Commerce Bancshares Inc.
01/19/2022 | Press release | Distributed by Public on 01/19/2022 05:02
Commerce Bancshares, Inc. Reports Fourth Quarter Earnings Per Share of $.94
KANSAS CITY, Mo.--(BUSINESS WIRE)-- Commerce Bancshares, Inc. announced earnings of $.94 per share for the three months ended December 31, 2021, compared to $1.05 per common share in the same quarter last year and $.99 per share in the third quarter of 2021. Net income attributable to Commerce Bancshares, Inc. (net income) for the fourth quarter of 2021 amounted to $114.9 million, compared to $129.9 million in the fourth quarter of 2020 and $122.6 million in the prior quarter.
In announcing these results, John Kemper, Chief Executive Officer, said, "Commerce had a strong quarter to close out 2021, reflecting a growing economy and a resilient customer base. Trust fees were up 16.5% over the fourth quarter of 2020, driven by rising market values, excellent customer attraction and retention, and the ongoing investments we've made in our wealth business. Corporate and retail spending levels continued to increase, amounting to growth of 12% in bank card transaction fees over the same period last year.
The growth in our fee-based businesses continues to provide strong revenue diversification. Non-interest income comprised 42% of total revenue in the fourth quarter. Compared to the previous quarter, we experienced higher loan demand, a reflection of accelerating business activity in our markets. We continue to be confident in our strong liquidity, capital levels, and credit quality, and we continue to invest in our excellent relationships with customers, teammates, shareholders, and regulators."
Fourth Quarter 2021 Financial Highlights:
- Net interest income in the fourth quarter amounted to $207.7 million, a 3.0% decrease compared to the third quarter, partly due to a $5.3 million decrease in interest income from Paycheck Protection Program (PPP) loans. The net interest margin decreased 15 basis points from the prior quarter to 2.43%.
- Non-interest income totaled $147.7 million in the fourth quarter, an increase of $10.2 million compared to the prior quarter.
- Net investment securities losses of $9.7 million this quarter were driven mostly by net fair value losses of $6.5 million in the Company's portfolio of private equity investments.
- Non-interest expense totaled $203.6 for the quarter, a decrease of $8.0 million compared to the previous quarter.
- Average loan balances totaled $15.1 billion, a decrease of $165.9 million, or 1.1%, from the prior quarter (average PPP loan balances declined $356.1 million). As of December 31, 2021, 93% of PPP loan balances have been forgiven.
- Total average available for sale debt securities increased 5.3%, or $726.3 million, over the previous quarter to $14.5 billion, at fair value. Purchases of securities during the quarter totaled $1.4 billion with a weighted average yield of approximately 1.27%.
- Compared to the previous quarter, average deposits grew $790.6 million, or 2.8%. The average rate paid on interest bearing deposits was 5 basis points this quarter.
- The ratio of annualized net loan charge-offs to average loans was .11% in the current quarter compared to .10% in the prior quarter. Net charge-offs on loans remained low.
- Non-accrual loans totaled $9.2 million compared to $10.4 million prior quarter. Non-accrual loans were .06% of total loans.
- At December 31, 2021, the allowance for credit losses on loans decreased to $150.0 million. The allowance for credit losses on loans to total loans was .99% at December 31, 2021.
- The Company purchased 696,367 shares of its common stock this quarter at an average price of $70.81.
- Total assets at December 31, 2021 were $36.7 billion, an increase of $2.2 billion, or 6.4%, from the prior quarter.
- For the quarter, the return on average assets was 1.28%, the return on average equity was 13.11% and the efficiency ratio was 57.3%.
