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Commerce Bancshares, Inc. Reports First Quarter Earnings Per Share of $.95

Business Wire - Tue Apr 18, 2023

Commerce Bancshares, Inc. (NASDAQ: CBSH) 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.
  • 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.

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.

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