Commerce Bancshares, Inc. · NASDAQ:CBSH
Commerce Bancshares — Q1 2022 Earnings Presentation
21 slides from Commerce Bancshares's earnings presentation, Apr 19, 2022
Slide 1: Commerce Bancshares, Inc. Earnings Highlights 1st Quarter 2022
COMMERCE BANCSHARES, INC. EARNINGS HIGHLIGHTS 1st 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: 1Q2022 Earnings Highlights
$0.97 EPS 3 • Net interest income increased .5% over Q4. • Net interest margin increased 2 bps over Q4 to 2.45%. • Non-interest income to total revenue of 38.7%. • Wealth management client assets of $65.8 billion at March 31, 2022. • Non-interest expense increased $2.1 million over Q4. • QTD average
Slide 4: Balance Sheet Highlights
Quarterly Average Balances Change vs. $ in millions 1Q22 4Q21 1Q21 Highlights Commercial1 $9,554.1 $130.6 $(1,093.7) • Linked quarter (LQ) reflects lower PPP loans (-132MM) offset by higher seasonal business, construction and business real estate Consumer 5,669.1 (0.5) (16.0) Total Loans $15,223.2 $
Slide 5: Balance Sheet
$16.1 $16.9 $17.8 $10.4 $11.9 $11.5 1Q224Q211Q21 $26.5 $29.3$28.8 +11% $5.7 $9.4 $9.5 $10.6 $5.7 $5.7 4Q21 $16.3 1Q21 $15.2 1Q22 $15.1 -7% BALANCE SHEET 5 Loans Loan Yield Commercial Loans Consumer Loans Deposits QTD Average Balances $ billions Non-Interest Bearing Interest Bearing Deposit Interest
Slide 6: Loan Portfolio
LOAN PORTFOLIO 6 $ in 000s 3/31/2022 12/31/2021 3/31/2021 QoQ YoY Business $5,508,508 $5,303,535 $6,624,209 3.9% -16.8% Business excl. PPP 5,455,089 5,174,372 5,197,349 5.4% 5.0% Construction 1,144,411 1,118,266 1,073,036 2.3% 6.7% Business Real Estate 3,109,668 3,058,837 3,017,242 1.7% 3.1% Persona
Slide 7: Income Statement Highlights
Change vs. $ in millions 1Q22 4Q21 1Q21 Highlights Net Interest Income $208.8 $1.1 $3.0 • Linked quarter (LQ) increase due to higher income earned on investment securities, partially offset by lower income earned on loans and securities purchased under agreements to resell Non-Interest Income $131.8
Slide 8: Non-Interest Income Highlights
Change vs. $ in millions 1Q22 4Q21 1Q21 Highlights Bank Card Transaction Fees $42.0 $(2.7) $4.4 • Increase of 11.5% over prior year (PY) driven by growth in net corporate card fees Trust Fees $47.8 $(1.1) $3.7 • Increase of 8.3% over PY resulting mostly from higher private client fee income • Decrea
Slide 9: Non-Interest Expense Highlights
Change vs. $ in millions 1Q22 4Q21 1Q21 Highlights Salaries and Employee Benefits $136.0 $3.3 $6.9 • Increase of 5.4% over prior year (PY) mostly due to higher full-time salaries Net Occupancy $12.3 — $.3 Equipment $4.6 $(.1) $.2 Supplies $4.7 $.3 $.6 Data Processing and Software $27.0 $1.2 $1.6 • I
Slide 10: Pre-Tax, Pre-Provision Net Revenue (PPNR)
10 PRE-TAX, PRE-PROVISION NET REVENUE (PPNR) $136 $149 $206 $193 1Q2021 $342 $148 $152 $208 $204 4Q2021 $355 $132 $135 $209 $206 $341 1Q2022 Non-Interest Income (+) Net Interest Income (+) Non-Interest Expense (-) Pre-Tax, Pre-Provision Net Revenue (=) 1Q2022 Comparison vs. 1Q2021 (11.1%) vs. 4Q2021
Slide 11: Maintaining Strong Credit Quality
$10.0 $4.3 $4.6 $7.9 $3.4 1Q21 4Q21 1Q22 MAINTAINING STRONG CREDIT QUALITY 11 Net Loan Charge-Offs (NCOs) $ in millions NCOs- CBSH NCOs - Peer Average NCO/Average Loans1 - CBSH $200.5 $150.0 $134.7 $302.0 $261.2 1Q21 4Q21 1Q22 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 December 31, 2021 March 31, 2022 $ in millions Allowance for Credit Losses (ACL) % of Outstanding Loans Allowance for Credit Losses (ACL) % of Outstanding Loans Business $ 43.9 .83% $ 40.9 .74% Bus R/E 30.7 1.00% 28.5
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% 3Q20182Q20173Q2015 4Q2015 2Q20161Q2016 4Q20173Q2016 4Q2016 1Q2017 3Q2017 1Q2018 2Q2018 4Q2018 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, (6
Slide 15: Balance Sheet: Low-Cost Deposits
$10 $0 $5 $15 $20 $25 $30 4Q211Q21 2Q21 3Q21 1Q22 0.09% 0.07% 0.06% 0.05% 0.05% 0.00% 0.05% 0.10% BALANCE SHEET: LOW-COST DEPOSITS Interest-bearing Deposits (left)Non Interest-Bearing Deposits (left) Av er ag e Ba la nc e $ in b illi on s Cost of Interest-Bearing Deposits (right) 15 – 39% of Q1 aver
Slide 16: Earning Asset Optimization Excluding Loans
0.0% 1.0% 2.0% 3.0% 4.0% 5.0% 6.0% 7.0% 8.0% 9.0% $10.0 $15.0 $0.0 $20.0 $5.0 $13.8 $0.8 $2.6 $0.9 $0.8 $8.6 $0.4 $19.1 4Q19 1Q20 $8.5 $0.9 1Q22 $0.6 $9.5 $10.0 $2.6 $2.7 $0.9 $1.8 $11.3 2Q20 $0.8 $1.0 3Q20 $12.1 $15.0 $1.6 $0.8 $1.1 4Q20 $1.5 1Q21 $12.9 2Q21 $12.7 $14.5 $1.7 $2.9 4Q21 $1.7 $15.0 3Q
Slide 17: 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 18: Sound Capital and Liquidity Position
Average Loan to Deposit Ratio3 SOUND CAPITAL AND LIQUIDITY POSITION 18 Tier 1 Risk-Based Capital Ratio1 1S&P Global Market Intelligence, Information as of December 31, 2021 2Period-end balances, as of March 31, 2022 3Includes loans held for sale, for the quarter ended March 31, 2022 15.3% 15.1% 14.3
Slide 19: Capital for Business Quick Facts
Quick Facts: Small Business Investment Company (SBIC) founded in 1959 Nationwide footprint with Greater Midwest Focus 36 Portfolio Companies Representing $920 million in Revenue Over 3,500 Employees Fair Value as of March 31, 2022: $153.4 million Investment Criteria • Manufacturing, distribution and
Slide 20: Non-GAAP Reconciliations
NON-GAAP RECONCILIATIONS 20 For The Three Months Ended (DOLLARS IN THOUSANDS) Mar. 31, 2022 Dec. 31, 2021 Mar. 31, 2021 A Net Interest Income $ 208,786 $ 207,657 $ 205,748 B Non-Interest Income $ 131,769 $ 147,699 $ 136,045 C Non-Interest Expense $ 205,648 $ 203,582 $ 192,573 Pre-Provision Net Reven
Slide 21: Commerce Bancshares, Inc.
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