Commerce Bancshares, Inc. Reports First Quarter Earnings Per Share of $.97
KANSAS CITY, Mo.–(BUSINESS WIRE)–Commerce Bancshares, Inc. announced earnings of $.97 per share for the three months ended March 31, 2022, compared to $1.06 per share in the same quarter last year and $.94 per share in the fourth quarter of 2021. Net income for the first quarter of 2022 amounted to $118.2 million, compared to $131.0 million in the first quarter of 2021 and $114.9 million in the prior quarter.
“Commerce had strong financial performance for the quarter, including an expanding net interest margin and increasing loan demand,” said John Kemper, Chief Executive Officer. “Loan demand increased across our commercial loan categories, reflecting higher seasonal business activity and good overall momentum in our markets.”
“The increase in interest rates and the steepening of the yield curve provided opportunities to optimize the mix of earning assets on our balance sheet. While net interest income grew, non-interest income comprised 39% of total revenue, a reflection of our diversified business model.”
First Quarter 2022 Financial Highlights:
- Net interest income was $208.8 million, a slight increase over the prior quarter. Net interest margin increased 2 basis points to 2.45%.
- Non-interest income totaled $131.8 million, a decrease of $15.9 million compared to the prior quarter.
- Net investment securities gains of $7.2 million were driven by net fair value gains of $7.5 million in the Company’s portfolio of private equity investments.
- Non-interest expense totaled $205.6 million, an increase of $2.1 million compared to the prior quarter.
- Average loan balances totaled $15.2 billion, an increase of $130.1 million, or .9%, over the prior quarter (average Paycheck Protection Program (PPP) loan balances declined $132.0 million).
- Total average available for sale debt securities increased 2.9%, or $418.0 million, over the prior quarter to $14.9 billion, at fair value. Purchases of securities during the quarter totaled $1.8 billion, with a weighted average yield of approximately 2.06%.
- Compared to the prior quarter, average deposits grew $501.7 million, or 1.7%. The average rate paid on interest bearing deposits was 5 basis points.
- The ratio of annualized net loan charge-offs to average loans was .12% compared to .11% in the prior quarter.
- Non-accrual loans totaled $8.3 million compared to $9.2 million in the prior quarter. Non-accrual loans were .05% of total loans.
- At March 31, 2022, the allowance for credit losses on loans decreased to $134.7 million. The allowance for credit losses on loans to total loans was .87% at March 31, 2022.
- The Company purchased 795,387 shares of its common stock this quarter at an average price of $70.22.
- Total assets at March 31, 2022 were $35.0 billion, a decrease of $1.7 billion, or 4.6%, from the prior quarter.
- For the quarter, the return on average assets was 1.33%, the return on average equity was 14.41%, and the efficiency ratio was 60.3%.
Commerce Bancshares, Inc. is a regional bank holding company offering a full line of banking services, including payment solutions, investment management and securities brokerage. Commerce Bank, a subsidiary of Commerce Bancshares, Inc., leverages more than 155 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.
