Commerce Bancshares, Inc. · NASDAQ:CBSH
Commerce Bancshares — Q2 2023 Earnings Presentation
25 slides from Commerce Bancshares's earnings presentation, 2023
Slide 1: Commerce Bancshares, Inc. Earnings Highlights 2nd Quarter 2023
PEOPLE, GROWTH AND POSSIBILITIES COMMERCE BANCSHARES, INC. EARNINGS HIGHLIGHTS 2nd Quarter 2023
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 at a glance
COMMERCE BANCSHARES TOTAL ASSETS $32.8 158 YEARS IN BUSINESS BILLION TOTAL DEPOSITS $25.9 BILLION 40TH LARGEST U.S. BANK BASED ON ASSET SIZE1 MARKET CAP TOTAL $17.0 LOANS2 BILLION $6.1 BILLION $10.4 COMMERCIAL CARD VOLUME 17TH BILLION AS OF DECEMBER 31, 2022 LARGEST U.S. BANK BASED ON MARKET CAP1 TO
Slide 4: Track Record of Long-Term Outperformance
TRACK RECORD OF LONG-TERM OUTPERFORMANCE Revenue Diversification Deposit Franchise Continued Long-Term Investments Balanced earnings profile, fee $24.2 billion in low-cost, diverse revenue at 36%1 of total revenue, deposits2 with peer-leading Core banking system bolstered by growing wealth and histo
Slide 5: 2Q2023 Highlights
2Q2023 HIGHLIGHTS Highlights Well-positioned for current environment PPNR1 • Built additional cushion of liquidity in Q2 – (Average cash at $169.5 million Fed of $2.3B) Net Income • Grew period end total deposits over Q1 by $1.2B ($904MM $127.8 million short-term brokered). EPS • Net interest margin
Slide 6: Balance Sheet Highlights
BALANCE SHEET HIGHLIGHTS Quarterly Average Balances 2Q23 vs. 1Q23 2Q23 vs. 2Q22 $ in millions 2Q23 $ Change % Change $ Change % Change Loans: Quarterly growth in all categories except consumer card. Commercial $10,748.4 $203.1 2% $974.5 10% Investment securities: Consumer 5,920.6 62.1 1% 209.0 4% Co
Slide 7: Balance Sheet
BALANCE SHEET Loans Deposits QTD Average Balances QTD Average Balances $ billions $ billions $28.7 -12% +8% $25.2 $25.2 5.84% $11.2 5.56% $9.1 $8.2 $16.4 $16.7 $15.5 $5.7 $5.9 $5.9 1.29% $17.5 $16.1 $17.0 .71% 3.72% $9.8 $10.5 $10.8 .07% 2Q22 1Q23 2Q23 2Q22 1Q23 2Q23 Consumer Loans Loan Yield Non-In
Slide 8: Loan Portfolio
LOAN PORTFOLIO Period-End Balances QTD Average Balances $ in 000s 6/30/2023 3/31/2023 6/30/2022 QoQ YoY $ in 000s 6/30/2023 3/31/2023 6/30/2022 QoQ YoY Business $5,906,493 $5,704,467 $5,441,592 3.5% 8.5% Business $5,757,388 $5,656,104 $5,385,181 1.8% 6.9% Construction 1,451,783 1,437,419 1,266,260 1
Slide 9: Commercial Real Estate Breakdown
COMMERCIAL REAL ESTATE BREAKDOWN Real Estate - Business Loans: Office Outstanding Balances by Geography1 Other Real Estate - Business Loans Midwest Other States States Real Estate - % of Total Business Loans Loans $3.6 billion CO OH 7.6% 0.8% IL 5.0% Owner – Occupied 6.8% Owner- OK 2.4% 31.7% occupi
Slide 10: Income Statement Highlights
INCOME STATEMENT HIGHLIGHTS Pre-Tax, Pre-Provision Net Revenue (PPNR) Net Interest Income (+) 2Q23 Comparison Non-Interest Income (+) vs. 2Q22 7.1% Revenue was up 2.0% Non-Interest Expense (-) Pre-Tax, Pre-Provision Net Revenue (=) vs. 1Q23 2.7% over 1Q and up 6.8% over the same period $389 $398 $37
Slide 11: Income Statement
INCOME STATEMENT 2Q23 vs. 1Q23 2Q23 vs. 2Q22 $ in millions 2Q23 $ Change % Change $ Change % Change Net Interest Income $249.5 $(2.1) -1% $17.2 7% Non-Interest Income 147.6 10.0 7% 8.2 6% Non-Interest Expense 227.6 3.5 2% 14.1 7% Pre-Tax, Pre-Provision Net Revenue1 $169.5 $4.4 3% $11.2 7% Investment
Slide 12: Non-Interest Income Highlights
NON-INTEREST INCOME HIGHLIGHTS 2Q23 vs. 1Q23 2Q23 vs. 2Q22 $ in millions 2Q23 $ Change % Change $ Change % Change Bank Card : Corporate card fees Bank Card Transaction Fees $49.7 $3.1 7% 5.9 13% increased over prior year due to higher interchange fee Trust Fees 47.3 1.9 4% .5 1% income and lower rew
Slide 13: Non-Interest Expense Highlights