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 150 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 |
For the Year Ended |
||||||||||
|
(Unaudited) (Dollars in thousands, except per share data) |
Dec. 31, |
Sep. 30, |
Dec. 31, |
Dec. 31, |
Dec. 31, |
||||||
|
FINANCIAL SUMMARY |
|||||||||||
|
Net interest income |
$207,657 |
$214,037 |
$209,763 |
$835,424 |
$829,847 |
||||||
|
Non-interest income |
147,699 |
137,506 |
135,117 |
560,393 |
505,867 |
||||||
|
Total revenue |
355,356 |
351,543 |
344,880 |
1,395,817 |
1,335,714 |
||||||
|
Investment securities gains (losses), net |
(9,706 |
) |
13,108 |
12,307 |
30,059 |
11,032 |
|||||
|
Provision for credit losses |
(7,054 |
) |
(7,385 |
) |
(4,403 |
) |
(66,326 |
) |
137,190 |
||
|
Non-interest expense |
203,582 |
211,620 |
196,310 |
805,901 |
768,378 |
||||||
|
Income before taxes |
149,122 |
160,416 |
165,280 |
686,301 |
441,178 |
||||||
|
Income taxes |
33,764 |
34,662 |
33,084 |
145,711 |
87,293 |
||||||
|
(Income) loss attributable to non-controlling interest |
452 |
3,193 |
2,307 |
9,825 |
(172 |
) |
|||||
|
Net income attributable to Commerce Bancshares, Inc. |
114,906 |
122,561 |
129,889 |
530,765 |
354,057 |
||||||
|
Preferred stock dividends |
- |
- |
- |
- |
11,966 |
||||||
|
Net income available to common shareholders |
$114,906 |
$122,561 |
$129,889 |
$530,765 |
$342,091 |
||||||
|
Earnings per common share: |
|||||||||||
|
Net income - basic |
$0.94 |
$1.00 |
$1.05 |
$4.32 |
$2.77 |
||||||
|
Net income - diluted |
$0.94 |
$0.99 |
$1.05 |
$4.31 |
$2.77 |
||||||
|
Effective tax rate |
22.71 |
% |
22.05 |
% |
20.30 |
% |
21.54 |
% |
19.78 |
% |
|
|
Tax equivalent net interest income |
$210,424 |
$216,858 |
$213,017 |
$847,116 |
$842,790 |
||||||
|
Average total interest earning assets (1) |
$ 34,318,520 |
$ 33,306,752 |
$ 30,297,922 |
$ 32,874,701 |
$ 28,143,048 |
||||||
|
Diluted wtd. average shares outstanding |
121,221,482 |
121,881,091 |
122,333,233 |
121,940,992 |
122,413,216 |
||||||
|
RATIOS |
|||||||||||
|
Average loans to deposits (2) |
52.36 |
% |
54.44 |
% |
64.05 |
% |
56.46 |
% |
67.73 |
% |
|
|
Return on total average assets |
1.28 |
1.40 |
1.63 |
1.55 |
1.20 |
||||||
|
Return on average common equity(3) |
13.11 |
13.74 |
15.49 |
15.37 |
10.64 |
||||||
|
Non-interest income to total revenue |
41.56 |
39.11 |
39.18 |
40.15 |
37.87 |
||||||
|
Efficiency ratio (4) |
57.29 |
59.95 |
56.68 |
57.64 |
57.19 |
||||||
|
Net yield on interest earning assets |
2.43 |
2.58 |
2.80 |
2.58 |
2.99 |
||||||
|
EQUITY SUMMARY |
|||||||||||
|
Cash dividends per common share |
$.250 |
$.250 |
$.245 |
$1.00 |
$.980 |
||||||
|
Cash dividends on common stock |
$30,489 |
$30,645 |
$30,178 |
$122,693 |
$120,818 |
||||||
|
Cash dividends on preferred stock |
$- |
$- |
$- |
$- |
$11,966 |
||||||
|
Book value per common share (5) |
$28.40 |
$28.58 |
$27.64 |
||||||||
|
Market value per common share (5) |
$68.74 |
$66.36 |
$62.57 |
||||||||
|
High market value per common share |
$71.50 |
$72.08 |
$64.85 |
||||||||
|
Low market value per common share |
$64.85 |
$61.81 |
$49.62 |
||||||||
|
Common shares outstanding (5) |
121,436,734 |
122,148,786 |
122,995,353 |
||||||||
|
Tangible common equity to tangible assets (6) |
9.01 |
% |
9.71 |
% |
9.92 |
% |
|||||
|
Tier I leverage ratio |
9.13 |
% |
9.31 |
% |
9.45 |
% |
|||||
|
OTHER QTD INFORMATION |
|||||||||||
|
Number of bank/ATM locations |
287 |
292 |
306 |
||||||||
|
Full-time equivalent employees |
4,567 |
4,582 |
4,766 |
|
(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 available to common shareholders divided by average total equity less preferred stock. |
