Commerce Bancshares, Inc. · NASDAQ:CBSH
Commerce Bancshares — Q3 2021 Earnings Presentation
20 slides from Commerce Bancshares's earnings presentation, Oct 19, 2021
Slide 1: Earnings Highlights 3rd Quarter 2021
COMMERCE BANCSHARES, INC. EARNINGS HIGHLIGHTS 3rd Quarter 2021
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: 3Q2021 Earnings Highlights
$1.05 EPS 3 • Net interest income increased 2.9% over Q2. • Net interest margin decreased 2 bps from Q2 to 2.58%. • Non-interest income totaled $137.5 million in Q3. – Non-interest income to total revenue of 39.1%. • Wealth management client assets increased 2.9% in Q3 to $66.8 billion. • Non-intere
Slide 4: Balance Sheet Highlights
Quarterly Average Balances Change vs. $ in millions 3Q21 2Q21 3Q20 Highlights Commercial1 $9,588.9 $(726.1) $(1,084.3) • Linked quarter (LQ) reflects lower business loans, mostly driven by PPP forgiveness (-$689.2 million) and lower business R/E Consumer 5,670.1 (5.4) (22.7) • LQ reflects decrease i
Slide 5: Balance Sheet
$14.9 $16.6 $16.6 $9.8 $11.1 $11.5 3Q20 2Q21 3Q21 $24.7 $27.7 $28.1 +13% $10.7 $10.3 $9.6 $5.7 $5.7 $5.7 2Q213Q20 3Q21 $16.4 $16.0 $15.3 -7% BALANCE SHEET 5 Loans Consumer Loans Commercial Loans Loan Yield Deposits QTD Average Balances $ billions Non-Interest Bearing Interest Bearing Deposit Yield I
Slide 6: Loan Portfolio
LOAN PORTFOLIO 6 $ in 000s 9/30/2021 6/30/2021 9/30/2020 QoQ YoY Business $5,277,850 $5,803,760 $6,683,413 -9.1% -21.0% Business excl. PPP 4,969,914 4,949,459 5,175,827 .4% -4.0% Construction 1,257,836 1,103,661 1,009,729 14.0% 24.6% Business Real Estate 2,937,852 3,017,560 2,993,192 -2.6% -1.8% Per
Slide 7: Balance Sheet: Low-Cost Deposits
$0 $15 $30 $5 $10 $20 $25 3Q20 2Q214Q20 1Q21 3Q21 0.09% 0.07% 0.06% 0.00% 0.05% 0.10% 0.15% 0.20% 0.18% 0.12% BALANCE SHEET: LOW-COST DEPOSITS Non Interest-Bearing Deposits (left) Interest-bearing Deposits (left) Av er ag e Ba la nc e $ in b illi on s Cost of Interest-Bearing Deposits (right) 7 – 41
Slide 8: Earning Asset Optimization
EARNING ASSET OPTIMIZATION 8 Av er ag e Ba la nc e $ in b illi on s 0.0% 1.0% 2.0% 3.0% 4.0% 5.0% 6.0% 7.0% 8.0% 9.0% $0.0 $15.0 $20.0 $10.0 $5.0 $14.0 $12.9 $0.2 $1.0 $0.7 $2.7 $0.8 $0.3 $16.5 $0.8 1Q19 $0.3 $8.7 3Q20 $1.1 $0.7 $0.8 2Q19 $0.9 $8.7 $0.7 $1.6 $0.9 3Q19 $8.6 2Q20 $9.6 $13.8 $0.8 $0.4
Slide 9: Net Interest Income and Earnings Summary
Change vs. $ in millions 3Q21 2Q21 3Q20 Highlights Net Interest Income $214.0 $6.1 $(1.9) • Linked quarter (LQ) increase due to higher income on investment securities, partially offset by lower interest earned on loans and securities purchased under agreements to resell Non-Interest Income $137.5 $(
Slide 10: Non-Interest Income Highlights
Change vs. $ in millions 3Q21 2Q21 3Q20 Highlights Bank Card Transaction Fees $42.8 $0.2 $4.9 • Increase of 13.0% over prior year (PY) driven by net corporate card fees Trust Fees $49.0 $2.7 $8.2 • Increase of 5.8% over linked quarter (LQ), 20.1% over PY resulting mostly from higher private client f
Slide 11: Non-Interest Expense Highlights
