Commerce Bancshares, Inc. · NASDAQ:CBSH
Commerce Bancshares — Q2 2024 Earnings Presentation
26 slides from Commerce Bancshares's earnings presentation, 2024
Slide 1: Commerce Bancshares, Inc. Earnings Highlights 2nd Quarter 2024
COMMERCE BANCSHARES, INC. EARNINGS HIGHLIGHTS 2nd Quarter 2024
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 $30.6 158 YEARS IN BUSINESS BILLION TOTAL DEPOSITS $24.3 BILLION 41st LARGEST U.S. BANK BASED ON ASSET SIZE2 MARKET CAP TOTAL $17.2 LOANS3 BILLION $7.2 BILLION $9.9 COMMERCIAL CARD VOLUME 21st BILLION AS OF DECEMBER 31, 2023 LARGEST U.S. BANK BASED ON MARKET CAP2 TOT
Slide 4: Track Record of Long-Term Outperformance
TRACK RECORD OF LONG-TERM OUTPERFORMANCE Revenue Diversification Deposit Franchise Balanced earnings profile, fee revenue $22.9 billion in low-cost, diverse at 37%1 of total revenue, bolstered by deposits2 with peer-leading growing wealth and national payments historical deposit betas businesses Cre
Slide 5: 2Q2024 Highlights
2Q2024 HIGHLIGHTS Highlights Well-positioned for current environment PPNR1 • Net interest income increased 5% over Q1 to $262MM. $182.3 million • Net interest margin expanded 22 bps over Q1 to 3.55%. Net Income • Total cost of deposits increased 2 bps to 1.40%, compared to an increase $139.6 million
Slide 6: Balance Sheet Highlights
BALANCE SHEET HIGHLIGHTS Quarterly Average Balances 2Q24 vs. 1Q24 2Q24 vs. 2Q23 2Q24 Average Loans: 3% growth $ in millions $ Change % Change $ Change % Change over the prior year. Commercial $11,117.9 $44.2 0% $369.5 3% Investment securities: Providing liquidity through Consumer 6,056.5 50.2 1% 135
Slide 7: Balance Sheet
BALANCE SHEET Loans Deposits QTD Average Balances QTD Average Balances $ billions $ billions +3% 6.27% 6.30% -4% $25.2 $24.4 $24.3 5.84% $8.2 $7.3 $7.3 $16.7 $17.1 $17.2 $5.9 $6.0 $6.1 1.97% 1.99% $17.0 1.29% $17.1 $17.0 $10.8 $11.1 $11.1 2Q23 1Q24 2Q24 2Q23 1Q24 2Q24 Consumer Loans Loan Yield1 Non-
Slide 8: Loan Portfolio
LOAN PORTFOLIO Period-End Balances QTD Average Balances $ in 000s 6/30/2024 3/31/2024 6/30/2023 QoQ YoY $ in 000s 6/30/2024 3/31/2024 6/30/2023 QoQ YoY Business $6,090,724 $5,994,974 $5,906,493 1.6% 3.1% Business $5,980,364 $5,873,525 $5,757,388 1.8% 3.9% Construction 1,396,515 1,497,647 1,451,783 -
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 6.8% 0.7% IL 4.7% Owner- 2.3% Owner – Occupied 6.9% 33.1% occupied
Slide 10: Income Statement Highlights
INCOME STATEMENT HIGHLIGHTS Pre-Tax, Pre-Provision Net Revenue (PPNR) $ in millions Net Interest Income (+) 2Q24 Comparison Non-Interest Income (+) vs. 2Q23 7.5% Non-Interest Expense (-) vs. 1Q24 19.8% Pre-Tax, Pre-Provision Net Revenue (=) $414 Revenue was increased $398 $398 4.2% over Q1 and incre
Slide 11: Income Statement Highlights
INCOME STATEMENT HIGHLIGHTS 2Q24 vs. 1Q24 2Q24 vs. 2Q23 $ in millions 2Q24 $ Change % Change $ Change % Change Net Interest Income $262.3 $13.3 5% $12.7 5% Non-Interest Income $152.2 $3.4 2% $4.6 3% Non-Interest Expense $232.2 $-13.5 -5% $4.6 2% Pre-Tax, Pre-Provision Net Revenue1 $182.3 $30.1 20% $
Slide 12: Non-Interest Income Highlights
NON-INTEREST INCOME HIGHLIGHTS 2Q24 vs. 1Q24 2Q24 vs. 2Q23 $ in millions 2Q24 $ Change % Change $ Change % Change Bank Card Transaction Fees $47.5 $.5 1% $-2.3 -5% Bank Card Fees: Decrease from the prior Trust Fees 52.3 1.2 2% 5.0 11% year was due to lower corporate card fees. Deposit Account Charge
Slide 13: Non-Interest Expense Highlights
NON-INTEREST EXPENSE HIGHLIGHTS 2Q24 vs. 1Q24 2Q24 vs. 2Q23 Total non-interest expense: Flat over the prior year excluding $ in millions 2Q24 $ Change % Change $ Change % Change a one-time $5MM contribution to Salaries and Employee the Commerce Bancshares $149.1 $-2.7 -2% $3.7 3% Foundation. Benefit