* * * * * * * * * * * * * * *
COMMERCE BANCSHARES, INC. and SUBSIDIARIES FINANCIAL HIGHLIGHTS | |||||||
|
| For the Three Months Ended | |||||
(Unaudited) (Dollars in thousands, except per share data) |
| Mar. 31, 2022 | Dec. 31, 2021 | Mar. 31, 2021 | |||
FINANCIAL SUMMARY | |||||||
Net interest income |
| $208,786 |
| $207,657 |
| $205,748 |
|
Non-interest income |
| 131,769 |
| 147,699 |
| 136,045 |
|
Total revenue |
| 340,555 |
| 355,356 |
| 341,793 |
|
Investment securities gains (losses), net |
| 7,163 |
| (9,706 | ) | 9,853 |
|
Provision for credit losses |
| (9,858 | ) | (7,054 | ) | (6,232 | ) |
Non-interest expense |
| 205,648 |
| 203,582 |
| 192,573 |
|
Income before taxes |
| 151,928 |
| 149,122 |
| 165,305 |
|
Income taxes |
| 31,902 |
| 33,764 |
| 32,076 |
|
Non-controlling interest expense |
| 1,872 |
| 452 |
| 2,257 |
|
Net income attributable to Commerce Bancshares, Inc. | 118,154 |
| 114,906 |
| 130,972 |
| |
Earnings per common share: |
|
|
|
| |||
Net income — basic |
| $0.97 |
| $0.94 |
| $1.06 |
|
Net income — diluted |
| $0.97 |
| $0.94 |
| $1.06 |
|
Effective tax rate |
| 21.26 | % | 22.71 | % | 19.67 | % |
Tax equivalent net interest income |
| $211,393 |
| $210,424 |
| $208,774 |
|
Average total interest earning assets (1) |
| $ 34,937,086 |
| $ 34,318,520 |
| $ 31,278,721 |
|
Diluted wtd. average shares outstanding |
| 120,616,095 |
| 121,221,482 |
| 122,402,075 |
|
|
|
|
|
| |||
RATIOS |
|
|
|
| |||
Average loans to deposits (2) |
| 51.90 | % | 52.36 | % | 61.79 | % |
Return on total average assets |
| 1.33 |
| 1.28 |
| 1.63 |
|
Return on average equity (3) |
| 14.41 |
| 13.11 |
| 15.69 |
|
Non-interest income to total revenue |
| 38.69 |
| 41.56 |
| 39.80 |
|
Efficiency ratio (4) |
| 60.29 |
| 57.29 |
| 56.37 |
|
Net yield on interest earning assets |
| 2.45 |
| 2.43 |
| 2.71 |
|
|
|
|
|
| |||
EQUITY SUMMARY |
|
|
|
| |||
Cash dividends per share |
| $.265 |
| $.250 |
| $.250 |
|
Cash dividends on common stock |
| $32,143 |
| $30,489 |
| $30,799 |
|
Book value per share (5) |
| $24.60 |
| $28.40 |
| $26.99 |
|
Market value per share (5) |
| $71.59 |
| $68.74 |
| $72.96 |
|
High market value per share |
| $74.72 |
| $71.50 |
| $79.10 |
|
Low market value per share |
| $66.28 |
| $64.85 |
| $61.68 |
|
Common shares outstanding (5) |
| 120,881,120 |
| 121,436,734 |
| 122,931,140 |
|
Tangible common equity to tangible assets (6) |
| 8.09 | % | 9.01 | % | 9.57 | % |
Tier I leverage ratio |
| 9.07 | % | 9.13 | % | 9.38 | % |
|
|
|
|
| |||
OTHER QTD INFORMATION |
|
|
|
| |||
Number of bank/ATM locations |
| 285 |
| 287 |
| 298 |
|
Full-time equivalent employees |
| 4,563 |
| 4,567 |
| 4,619 |
|
(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 revenue. |
(5) | As of period end. |
(6) | The tangible common equity ratio 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 2021. | |
COMMERCE BANCSHARES, INC. and SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME | |||||||||||
(Unaudited) (In thousands, except per share data) |
| For the Three Months Ended | |||||||||
| Mar. 31, 2022 | Dec. 31, 2021 | Sep. 30, 2021 | Jun. 30, 2021 | Mar. 31, 2021 | ||||||
Interest income |
| $211,782 |
| $210,479 |
| $216,981 |
| $211,133 |
| $209,697 |
|
Interest expense |
| 2,996 |