Change vs. $ in millions 3Q21 2Q21 3Q20 Highlights Salaries and Employee Benefits $132.8 $2.1 $5.5 • Increase of 1.6% over linked quarter (LQ), 4.3% over prior year (PY) mostly due to higher incentive compensation Net Occupancy $12.3 $0.8 $0.3 Equipment $4.4 $(0.2) $(0.3) Supplies $4.5 $0.5 $0.4 Dat
Slide 12: Pre-Tax, Pre-Provision Net Revenue (PPNR)
12 PRE-TAX, PRE-PROVISION NET REVENUE (PPNR) $130 $155 $216 $191 3Q2020 $346 $139 $149 $208 $198 $347 2Q2021 $138 $140 $214 $212 3Q2021 $352 Non-Interest Income (+) Net Interest Income (+) Non-Interest Expense (-) Pre-Tax, Pre-Provision Net Revenue (=) 3Q2021 Comparison vs. 3Q2020 (9.5)% vs. 2Q2021
Slide 13: Sound Capital and Liquidity Position
Average Loan to Deposit Ratio3 SOUND CAPITAL AND LIQUIDITY POSITION 13 Tier 1 Risk-Based Capital Ratio1 1S&P Global Market Intelligence, Information as of June 30, 2021 2Period-end balances, as of September 30, 2021 3Includes loans held for sale, for the quarter ended September 30, 2021 14.5% 14.2%
Slide 14: Maintaining Strong Credit Quality
$7.6 $0.7 $3.7 $10.6 $7.0 3Q20 2Q21 3Q21 MAINTAINING STRONG CREDIT QUALITY 14 Net Loan Charge-Offs (NCOs) $ in millions NCOs- CBSH NCOs - Peer Average NCO/Average Loans1 - CBSH $236.4 $172.4 $162.8 $311.3 $273.4 3Q213Q20 2Q21 Allowance for Credit Losses on Loans (ACL) $ in millions ACL - CBSH ACL -
Slide 15: Paycheck Protection Program Impact and Update
PAYCHECK PROTECTION PROGRAM IMPACT AND UPDATE 15 Yield and Interest Income2 Q3 2021, $ in millions 3.43% 7.73% 2.92% Yield Business Loans PPP Yield and Fee Recognition Business Loans (ex PPP) $47.0 $11.2 $35.8 Interest Income Total Loan Originations1: $1.9 Billion Total SBA Fees: $60.4 Million 1Incl
Slide 16: Paycheck Protection Program Impact and Update: Loan Portfolio
PAYCHECK PROTECTION PROGRAM IMPACT AND UPDATE 16 Loan Portfolio Impact QTD Average Balances, $ in millions $5,494 $5,517 $5,203 $5,104 $5,159 $4,947 $4,863 $1,244 $1,506 $1,476 $1,374 $1,264 3Q202Q20 $6,761 1Q211Q20 4Q20 $6,533 2Q21 $5,494 $6,709 $6,580 $6,211 3Q21 $575 $5,437 Interest Income Impact
Slide 17: Allocation of Allowance
ALLOCATION OF ALLOWANCE 17 CECL allowances reflect the economic and market outlook June 30, 2021 September 30, 2021 $ in millions Allowance for Credit Losses (ACL) % of Outstanding Loans Allowance for Credit Losses (ACL) % of Outstanding Loans Business $ 44.9 .77% $ 41.0 .78% Bus R/E 29.6 .98% 32.3
Slide 18: Quick Facts: Capital for Business
Quick Facts: Small Business Investment Company (SBIC) founded in 1959 Nationwide footprint with Greater Midwest Focus 33 Portfolio Companies Representing $733 million in Revenue Over 2,900 Employees Fair Value as of September 30, 2021: $138.1 million Investment Criteria • Manufacturing, distribution
Slide 19: Non-GAAP Reconciliations
NON-GAAP RECONCILIATIONS 19 For The Three Months Ended (DOLLARS IN THOUSANDS) Sept. 30, 2021 Jun. 31, 2021 Sept. 30, 2020 A Net Interest Income $ 214,037 $ 207,982 $ 215,962 B Non-Interest Income $ 137,506 $ 139,143 $ 129,572 C Non-Interest Expense $ 211,620 $ 198,126 $ 190,858 Pre-Provision Net Rev
Slide 20: Commerce Bancshares, Inc.
Commerce Bancshares, Inc.