Slide 14: Liquidity and Capital
LIQUIDITY AND CAPITAL 14
Slide 15: Visa Stock & Securities Portfolio Repositioning Update
VISA STOCK & SECURITIES PORTFOLIO REPOSITIONING UPDATE Period-End Balances 2Q24 vs. 1Q24 • $177.0 million gain related to Visa shares. 1Q24 2Q24 $ in millions $ Change • Sold two thirds of Visa Class C shares (converted to Class A) resulting in proceeds of U.S. government and $828 $1,717 $889 federa
Slide 16: Liquidity and Capital Highlights
LIQUIDITY AND CAPITAL HIGHLIGHTS Liquidity Balance Sheet / Deposits • $2.2B in cash at Federal Reserve Bank (FRB) • QTD Average loan to deposit ratio of 71%. at Q2. • Optimizing sources and uses of funding, allowing high cost • AFS debt securities portfolio duration of CDs to mature. 4.0 years. • To
Slide 17: Deposit Balance Trends
DEPOSIT BALANCE TRENDS Segment view $ in billions Commercial Consumer Wealth $13.4 $12.8 $12.1 $12.2 $12.4 $12.4 $12.6 $12.5 $12.0 $11.9 $11.3 $10.6 $10.4 $9.9 $9.9 $9.5 $9.3 $9.4 $3.0 $2.8 $2.3 $2.3 $2.4 $2.4 $2.5 $2.4 $2.3 2020 2021 2022 4Q23 1Q24 2Q24 4Q23 1Q24 2Q24 2020 2021 2022 4Q23 1Q24 2Q24
Slide 18: Well-Positioned for Multiple Rate Environments
WELL-POSITIONED FOR MULTIPLE RATE ENVIRONMENTS Opportunities to enhance and protect NII. Cost of Total Deposits & Deposit Beta • Net yield on interest earning assets increased 22 Cost of Total Deposits bps over Q1 to 3.55%. Before Fed Rate End of Fed Rate Deposit • Loan yield increased 3 bps over Q1
Slide 19: Summary of Fixed & Floating Loans
SUMMARY OF FIXED & FLOATING LOANS Over 57% of total loans are variable; 65% of commercial loans have floating rates Fixed Variable Business Construction Business RE Commercial Total Loans: $6.0B Total Loans: $1.4B Total Loans: $3.7B 3% 40% 41% 60% 59% 97% Personal RE Consumer HELOC Consumer Card Tot
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, 2024 Total available for sale securities Average balance: $8.8 billion, at fair value Duration QTD – June 30, 2024 Avg Rate (yrs) Treasury & agency Treasury & agency1 2.74% 3.0 4% 13% 18% Municip
Slide 21: Sound Capital and Liquidity Position
SOUND CAPITAL AND LIQUIDITY POSITION Tier 1 Risk-Based Capital Ratio1 Loan to Deposit Ratio PB Peer Median: 12.0% Large, stable deposit base 15.8% 71% Average CBSH 15.4% Core Deposits Loan to HOMB 14.3% Deposit Ratio 3 CFR 13.9% $21.9 Commerce 84% UBSI 13.2% Average Loan to UCBI 12.8% 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 $9.8 $297.1 $315.8 $8.9 $9.2 $6.5 $7.5 $158.7 1.27% $160.5 1.31% $158.6 .21% .23% .16% .13% .15% .94% .93% .92% 2Q23 1Q24 2Q24 2Q23 1Q24 2Q24 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, 2024 June 30, 2024 $ in millions $225 1.40% Allowance for % of Allowance for % of Credit Losses Outstanding Credit Losses Outstanding $ in millions (ACL) Loans (ACL) L
Slide 24: Capital for Business
CAPITAL FOR BUSINESS® A middle-market private equity firm focused on the success of industrial growth companies Transaction Types Quick Facts: Investment Criteria Management buyouts Leveraged buyouts • Manufacturing, distribution and Succession plans Small Business Investment certain service compani
Slide 25: Non-GAAP Reconciliations
NON-GAAP RECONCILIATIONS Pre-tax, Pre-provision Net Revenue For The Three Months Ended (DOLLARS IN THOUSANDS) June 30, 2024 Mar. 31, 2024 June 30, 2023 A Net Interest Income $ 262,249 $ 248,999 $ 249,538 B Non-Interest Income $ 152,244 $ 148,848 $ 147,605 C Non-Interest Expense $ 232,214 $ 245,697 $
Slide 26: Commerce Bancshares, Inc.
] Commerce Bancshares, Inc.