CBSH 8-K
Commerce Bancshares Inc /Mo/ (CBSH)
8-K
2023-04-18
For: 2023-04-18
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Added on
April 11, 2026
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
__________________________
Form 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): April 18, 2023
(Exact name of registrant as specified in its charter)
| (State of Incorporation) | (Commission File Number) | (IRS Employer Identification No.) | ||||||||||||
| (Address of principal executive offices) | (Zip Code) | ||||||||||
(816 ) 234-2000
(Registrant’s telephone number, including area code)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| Securities registered pursuant to Section 12(b) of the Act: | ||||||||
| Title of class | Trading symbol(s) | Name of exchange on which registered | ||||||
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 or Rule 12b-2 of the Securities Exchange Act of 1934.
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 2.02 Results of Operations and Financial Condition
A copy of the press release issued April 18, 2023 by Commerce Bancshares, Inc. announcing First Quarter 2023 earnings is furnished under Item 2.02 of this Current Report on Form 8-K as Exhibit 99.1. Additionally, a slide presentation for investors and analysts is being furnished as Exhibit 99.2 to this Current Report on Form 8-K.
The information in this Current Report on Form 8-K, including the exhibits, is furnished pursuant to Item 2.02 and shall not be deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities under that Section. Furthermore, the information in this Current Report on Form 8-K, including the exhibits, shall not be deemed to be incorporated by reference into the filings of Commerce Bancshares, Inc. under the Securities Act of 1933, as amended.
All information included in this Current Report on Form 8-K is available on the Company’s website at https://investor.commercebank.com/news-info/financial-news-releases/default.aspx.
Item 9.01 Financial Statements and Exhibits
Exhibits
104 The XBRL tags on the cover page of this Form 8-K are embedded within the Inline XBRL document.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| COMMERCE BANCSHARES, INC. | |||||||||||
| By: | /s/ Paul A. Steiner | ||||||||||
| Paul A. Steiner | |||||||||||
Controller (Chief Accounting Officer) | |||||||||||
Date: April 18, 2023
Exhibit 99.1
Exhibit 99.1
 | CBSH | ||||
1000 Walnut Street / Suite 700 / Kansas City, Missouri 64106 / 816.234.2000 | |||||
FOR IMMEDIATE RELEASE:
Tuesday, April 18, 2023
COMMERCE BANCSHARES, INC. REPORTS
FIRST QUARTER EARNINGS PER SHARE OF $.95
Commerce Bancshares, Inc. announced earnings of $.95 per share for the three months ended March 31, 2023, compared to $.92 per share in the same quarter last year and $1.05 per share in the fourth quarter of 2022. Net income for the first quarter of 2023 amounted to $119.5 million, compared to $118.2 million in the first quarter of 2022 and $131.6 million in the prior quarter.
“Our first quarter results are the product of the consistent and conservative business model that Commerce has executed for nearly 160 years,” said John Kemper, President and Chief Executive Officer.
On deposit balances, Kemper added, “We saw normal seasonal deposit outflows in January, but experienced minimal flows throughout the remainder of the quarter, reflecting the strength and diversity of our deposit portfolio.
“Although disruption from recent bank failures may be felt across the industry for a period of time, we see this as a moment for our franchise to differentiate itself as a safe haven, and bring peace of mind to customers who put a lot of trust in Commerce and in the banking system.”
“Our stakeholders can rest assured that we have ample liquidity and capital to weather any events to come, and we are well-positioned to accommodate our customers’ lending, deposit, and service needs.”
First Quarter 2023 Financial Highlights:
•Net interest income was $251.6 million, a $3.0 million decrease from the prior quarter. The net yield on interest earning assets increased 8 basis points to 3.26%.
•Non-interest income totaled $137.6 million, an increase of $5.8 million compared to the same quarter last year.
•Net securities losses of $306 thousand compared to net gains of $8.9 million in the prior quarter.
•Non-interest expense totaled $224.1 million, an increase of $18.5 million compared to the same quarter last year.
•Average loan balances totaled $16.4 billion, an increase of $518.9 million, or 3.3%, over the prior quarter.
1
Exhibit 99.1
•Total average available for sale debt securities decreased 4.8%, or $591.1 million, from the prior quarter to $11.8 billion, at fair value. During the first quarter of 2023, the unrealized loss on available for sale securities decreased $190.0 million to $1.3 billion, at period end.
•Average deposits declined $1.4 billion, or 5.1%, from the prior quarter. The average rate paid on interest bearing deposits was .71%.
•The ratio of annualized net loan charge-offs to average loans was .17% compared to .14% in the prior quarter.
•Non-accrual loans totaled $7.8 million compared to $8.3 million in the prior quarter. Non-accrual loans were .05% of total loans.
•The allowance for credit losses on loans increased $9.2 million during the first quarter to $159.3 million, and at March 31, 2023, the ratio of the allowance for credit losses on loans to total loans was .96%, compared to .92% at December 31, 2022.
•The Company purchased 547,381 shares of its common stock this quarter at an average price of $65.93.
•Total assets at March 31, 2023 were $32.0 billion, an increase of $128.9 million, or .4%, over the prior quarter.
•For the quarter, the return on average assets was 1.54%, the return on average equity was 18.75%, and the efficiency ratio was 57.5%.
Commerce Bancshares, Inc. is a regional bank holding company offering a full line of banking services through its subsidiaries, including payment solutions, investment management and securities brokerage. One of its subsidiaries, Commerce Bank, leverages nearly 160 years of proven strength and experience to help individuals and businesses solve financial challenges. In addition to offering payment solutions across the U.S., Commerce Bank currently operates full-service banking facilities across the Midwest including the St. Louis and Kansas City metropolitan areas, Springfield, Central Missouri, Central Illinois, Wichita, Tulsa, Oklahoma City, and Denver. It also maintains commercial offices in Dallas, Houston, Cincinnati, Nashville, Des Moines, Indianapolis, and Grand Rapids. Commerce delivers high-touch service and sophisticated financial solutions at regional branches, commercial offices, ATMs, online, mobile and through a 24/7 customer service line.
This financial news release and the supplementary Earnings Highlights presentation are available on the Company’s website at https://investor.commercebank.com/news-info/financial-news-releases/default.aspx.
* * * * * * * * * * * * * * *
For additional information, contact
Matt Burkemper, Investor Relations
(314) 746-7485
www.commercebank.com
2
Exhibit 99.1
COMMERCE BANCSHARES, INC. and SUBSIDIARIES
FINANCIAL HIGHLIGHTS
| For the Three Months Ended | ||||||||||||||
| (Unaudited) (Dollars in thousands, except per share data) | Mar. 31, 2023 | Dec. 31, 2022 | Mar. 31, 2022 | |||||||||||
| FINANCIAL SUMMARY | ||||||||||||||
| Net interest income | $251,623 | $254,641 | $208,786 | |||||||||||
| Non-interest income | 137,612 | 136,825 | 131,769 | |||||||||||
| Total revenue | 389,235 | 391,466 | 340,555 | |||||||||||
| Investment securities gains (losses) | (306) | 8,904 | 7,163 | |||||||||||
| Provision for credit losses | 11,456 | 15,477 | (9,858) | |||||||||||
| Non-interest expense | 224,107 | 216,740 | 205,648 | |||||||||||
| Income before taxes | 153,366 | 168,153 | 151,928 | |||||||||||
| Income taxes | 32,813 | 34,499 | 31,902 | |||||||||||
| Non-controlling interest expense (income) | 1,101 | 2,026 | 1,872 | |||||||||||
| Net income attributable to Commerce Bancshares, Inc. | $119,452 | $131,628 | $118,154 | |||||||||||
| Earnings per common share: | ||||||||||||||
| Net income — basic | $0.95 | $1.05 | $0.92 | |||||||||||
| Net income — diluted | $0.95 | $1.04 | $0.92 | |||||||||||
| Effective tax rate | 21.55 | % | 20.77 | % | 21.26 | % | ||||||||
| Fully-taxable equivalent net interest income | $253,411 | $256,675 | $211,393 | |||||||||||
Average total interest earning assets (1) | $31,568,594 | $31,991,224 | $34,937,086 | |||||||||||
| Diluted wtd. average shares outstanding | 124,258,981 | 124,589,323 | 126,646,900 | |||||||||||
| RATIOS | ||||||||||||||
Average loans to deposits (2) | 64.99 | % | 59.73 | % | 51.90 | % | ||||||||
| Return on total average assets | 1.54 | 1.65 | 1.33 | |||||||||||
Return on average equity (3) | 18.75 | 21.88 | 14.41 | |||||||||||
| Non-interest income to total revenue | 35.35 | 34.95 | 38.69 | |||||||||||
Efficiency ratio (4) | 57.49 | 55.26 | 60.29 | |||||||||||
| Net yield on interest earning assets | 3.26 | 3.18 | 2.45 | |||||||||||
| EQUITY SUMMARY | ||||||||||||||
| Cash dividends per share | $.270 | $.252 | $.252 | |||||||||||
| Cash dividends on common stock | $33,759 | $31,648 | $32,143 | |||||||||||
Book value per share (5) | $21.51 | $19.85 | $23.43 | |||||||||||
Market value per share (5) | $58.35 | $68.07 | $68.18 | |||||||||||
| High market value per share | $70.20 | $72.60 | $71.16 | |||||||||||
| Low market value per share | $55.72 | $63.17 | $63.12 | |||||||||||
Common shares outstanding (5) | 124,720,710 | 124,999,100 | 126,925,176 | |||||||||||
Tangible common equity to tangible assets (6) | 7.92 | % | 7.32 | % | 8.09 | % | ||||||||
| Tier I leverage ratio | 10.61 | % | 10.34 | % | 9.07 | % | ||||||||
| OTHER QTD INFORMATION | ||||||||||||||
| Number of bank/ATM locations | 275 | 275 | 285 | |||||||||||
| Full-time equivalent employees | 4,636 | 4,594 | 4,563 | |||||||||||
(1)Excludes allowance for credit losses on loans and unrealized gains/(losses) on available for sale debt securities.