| 2,822 |
| 2,944 |
| 3,151 |
| 3,949 |
|
Net interest income |
| 208,786 |
| 207,657 |
| 214,037 |
| 207,982 |
| 205,748 |
|
Provision for credit losses |
| (9,858 | ) | (7,054 | ) | (7,385 | ) | (45,655 | ) | (6,232 | ) |
Net interest income after credit losses | 218,644 |
| 214,711 |
| 221,422 |
| 253,637 |
| 211,980 |
| |
NON-INTEREST INCOME |
|
|
|
|
|
| |||||
Bank card transaction fees |
| 42,045 |
| 44,773 |
| 42,815 |
| 42,608 |
| 37,695 |
|
Trust fees |
| 47,811 |
| 48,893 |
| 48,950 |
| 46,257 |
| 44,127 |
|
Deposit account charges and other fees | 22,307 |
| 25,493 |
| 25,161 |
| 23,988 |
| 22,575 |
| |
Capital market fees |
| 4,125 |
| 3,841 |
| 3,794 |
| 3,327 |
| 4,981 |
|
Consumer brokerage services |
| 4,446 |
| 4,878 |
| 4,900 |
| 4,503 |
| 4,081 |
|
Loan fees and sales |
| 4,235 |
| 5,248 |
| 6,842 |
| 7,446 |
| 10,184 |
|
Other |
| 6,800 |
| 14,573 |
| 5,044 |
| 11,014 |
| 12,402 |
|
Total non-interest income |
| 131,769 |
| 147,699 |
| 137,506 |
| 139,143 |
| 136,045 |
|
INVESTMENT SECURITIES GAINS (LOSSES), NET | 7,163 |
| (9,706 | ) | 13,108 |
| 16,804 |
| 9,853 |
| |
NON-INTEREST EXPENSE |
|
|
|
|
|
| |||||
Salaries and employee benefits |
| 135,953 |
| 132,640 |
| 132,824 |
| 130,751 |
| 129,033 |
|
Net occupancy |
| 12,296 |
| 12,308 |
| 12,329 |
| 11,527 |
| 12,021 |
|
Equipment |
| 4,568 |
| 4,691 |
| 4,440 |
| 4,605 |
| 4,353 |
|
Supplies and communication |
| 4,713 |
| 4,430 |
| 4,530 |
| 4,033 |
| 4,125 |
|
Data processing and software |
| 27,016 |
| 25,777 |
| 25,598 |
| 24,954 |
| 25,463 |
|
Marketing |
| 6,344 |
| 5,395 |
| 5,623 |
| 5,680 |
| 5,158 |
|
Other |
| 14,758 |
| 18,341 |
| 26,276 |
| 16,576 |
| 12,420 |
|
Total non-interest expense |
| 205,648 |
| 203,582 |
| 211,620 |
| 198,126 |
| 192,573 |
|
Income before income taxes |
| 151,928 |
| 149,122 |
| 160,416 |
| 211,458 |
| 165,305 |
|
Less income taxes |
| 31,902 |
| 33,764 |
| 34,662 |
| 45,209 |
| 32,076 |
|
Net income |
| 120,026 |
| 115,358 |
| 125,754 |
| 166,249 |
| 133,229 |
|
Less non-controlling interest expense | 1,872 |
| 452 |
| 3,193 |
| 3,923 |
| 2,257 |
| |
Net income attributable to Commerce Bancshares, Inc. | 118,154 |
| 114,906 |
| 122,561 |
| 162,326 |
| 130,972 |
| |
Net income per common share — basic | $0.97 |
| $0.94 |
| $1.00 |
| $1.32 |
| $1.06 |
| |
Net income per common share — diluted | $0.97 |
| $0.94 |
| $0.99 |
| $1.32 |
| $1.06 |
| |
|
|
|
|
|
|
| |||||
OTHER INFORMATION |
|
|
|
|
| ||||||
Return on total average assets |
| 1.33 | % | 1.28 | % | 1.40 | % | 1.93 | % | 1.63 | % |
Return on average equity (1) | 14.41 |
| 13.11 |
| 13.74 |
| 19.12 |
| 15.69 |
| |
Efficiency ratio (2) |
| 60.29 |
| 57.29 |
| 59.95 |
| 56.90 |
| 56.37 |
|
Effective tax rate |
| 21.26 |
| 22.71 |
| 22.05 |
| 21.78 |
| 19.67 |
|
Net yield on interest earning assets | 2.45 |
| 2.43 |
| 2.58 |
| 2.60 |
| 2.71 |
| |
Tax equivalent net interest income |
| $211,393 |
| $210,424 |
| $216,858 |
| $211,060 |
| $208,774 |
|
(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 revenue. |
COMMERCE BANCSHARES, INC. and SUBSIDIARIES CONSOLIDATED BALANCE SHEETS – PERIOD END | |||||||
(Unaudited) (In thousands) |
| Mar. 31, 2022 | Dec. 31, 2021 | Mar. 31, 2021 | |||
ASSETS |
|
|
|
| |||
Loans |
|
|
|
| |||
Business |
| $ 5,508,508 |
| $ 5,303,535 |
