Commerce Bancshares, Inc. · NASDAQ:CBSH
Commerce Bancshares — Q3 2023 Earnings Presentation
25 slides from Commerce Bancshares's earnings presentation, 2023
Slide 1: Earnings Highlights 3rd Quarter 2023
PEOPLE, GROWTH AND POSSIBILITIES COMMERCE BANCSHARES, INC. EARNINGS HIGHLIGHTS 3rd 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 $31.4 158 YEARS IN BUSINESS BILLION TOTAL DEPOSITS $25.1 BILLION 40TH LARGEST U.S. BANK BASED ON ASSET SIZE1 MARKET CAP TOTAL $17.1 LOANS2 BILLION $6.0 BILLION $10.4 COMMERCIAL CARD VOLUME 20TH 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 $23.3 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: 3Q2023 Highlights
3Q2023 HIGHLIGHTS Highlights Well-positioned for current environment PPNR1 • Average loans up 1.8% over Q2. $163.5 million • Total average assets declined $755MM from Q2, driven by Net Income $1B of wholesale funding maturities. $120.6 million • Period end non-interest bearing deposits to total depo
Slide 6: Balance Sheet Highlights
BALANCE SHEET HIGHLIGHTS Quarterly Average Balances 3Q23 vs. 2Q23 3Q23 vs. 3Q22 $ in millions 3Q23 $ Change % Change $ Change % Change Loans: Quarterly growth in all categories. Commercial $11,000.1 $251.7 2% $1,135.5 12% Consumer 5,968.2 1% 186.8 3% Investment securities: 47.6 Continues to decline.
Slide 7: Balance Sheet
BALANCE SHEET Loans Deposits QTD Average Balances QTD Average Balances $ billions $ billions +8% -8% $27.8 $25.2 $25.6 6.02% 5.84% $10.8 $7.9 $8.2 $16.7 $17.0 $15.6 1.76% $5.9 $6.0 $5.8 1.29% 4.37% $17.0 $17.0 $17.7 $9.8 $10.8 $11.0 .21% 3Q22 2Q23 3Q23 3Q22 2Q23 3Q23 Consumer Loans Loan Yield Non-In
Slide 8: Loan Portfolio
LOAN PORTFOLIO Period-End Balances QTD Average Balances $ in 000s 9/30/2023 6/30/2023 9/30/2022 QoQ YoY $ in 000s 9/30/2023 6/30/2023 9/30/2022 QoQ YoY Business $5,908,330 $5,906,493 $5,528,895 0.0% 6.9% Business $5,849,227 $5,757,388 $5,317,696 1.6% 10.0% Construction 1,539,566 1,451,783 1,206,955
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 7.3% 0.8% IL 4.9% Owner – Occupied 6.6% Owner- OK 31.0% occupied 2.
Slide 10: Income Statement Highlights
INCOME STATEMENT HIGHLIGHTS Pre-Tax, Pre-Provision Net Revenue (PPNR) Net Interest Income (+) 3Q23 Comparison Non-Interest Income (+) vs. 3Q22 (5.0)% Revenue was down Non-Interest Expense (-) Pre-Tax, Pre-Provision Net Revenue (=) vs. 2Q23 (3.6)% 1.4% from 2Q and up 1.7% over the same $398 $391 $385
Slide 11: Income Statement
INCOME STATEMENT 3Q23 vs. 2Q23 3Q23 vs. 3Q22 $ in millions 3Q23 $ Change % Change $ Change % Change Net Interest Income $248.5 $(1.0) (0)% $2.2 1% Non-Interest Income 142.9 (4.7) (3)% 4.4 3% Non-Interest Expense 228.0 .4 0% 15.1 7% Pre-Tax, Pre-Provision Net Revenue1 $163.4 $(6.0) (4)% $(8.5) (5)% I
Slide 12: Non-Interest Income Highlights
NON-INTEREST INCOME HIGHLIGHTS 3Q23 vs. 2Q23 3Q23 vs. 3Q22 Bank Card: Corporate card fees $ in millions 3Q23 $ Change % Change $ Change % Change decreased from Q2 due to lower interchange fees and Bank Card Transaction Fees $46.9 $(2.8) (6)% $1.3 3% higher rewards expense. Trust Fees 49.2 1.9 4% 3.8
Slide 13: Non-Interest Expense Highlights