(2)Includes loans held for sale.
(3)Annualized net income attributable to Commerce Bancshares, Inc. divided by average total equity.
(4)The efficiency ratio is calculated as non-interest expense (excluding intangibles amortization) as a percent of total revenue.
(5)As of period end.
(6)The tangible common equity ratio is a non-gaap ratio and is calculated as stockholders’ equity reduced by goodwill and other intangible assets (excluding mortgage servicing rights) divided by total assets reduced by goodwill and other intangible assets (excluding mortgage servicing rights).
All share and per share amounts have been restated to reflect the 5% stock dividend distributed in December 2022.
3
Exhibit 99.1
COMMERCE BANCSHARES, INC. and SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
| (Unaudited) (In thousands, except per share data) | For the Three Months Ended | |||||||||||||||||||
| Mar. 31, 2023 | Dec. 31, 2022 | Sep. 30, 2022 | Jun. 30, 2022 | Mar. 31, 2022 | ||||||||||||||||
| Interest income | $308,857 | $286,377 | $262,666 | $238,154 | $211,782 | |||||||||||||||
| Interest expense | 57,234 | 31,736 | 16,293 | 5,769 | 2,996 | |||||||||||||||
| Net interest income | 251,623 | 254,641 | 246,373 | 232,385 | 208,786 | |||||||||||||||
| Provision for credit losses | 11,456 | 15,477 | 15,290 | 7,162 | (9,858) | |||||||||||||||
| Net interest income after credit losses | 240,167 | 239,164 | 231,083 | 225,223 | 218,644 | |||||||||||||||
| NON-INTEREST INCOME | ||||||||||||||||||||
| Trust fees | 45,328 | 44,710 | 45,406 | 46,792 | 47,811 | |||||||||||||||
| Bank card transaction fees | 46,654 | 44,588 | 45,638 | 43,873 | 42,045 | |||||||||||||||
| Deposit account charges and other fees | 21,752 | 21,989 | 24,521 | 25,564 | 22,307 | |||||||||||||||
| Consumer brokerage services | 5,085 | 4,518 | 5,085 | 5,068 | 4,446 | |||||||||||||||
| Capital market fees | 3,362 | 3,386 | 3,393 | 3,327 | 4,125 | |||||||||||||||
| Loan fees and sales | 2,589 | 2,566 | 3,094 | 3,246 | 4,235 | |||||||||||||||
| Other | 12,842 | 15,068 | 11,377 | 11,557 | 6,800 | |||||||||||||||
| Total non-interest income | 137,612 | 136,825 | 138,514 | 139,427 | 131,769 | |||||||||||||||
| INVESTMENT SECURITIES GAINS (LOSSES), NET | (306) | 8,904 | 3,410 | 1,029 | 7,163 | |||||||||||||||
| NON-INTEREST EXPENSE | ||||||||||||||||||||
| Salaries and employee benefits | 144,373 | 138,458 | 137,393 | 142,243 | 135,953 | |||||||||||||||
| Data processing and software | 28,154 | 27,991 | 28,050 | 27,635 | 27,016 | |||||||||||||||
| Net occupancy | 12,759 | 11,774 | 12,544 | 12,503 | 12,296 | |||||||||||||||
| Equipment | 4,850 | 5,021 | 5,036 | 4,734 | 4,568 | |||||||||||||||
| Supplies and communication | 4,590 | 4,446 | 4,581 | 4,361 | 4,713 | |||||||||||||||
| Marketing | 5,471 | 5,419 | 6,228 | 5,836 | 6,344 | |||||||||||||||
| Other | 23,910 | 23,631 | 19,052 | 16,193 | 14,758 | |||||||||||||||
| Total non-interest expense | 224,107 | 216,740 | 212,884 | 213,505 | 205,648 | |||||||||||||||
| Income before income taxes | 153,366 | 168,153 | 160,123 | 152,174 | 151,928 | |||||||||||||||
| Less income taxes | 32,813 | 34,499 | 33,936 | 32,021 | 31,902 | |||||||||||||||
| Net income | 120,553 | 133,654 | 126,187 | 120,153 | 120,026 | |||||||||||||||
| Less non-controlling interest expense (income) | 1,101 | 2,026 | 3,364 | 4,359 | 1,872 | |||||||||||||||
| Net income attributable to Commerce Bancshares, Inc. | $119,452 | $131,628 | $122,823 | $115,794 | $118,154 | |||||||||||||||
| Net income per common share — basic | $0.95 | $1.05 | $0.97 | $0.92 | $0.92 | |||||||||||||||
| Net income per common share — diluted | $0.95 | $1.04 | $0.97 | $0.92 | $0.92 | |||||||||||||||
| OTHER INFORMATION | ||||||||||||||||||||
| Return on total average assets | 1.54 | % | 1.65 | % | 1.48 | % | 1.36 | % | 1.33 | % | ||||||||||
Return on average equity (1) | 18.75 | 21.88 | 17.84 | 16.29 | 14.41 | |||||||||||||||
Efficiency ratio (2) | 57.49 | 55.26 | 55.19 | 57.29 | 60.29 | |||||||||||||||
| Effective tax rate | 21.55 | 20.77 | 21.65 | 21.66 | 21.26 | |||||||||||||||
| Net yield on interest earning assets | 3.26 | 3.18 | 3.01 | 2.79 | 2.45 | |||||||||||||||
| Fully-taxable equivalent net interest income | $253,411 | $256,675 | $248,737 | $235,010 | $211,393 | |||||||||||||||
(1)Annualized net income attributable to Commerce Bancshares, Inc. divided by average total equity.
(2)The efficiency ratio is calculated as non-interest expense (excluding intangibles amortization) as a percent of total revenue.