| $ 6,624,209 |
|
Real estate — construction and land |
| 1,144,411 |
| 1,118,266 |
| 1,073,036 |
|
Real estate — business |
| 3,109,668 |
| 3,058,837 |
| 3,017,242 |
|
Real estate — personal |
| 2,820,076 |
| 2,805,401 |
| 2,828,418 |
|
Consumer |
| 2,053,160 |
| 2,032,225 |
| 1,966,833 |
|
Revolving home equity |
| 264,401 |
| 275,945 |
| 285,261 |
|
Consumer credit card |
| 544,579 |
| 575,410 |
| 593,833 |
|
Overdrafts |
| 14,211 |
| 6,740 |
| 3,239 |
|
Total loans |
| 15,459,014 |
| 15,176,359 |
| 16,392,071 |
|
Allowance for credit losses on loans |
| (134,710 | ) | (150,044 | ) | (200,527 | ) |
Net loans |
| 15,324,304 |
| 15,026,315 |
| 16,191,544 |
|
Loans held for sale |
| 8,908 |
| 8,615 |
| 38,076 |
|
Investment securities: |
|
|
|
| |||
Available for sale debt securities |
| 14,780,494 |
| 14,450,027 |
| 12,528,203 |
|
Trading debt securities |
| 31,380 |
| 46,235 |
| 26,925 |
|
Equity securities |
| 9,284 |
| 9,202 |
| 4,337 |
|
Other securities |
| 199,576 |
| 194,047 |
| 155,913 |
|
Total investment securities |
| 15,020,734 |
| 14,699,511 |
| 12,715,378 |
|
Federal funds sold |
| — |
| 2,800 |
| 500 |
|
Securities purchased under agreements to resell |
| 1,825,000 |
| 1,625,000 |
| 850,000 |
|
Interest earning deposits with banks |
| 1,260,813 |
| 3,971,217 |
| 2,017,128 |
|
Cash and due from banks |
| 326,549 |
| 305,539 |
| 338,666 |
|
Premises and equipment — net |
| 394,028 |
| 388,738 |
| 371,737 |
|
Goodwill |
| 138,921 |
| 138,921 |
| 138,921 |
|
Other intangible assets — net |
| 15,885 |
| 15,570 |
| 13,098 |
|
Other assets |
| 671,651 |
| 506,862 |
| 594,738 |
|
Total assets |
| $ 34,986,793 |
| $ 36,689,088 |
| $ 33,269,786 |
|
LIABILITIES AND STOCKHOLDERS’ EQUITY |
|
|
|
| |||
Deposits: |
|
|
|
| |||
Non-interest bearing |
| $ 11,428,372 |
| $ 11,772,374 |
| $ 11,076,556 |
|
Savings, interest checking and money market |
| 16,751,632 |
| 16,598,085 |
| 14,572,378 |
|
Certificates of deposit of less than $100,000 |
| 422,992 |
| 435,960 |
| 504,472 |
|
Certificates of deposit of $100,000 and over |
| 716,345 |
| 1,006,654 |
| 1,267,219 |
|
Total deposits |
| 29,319,341 |
| 29,813,073 |
| 27,420,625 |
|
Federal funds purchased and securities sold under agreements to repurchase |
| 2,317,461 |
| 3,022,967 |
| 1,938,110 |
|
Other borrowings |
| 9,057 |
| 12,560 |
| 3,791 |
|
Other liabilities |
| 367,532 |
| 392,164 |
| 589,875 |
|
Total liabilities |
| 32,013,391 |
| 33,240,764 |
| 29,952,401 |
|
Stockholders’ equity: |
|
|
|
| |||
Common stock |
| 610,804 |
| 610,804 |
| 589,352 |
|
Capital surplus |
| 2,678,025 |
| 2,689,894 |
| 2,420,393 |
|
Retained earnings |
| 178,504 |
| 92,493 |
| 173,173 |
|
Treasury stock |
| (72,293 | ) | (32,973 | ) | (39,080 | ) |
Accumulated other comprehensive income |
| (434,400 | ) | 77,080 |
| 168,752 |
|
Total stockholders’ equity |
| 2,960,640 |
| 3,437,298 |
| 3,312,590 |
|
Non-controlling interest |
| 12,762 |
| 11,026 |
| 4,795 |
|
Total equity |
| 2,973,402 |
| 3,448,324 |
| 3,317,385 |
|
Total liabilities and equity |
| $ 34,986,793 |
| $ 36,689,088 |
| $ 33,269,786 |
|
COMMERCE BANCSHARES, INC. and SUBSIDIARIES AVERAGE BALANCE SHEETS | ||||||||||
(Unaudited) (In thousands) | For the Three Months Ended | |||||||||
Mar. 31, 2022 | Dec. 31, 2021 | Sep. 30, 2021 | Jun. 30, 2021 | Mar. 31, 2021 | ||||||
