begins 7/2024. • 3.25% floor contract wi
Slide 18: Summary of Fixed & Floating Loans
Over 57% of total loans are variable; 65% of commercial loans have floating rates SUMMARY OF FIXED & FLOATING LOANS 40% 60% Business Total Loans: $6.0B Fixed Variable C om m er ci al 61% 39% Personal RE Total Loans: $3.0B C on su m er 100% HELOC Total Loans: $0.3B 41% 59% Business RE Total Loans: $3
Slide 19: High Quality, Highly Liquid and Diverse Investment Portfolio
9% 12% 55% 19% 5% Composition of AFS Portfolio Treasury & agency Municipal MBS Other asset backed Corporate HIGH QUALITY, HIGHLY LIQUID AND DIVERSE INVESTMENT PORTFOLIO 1Excludes inflation effect on TIPs; 2Tax equivalent yield Duration (yrs)Avg RateQTD – March 31, 2024 2.51.61%Treasury & agency1 5.2
Slide 20: Sound Capital and Liquidity Position
Average Loan to Deposit Ratio3 SOUND CAPITAL AND LIQUIDITY POSITION 20 Tier 1 Risk-Based Capital Ratio1 1S&P Global Market Intelligence, Information as of December 31, 2023 2Period-end balances, as of March 31, 2024 3Includes loans held for sale, for the quarter ended March 31, 2024 15.5% 15.3% 13.7
Slide 21: Maintaining Strong Credit Quality
$7.8 $7.3 $5.8 $93.2 $118.2 1Q23 4Q23 1Q24 $6.8 $8.0 $8.9 $6.1 $10.1 1Q23 4Q23 1Q24 MAINTAINING STRONG CREDIT QUALITY 21 Net Loan Charge-Offs (NCOs) $ in millions NCOs- CBSH NCOs - Peer Average NCO/Average Loans1 - CBSH $159.3 $162.4 $160.5 $280.5 $312.1 1Q23 4Q23 1Q24 Allowance for Credit Losses on
Slide 22: Allocation of Allowance
ALLOCATION OF ALLOWANCE 22 CECL allowances reflect the economic and market outlook March 31, 2024Dec. 31, 2023 % of Outstanding Loans Allowance for Credit Losses (ACL) % of Outstanding Loans Allowance for Credit Losses (ACL)$ in millions .73%$ 43.8.78%$ 47.1Business .81%30.2 .80%29.7 Bus R/E 2.10%31
Slide 23: Capital for Business: Private Equity Quick Facts
Quick Facts: Small Business Investment Company (SBIC) founded in 1959 Nationwide footprint with Greater Midwest Focus 36 Portfolio Companies Representing $960.2 million in Revenue Over 3,300 Employees Fair Value as of March 31, 2024: $183.7 million Investment Criteria • Manufacturing, distribution a
Slide 24: Non-GAAP Reconciliations
NON-GAAP RECONCILIATIONS 24 For The Three Months Ended Mar. 31, 2023Dec. 31, 2023Mar. 31, 2024(DOLLARS IN THOUSANDS) 251,623$248,421$248,999$Net Interest IncomeA 137,612$144,879$148,848$Non-Interest IncomeB 224,107$251,254$245,697$Non-Interest ExpenseC 165,128$142,046$152,150$Pre-Provision Net Reven
Slide 25: Commerce Bancshares, Inc.
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