4
Exhibit 99.1
COMMERCE BANCSHARES, INC. and SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS - PERIOD END
| (Unaudited) (In thousands) | Mar. 31, 2023 | Dec. 31, 2022 | Mar. 31, 2022 | |||||||||||
| ASSETS | ||||||||||||||
| Loans | ||||||||||||||
| Business | $ | 5,704,467 | $ | 5,661,725 | $ | 5,508,508 | ||||||||
| Real estate — construction and land | 1,437,419 | 1,361,095 | 1,144,411 | |||||||||||
| Real estate — business | 3,486,543 | 3,406,981 | 3,109,668 | |||||||||||
| Real estate — personal | 2,952,042 | 2,918,078 | 2,820,076 | |||||||||||
| Consumer | 2,094,389 | 2,059,088 | 2,053,160 | |||||||||||
| Revolving home equity | 295,478 | 297,207 | 264,401 | |||||||||||
| Consumer credit card | 558,669 | 584,000 | 544,579 | |||||||||||
| Overdrafts | 6,515 | 14,957 | 14,211 | |||||||||||
| Total loans | 16,535,522 | 16,303,131 | 15,459,014 | |||||||||||
| Allowance for credit losses on loans | (159,317) | (150,136) | (134,710) | |||||||||||
| Net loans | 16,376,205 | 16,152,995 | 15,324,304 | |||||||||||
| Loans held for sale | 6,162 | 4,964 | 8,908 | |||||||||||
| Investment securities: | ||||||||||||||
| Available for sale debt securities | 11,228,616 | 12,238,316 | 14,780,494 | |||||||||||
| Trading debt securities | 41,584 | 43,523 | 31,380 | |||||||||||
| Equity securities | 12,528 | 12,304 | 9,284 | |||||||||||
| Other securities | 268,417 | 225,034 | 199,576 | |||||||||||
| Total investment securities | 11,551,145 | 12,519,177 | 15,020,734 | |||||||||||
| Federal funds sold | 27,060 | 49,505 | — | |||||||||||
| Securities purchased under agreements to resell | 825,000 | 825,000 | 1,825,000 | |||||||||||
| Interest earning deposits with banks | 1,341,854 | 389,140 | 1,260,813 | |||||||||||
| Cash and due from banks | 351,210 | 452,496 | 326,549 | |||||||||||
| Premises and equipment — net | 428,169 | 418,909 | 394,028 | |||||||||||
| Goodwill | 138,921 | 138,921 | 138,921 | |||||||||||
| Other intangible assets — net | 14,918 | 15,234 | 15,885 | |||||||||||
| Other assets | 944,212 | 909,590 | 671,651 | |||||||||||
| Total assets | $ | 32,004,856 | $ | 31,875,931 | $ | 34,986,793 | ||||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||||||||
| Deposits: | ||||||||||||||
| Non-interest bearing | $ | 8,685,234 | $ | 10,066,356 | $ | 11,428,372 | ||||||||
| Savings, interest checking and money market | 14,419,741 | 15,126,981 | 16,751,632 | |||||||||||
| Certificates of deposit of less than $100,000 | 468,667 | 387,336 | 422,992 | |||||||||||
| Certificates of deposit of $100,000 and over | 1,109,818 | 606,767 | 716,345 | |||||||||||
| Total deposits | 24,683,460 | 26,187,440 | 29,319,341 | |||||||||||
| Federal funds purchased and securities sold under agreements to repurchase | 2,784,559 | 2,841,734 | 2,317,461 | |||||||||||
| Other borrowings | 1,507,776 | 9,672 | 9,057 | |||||||||||
| Other liabilities | 346,649 | 355,508 | 367,532 | |||||||||||
| Total liabilities | 29,322,444 | 29,394,354 | 32,013,391 | |||||||||||
| Stockholders’ equity: | ||||||||||||||
| Common stock | 629,319 | 629,319 | 610,804 | |||||||||||
| Capital surplus | 2,919,060 | 2,932,959 | 2,678,025 | |||||||||||
| Retained earnings | 117,313 | 31,620 | 178,504 | |||||||||||
| Treasury stock | (59,670) | (41,743) | (72,293) | |||||||||||
| Accumulated other comprehensive income (loss) | (940,498) | (1,086,864) | (434,400) | |||||||||||
| Total stockholders’ equity | 2,665,524 | 2,465,291 | 2,960,640 | |||||||||||
| Non-controlling interest | 16,888 | 16,286 | 12,762 | |||||||||||
| Total equity | 2,682,412 | 2,481,577 | 2,973,402 | |||||||||||
| Total liabilities and equity | $ | 32,004,856 | $ | 31,875,931 | $ | 34,986,793 | ||||||||
5
Exhibit 99.1
COMMERCE BANCSHARES, INC. and SUBSIDIARIES
AVERAGE BALANCE SHEETS
| (Unaudited) (In thousands) | For the Three Months Ended | ||||||||||||||||
| Mar. 31, 2023 | Dec. 31, 2022 | Sep. 30, 2022 | Jun. 30, 2022 | Mar. 31, 2022 | |||||||||||||
| ASSETS: | |||||||||||||||||
| Loans: | |||||||||||||||||
| Business | $ | 5,656,104 | $ | 5,478,241 | $ | 5,317,696 | $ | 5,385,181 | $ | 5,324,172 | |||||||
| Real estate — construction and land | 1,410,835 | 1,268,900 | 1,288,721 | 1,225,267 | 1,134,902 | ||||||||||||
| Real estate — business | 3,478,382 | 3,300,697 | 3,258,128 | 3,163,508 | 3,095,068 | ||||||||||||
| Real estate — personal | 2,933,750 | 2,886,686 | 2,844,376 | 2,825,578 | 2,808,980 | ||||||||||||
| Consumer | 2,067,385 | 2,089,912 | 2,101,622 | 2,070,560 | 2,040,200 | ||||||||||||
| Revolving home equity | 296,748 | 293,681 | 280,923 | 272,280 | 273,859 | ||||||||||||
| Consumer credit card | 556,223 | 559,463 | 550,058 | 537,681 | 540,844 | ||||||||||||
| Overdrafts | 4,449 | 7,428 | 4,438 | 5,524 | 5,178 | ||||||||||||
Total loans | 16,403,876 | 15,885,008 | 15,645,962 | 15,485,579 | 15,223,203 | ||||||||||||
| Allowance for credit losses on loans | (150,117) | (143,285) | (137,833) | (134,670) | (149,685) | ||||||||||||
| Net loans | 16,253,759 | 15,741,723 | 15,508,129 | 15,350,909 | 15,073,518 | ||||||||||||
| Loans held for sale | 5,708 | 6,567 | 7,170 | 7,933 | 9,383 | ||||||||||||
| Investment securities: | |||||||||||||||||
| U.S. government and federal agency obligations | 1,099,067 | 1,055,602 | 1,113,442 | 1,119,305 | 1,103,749 | ||||||||||||
| Government-sponsored enterprise obligations | 87,086 | 55,732 | 55,753 | 55,762 | 51,770 | ||||||||||||
| State and municipal obligations | 1,793,756 | 1,990,643 | 2,052,908 | 2,126,380 | 2,077,600 | ||||||||||||
| Mortgage-backed securities | 6,454,408 | 6,605,936 | 6,847,912 | 7,158,252 | 7,316,609 | ||||||||||||
| Asset-backed securities | 3,233,757 | 3,714,092 | 3,870,953 | 4,038,113 | 3,933,061 | ||||||||||||
Other debt securities | 528,941 | 560,951 | 587,026 | 643,463 | 636,247 | ||||||||||||
| Unrealized loss on debt securities | (1,387,196) | (1,582,061) | (1,064,534) | (851,110) | (174,297) | ||||||||||||
| Total available for sale debt securities | 11,809,819 | 12,400,895 | 13,463,460 | 14,290,165 | 14,944,739 | ||||||||||||
Trading debt securities | 45,757 | 44,626 | 35,621 | 43,904 | 40,686 | ||||||||||||
| Equity securities | 12,458 | 10,534 | 8,838 | 9,094 | 9,498 | ||||||||||||
| Other securities | 229,867 | 219,354 | 208,708 | 195,090 | 192,311 | ||||||||||||
| Total investment securities | 12,097,901 | 12,675,409 | 13,716,627 | 14,538,253 | 15,187,234 | ||||||||||||
| Federal funds sold | 38,978 | 27,683 | 13,486 | 4,269 | 1,053 | ||||||||||||
| Securities purchased under agreements to resell | 825,000 | 1,174,457 | 1,379,341 | 1,703,569 | 1,733,887 | ||||||||||||
| Interest earning deposits with banks | 809,935 | 640,039 | 980,273 | 1,248,942 | 2,608,029 | ||||||||||||
| Other assets | 1,376,551 | 1,339,554 | 1,256,498 | 1,238,493 | 1,304,400 | ||||||||||||
| Total assets | $ | 31,407,832 | $ | 31,605,432 | $ | 32,861,524 | $ | 34,092,368 | $ | 35,917,504 | |||||||
| LIABILITIES AND EQUITY: | |||||||||||||||||
| Non-interest bearing deposits | $ | 9,114,512 | $ | 10,360,834 | $ | 10,758,353 | $ | 11,209,680 | $ | 11,544,701 | |||||||
| Savings | 1,550,215 | 1,567,113 | 1,595,857 | 1,609,694 | 1,563,093 | ||||||||||||
| Interest checking and money market | 13,265,485 | 13,693,974 | 14,423,713 | 14,847,306 | 14,949,727 | ||||||||||||
| Certificates of deposit of less than $100,000 | 415,367 | 388,304 | 397,071 | 411,655 | 429,852 | ||||||||||||
| Certificates of deposit of $100,000 and over | 903,393 | 596,703 | 578,158 | 648,728 | 862,232 | ||||||||||||
| Total deposits | 25,248,972 | 26,606,928 | 27,753,152 | 28,727,063 | 29,349,605 | ||||||||||||
| Borrowings: | |||||||||||||||||