ASSETS: |
|
|
|
|
| |||||
Loans: |
|
|
|
|
| |||||
Business | $ 5,324,172 |
| $ 5,191,844 |
| $ 5,437,498 |
| $ 6,211,610 |
| $ 6,532,921 |
|
Real estate — construction and land | 1,134,902 |
| 1,228,237 |
| 1,168,566 |
| 1,088,433 |
| 1,091,969 |
|
Real estate — business | 3,095,068 |
| 3,003,459 |
| 2,982,847 |
| 3,014,955 |
| 3,022,979 |
|
Real estate — personal | 2,808,980 |
| 2,785,095 |
| 2,775,638 |
| 2,804,388 |
| 2,826,112 |
|
Consumer | 2,040,200 |
| 2,043,690 |
| 2,041,263 |
| 2,004,625 |
| 1,947,322 |
|
Revolving home equity | 273,859 |
| 276,464 |
| 281,689 |
| 287,031 |
| 299,371 |
|
Consumer credit card | 540,844 |
| 559,429 |
| 566,406 |
| 575,725 |
| 608,747 |
|
Overdrafts | 5,178 |
| 4,926 |
| 5,110 |
| 3,735 |
| 3,546 |
|
Total loans | 15,223,203 |
| 15,093,144 |
| 15,259,017 |
| 15,990,502 |
| 16,332,967 |
|
Allowance for credit losses on loans | (149,685 | ) | (162,428 | ) | (172,112 | ) | (200,801 | ) | (220,512 | ) |
Net loans | 15,073,518 |
| 14,930,716 |
| 15,086,905 |
| 15,789,701 |
| 16,112,455 |
|
Loans held for sale | 9,383 |
| 11,203 |
| 16,021 |
| 23,389 |
| 35,814 |
|
Investment securities: |
|
|
|
|
| |||||
U.S. government and federal agency obligations | 1,103,749 |
| 1,009,025 |
| 727,566 |
| 719,849 |
| 725,367 |
|
Government-sponsored enterprise obligations | 51,770 |
| 50,777 |
| 50,785 |
| 50,793 |
| 50,801 |
|
State and municipal obligations | 2,077,600 |
| 2,095,517 |
| 2,039,942 |
| 1,966,673 |
| 1,958,637 |
|
Mortgage-backed securities | 7,316,609 |
| 7,141,249 |
| 7,115,419 |
| 6,685,407 |
| 6,998,521 |
|
Asset-backed securities | 3,933,061 |
| 3,514,541 |
| 3,028,076 |
| 2,653,928 |
| 2,085,491 |
|
Other debt securities | 636,247 |
| 629,643 |
| 608,642 |
| 605,772 |
| 570,115 |
|
Unrealized gain on debt securities | (174,297 | ) | 86,020 |
| 230,058 |
| 197,124 |
| 283,511 |
|
Total available for sale debt securities | 14,944,739 |
| 14,526,772 |
| 13,800,488 |
| 12,879,546 |
| 12,672,443 |
|
Trading debt securities | 40,686 |
| 46,513 |
| 32,238 |
| 34,955 |
| 32,320 |
|
Equity securities | 9,498 |
| 9,171 |
| 8,756 |
| 4,914 |
| 4,321 |
|
Other securities | 192,311 |
| 190,346 |
| 183,397 |
| 156,984 |
| 154,030 |
|
Total investment securities | 15,187,234 |
| 14,772,802 |
| 14,024,879 |
| 13,076,399 |
| 12,863,114 |
|
Federal funds sold | 1,053 |
| 564 |
| 792 |
| 1,338 |
| 7 |
|
Securities purchased under agreements to resell | 1,733,887 |
| 1,669,835 |
| 1,633,205 |
| 937,372 |
| 849,999 |
|
Interest earning deposits with banks | 2,608,029 |
| 2,856,992 |
| 2,602,896 |
| 2,724,782 |
| 1,480,331 |
|
Other assets | 1,304,400 |
| 1,288,323 |
| 1,261,277 |
| 1,258,989 |
| 1,308,105 |
|
Total assets | $ 35,917,504 |
| $ 35,530,435 |
| $ 34,625,975 |
| $ 33,811,970 |
| $ 32,649,825 |
|
|
|
|
|
|
| |||||
LIABILITIES AND EQUITY: |
|
|
|
|
| |||||
Non-interest bearing deposits | $ 11,544,701 |
| $ 11,919,268 |
| $ 11,475,113 |
| $ 11,109,198 |
| $ 10,438,637 |
|
Savings | 1,563,093 |
| 1,507,199 |
| 1,484,923 |
| 1,474,391 |
| 1,333,177 |
|
Interest checking and money market | 14,949,727 |
| 13,873,985 |
| 13,343,180 |
| 13,283,481 |
| 12,970,629 |
|
Certificates of deposit of less than $100,000 | 429,852 |
| 441,920 |
| 464,367 |
| 491,446 |
| 516,728 |
|