NON-INTEREST EXPENSE HIGHLIGHTS 3Q23 vs. 2Q23 3Q23 vs. 3Q22 $ in millions 3Q23 $ Change % Change $ Change % Change Salaries and employee Salaries and Employee Benefits $146.8 $1.4 1% $9.4 7% benefits: Increased over the prior year Net Occupancy 13.9 1.0 7% 1.4 11% due to higher full-time salaries an
Slide 14: Liquidity and Capital
LIQUIDITY AND CAPITAL 14
Slide 15: Liquidity and Capital Highlights
LIQUIDITY AND CAPITAL HIGHLIGHTS Liquidity / Borrowing Deposits • $1.8B of cash at Federal Reserve Bank (FRB) • Average loan to deposit ratio of 66%. at Q3. • Uninsured deposits1 of 32% of total deposits at Q3. • Average FHLB advances declined $932MM. • Brokered deposits of $503MM matured in Q3 • AF
Slide 16: Deposit Balance Trends
DEPOSIT BALANCE TRENDS Segment view $ in billions Commercial Consumer Wealth $13.4 $12.8 $12.0 $11.9 $12.3 $12.1 $12.3 $12.3 $11.3 $10.5 $10.3 $10.2 $9.9 $10.1 $10.0 $7.8 $3.0 $2.8 $2.3 $2.4 $2.3 $2.3 $2.3 $1.8 2019 2020 2021 2022 2Q23 3Q23 2Q23 3Q23 2019 2020 2021 2022 2Q23 3Q23 2Q23 3Q23 2019 2020
Slide 17: Deposit Portfolio Characteristics
DEPOSIT PORTFOLIO CHARACTERISTICS Percent of accounts under $250,000 99% Uninsured Deposit Analysis $ in billions 9/30/2023 Uninsured Deposits $ 10.2 Percent of deposits ($) uninsured1 32% Less: Affiliate Deposits $ 0.4 Less: Collateralized Deposits $ 1.7 Average balance of accounts $25,479 Uninsure
Slide 18: FHLB Advances & Brokered CDs
FHLB ADVANCES & BROKERED CDS Current Maturity Schedule as of 9/30/2023 Brokered CDs FHLB Advance • Short-term, wholesale $1,904MM funding decreased as short-term brokered $904MM CDs and FHLB advances matured $901MM $401MM • Remaining FHLB $1,000MM advances and $500MM brokered CDs mature $0MM by Dece
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 1 bps Before Fed Rate End of Fed Rate Deposit
Slide 20: High Quality, Highly Liquid and Diverse Investment Portfolio
HIGH QUALITY, HIGHLY LIQUID AND DIVERSE INVESTMENT PORTFOLIO Composition of AFS Portfolio As of September 30, 2023 Total available for sale securities Average balance: $10.2 billion, at fair value Duration QTD – Sept. 30, 2023 Avg Rate (yrs) Treasury & agency Treasury & agency1 1.04% 2.0 4% 9% Munic
Slide 21: Sound Capital and Liquidity Position
SOUND CAPITAL AND LIQUIDITY POSITION Tier 1 Risk-Based Capital Ratio1 Loan to Deposit Ratio Peer Median: 11.0% Large, stable deposit base CBSH 14.7% 14.5% 66% Average PB Core Deposits Loan to CFR 13.9% Deposit Ratio 3 UBSI 12.8% 12.7% $22.1 84% Average UCBI Loan to BOKF 12.1% Billion2 Deposit Ratio
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 $298.0 $8.2 $260.6 $6.5 $4.8 $143.4 $158.7 1.21% $162.2 .23% 1.15% $3.4 .16% .14% .12% .95% .90% .94% .06% 3Q22 2Q23 3Q23 3Q22 2Q23 3Q23 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 June 30, 2023 Sept. 30, 2023 $ in millions $250 1.47% 1.60% 1.44% Allowance Allowance 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) Sep. 30, 2023 Jun. 30, 2023 Sep. 30, 2022 A Net Interest Income $ 248,547 $ 249,538 $ 246,373 B Non-Interest Income $ 142,949 $ 147,605 $ 138,514 C Non-Interest Expense $ 228,010 $ 227,611 $
Slide 25: Commerce Bancshares, Inc.
] Commerce Bancshares, Inc.