| Federal funds purchased | 493,721 | 143,630 | 51,929 | 113,128 | 23,356 | ||||||||||||
| Securities sold under agreements to repurchase | 2,418,726 | 2,260,263 | 2,199,866 | 2,258,184 | 2,712,468 | ||||||||||||
| Other borrowings | 551,267 | 179,552 | 2,010 | 2,029 | 768 | ||||||||||||
| Total borrowings | 3,463,714 | 2,583,445 | 2,253,805 | 2,373,341 | 2,736,592 | ||||||||||||
| Other liabilities | 112,052 | 28,745 | 123,691 | 139,986 | 505,644 | ||||||||||||
| Total liabilities | 28,824,738 | 29,219,118 | 30,130,648 | 31,240,390 | 32,591,841 | ||||||||||||
| Equity | 2,583,094 | 2,386,314 | 2,730,876 | 2,851,978 | 3,325,663 | ||||||||||||
| Total liabilities and equity | $ | 31,407,832 | $ | 31,605,432 | $ | 32,861,524 | $ | 34,092,368 | $ | 35,917,504 | |||||||
6
Exhibit 99.1
COMMERCE BANCSHARES, INC. and SUBSIDIARIES
AVERAGE RATES
| (Unaudited) | For the Three Months Ended | ||||||||||||||||
| Mar. 31, 2023 | Dec. 31, 2022 | Sep. 30, 2022 | Jun. 30, 2022 | Mar. 31, 2022 | |||||||||||||
| ASSETS: | |||||||||||||||||
| Loans: | |||||||||||||||||
Business (1) | 5.31 | % | 4.68 | % | 3.94 | % | 3.16 | % | 2.93 | % | |||||||
| Real estate — construction and land | 7.33 | 6.80 | 5.27 | 4.09 | 3.76 | ||||||||||||
| Real estate — business | 5.65 | 5.15 | 4.40 | 3.70 | 3.38 | ||||||||||||
| Real estate — personal | 3.61 | 3.45 | 3.36 | 3.27 | 3.28 | ||||||||||||
| Consumer | 5.31 | 4.77 | 4.17 | 3.62 | 3.59 | ||||||||||||
| Revolving home equity | 7.03 | 5.89 | 4.82 | 3.69 | 3.48 | ||||||||||||
| Consumer credit card | 13.68 | 12.64 | 12.05 | 11.32 | 11.35 | ||||||||||||
| Overdrafts | — | — | — | — | — | ||||||||||||
| Total loans | 5.56 | 5.03 | 4.37 | 3.72 | 3.54 | ||||||||||||
| Loans held for sale | 10.30 | 10.09 | 8.80 | 8.14 | 6.48 | ||||||||||||
| Investment securities: | |||||||||||||||||
| U.S. government and federal agency obligations | 1.90 | 2.01 | 4.51 | 4.93 | 3.42 | ||||||||||||
| Government-sponsored enterprise obligations | 3.21 | 2.36 | 2.36 | 2.39 | 2.33 | ||||||||||||
State and municipal obligations (1) | 2.26 | 2.29 | 2.27 | 2.30 | 2.29 | ||||||||||||
| Mortgage-backed securities | 2.06 | 1.88 | 1.93 | 1.99 | 1.98 | ||||||||||||
| Asset-backed securities | 2.01 | 1.96 | 1.62 | 1.35 | 1.13 | ||||||||||||
| Other debt securities | 1.93 | 1.89 | 1.93 | 1.97 | 2.00 | ||||||||||||
| Total available for sale debt securities | 2.07 | 1.97 | 2.09 | 2.08 | 1.91 | ||||||||||||
Trading debt securities (1) | 4.59 | 3.81 | 2.74 | 2.46 | 1.84 | ||||||||||||
Equity securities (1) | 23.24 | 28.44 | 27.11 | 26.90 | 26.00 | ||||||||||||
Other securities (1) | 7.11 | 6.67 | 7.09 | 22.38 | 5.91 | ||||||||||||
| Total investment securities | 2.18 | 2.07 | 2.18 | 2.36 | 1.97 | ||||||||||||
| Federal funds sold | 5.09 | 4.27 | 2.77 | 1.79 | .39 | ||||||||||||
| Securities purchased under agreements to resell | 1.94 | 2.36 | 1.72 | 1.03 | 1.24 | ||||||||||||
| Interest earning deposits with banks | 4.67 | 3.69 | 2.25 | .78 | .18 | ||||||||||||
| Total interest earning assets | 4.00 | 3.59 | 3.21 | 2.86 | 2.49 | ||||||||||||
| LIABILITIES AND EQUITY: | |||||||||||||||||
| Interest bearing deposits: | |||||||||||||||||
| Savings | .05 | .06 | .04 | .04 | .05 | ||||||||||||
| Interest checking and money market | .61 | .38 | .20 | .06 | .04 | ||||||||||||
| Certificates of deposit of less than $100,000 | 1.39 | .73 | .41 | .20 | .13 | ||||||||||||
| Certificates of deposit of $100,000 and over | 2.98 | 1.42 | .60 | .29 | .20 | ||||||||||||
| Total interest bearing deposits | .71 | .40 | .21 | .07 | .05 | ||||||||||||
| Borrowings: | |||||||||||||||||
| Federal funds purchased | 4.59 | 3.56 | 2.41 | .79 | .12 | ||||||||||||
| Securities sold under agreements to repurchase | 2.93 | 2.29 | 1.37 | .48 | .10 | ||||||||||||
| Other borrowings | 4.94 | 4.02 | 1.78 | 2.37 | .53 | ||||||||||||
| Total borrowings | 3.49 | 2.48 | 1.39 | .50 | .10 | ||||||||||||
| Total interest bearing liabilities | 1.20 | % | .69 | % | .34 | % | .12 | % | .06 | % | |||||||
| Net yield on interest earning assets | 3.26 | % | 3.18 | % | 3.01 | % | 2.79 | % | 2.45 | % | |||||||
(1) Stated on a fully taxable-equivalent basis using a federal income tax rate of 21%.
7
Exhibit 99.1
COMMERCE BANCSHARES, INC. and SUBSIDIARIES
CREDIT QUALITY
| For the Three Months Ended | ||||||||||||||||||||
| (Unaudited) (In thousands, except ratios) | Mar. 31, 2023 | Dec. 31, 2022 | Sep. 30, 2022 | Jun. 30, 2022 | Mar. 31, 2022 | |||||||||||||||
| ALLOWANCE FOR CREDIT LOSSES ON LOANS | ||||||||||||||||||||
| Balance at beginning of period | $150,136 | $143,377 | $138,039 | $134,710 | $150,044 | |||||||||||||||
| Provision for credit losses on loans | 15,948 | 12,404 | 10,150 | 7,287 | (10,686) | |||||||||||||||
| Net charge-offs (recoveries): | ||||||||||||||||||||
| Commercial portfolio: | ||||||||||||||||||||
| Business | 230 | 496 | 461 | 19 | 77 | |||||||||||||||
| Real estate — construction and land | — | — | — | — | — | |||||||||||||||
| Real estate — business | (4) | (4) | (8) | (1) | (7) | |||||||||||||||
| 226 | 492 | 453 | 18 | 70 | ||||||||||||||||
| Personal banking portfolio: | ||||||||||||||||||||
| Consumer credit card | 4,325 | 3,467 | 2,882 | 2,937 | 3,372 | |||||||||||||||
| Consumer | 1,275 | 1,522 | 827 | 633 | 808 | |||||||||||||||
| Overdraft | 978 | 230 | 703 | 425 | 358 | |||||||||||||||
| Real estate — personal | (11) | (40) | (15) | (41) | 22 | |||||||||||||||
| Revolving home equity | (26) | (26) | (38) | (14) | 18 | |||||||||||||||
| 6,541 | 5,153 | 4,359 | 3,940 | 4,578 | ||||||||||||||||
| Total net loan charge-offs | 6,767 | 5,645 | 4,812 | 3,958 | 4,648 | |||||||||||||||
| Balance at end of period | $159,317 | $150,136 | $143,377 | $138,039 | $134,710 | |||||||||||||||
| LIABILITY FOR UNFUNDED LENDING COMMITMENTS | $28,628 | $33,120 | $30,047 | $24,907 | $25,032 | |||||||||||||||
NET CHARGE-OFF RATIOS (1) | ||||||||||||||||||||
| Commercial portfolio: | ||||||||||||||||||||
| Business | .02 | % | .04 | % | .03 | % | — | % | .01 | % | ||||||||||
| Real estate — construction and land | — | — | — | — | — | |||||||||||||||
| Real estate — business | — | — | — | — | — | |||||||||||||||
| .01 | .02 | .02 | — | — | ||||||||||||||||
| Personal banking portfolio: | ||||||||||||||||||||
| Consumer credit card | 3.15 | 2.46 | 2.08 | 2.19 | 2.53 | |||||||||||||||
| Consumer | .25 | .29 | .16 | .12 | .16 | |||||||||||||||
| Overdraft | 89.15 | 12.28 | 62.85 | 30.86 | 28.04 | |||||||||||||||
| Real estate — personal | — | (.01) | — | (.01) | — | |||||||||||||||
| Revolving home equity | (.04) | (.04) | (.05) | (.02) | .03 | |||||||||||||||
| .45 | .35 | .30 | .28 | .33 | ||||||||||||||||
| Total | .17 | % | .14 | % | .12 | % | .10 | % | .12 | % | ||||||||||
| CREDIT QUALITY RATIOS | ||||||||||||||||||||
| Non-accrual loans to total loans | .05 | % | .05 | % | .05 | % | .05 | % | .05 | % | ||||||||||
| Allowance for credit losses on loans to total loans | .96 | .92 | .90 | .88 | .87 | |||||||||||||||
| NON-ACCRUAL AND PAST DUE LOANS | ||||||||||||||||||||
| Non-accrual loans: | ||||||||||||||||||||
| Business | $6,361 | $6,751 | $5,645 | $6,314 | $6,756 | |||||||||||||||
| Real estate — construction and land | — | — | — | — | — | |||||||||||||||
| Real estate — business | 171 | 189 | 149 | 167 | 190 | |||||||||||||||
| Real estate — personal | 1,269 | 1,366 | 1,390 | 1,436 | 1,389 | |||||||||||||||
| Total | 7,801 | 8,306 | 7,184 | 7,917 | 8,335 | |||||||||||||||
| Loans past due 90 days and still accruing interest | $14,800 | $15,830 | $12,538 | $11,909 | $10,670 | |||||||||||||||
(1) Net charge-offs are annualized and calculated as a percentage of average loans (excluding loans held for sale).
8
COMMERCE BANCSHARES, INC.