Certificates of deposit of $100,000 and over | 862,232 |
| 1,105,480 |
| 1,289,665 |
| 1,354,685 |
| 1,230,075 |
|
Total deposits | 29,349,605 |
| 28,847,852 |
| 28,057,248 |
| 27,713,201 |
| 26,489,246 |
|
Borrowings: |
|
|
|
|
| |||||
Federal funds purchased | 23,356 |
| 20,848 |
| 13,606 |
| 23,291 |
| 37,034 |
|
Securities sold under agreements to repurchase | 2,712,468 |
| 2,620,348 |
| 2,347,270 |
| 2,142,405 |
| 2,129,038 |
|
Other borrowings | 768 |
| 1,078 |
| 347 |
| 978 |
| 831 |
|
Total borrowings | 2,736,592 |
| 2,642,274 |
| 2,361,223 |
| 2,166,674 |
| 2,166,903 |
|
Other liabilities | 505,644 |
| 562,102 |
| 667,786 |
| 527,401 |
| 608,212 |
|
Total liabilities | 32,591,841 |
| 32,052,228 |
| 31,086,257 |
| 30,407,276 |
| 29,264,361 |
|
Equity | 3,325,663 |
| 3,478,207 |
| 3,539,718 |
| 3,404,694 |
| 3,385,464 |
|
Total liabilities and equity | $ 35,917,504 |
| $ 35,530,435 |
| $ 34,625,975 |
| $ 33,811,970 |
| $ 32,649,825 |
|
COMMERCE BANCSHARES, INC. and SUBSIDIARIES AVERAGE RATES | ||||||||||
(Unaudited) | For the Three Months Ended | |||||||||
Mar. 31, 2022 | Dec. 31, 2021 | Sep. 30, 2021 | Jun. 30, 2021 | Mar. 31, 2021 | ||||||
ASSETS: |
|
|
|
|
| |||||
Loans: |
|
|
|
|
| |||||
Business (1) | 2.93 | % | 3.16 | % | 3.43 | % | 3.15 | % | 3.09 | % |
Real estate — construction and land | 3.76 |
| 3.61 |
| 3.51 |
| 3.56 |
| 3.54 |
|
Real estate — business | 3.38 |
| 3.41 |
| 3.46 |
| 3.49 |
| 3.52 |
|
Real estate — personal | 3.28 |
| 3.21 |
| 3.27 |
| 3.31 |
| 3.40 |
|
Consumer | 3.59 |
| 3.65 |
| 3.71 |
| 3.84 |
| 4.02 |
|
Revolving home equity | 3.48 |
| 3.47 |
| 3.46 |
| 3.43 |
| 3.38 |
|
Consumer credit card | 11.35 |
| 11.06 |
| 11.29 |
| 11.22 |
| 10.97 |
|
Overdrafts | — |
| — |
| — |
| — |
| — |
|
Total loans | 3.54 |
| 3.62 |
| 3.74 |
| 3.65 |
| 3.66 |
|
Loans held for sale | 6.48 |
| 5.10 |
| 4.63 |
| 4.20 |
| 3.44 |
|
Investment securities: |
|
|
|
|
| |||||
U.S. government and federal agency obligations | 3.42 |
| 3.11 |
| 5.74 |
| 5.52 |
| 2.54 |
|
Government-sponsored enterprise obligations | 2.33 |
| 2.30 |
| 2.30 |
| 2.33 |
| 2.36 |
|
State and municipal obligations (1) | 2.29 |
| 2.26 |
| 2.35 |
| 2.41 |
| 2.46 |
|
Mortgage-backed securities | 1.98 |
| 1.40 |
| 1.53 |
| 1.11 |
| 1.39 |
|
Asset-backed securities | 1.13 |
| 1.03 |
| 1.08 |
| 1.25 |
| 1.39 |
|
Other debt securities | 2.00 |
| 2.07 |
| 2.04 |
| 2.06 |
| 2.15 |
|
Total available for sale debt securities | 1.91 |
| 1.59 |
| 1.80 |
| 1.64 |
| 1.67 |
|
Trading debt securities (1) | 1.84 |
| 1.54 |
| 1.01 |
| 1.19 |
| 1.08 |
|
Equity securities (1) | 26.00 |
| 27.64 |
| 23.92 |
| 43.10 |
| 49.56 |
|
Other securities (1) | 5.91 |
| 18.39 |
| 7.46 |
| 11.90 |
| 5.26 |
|
Total investment securities | 1.97 |
| 1.82 |
| 1.89 |
| 1.78 |
| 1.72 |
|
Federal funds sold | .39 |
| .70 |
| .50 |
| .60 |
| — |
|
Securities purchased under agreements to resell | 1.24 |
| 1.62 |
| 2.19 |
| 4.46 |
| 5.31 |
|
Interest earning deposits with banks | .18 |
| .15 |
| .15 |
| .11 |
| .10 |
|
Total interest earning assets | 2.49 |
| 2.47 |
| 2.62 |
| 2.64 |
| 2.76 |
|
|
|
|
|
|
| |||||
LIABILITIES AND EQUITY: |
|
|
|
|
| |||||
Interest bearing deposits: |
|
|
|
|
| |||||
Savings | .05 |
| .08 |
| .08 |
| .08 |
| .08 |
|
Interest checking and money market | .04 |
| .04 |
| .05 |
| .05 |