|
(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 preferred stock, 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 |
For the Year Ended |
|||||||||||||
|
Dec. 31, |
Sep. 30, |
Jun. 30, |
Mar. 31, |
Dec. 31, |
Dec. 31, |
Dec. 31, |
|||||||||
|
Interest income |
$210,479 |
$216,981 |
$211,133 |
$209,697 |
$214,726 |
$848,290 |
$872,648 |
||||||||
|
Interest expense |
2,822 |
2,944 |
3,151 |
3,949 |
4,963 |
12,866 |
42,801 |
||||||||
|
Net interest income |
207,657 |
214,037 |
207,982 |
205,748 |
209,763 |
835,424 |
829,847 |
||||||||
|
Provision for credit losses |
(7,054 |
) |
(7,385 |
) |
(45,655 |
) |
(6,232 |
) |
(4,403 |
) |
(66,326 |
) |
137,190 |
||
|
Net interest income after credit losses |
214,711 |
221,422 |
253,637 |
211,980 |
214,166 |
901,750 |
692,657 |
||||||||
|
NON-INTEREST INCOME |
|||||||||||||||
|
Bank card transaction fees |
44,773 |
42,815 |
42,608 |
37,695 |
39,979 |
167,891 |
151,797 |
||||||||
|
Trust fees |
48,893 |
48,950 |
46,257 |
44,127 |
41,961 |
188,227 |
160,637 |
||||||||
|
Deposit account charges and other fees |
25,493 |
25,161 |
23,988 |
22,575 |
24,164 |
97,217 |
93,227 |
||||||||
|
Capital market fees |
3,841 |
3,794 |
3,327 |
4,981 |
3,826 |
15,943 |
14,582 |
||||||||
|
Consumer brokerage services |
4,878 |
4,900 |
4,503 |
4,081 |
3,996 |
18,362 |
15,095 |
||||||||
|
Loan fees and sales |
5,248 |
6,842 |
7,446 |
10,184 |
9,031 |
29,720 |
26,684 |
||||||||
|
Other |
14,573 |
5,044 |
11,014 |
12,402 |
12,160 |
43,033 |
43,845 |
||||||||
|
Total non-interest income |
147,699 |
137,506 |
139,143 |
136,045 |
135,117 |
560,393 |
505,867 |
||||||||
|
INVESTMENT SECURITIES GAINS (LOSSES), NET |
(9,706 |
) |
13,108 |
16,804 |
9,853 |
12,307 |
30,059 |
11,032 |
|||||||
|
NON-INTEREST EXPENSE |
|||||||||||||||
|
Salaries and employee benefits |
132,640 |
132,824 |
130,751 |
129,033 |
129,983 |
525,248 |
512,987 |
||||||||
|
Net occupancy |
12,308 |
12,329 |
11,527 |
12,021 |
11,570 |
48,185 |
46,645 |
||||||||
|
Equipment |
4,691 |
4,440 |
4,605 |
4,353 |
4,526 |
18,089 |
18,839 |
||||||||
|
Supplies and communication |
4,430 |
4,530 |
4,033 |
4,125 |
4,193 |
17,118 |
17,419 |
||||||||
|
Data processing and software |
25,777 |
25,598 |
24,954 |
25,463 |
24,323 |
101,792 |
95,325 |
||||||||
|
Marketing |
5,395 |
5,623 |
5,680 |
5,158 |
5,028 |
21,856 |
19,734 |
||||||||
|
Other |
18,341 |
26,276 |
16,576 |
12,420 |
16,687 |
73,613 |
57,429 |
||||||||
|
Total non-interest expense |
203,582 |
211,620 |
198,126 |
192,573 |
196,310 |
805,901 |
768,378 |
||||||||
|
Income before income taxes |
149,122 |
160,416 |
211,458 |
165,305 |
165,280 |
686,301 |
441,178 |
||||||||
|
Less income taxes |
33,764 |
34,662 |
45,209 |
32,076 |
33,084 |
145,711 |
87,293 |
||||||||
|
Net income |
115,358 |
125,754 |
166,249 |
133,229 |
132,196 |
540,590 |
353,885 |
||||||||
|
Less (income) loss attributable to non-controlling interest |
452 |
3,193 |
3,923 |
2,257 |
2,307 |
9,825 |
(172 |
) |
|||||||
|
Net income attributable to Commerce Bancshares, Inc. |
114,906 |
122,561 |
162,326 |
130,972 |
129,889 |
530,765 |
354,057 |
||||||||
|
Less preferred stock dividends |
- |
- |
- |
- |
- |
- |
11,966 |
||||||||
|
Net income available to common shareholders |
$114,906 |
$122,561 |
$162,326 |
$130,972 |
$129,889 |
$530,765 |
$342,091 |
||||||||
|
Net income per common share - basic |
$0.94 |
$1.00 |
$1.32 |
$1.06 |
$1.05 |
$4.32 |
$2.77 |
||||||||
|
Net income per common share - diluted |
$0.94 |
$0.99 |
$1.32 |
$1.06 |
$1.05 |
$4.31 |
$2.77 |
||||||||