Management Discussion of First Quarter Results
March 31, 2023
For the quarter ended March 31, 2023, net income amounted to $119.5 million, compared to $131.6 million in the previous quarter and $118.2 million in the same quarter last year. The decrease in net income compared to the previous quarter was primarily the result of net realized investment securities losses compared to net gains recorded in the prior quarter, lower net interest income and higher non-interest expense. These decreases to income were partly offset by a decrease in the provision for credit losses. The net yield on interest earning assets grew eight basis points to 3.26%. Average loans grew $518.9 million compared to the previous quarter, while average deposits and average available for sale debt securities declined $1.4 billion and $591.1 million, respectively. For the quarter, the return on average assets was 1.54%, the return on average equity was 18.75%, and the efficiency ratio was 57.5%.
Balance Sheet Review
During the 1st quarter of 2023, average loans totaled $16.4 billion, an increase of $518.9 million over the prior quarter, and $1.2 billion, or 7.8%, over the same quarter last year. Compared to the previous quarter, average balances of business, business real estate, and construction loans grew $177.9 million, $177.7 million, and $141.9 million, respectively. During the current quarter, the Company sold certain fixed rate personal real estate loans totaling $3.2 million, compared to $2.4 million in the prior quarter.
Total average available for sale debt securities decreased $591.1 million compared to the previous quarter to $11.8 billion, at fair value. The decrease in investment securities was mainly the result of lower balances of mortgage-backed, other asset-backed, and state and municipal securities. During the 1st quarter of 2023, the unrealized loss on available for sale securities decreased $190.0 million to $1.3 billion, and sales, maturities and pay downs were $1.3 billion. At March 31, 2023, the duration of the available for sale investment portfolio was 3.9 years. The Company does not have any investment securities classified as held-to-maturity.
Total average deposits decreased $1.4 billion this quarter compared to the previous quarter. The decrease in deposits mostly resulted from lower demand deposits and interest checking and money market deposits of $1.2 billion and $428.5 million, respectively, partly offset by higher certificate of deposit balances of $333.8 million. Compared to the previous quarter, total average commercial and consumer deposits declined $868.9 million and $530.1 million, respectively, while average wealth deposits increased $39.8 million. The average loans to deposits ratio was 65.0% in the current quarter and 59.7% in the prior quarter. The Company’s average borrowings, which included customer repurchase agreements of $2.4 billion, were $3.5 billion in the 1st quarter of 2023 and $2.6 billion in the prior quarter.
Net Interest Income
Net interest income in the 1st quarter of 2023 amounted to $251.6 million, a decrease of $3.0 million compared to the previous quarter. On a fully taxable-equivalent (FTE) basis, net interest income for the current quarter decreased $3.3 million from the previous quarter to $253.4 million. The decrease in net interest income was due to higher interest expense, partly offset by higher interest earned on loans. The net yield (FTE) on earning assets increased to 3.26%, compared to 3.18% in the prior quarter.
Compared to the previous quarter, interest income on loans (FTE) increased $23.4 million, due to higher average rates earned on all loan categories, coupled with higher average balances of construction, business, and business real estate loans. The average yield (FTE) on the loan portfolio increased 53 basis points to 5.56% this quarter.
Interest income on investment securities (FTE) decreased $1.8 million compared to the prior quarter, due to lower average balances, partly offset by higher rates earned. Interest income earned on U.S. government and federal agency securities decreased due to lower rates earned, which included the impact of $652 thousand in lower inflation income from Treasury inflation-protected securities this quarter. At March 31, 2023, the Company recorded an $802 thousand adjustment to premium amortization, which increased interest income to reflect slower forward prepayment speed estimates on mortgage-backed securities. The average yield (FTE) on total investment securities was 2.18% in the current quarter, compared to 2.07% in the previous quarter.
The average rate paid on interest bearing deposits totaled .71% in the current quarter compared to .40% in the prior quarter. Interest expense on deposits increased $11.8 million this quarter compared to the previous quarter, while interest expense on borrowings increased $13.6 million, due to a 101 basis point increase in the average rate paid coupled with higher average borrowings of $880.3 million. The overall rate paid on interest bearing liabilities was 1.20% in the current quarter compared to .69% in the prior quarter.
Non-Interest Income
In the 1st quarter of 2023, total non-interest income amounted to $137.6 million, an increase of $5.8 million compared to the same period last year and increased $787 thousand compared to the prior quarter. The increase in non-interest income compared to the same period last year was mainly due to higher bank card and sweep fees. In addition, a $2.0 million increase in fair value adjustments was recorded on the Company’s deferred compensation plan assets, which are held in a trust and recorded as both an asset and liability, affecting both other income and other expense. These increases were
9
COMMERCE BANCSHARES, INC.
Management Discussion of First Quarter Results
March 31, 2023
partly offset by lower trust fees and loan fees and sales. The increase in non-interest income compared to the prior quarter was mainly due to higher bank card fees, mostly offset by a gain on the sale of real estate recorded in the prior quarter that did not reoccur this quarter, and lower tax credit sales fee income.
Total net bank card fees in the current quarter increased $4.6 million, or 11.0%, compared to the same period last year, and increased $2.1 million compared to the prior quarter. Net corporate card fees increased $3.6 million, or 14.9%, over the same quarter of last year mainly due to higher interchange fee income. Net debit card fees increased $735 thousand, or 7.7%, and net merchant fees increased $371 thousand, or 7.4%, while net credit card fees decreased $47 thousand, or 1.3%. Total net bank card fees this quarter were comprised of fees on corporate card ($27.3 million), debit card ($10.3 million), merchant ($5.4 million) and credit card ($3.7 million) transactions.
In the current quarter, trust fees decreased $2.5 million, or 5.2%, from the same period last year, mostly resulting from lower private client and institutional trust fees. Compared to the same period last year, deposit account fees decreased $555 thousand, or 2.5%, mainly due to lower overdraft and return item fees of $2.7 million, partly offset by higher personal deposit account fees and corporate cash management fees of $1.0 million and $959 thousand, respectively. Loan fees and sales declined $1.6 million, or 38.9%, compared to amounts recorded in the same quarter last year, due to lower mortgage banking revenue.
Other non-interest income increased over the same period last year primarily due to higher sweep fees of $2.6 million, the deferred compensation adjustment previously mentioned, and a write down on a branch location of $965 thousand recorded in the 1st quarter of 2022. For the 1st quarter of 2023, non-interest income comprised 35.4% of the Company’s total revenue.
Investment Securities Gains and Losses
The Company recorded net securities losses of $306 thousand in the current quarter, compared to gains of $8.9 million in the prior quarter and $7.2 million in the 1st quarter of 2022. Net securities losses in the current quarter primarily resulted from losses of $3.1 million realized on sales of available for sale debt securities, mostly offset by net fair value gains of $2.3 million and a $653 thousand gain on the sale of an investment in the Company’s private equity investment portfolio.
Non-Interest Expense
Non-interest expense for the current quarter amounted to $224.1 million, compared to $205.6 million in the same period last year and $216.7 million in the prior quarter. The increase in non-interest
expense compared to the same period last year was mainly due to higher salaries and employee benefits expense, FDIC insurance expense, data processing and software expense, miscellaneous losses, travel and entertainment expense, and the deferred compensation adjustment previously mentioned. The increase in non-interest expense compared to the prior quarter was mainly due to higher salaries and employee benefits expense, FDIC insurance expense, and occupancy expense, partly offset by lower travel and entertainment and legal and professional fees expense.
Compared to the 1st quarter of last year, salaries and employee benefits expense increased $8.4 million, mostly due to higher full-time salaries expense of $7.6 million, or 8.9%, and higher employee benefits expense of $1.4 million. Full-time equivalent employees totaled 4,636 and 4,563 at March 31, 2023 and 2022, respectively.
Compared to the same period last year, data processing and software expense increased $1.1 million due to higher bank card fees expense and increased costs for service providers. Other non-interest expense increased $9.2 million, mostly due to growth in FDIC insurance, deferred compensation, miscellaneous losses, and travel and entertainment expense of $2.3 million, $2.0 million, $1.3 million, and $1.1 million, respectively.
Income Taxes
The effective tax rate for the Company was 21.5% in the current quarter, 20.8% in the previous quarter, and 21.3% in the 1st quarter of 2022.
Credit Quality
Net loan charge-offs in the 1st quarter of 2023 amounted to $6.8 million, compared to $5.6 million in the prior quarter and $4.6 million in the same period last year. The ratio of annualized net loan charge-offs to total average loans was .17% in the current quarter, .14% in the previous quarter, and .12% in the 1st quarter of last year. Net loan charge-offs on personal banking loans increased $1.4 million to $6.5 million, mainly due to higher overdraft and consumer credit card loan net charge-offs.
In the 1st quarter of 2023, annualized net loan charge-offs on average consumer credit card loans were 3.15%, compared to 2.46% in the previous quarter, and 2.53% in the same quarter last year. Consumer loan net charge-offs were .25% of average consumer loans in the current quarter, .29% in the prior quarter, and .16% in the same quarter last year
At March 31, 2023, the allowance for credit losses on loans totaled $159.3 million, or .96% of total loans, and increased $9.2 million compared to the prior quarter. Additionally, the liability for unfunded lending commitments at March 31, 2023 was $28.6 million, a decrease of $4.5 million compared to the liability at December 31, 2022.