| .06 |
|
Certificates of deposit of less than $100,000 | .13 |
| .14 |
| .18 |
| .27 |
| .37 |
|
Certificates of deposit of $100,000 and over | .20 |
| .14 |
| .14 |
| .20 |
| .35 |
|
Total interest bearing deposits | .05 |
| .05 |
| .06 |
| .07 |
| .09 |
|
Borrowings: |
|
|
|
|
| |||||
Federal funds purchased | .12 |
| .11 |
| .10 |
| .05 |
| .05 |
|
Securities sold under agreements to repurchase | .10 |
| .08 |
| .08 |
| .06 |
| .06 |
|
Other borrowings | .53 |
| — |
| 1.14 |
| .82 |
| .98 |
|
Total borrowings | .10 |
| .08 |
| .08 |
| .06 |
| .06 |
|
Total interest bearing liabilities | .06 | % | .06 | % | .06 | % | .07 | % | .09 | % |
|
|
|
|
|
| |||||
Net yield on interest earning assets | 2.45 | % | 2.43 | % | 2.58 | % | 2.60 | % | 2.71 | % |
(1) Stated on a tax equivalent basis using a federal income tax rate of 21%. |
COMMERCE BANCSHARES, INC. and SUBSIDIARIES CREDIT QUALITY | |||||||||||
|
| For the Three Months Ended | |||||||||
(Unaudited) (In thousands, except ratios) |
| Mar. 31, 2022 | Dec. 31, 2021 | Sep. 30, 2021 | Jun. 30, 2021 | Mar. 31, 2021 | |||||
ALLOWANCE FOR CREDIT LOSSES ON LOANS |
|
|
|
|
|
| |||||
Balance at beginning of period |
| $150,044 |
| $162,775 |
| $172,395 |
| $200,527 |
| $220,834 |
|
Adoption of ASU 2016-13 |
| — |
| — |
| — |
| — |
| — |
|
Provision for credit losses on loans |
| (10,686 | ) | (8,474 | ) | (5,961 | ) | (27,433 | ) | (10,355 | ) |
Net charge-offs (recoveries): |
|
|
|
|
|
| |||||
Commercial portfolio: |
|
|
|
|
|
| |||||
Business |
| 77 |
| 90 |
| 65 |
| (4,909 | ) | (4 | ) |
Real estate — construction and land |
| — |
| — |
| — |
| — |
| 1 |
|
Real estate — business |
| (7 | ) | 6 |
| (5 | ) | (85 | ) | 20 |
|
|
| 70 |
| 96 |
| 60 |
| (4,994 | ) | 17 |
|
Personal banking portfolio: |
|
|
|
|
|
| |||||
Consumer credit card |
| 3,372 |
| 2,964 |
| 2,908 |
| 5,155 |
| 8,981 |
|
Consumer |
| 808 |
| 919 |
| 496 |
| 378 |
| 763 |
|
Overdraft |
| 358 |
| 375 |
| 243 |
| 148 |
| 153 |
|
Real estate — personal |
| 22 |
| (71 | ) | (26 | ) | (16 | ) | 15 |
|
Revolving home equity |
| 18 |
| (26 | ) | (22 | ) | 28 |
| 23 |
|
|
| 4,578 |
| 4,161 |
| 3,599 |
| 5,693 |
| 9,935 |
|
Total net loan charge-offs |
| 4,648 |
| 4,257 |
| 3,659 |
| 699 |
| 9,952 |
|
Balance at end of period |
| $134,710 |
| $150,044 |
| $162,775 |
| $172,395 |
| $200,527 |
|
LIABILITY FOR UNFUNDED LENDING COMMITMENTS |
| $25,032 |
| $24,204 |
| $22,784 |
| $24,208 |
| $42,430 |
|
|
|
|
|
|
|
| |||||
NET CHARGE-OFF RATIOS (1) |
|
|
|
|
|
| |||||
Commercial portfolio: |
|
|
|
|
|
| |||||
Business |
| .01 | % | .01 | % | — | % | (.32 | %) | — | % |
Real estate — construction and land |
| — |
| — |
| — |
| — |
| — |
|
Real estate — business |
| — |
| — |
| — |
| (.01 | ) | — |
|
|
| — |
| — |
| — |
| (.19 | ) | — |
|
Personal banking portfolio: |
|
|
|
|
|
| |||||
Consumer credit card |
| 2.53 |
| 2.10 |
| 2.04 |
| 3.59 |
| 5.98 |
|
Consumer |
| .16 |
| .18 |
| .10 |
| .08 |
| .16 |
|
Overdraft |
| 28.04 |
| 30.20 |
| 18.87 |
| 15.89 |
| 17.50 |
|
Real estate — personal |
| — |
| (.01 | ) | — |
| — |
| — |
|
Revolving home equity |
| .03 |
| (.04 | ) | (.03 | ) | .04 |
| .03 |
|
|
| .33 |
| .29 |
| .25 |
| .40 |
| .71 |
|
Total |
| .12 | % | .11 | % | .10 | % | .02 | % | .25 | % |
|
|
|
|
|
|
| |||||
CREDIT QUALITY RATIOS |
