Commerce Bancshares, Inc. · NASDAQ:CBSH
Commerce Bancshares — Q4 2023 Earnings Presentation
26 slides from Commerce Bancshares's earnings presentation, Jan 18, 2024
Slide 1: Earnings Highlights 4th Quarter 2023
COMMERCE BANCSHARES, INC. EARNINGS HIGHLIGHTS 4th Quarter 2023 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 FULL-SERVICE BANKING FOOTPRINT 141 full-service branches and 272 ATMs St. Louis Kansas City Springfield Central Missouri Central Illinois Wichita Tulsa Oklahoma City Denver COMMERCIAL OFFICES Cincinnati Nashville Dallas Des Moines Indiana
Slide 4: Track Record of Long-Term Outperformance
4 TRACK RECORD OF LONG-TERM OUTPERFORMANCE Revenue Diversification Balanced earnings profile, fee revenue at 36%1 of total revenue, bolstered by growing wealth and national payments businesses Deposit Franchise $23.4 billion in low-cost, diverse deposits2 with peer-leading historical deposit betas C
Slide 5: 4Q2023 Highlights
$.84 EPS 5 • Net interest income flat to Q3 at $248MM. • Net interest margin increased 6 bps from Q3 to 3.17%. • Total cost of deposits increased 13 bps to 1.34%, compared to an increase of 34 bps in Q3. • Non-interest expense includes a $16MM one-time FDIC special assessment2. • Total average asset
Slide 6: Balance Sheet Highlights
Quarterly Average Balances 4Q23 vs. 3Q23 4Q23 vs. 4Q22 $ in millions 4Q23 $ Change % Change $ Change % Change Commercial $11,029.5 $29.4 0% $981.7 10% Consumer 6,028.6 60.4 1% 191.4 3% Total Loans $17,058.1 $89.8 1% $1,173.1 7% Investment Securities $9,843.0 $(646.8) (6)% $(2,832.4) (22)% Interest E
Slide 7: Balance Sheet
$16.2 $17.5 $10.4 $7.9 $7.7 4Q22 $17.7 3Q23 4Q23 $26.6 $25.6 $25.2 -5% $10.1 $11.0 $11.0 $5.8 $6.0 $6.1 4Q22 3Q23 4Q23 $15.9 $17.0 $17.1 BALANCE SHEET 7 Loans Consumer Loans Commercial Loans Loan Yield Deposits QTD Average Balances $ billions Non-Interest Bearing Interest-Bearing Deposits Interest-B
Slide 8: Loan Portfolio
LOAN PORTFOLIO 8 $ in 000s 12/31/2023 9/30/2023 12/31/2022 QoQ YoY Business $6,019,036 $5,908,330 $5,661,725 1.9% 6.3% Construction 1,446,764 1,539,566 1,361,095 -6.0% 6.3% Business Real Estate 3,719,306 3,647,168 3,406,981 2.0% 9.2% Personal Real Estate 3,026,041 3,024,639 2,918,078 .0% 3.7% Consum
Slide 9: Commercial Real Estate Breakdown
Real Estate - Business Loans: Office Outstanding Balances by Geography1 Real Estate - Business Loans % of Total Loans Owner – Occupied 6.8% Industrial 3.7% Office 2.8% Retail 2.1% Hotels 1.7% Multi-family 1.5% Farm 1.1% Senior living 1.1% Other .8% Total 21.6% COMMERCIAL REAL ESTATE BREAKDOWN 9 31.6
Slide 10: Income Statement Highlights
10 INCOME STATEMENT HIGHLIGHTS $137 $175 $255 $217 4Q22 $391 $143 $163 $248 $228 3Q23 $391 $145 $142 $248 $235 4Q23 $393 Non-Interest Income (+) Net Interest Income (+) Non-Interest Expense (-) Pre-Tax, Pre-Provision Net Revenue (=) 4Q23 Comparison vs. 4Q22 (18.7)% vs. 3Q23 (13.1)% Pre-Tax, Pre-Prov
Slide 11: Income Statement
4Q23 vs. 3Q23 4Q23 vs. 4Q22 $ in millions 4Q23 $ Change % Change $ Change % Change Net Interest Income $248.4 $(0.1) (0)% $(6.2 ) (2)% Non-Interest Income 144.9 1.9 1% 8.1 6% Non-Interest Expense 251.3 23.2 10% 34.5 16% Pre-Tax, Pre-Provision Net Revenue1 $142.0 $(21.4) (13)% $(32.7) (19)% Investmen
Slide 12: Non-Interest Income Highlights
NON-INTEREST INCOME HIGHLIGHTS 12 4Q23 vs. 3Q23 4Q23 vs. 4Q22 $ in millions 4Q23 $ Change % Change $ Change % Change Bank Card Transaction Fees $47.9 $1.0 2% $3.3 7% Trust Fees 49.2 (.1) 0% 4.4 10% Deposit Account Charges and Other Fees 23.5 .4 2% 1.5 7% Capital Market Fees 4.3 .7 21% .9 26% Consume
Slide 13: Non-Interest Expense Highlights
NON-INTEREST EXPENSE HIGHLIGHTS 13 4Q23 vs. 3Q23 4Q23 vs. 4Q22 $ in millions 4Q23 $ Change % Change $ Change % Change Salaries and Employee Benefits $147.5 $.7 0% $9.0 6% Net Occupancy 13.9 (.0) (0)% 2.2 18% Deposit Insurance 20.3 16.3 404% 17.2 544% Equipment 5.1 .4 9% .1 2% Supplies and Communicat
Slide 14: Liquidity and Capital
LIQUIDITY AND CAPITAL & commerce Bancshares, Inc.