10
COMMERCE BANCSHARES, INC.
Management Discussion of First Quarter Results
March 31, 2023
At March 31, 2023, total non-accrual loans amounted to $7.8 million, a decrease of $505 thousand compared to the previous quarter. At March 31, 2023, the balance of non-accrual loans, which represented .05% of loans outstanding, included business loans of $6.4 million, personal real estate loans of $1.3 million, and business real estate loans of $171 thousand. Loans more than 90 days past due and still accruing interest totaled $14.8 million at March 31, 2023.
Liquidity
During the 1st quarter of 2023, the Company increased its deposit balance at the Federal Reserve Bank (FRB) by $952.7 million to $1.3 billion. The change in the balance at the FRB was mostly the result of a $1.5 billion increase in Federal Home Loan Bank (FHLB) advances and $1.3 billion of sales, maturities, and paydowns in the available for sale debt securities portfolio, partly offset by a $1.5 billion decrease in total deposits.
The Company regularly pledges loans and securities to the FRB and at March 31, 2023, the Company’s pledging resulted in a total borrowing capacity of $3.8 billion, or an increase of $2.9 billion compared to December 31, 2022. The Company did not have any borrowings from the FRB’s Discount Window or its newly established Bank Term Funding Program during the current quarter. The Company also pledges loans and securities and borrows from the FHLB. As of March 31, 2023, the Company had $1.5 billion of outstanding borrowings from the FHLB and $554.3 million of remaining borrowing capacity. Additionally, the Company pledges portions of its investment securities portfolio to secure public fund deposits, trust funds, and securities sold under agreements to repurchase.
The Company has an available for sale debt securities portfolio with a fair market value of $11.2 billion at March 31, 2023. Approximately $2.0 billion is expected to mature or pay down over the next 12 months. At March 31, 2023, the Company had pledged $8.1 billion of the securities portfolio. The Company also has a portfolio of $825.0 million in securities purchased under agreements to resell, of which $700.0 million are expected to mature over the next 12 months.
Other
During the 1st quarter of 2023, the Company paid a cash dividend of $.27 per common share, representing a 7.1% increase over the same period last year. The Company purchased 547,381 shares of treasury stock during the current quarter at an average price of $65.93.
Forward Looking Information
This information contains forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995. Such statements include future financial and operating results, expectations, intentions, and other statements that are not historical facts. Such statements are based on current beliefs and expectations of the Company’s management and are subject to significant risks and uncertainties. Actual results may differ materially from those set forth in the forward-looking statements.
11
COMMERCE BANCSHARES, INC. EARNINGS HIGHLIGHTS 1st Quarter 2023 MOMENTUM: Innovation. Improvement. Growth.
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, projections, estimates and intentions. These forward- looking statements involve significant risks and uncertainties and are subject to change based on various factors (some of which are beyond the Corporation’s control). Factors that could cause the Corporation’s actual results to differ materially from such forward- looking statements made herein or by management of the Corporation are set forth in the Corporation’s 2022 Annual Report on Form 10-K and the Corporation’s Current Reports on Form 8-K. 2
COMMERCE BANCSHARES 158 YEARS IN BUSINESS FULL-SERVICE BANKING FOOTPRINT 148 full-service branches and 293 ATMs St. Louis Kansas City Springfield Central Missouri Central Illinois Wichita Tulsa Oklahoma City Denver COMMERCIAL OFFICES Cincinnati Nashville Dallas Des Moines Indianapolis Grand Rapids Houston U.S. PRESENCE Extended Commercial Market Area Commercial Payments Services Offered in 48 states across the U.S. Sources: 1S&P Global Market Intelligence – Regulated U.S. depositories which includes commercial banks, bank holding companies, and credit unions, rankings as of 12/31/2022; 2Includes loans held for sale; 3Moody’s Credit Opinion – Commerce Bancshares, Inc., February 15, 2023, Baseline Credit Assessment (BCA) reflects a bank’s standalone credit strength; Company reports and filings, information as of 3/31/2023 unless otherwise noted. 3 $32.0 BILLION TOTAL ASSETS 43RD LARGEST U.S. BANK BASED ON ASSET SIZE1 $7.3 BILLION MARKET CAP 21ST LARGEST U.S. BANK BASED ON MARKET CAP1 $62.0 BILLION TOTAL TRUST ASSETS UNDER ADMINISTRATION 20TH LARGEST AMONG BANK-MANAGED TRUST COMPANIES BASED ON AUM1 14.1% TIER 1 COMMON RISK- BASED CAPITAL RATIO 6TH HIGHEST AMONG TOP 50 U.S. BANKS BASED ON ASSET SIZE1 a1 BASELINE CREDIT ASSESSMENT3 1 of 5 MOODY’S RANKS COMMERCE AMONG THE TOP 5 BANKS IN THE COUNTRY $24.7 BILLION TOTAL DEPOSITS $16.5 BILLION TOTAL LOANS2 $10.4 BILLION COMMERCIAL CARD VOLUME 18.8% RETURN ON AVERAGE COMMON EQUITY YTD 5TH YTD ROACE FOR THE TOP 50 U.S. BANKS BASED ON ASSET SIZE1 AS OF DECEMBER 31, 2022 AS OF DECEMBER 31, 2022
4 TRACK RECORD OF LONG-TERM OUTPERFORMANCE Revenue Diversification Balanced earnings profile, fee revenue at 35%1 of total revenue, bolstered by growing wealth and national payments businesses Deposit Franchise $23.6 billion in low-cost, diverse deposits2 with peer-leading historical deposit betas Continued Long-Term Investments Core banking system implementation, Enterprise Digital, Expansion Markets, Wealth Management, Consistent Earnings & Shareholder Value Over 9% total annualized return to shareholders over the last 15 years, outperforming the annualized KBW Regional Bank Index return of 4%1 Capital Management Strong capital ratios, 55th consecutive year of common dividend increases3 Credit Quality Conservative risk profile drives outperformance across credit cycles 1As of 3/31/2023 2Excludes certificates of deposit greater than $100,000, period-end balance as of 3/31/2023 3Based on 1Q2023 declared dividend
$0.95 EPS 5 • PPNR1 was up 22.4% year over year but down 5.5% from Q4. • Net interest income decreased 1.2% from Q4. • Net interest margin increased 81 bps year over year and 8 bps over Q4 to 3.26%. • Non-interest income increased 0.6% over Q4 (35.4% of total revenue). • Wealth management client assets increased 2.9% in Q1 to $62.0 billion. • Non-interest expense increased 3.4% over Q4. • QTD average loans up 3.3% over Q4. Period-end loans up 1.4% over Q4. • QTD average deposits decreased $1.4 billion from Q4. Period-end deposits decreased $1.5 billion from Q4. See Liquidity and Capital Section (page 13) for more information. • Net charge-offs to total average loans of .17% and non-accrual loans to total loans of .05%. • Tangible common equity to tangible assets of 7.92%. Leverage ratio of 10.61%. Highlights Well-positioned for current environment 1Q2023 HIGHLIGHTS $165.1 million PPNR1 $119.5 million Net Income 18.75% ROACE 1.54% ROAA 57.49% Efficiency Ratio 1See the non-GAAP reconciliation on page 26
