Commerce Bancshares, Inc. · NASDAQ:CBSH
Commerce Bancshares — Q3 2022 Earnings Presentation
19 slides from Commerce Bancshares's earnings presentation, Oct 18, 2022
Slide 1: Earnings Highlights 3rd Quarter 2022
COMMERCE BANCSHARES, INC. EARNINGS HIGHLIGHTS 3rd 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: 3Q2022 Earnings Highlights
$1.02 EPS 3 • PPNR1 increased 8.7% over Q2. • Net interest income increased 6.0% over Q2. • Net interest margin increased 22 bps over Q2 to 3.01%. • Non-interest income decreased .7% from Q2 (36.0% of total revenue). • Wealth management client assets of $57.1 billion at September 30, 2022. • Non-int
Slide 4: Balance Sheet Highlights
Quarterly Average Balances Change vs. $ in millions 3Q22 2Q22 3Q21 Highlights Commercial1 $9,864.5 $90.6 $275.6 • Linked quarter (LQ) reflects growth in business real estate and construction, partly offset by a decline in business loans Consumer 5,781.4 69.8 111.3 Total Loans $15,646.0 $160.4 $386.9
Slide 5: Balance Sheet
$16.6 $17.5 $17.0 $11.5 $11.2 $10.8 $27.8 3Q21 2Q22 3Q22 $28.1 $28.7 -1% $9.6 $9.8 $5.7 $5.7 $5.8 $15.3 2Q223Q21 3Q22 $15.5 $15.6 $9.8 +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 9/30/2022 6/30/2022 9/30/2021 QoQ YoY Business $5,528,895 $5,441,592 $5,277,850 1.6% 4.8% Business excl. PPP 5,507,081 5,406,321 4,969,914 1.9% 10.8% Construction 1,206,955 1,266,260 1,257,836 -4.7% -4.0% Business Real Estate 3,331,627 3,215,578 2,937,852 3.6% 13.4% Person
Slide 7: Income Statement Highlights
Change vs. $ in millions 3Q22 2Q22 3Q21 Highlights Net Interest Income $246.4 $14.0 $32.3 • Linked quarter (LQ) increase due to higher interest earned on loans, partly offset by lower interest earned on investment securities and higher interest expense Non-Interest Income $138.5 $(0.9) $1.0 • See pa
Slide 8: Non-Interest Income Highlights
Change vs. $ in millions 3Q22 2Q22 3Q21 Highlights Bank Card Transaction Fees $45.6 $1.8 $2.8 • Increase of 6.6% over prior year (PY) driven by growth in net corporate card fees Trust Fees $45.4 $(1.4) $(3.5) • 3Q2022 reflects lower market values on assets under management Deposit Account Charges an
Slide 9: Non-Interest Expense Highlights
Change vs. $ in millions 3Q22 2Q22 3Q21 Highlights Salaries and Employee Benefits $137.4 $(4.8) $4.6 • Increase of 3.4% over prior year (PY) due to higher full-time salaries expense partly offset by lower incentive compensation expense • Decrease from linked quarter (LQ) mainly due to an accrual of
Slide 10: Pre-Tax, Pre-Provision Net Revenue (PPNR)
10 PRE-TAX, PRE-PROVISION NET REVENUE (PPNR) $138 $140 $214 $212 3Q2021 $352 $140 $158 $232 $214 2Q2022 $372 $139 $172 $246 $213 3Q2022 $385 Non-Interest Income (+) Net Interest Income (+) Non-Interest Expense (-) Pre-Tax, Pre-Provision Net Revenue (=) 3Q2022 Comparison vs. 3Q2021 22.9% vs. 2Q2022 8
Slide 11: Maintaining Strong Credit Quality
$3.7 $4.0 $4.8 $4.0 $3.6 3Q21 2Q22 3Q22 MAINTAINING STRONG CREDIT QUALITY 11 Net Loan Charge-Offs (NCOs) $ in millions NCOs- CBSH NCOs - Peer Average NCO/Average Loans1 - CBSH $162.8 $138.0 $143.4 $270.0 $275.8 3Q21 2Q22 3Q22 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 June 30, 2022 September 30, 2022 $ in millions Allowance for Credit Losses (ACL) % of Outstanding Loans Allowance for Credit Losses (ACL) % of Outstanding Loans Business $ 41.5 .76% $ 45.0 .81% Bus R/E 29.9 .93% 28.7
Slide 13: Well-Positioned for Current Environment
13 WELL-POSITIONED FOR CURRENT ENVIRONMENT
Slide 14: Well-Positioned for Multiple Rate Environments
0.0% 0.5% 1.0% 1.5% 2.0% 2.5% 3.0% 3.5% 3Q2022 Hedging actions: Entered into one 2.5% floor contract (indexed to 1 Month SOFR) with a notional value of $500 million, to hedge the risk of declining interest rates on floating rate commercial loans. The contract begins 1/2024 and has a term of 6 years.
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 Co m m er ci al 73% 27% Personal RE Total Loans: $2.8B Co ns um 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 June 30, 2022 2Period-end balances, as of September 30, 2022 3Includes loans held for sale, for the quarter ended September 30, 2022 15.3% 13.9%
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 September 30, 2022: $176.3 million Investment Criteria • Manufacturing, distribution
Slide 18: Non-GAAP Reconciliations
NON-GAAP RECONCILIATIONS 18 For The Three Months Ended (DOLLARS IN THOUSANDS) Sep. 30, 2022 Jun. 30, 2022 Sep. 30, 2021 A Net Interest Income $ 246,373 $ 232,385 $ 214,037 B Non-Interest Income $ 138,514 $ 139,427 $ 137,506 C Non-Interest Expense $ 212,884 $ 213,505 $ 211,620 Pre-Provision Net Reven
Slide 19: Commerce Bancshares, Inc.
& Commerce Bancshares, Inc.