Slide 15: Liquidity and Capital Highlights
LIQUIDITY AND CAPITAL HIGHLIGHTS 15 • $2.2B of cash at Federal Reserve Bank (FRB) at Q4. • Final FHLB advances matured as planned. • AFS debt securities portfolio duration of 4.1 years. • Cash flows from maturities and paydowns of investments and resale agreements of approximately $2.1B expected ove
Slide 16: Deposit Balance Trends
2019 2020 2021 2022 3Q23 4Q23 $1.8 $2.3 $3.0 $2.8 $2.3 $2.3 3Q23 4Q23 $2.3 $2.5 DEPOSIT BALANCE TRENDS Segment view $ in billions 16 2019 2020 2021 2022 3Q23 4Q23 $7.8 $9.9 $12.0 $11.9 $10.5 $10.6 2019 2020 2021 2022 3Q23 4Q23 $10.2 $11.3 $12.8 $13.4 $12.1 $12.1 Commercial Consumer Wealth Average Ba
Slide 17: Deposit Portfolio Characteristics
DEPOSIT PORTFOLIO CHARACTERISTICS 17 Percent of accounts under $250,000 Percent of deposits ($) uninsured1 Average balance of accounts <$250,000 Average balance of accounts 99% 35% $13,404 $25,902 Uninsured Deposit Analysis $ in billions 12/31/2023 Uninsured Deposits $ 10.8 Less: Affiliate Deposits
Slide 18: 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 19: 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 20: High Quality, Highly Liquid and Diverse Investment Portfolio
8% 12% 54% 21% 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 QTD – Dec. 31, 2023 Avg Rate Duration (yrs) Treasury & agency1 1.12% 2.0
Slide 21: Sound Capital and Liquidity Position
Average Loan to Deposit Ratio3 SOUND CAPITAL AND LIQUIDITY POSITION 21 Tier 1 Risk-Based Capital Ratio1 1S&P Global Market Intelligence, Information as of September 30, 2023 2Period-end balances, as of December 31, 2023 3Includes loans held for sale, for the quarter ended December 31, 2023 15.1% 15.
Slide 22: Maintaining Strong Credit Quality
$5.6 $9.8 $8.0 $4.5 $14.5 4Q22 3Q23 4Q23 MAINTAINING STRONG CREDIT QUALITY 22 Net Loan Charge-Offs (NCOs) $ in millions NCOs- CBSH NCOs - Peer Average NCO/Average Loans1 - CBSH $150.1 $162.2 $162.4 $269.8 $304.6 4Q22 3Q23 4Q23 Allowance for Credit Losses on Loans (ACL) $ in millions ACL - CBSH ACL -
Slide 23: Allocation of Allowance
ALLOCATION OF ALLOWANCE 23 CECL allowances reflect the economic and market outlook Sept. 30, 2023 Dec. 31, 2023 $ in millions Allowance for Credit Losses (ACL) % of Outstanding Loans Allowance for Credit Losses (ACL) % of Outstanding Loans Business $ 48.0 .81% $ 47.1 .78% Bus R/E 30.2 .83% 29.7 .80%
Slide 24: 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 $885.8 million in Revenue Over 3,100 Employees Fair Value as of December 31, 2023: $176.7 million Investment Criteria • Manufacturing, distributio
Slide 25: Non-GAAP Reconciliations
NON-GAAP RECONCILIATIONS 25 For The Three Months Ended (DOLLARS IN THOUSANDS) Dec. 31, 2023 Sep. 30, 2023 Dec. 31, 2022 A Net Interest Income $ 248,421 $ 248,547 $ 254,641 B Non-Interest Income $ 144,879 $ 142,949 $ 136,825 C Non-Interest Expense $ 251,254 $ 228,010 $ 216,740 Pre-Provision Net Reven
Slide 26: {37 Commerce Bancshares, Inc.
\ {37 Commerce Bancshares, Inc.