Quarterly Average Balances Change vs. $ in millions 1Q23 4Q22 1Q22 Highlights Commercial1 $10,545.3 $497.5 $991.2 • Linked quarter (LQ) and prior year (PY) reflects growth in business, business real estate, and construction loans Consumer 5,858.6 21.4 189.5 Total Loans $16,403.9 $518.9 $1,180.7 Investment Securities $12,097.9 $(577.5) $(3,089.3) • LQ decrease mainly due to sales, maturities and pay downs of AFS securities • No investment securities are classified as held-to-maturity Interest Earning Deposits with Banks $809.9 $169.9 $(1,798.1) Deposits $25,249.0 $(1,358.0) $(4,100.6) • 5.1% decline from LQ • See the Liquidity and Capital section starting on page 13 for more information Book Value per Share2 $21.51 $1.66 $(1.92) • Lower long-term interest rates (AOCI impact) and higher net income drove quarterly increase BALANCE SHEET HIGHLIGHTS 6
$17.8 $16.2 $16.1 $11.5 $10.4 $9.1 1Q22 4Q22 1Q23 $29.3 $26.6 $25.2 -14% $9.5 $10.1 $10.5 $5.7 $5.8 $5.9 $16.4 4Q221Q22 1Q23 $15.2 $15.9 BALANCE SHEET 7 Loans Consumer Loans Commercial Loans Loan Yield Deposits QTD Average Balances $ billions Non-Interest Bearing Interest Bearing Deposit Interest Bearing Deposit Yield QTD Average Balances $ billions 3.54% 5.03% 5.56% .05% .40% .71% +8%
LOAN PORTFOLIO 8 $ in 000s 3/31/2023 12/31/2022 3/31/2022 QoQ YoY Business $5,704,467 $5,661,725 $5,508,508 0.8% 3.6% Construction 1,437,419 1,361,095 1,144,411 5.6% 25.6% Business Real Estate 3,486,543 3,406,981 3,109,668 2.3% 12.1% Personal Real Estate 2,952,042 2,918,078 2,820,076 1.2% 4.7% Consumer 2,094,389 2,059,088 2,053,160 1.7% 2.0% Revolving Home Equity 295,478 297,207 264,401 -.6% 11.8% Consumer Credit Card 558,669 584,000 544,579 -4.3% 2.6% Overdrafts 6,515 14,957 14,211 -56.4% -54.2% Total Loans $16,535,522 $16,303,131 $15,459,014 1.4% 7.0% Period-End Balances $ in 000s 3/31/2023 12/31/2022 3/31/2022 QoQ YoY Business $5,656,104 $5,478,241 $5,324,172 3.2% 6.2% Construction 1,410,835 1,268,900 1,134,902 11.2% 24.3% Business Real Estate 3,478,382 3,300,697 3,095,068 5.4% 12.4% Personal Real Estate 2,933,750 2,886,686 2,808,980 1.6% 4.4% Consumer 2,067,385 2,089,912 2,040,200 -1.1% 1.3% Revolving Home Equity 296,748 293,681 273,859 1.0% 8.4% Consumer Credit Card 556,223 559,463 540,844 -.6% 2.8% Overdrafts 4,449 7,428 5,178 -40.1% -14.1% Total Loans $16,403,876 $15,885,008 $15,223,203 3.3% 7.8% QTD Average Balances
Change vs. $ in millions 1Q23 4Q22 1Q22 Highlights Net Interest Income $251.6 $(3.0) $42.8 • Linked quarter (LQ) decrease due to higher interest expense and lower investment securities balances, partly offset by higher interest earned on loans Non-Interest Income $137.6 $.8 $5.8 • See page 10 Non-Interest Expense $224.1 $7.4 $18.5 • See page 11 Pre-Tax, Pre-Provision Net Revenue1 $165.1 $(9.6) $30.2 Investment Securities Losses, Net $(0.3) $(9.2) $(7.5) • 1Q23 net losses resulted from losses of $3.1 million on sales of available for sale debt securities, mostly offset by net fair value gains of $2.3 million and a gain on the sale of an investment in the private equity investment portfolio Provision for Credit Losses $11.5 $(4.0) $21.3 • 1Q23 provision reflects an increase in the ACL on loans of $9.2 million and a decrease in the liability for unfunded lending commitments of $4.5 million Net-Income Attributable to Commerce Bancshares, Inc. $119.5 $(12.2) $1.3 For the three months ended 1Q23 4Q22 1Q22 Net Income per Common Share – Diluted $.95 $1.04 $.92 Net Yield on Interest Earning Assets 3.26% 3.18% 2.45% • Higher rates on earning assets supported quarterly margin expansion INCOME STATEMENT HIGHLIGHTS 1See the non-GAAP reconciliation on page 26 9
Change vs. $ in millions 1Q23 4Q22 1Q22 Highlights Bank Card Transaction Fees $46.7 $2.1 $4.6 • Prior year (PY) increase mainly due to higher corporate card fees Trust Fees $45.3 $.6 $(2.5) • 1Q23 reflects lower market values on assets under management compared to prior year (PY) Deposit Account Charges and Other Fees $21.8 $(.2) $(.6) Capital Market Fees $3.4 — $(.8) Consumer Brokerage Services $5.1 $.6 $.6 Loan Fees and Sales $2.6 — $(1.6) • Decline from PY reflects lower mortgage banking revenue Other $12.8 $(2.2) $6.0 • Increase over PY mainly due to higher sweep fees of $2.6 million, a $2.0 million increase in deferred compensation adjustments and a write down on a branch of $956 thousand in the PY Total Non-Interest Income $137.6 $.8 $5.8 NON-INTEREST INCOME HIGHLIGHTS 10
Change vs. $ in millions 1Q23 4Q22 1Q22 Highlights Salaries and Employee Benefits $144.4 $5.9 $8.4 • Increase over prior year (PY) mostly due to higher full-time salaries expense of $7.6 million and higher benefits expense of $1.4 million Net Occupancy $12.8 $1.0 $.5 Equipment $4.8 $(.2) $.3 Supplies and Communication $4.6 $.1 $(.1) Data Processing and Software $28.1 $.2 $1.1 • Increase over PY due to higher bank card processing fees and increased costs for service providers Marketing $5.5 $.1 $(.9) Other $23.9 $.3 $9.2 • Increase over PY mostly due to growth in FDIC insurance ($2.3 million), deferred compensation ($2.0 million) miscellaneous losses ($1.3 million), and travel and entertainment expense ($1.1 million) Total Non-Interest Expense $224.1 $7.4 $18.5 NON-INTEREST EXPENSE HIGHLIGHTS 11
12 PRE-TAX, PRE-PROVISION NET REVENUE (PPNR) $132 $135 $209 $206 1Q2022 $341 $137 $175 $255 $217 4Q2022 $391 $137 $165 $252 $224 $389 1Q2023 Non-Interest Income (+) Net Interest Income (+) Non-Interest Expense (-) Pre-Tax, Pre-Provision Net Revenue (=) 1Q2023 Comparison vs. 1Q2022 22.4% vs. 4Q2022 (5.5)% See the non-GAAP reconciliation on page 26
13 LIQUIDITY AND CAPITAL
LIQUIDITY AND CAPITAL HIGHLIGHTS 14 • $1.3B of cash at Federal Reserve Bank (FRB) at Q1. • $1.5B in Federal Home Loan Bank (FHLB) advances at Q1. • No borrowings from Federal Reserve lending facilities during Q1. • Increased borrowing capacity in Q1 from $8.0B at Q4 to $9.2B. • AFS debt securities portfolio duration of 3.9 years. • Cash flows from maturities and paydowns of approximately $2.7B expected over the next twelve months. – AFS debt securities of $2 billion – Securities purchased under agreements to resell of $700 million Liquidity / Borrowing • TCE/TA of 7.92%, an increase of .60% over Q4. Tier 1 leverage at 10.61%. • AOCI declined 13% from $1.1B at Q4 to $940MM at Q1. • No Held-To-Maturity securities. Capital • Average loan to deposit ratio of 65%. • Seasonal deposit runoff in January occurred in line with expectations. • Uninsured deposits2 of 32% of total deposits at Q1. • Largest industry segment commercial deposit concentration was 5.1%1 of total deposits. Deposits 1Largest commercial deposit sector (Finance and Insurance) includes affiliate deposits. 2Excludes affiliate and collateralized deposits
$20,000 $22,000 $24,000 $26,000 $28,000 $30,000 1/7 2/1 3/1 4/1 -3% 7-Day Moving Average $ in millions DEPOSIT TRENDS – YTD 2023 January 1, 2023 – April 10, 2023 Z0% 3/8 Seasonal runoff early in the first quarter was in line with expectations. 15 Deposit balances declined slightly after March 8, but have been rebounding in April.