NON-INTEREST EXPENSE HIGHLIGHTS 2Q23 vs. 1Q23 2Q23 vs. 2Q22 Salaries and employee $ in millions 2Q23 $ Change % Change $ Change % Change benefits: Increased over prior year due to Salaries and Employee higher full-time salaries, partially Benefits $145.4 $1.1 1% 3.2 2% offset by lower incentive comp
Slide 14: Liquidity and Capital
LIQUIDITY AND CAPITAL 14
Slide 15: Liquidity and Capital Highlights
LIQUIDITY AND CAPITAL HIGHLIGHTS Liquidity / Borrowing Deposits • $2.6B of cash at Federal Reserve Bank (FRB) • Average loan to deposit ratio of 66%. at Q2. • Uninsured deposits1 of 32% of total deposits at Q2. • FHLB advances declined from $1.5B to $1.0B. • Added brokered deposits of $904MM to boos
Slide 16: Deposit Balance Trends
DEPOSIT BALANCE TRENDS Segment view $ in billions Commercial Consumer Wealth $13.4 $12.8 $12.5 $12.3 $12.7 $12.3 $12.0 $11.9 $11.3 $9.9 $10.3 $10.1 $10.3 $10.2 $9.5 $7.8 $3.0 $2.8 $2.3 $2.5 $2.4 $2.4 $2.3 $1.8 2019 2020 2021 2022 1Q23 2Q23 1Q23 2Q23 2019 2020 2021 2022 1Q23 2Q23 1Q23 2Q23 2019 2020
Slide 17: Deposit Portfolio Characteristics
DEPOSIT PORTFOLIO CHARACTERISTICS Percent of accounts under $250,000 99% Uninsured Deposit Analysis $ in billions 6/30/2023 Uninsured Deposits $ 10.4 Percent of deposits ($) uninsured1 32% Less: Affiliate Deposits $ 0.3 Less: Collateralized Deposits $ 1.9 Average balance of accounts $27,262 Uninsure
Slide 18: FHLB Advances & Brokered CDs by Maturity
FHLB ADVANCES & BROKERED CDS BY MATURITY $1,003MM • Short-term, wholesale Brokered CDs $901MM funding added FHLB Advance providing ample $503MM $401MM liquidity cushion • FHLB advances and brokered CDs mature by December 31, 2023 $500MM $500MM Weighted 3Q23 4Q23 average rate 5.21% 5.21% 18
Slide 19: Well-Positioned for Multiple Rate Environments
WELL-POSITIONED FOR MULTIPLE RATE ENVIRONMENTS Opportunities to enhance and protect NII in a Cost of Total Deposits & Deposit Beta: Prior & Current Fed Cycle rising rate environment. Cost of Total Deposits • Net yield on interest earning assets decreased 14 Before Fed Rate End of Fed Rate Deposit bp
Slide 20: High Quality, Highly Liquid and Diverse Investment Portfolio
HIGH QUALITY, HIGHLY LIQUID AND DIVERSE INVESTMENT PORTFOLIO Composition of AFS Portfolio As of June 30, 2023 Total available for sale securities Average balance: $11.0 billion, at fair value Duration QTD – June 30, 2023 Avg Rate (yrs) Treasury & agency Treasury & agency1 1.22% 2.0 4% 9% Municipal 2
Slide 21: Sound Capital and Liquidity Position
SOUND CAPITAL AND LIQUIDITY POSITION Tier 1 Risk-Based Capital Ratio1 Loan to Deposit Ratio Peer Median: 11.1% Large, stable deposit base PB 15.6% CBSH 14.5% CFR 13.7% Core Deposits 66% Average Loan to Deposit Ratio 3 UCBI 12.6% 12.5% $22.6 Commerce 82% Average UBSI Loan to BOKF 12.2% Billion2 Depos
Slide 22: Maintaining Strong Credit Quality
MAINTAINING STRONG CREDIT QUALITY Net Loan Charge-Offs (NCOs) Allowance for Credit $ in millions Losses on Loans (ACL) $ in millions $6.8 $6.5 $256.0 $280.5 $6.1 $4.0 $138.0 $159.3 $158.7 1.17% 1.17% .10% $2.2 .17% .10% .16% .96% .94% .04% .88% 2Q22 1Q23 2Q23 2Q22 1Q23 2Q23 NCOs- CBSH NCO/Average Lo
Slide 23: Allocation of Allowance
ALLOCATION OF ALLOWANCE CECL allowances reflect the economic and market outlook Allowance for Credit Losses (ACL) on Loans March 31, 2023 June 30, 2023 $ in millions Allowance Allowance $250 1.47% 1.60% 1.44% for Credit % of for Credit % of Losses Outstanding Losses Outstanding 1.35% $ in millions (
Slide 24: Non-GAAP Reconciliations
NON-GAAP RECONCILIATIONS Pre-tax, Pre-provision Net Revenue For The Three Months Ended (DOLLARS IN THOUSANDS) Jun. 30, 2023 Mar. 31, 2023 Jun. 30, 2022 A Net Interest Income $ 249,538 $ 251,623 $ 232,385 B Non-Interest Income $ 147,605 $ 137,612 $ 139,427 C Non-Interest Expense $ 227,611 $ 224,107 $
Slide 25: Commerce Bancshares, Inc.
] Commerce Bancshares, Inc.