|
|
|
|
|
| |||||
Non-accrual loans to total loans |
| .05 | % | .06 | % | .07 | % | .07 | % | .14 | % |
Allowance for credit losses on loans to total loans(2) |
| .87 |
| .99 |
| 1.07 |
| 1.10 |
| 1.22 |
|
|
|
|
|
|
|
| |||||
NON-ACCRUAL AND PAST DUE LOANS |
|
|
|
|
|
| |||||
Non-accrual loans: |
|
|
|
|
|
| |||||
Business |
| $6,756 |
| $7,312 |
| $8,293 |
| $8,839 |
| $20,215 |
|
Real estate — construction and land |
| — |
| — |
| — |
| — |
| — |
|
Real estate — business |
| 190 |
| 214 |
| 577 |
| 655 |
| 1,572 |
|
Real estate — personal |
| 1,389 |
| 1,631 |
| 1,551 |
| 1,672 |
| 1,719 |
|
Total |
| 8,335 |
| 9,157 |
| 10,421 |
| 11,166 |
| 23,506 |
|
Loans past due 90 days and still accruing interest | $10,670 |
| $11,726 |
| $10,496 |
| $12,338 |
| $21,512 |
|
(1) | Net charge-offs are annualized and calculated as a percentage of average loans (excluding loans held for sale). |
(2) | Excluding PPP loans, the allowance for credit losses on loans to total loans was .87% and 1.00% as of March 31, 2022 and December 31, 2021, respectively. |
COMMERCE BANCSHARES, INC.
Management Discussion of First Quarter Results
March 31, 2022
For the quarter ended March 31, 2022, net income amounted to $118.2 million, compared to $114.9 million in the previous quarter and $131.0 million in the same quarter last year. The increase in net income compared to the previous quarter was primarily the result of net investment securities gains recorded this quarter compared to net losses recorded in the prior quarter, mostly offset by lower non-interest income. The net yield on interest earning assets grew two basis points to 2.45%. Average loans grew $130.1 million compared to the previous quarter, while average available for sale debt securities grew $418.0 million, and average deposits increased $501.7 million. For the quarter, the return on average assets was 1.33%, the return on average equity was 14.41%, and the efficiency ratio was 60.3%.
Balance Sheet Review
During the 1st quarter of 2022, average loans totaled $15.2 billion, an increase of $130.1 million over the prior quarter, and declined $1.1 billion, or 6.8%, from the same quarter last year. Compared to the previous quarter, average balances of business loans grew $132.3 million (includes a decline of $132.0 million in Paycheck Protection Program (PPP) average loan balances). Average business real estate loan balances grew $91.6 million, while construction loan balances declined $93.3 million. Period end loans increased $282.7 million compared to the prior quarter, including PPP loan balances that decreased $75.7 million this quarter and totaled $53.4 million at March 31, 2022. Excluding PPP loans, period end business loans increased $280.7 million. As of March 31, 2022, 97% of PPP loan balances have been forgiven. During the current quarter, the Company sold certain fixed rate personal real estate loans totaling $55.6 million, compared to $119.3 million in the prior quarter.
Total average available for sale debt securities increased $418.0 million over the previous quarter to $14.9 billion, at fair value. The increase in investment securities was mainly the result of growth in asset-backed securities.
Contacts
Matt Burkemper, Investor Relations
(314) 746-7485
www.commercebank.com
[email protected]