$3.0 2019 2020 2021 $1.8 2022 1Q23 $2.3 $2.8 $2.5 1Q23 $2.4 1Q23 $9.5 DEPOSIT BALANCE TRENDS Segment view $ in billions 16 $12.0 2019 2020 $7.8 2021 1Q232022 $9.9 $11.9 $10.3 20222020 $12.8 2019 2021 1Q23 $11.3 $10.2 $13.4 $12.5 Commercial Consumer Wealth Average Balance Period End 1Q23 $12.7 Period EndAverage Balance Average Balance Period End 2019 through 2022 are full year average balances
DEPOSIT PORTFOLIO CHARACTERISTICS 17 1Finance and Insurance Sector includes affiliate deposits. 2Excludes affiliate and collateralized deposits Top 10 Commercial Sectors (NAICS Sector / Industry) % of Commercial Segment Deposits % of Total Deposits Finance and Insurance 13.3% 5.1%1 Construction 10.0% 3.8% Educational Services 9.7% 3.7% Professional, Scientific and Technical Services 8.9% 3.4% Health Care and Social Assistance 8.8% 3.4% Public Administration 8.7% 3.3% Manufacturing 8.4% 3.2% Other Services (except Public Administration) 6.6% 2.5% Real Estate and Rental & Leasing 5.9% 2.3% Wholesale Trade 4.4% 1.7% Percent of accounts under $250,000 Percent of deposits ($) uninsured2 Average balance of accounts <$250,000 Average balance of accounts 99% 32% $13,922$25,294 Uninsured Deposit Analysis $ in billions 3/31/2023 Uninsured Deposits $ 9.8 Less: Affiliate Deposits $ 0.3 Less: Collateralized Deposits $ 1.7 Uninsured deposits2 $ 7.8 Total Deposits $ 24.7 Uninsured deposits2 as % of Total Deposits 32%
Hedging actions: Entered into three 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. • 3Q2022: One 2.5% floor contract with a notional value of $500 million. The contract begins 1/2024. • 4Q2022: One 3.0% floor contract with a notional value of $500 million. The contract begins 4/2024. • 1Q2023: One 3.5% floor contract with a notional value of $500 million. The contract begins 7/2024. WELL-POSITIONED FOR MULTIPLE RATE ENVIRONMENTS 18 Opportunities to enhance and protect NII in a rising rate environment. • Net yield on interest earning assets increased 8 bps over Q4 to 3.26% in Q1. • Loan yield increased 53 bps over Q4 to 5.56% in Q1. • Total deposit costs increased 21 bps over Q4 to .45% in Q1. • As of December 31, 2022, 56% of loans were variable rate, (64% commercial, 42% consumer). • Large core deposit base and historically low betas. Cost of Total Deposits & Deposit Beta: Prior & Current Fed Cycle Cost of Total Deposits Before Fed Rate Increases End of Fed Rate Increases / Current Deposit Beta1 Commerce (3Q2015 – 2Q2019) .12% .38% 12% Peer Median (3Q2015 – 2Q2019) .23% .85% 27% Commerce (4Q2021 – 1Q2023) .03% .45% 9% 0.0% 0.5% 1.0% 1.5% 2.0% 2.5% 3.0% 3.5% 4.0% 4.5% 5.0% 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 Quarter in the Fed Cycle Source: S&P Global Market Intelligence, 2022 10-K 1 Fed Rate increase cycle from 3Q2015 through 2Q2019, +225 bps; Fed Rate increase cycle from 4Q2021 through 1Q2023, +475 bps; 2 As of December 31, 2022 Effective Fed Funds Rate (3Q2015 - 2Q2019) Effective Fed Funds Rate (4Q2021 - Current) 3Q2015 / 4Q2021
9% 14% 49% 24% 4% 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 – March 31, 2023 Avg Rate Duration (yrs) Treasury & agency1 1.32% 2.2 Municipal 2.26%2 5.3 MBS 2.06% 5.1 Other asset-backed 2.01% 1.3 Corporate 1.93% 3.9 Total 2.07% 3.9 19 Total available for sale securities Average balance: $11.8 billion, at fair value As of March 31, 2023
Average Loan to Deposit Ratio3 SOUND CAPITAL AND LIQUIDITY POSITION 20 Tier 1 Risk-Based Capital Ratio1 1S&P Global Market Intelligence, Information as of December 31, 2022 2Period-end balances, as of March 31, 2023 3Includes loans held for sale, for the quarter ended March 31, 2023 15.9% 14.1% 13.4% 12.9% 12.6% 12.3% 11.9% 11.7% 11.4% 11.0% 10.9% 10.7% 10.7% 10.6% 10.6% 10.1% 10.0% 10.0% 9.9% 9.5% CFR PB CBSH BOKF UMPQ OZK ONB UBSI SFNC HWC SSB FULT SNV ABCB UMBF PNFP FNB ASB WTFC VLY Peer Median: 10.9% Core Deposits $23.1 Billion2 Large, stable deposit base Loan to Deposit Ratio Total Deposits 65% Average Loan to Deposit Ratio183% Peer Average Commerce 94%6% Core Deposits - Non-Interest Bearing - Interest Checking - Savings and Money Market Certificates of Deposit
Over 55% of total loans are variable; 64% of commercial loans have floating rates SUMMARY OF FIXED & FLOATING LOANS 40% 60% Business Total Loans: $5.7B Fixed Variable C om m er ci al 67% 33% Personal RE Total Loans: $2.9B C on su m er 95% 5% Construction Total Loans: $1.4B 99% 1% HELOC Total Loans: $0.3B 43% 57% Business RE Total Loans: $3.4B 95% 5% Consumer Card Total Loans: $0.6B 70% 30% Consumer Total Loans: $2.1B 21Source: 2022 10-K
Real Estate Business Loans % of Total Loans Owner – Occupied 7.0% Office 3.1% Industrial 2.9% Retail 2.0% Multi-family 1.9% Hotels 1.4% Farm 1.2% Senior living .8% Other .6% Total 20.9% COMMERCIAL REAL ESTATE BREAKDOWN 22 33.3% 14.6% 14.0% 9.5% 9.0% 6.8% 5.8% Owner-occupied Industrial Senior living Office Farm Retail Other Hotels Multi-family 3.9% 3.1% Over 30% of CRE loans are owner-occupied real estate properties, which present lower risk profiles Business Real Estate Loans - $3.4 billion Source: 2022 10-K
$4.6 $5.6 $6.8 $3.3 $6.9 1Q234Q221Q22 MAINTAINING STRONG CREDIT QUALITY 23 Net Loan Charge-Offs (NCOs) $ in millions NCOs- CBSH NCOs - Peer Average NCO/Average Loans1 - CBSH $134.7 $150.1 $159.3 $265.7 $289.9 1Q22 4Q22 1Q23 Allowance for Credit Losses on Loans (ACL) $ in millions ACL - CBSH ACL - Peer Average ACL / Total Loans - CBSH $8.3 $8.3 $7.8 $111.4 $109.7 1Q231Q22 4Q22 Non-Accrual Loans (NALs) $ in millions NALs - CBSH NALs - Peer Average 16.2x 18.1x 20.4x 3.8x 4.3x 1Q22 4Q22 1Q23 Allowance for Credit Losses on Loans (ACL) to NALs ACL / NALs - Peer AverageACL / NALs - CBSH Percentages are illustrative and not to scale; Peer Banks include: ABCB, ASB, BOKF, CFR, FNB, FULT, HWC, ONB, OZK, PB, PNFP, SFNC, SNV, SSB, UMBF, UMPQ, UBSI, VLY, WTFC 1As a percentage of average loans (excluding loans held for sale) NALs / Total Loans - CBSH NCO/Average Loans1 – Peer Average .05% NALs / Total Loans – Peer Average .05% .05% .49% .41% ACL / Total Loans – Peer Average .87% .92% .96% 1.18% 1.12% .12% .14% .17% .06% .09%
ALLOCATION OF ALLOWANCE 24 CECL allowances reflect the economic and market outlook December 31, 2022 March 31, 2023 $ in millions Allowance for Credit Losses (ACL) % of Outstanding Loans Allowance for Credit Losses (ACL) % of Outstanding Loans Business $ 46.3 .82% $ 49.5 .87% Bus R/E 28.2 .83% 27.7 .80% Construction 28.8 2.12% 31.4 2.19% Commercial total $ 103.3 .99% $ 108.6 1.02% Consumer 10.3 .50% 11.5 .55% Consumer CC 24.9 4.26% 25.9 4.64% Personal R/E 10.0 .34% 11.5 .39% Revolving H/E 1.6 .53% 1.7 .58% Overdrafts .1 .74% .1 1.84% Consumer total $ 46.8 .80% $ 50.7 .86% Allowance for credit losses on loans $ 150.1 .92% $ 159.3 .96% 1.47% 1.44% 1.35% 1.22% 1.07% 0.88% 0.90% 0.92% 0.96% 0.60% 0.80% 1.00% 1.20% 1.40% 1.60% $200 $150 $100 $250 $171.7 $236.4 4Q $139.6 0.95% 1/1 1.14% 1Q $240.7 2Q $220.8 $143.4 3Q 4Q $162.8 $200.5 $150.1 1Q 2Q1Q $172.4 1.10% 2Q 3Q $150.0 0.99% $134.7 0.87% $138.0 3Q 4Q $159.3 1Q Allowance for Credit Losses (ACL) on Loans ACL - Loans (left) ACL / Total Loans (right) $ in millions 202220212020 2023
• Special cash dividend paid in 2012 totaled $131 million. • 2014 included $200 million accelerated share repurchase in conjunction with preferred stock issuance. • 2015 included a $100 million accelerated share repurchase. • 2019 included a $150 million accelerated share repurchase. • In 2020, all $150 million of preferred equity was redeemed. • Common cash dividends increased 10% in 2018, 16% in 2019, 9% in 2020, 2% in 2021, 6% in 2022 and 7% in 2023 (based on 1Q2023 declared dividend). 0% 50% 100% 150% 200% $0 $50 $100 $150 $200 $250 $300 20202013 20192014 2015 2017 20182016 2021 2022 STRONG CAPITAL POSITION – FLEXIBILITY IN CAPITAL PLANNING 55 consecutive years of regular common cash dividend increases1 Capital Ratios – 12/31/2022 Tier I common risk-based capital 14.1% Tier I risk-based capital 14.1% Total risk-based capital 14.9% Cash dividends paid on common stock (left) Total Payout - % (right) Common share repurchase (left) Capital Returned to Common Shareholders as a percentage of Net Income2 25 To ta l P ay ou t R at io ( %) $ in m illi on s 1Based on 1st quarter 2023 declared dividend; 2Net Income is defined as Net Income Available to Common Shareholders
NON-GAAP RECONCILIATIONS 26 For The Three Months Ended (DOLLARS IN THOUSANDS) Mar. 31, 2023 Dec. 31, 2022 Mar. 31, 2022 A Net Interest Income $ 251,623 $ 254,641 $ 208,786 B Non-Interest Income $ 137,612 $ 136,825 $ 131,769 C Non-Interest Expense $ 224,107 $ 216,740 $ 205,648 Pre-Provision Net Revenue (A+B-C) $ 165,128 $ 174,726 $ 134,907 Pre-tax, Pre-provision Net Revenue