|
OTHER INFORMATION |
|||||||||||||||
|
Return on total average assets |
1.28 |
% |
1.40 |
% |
1.93 |
% |
1.63 |
% |
1.63 |
% |
1.55 |
% |
1.20 |
% |
|
|
Return on average common equity (1) |
13.11 |
13.74 |
19.12 |
15.69 |
15.49 |
15.37 |
10.64 |
||||||||
|
Efficiency ratio (2) |
57.29 |
59.95 |
56.90 |
56.37 |
56.68 |
57.64 |
57.19 |
||||||||
|
Effective tax rate |
22.71 |
22.05 |
21.78 |
19.67 |
20.30 |
21.54 |
19.78 |
||||||||
|
Net yield on interest earning assets |
2.43 |
2.58 |
2.60 |
2.71 |
2.80 |
2.58 |
2.99 |
||||||||
|
Tax equivalent net interest income |
$210,424 |
$216,858 |
$211,060 |
$208,774 |
$213,017 |
$847,116 |
$842,790 |
| (1) |
Annualized net income available to common shareholders divided by average total equity less preferred stock. |
| (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) |
Dec. 31, |
Sep. 30, |
Dec. 31, |
||||
|
ASSETS |
|||||||
|
Loans |
|||||||
|
Business |
$ 5,303,535 |
$ 5,277,850 |
$ 6,546,087 |
||||
|
Real estate - construction and land |
1,118,266 |
1,257,836 |
1,021,595 |
||||
|
Real estate - business |
3,058,837 |
2,937,852 |
3,026,117 |
||||
|
Real estate - personal |
2,805,401 |
2,769,292 |
2,820,030 |
||||
|
Consumer |
2,032,225 |
2,049,559 |
1,950,502 |
||||
|
Revolving home equity |
275,945 |
281,442 |
307,083 |
||||
|
Consumer credit card |
575,410 |
569,976 |
655,078 |
||||
|
Overdrafts |
6,740 |
4,583 |
3,149 |
||||
|
Total loans |
15,176,359 |
15,148,390 |
16,329,641 |
||||
|
Allowance for credit losses on loans |
(150,044 |
) |
(162,775 |
) |
(220,834 |
) |
|
|
Net loans |
15,026,315 |
14,985,615 |
16,108,807 |
||||
|
Loans held for sale |
8,615 |
16,043 |
45,089 |
||||
|
Investment securities: |
|||||||
|
Available for sale debt securities |
14,450,027 |
14,165,656 |
12,449,264 |
||||
|
Trading debt securities |
46,235 |
40,114 |
35,321 |
||||
|
Equity securities |
9,202 |
9,174 |
4,363 |
||||
|
Other securities |
194,047 |
184,450 |
156,745 |
||||
|
Total investment securities |
14,699,511 |
14,399,394 |
12,645,693 |
||||
|
Federal funds sold |
2,800 |
- |
- |
||||
|
Securities purchased under agreements to resell |
1,625,000 |
1,750,000 |
850,000 |
||||
|
Interest earning deposits with banks |
3,971,217 |
1,888,545 |
1,747,363 |
||||
|
Cash and due from banks |
305,539 |
344,460 |
437,563 |
||||
|
Premises and equipment - net |
388,738 |
377,476 |
371,083 |
||||
|
Goodwill |
138,921 |
138,921 |
138,921 |
||||
|
Other intangible assets - net |
15,570 |
14,458 |
11,207 |
||||
|
Other assets |
506,862 |
582,631 |
567,248 |
||||
|
Total assets |
$ 36,689,088 |
$ 34,497,543 |
$ 32,922,974 |
||||
|
LIABILITIES AND STOCKHOLDERS' EQUITY |
|||||||
|
Deposits: |
|||||||
|
Non-interest bearing |
$ 11,772,374 |
$ 11,622,855 |
$ 10,497,598 |
||||
|
Savings, interest checking and money market |
16,598,085 |
14,907,654 |
14,604,456 |
||||
|
Certificates of deposit of less than $100,000 |
435,960 |
452,432 |
529,802 |
||||
|
Certificates of deposit of $100,000 and over |
1,006,654 |
1,163,343 |
1,314,889 |
||||
|
Total deposits |
29,813,073 |
28,146,284 |
26,946,745 |
||||
|
Federal funds purchased and securities sold under agreements to repurchase |
3,022,967 |
2,253,753 |
2,098,383 |
||||
|
Other borrowings |
12,560 |
4,006 |
802 |
||||
|
Other liabilities |
392,164 |
602,279 |
477,072 |
||||
|
Total liabilities |
33,240,764 |
31,006,322 |
29,523,002 |
||||
|
Stockholders' equity: |
|||||||
|
Common stock |
610,804 |
589,352 |
589,352 |
||||
|
Capital surplus |
2,689,894 |
2,427,544 |
2,436,288 |
||||
|
Retained earnings |
92,493 |
396,655 |
73,000 |
||||
|
Treasury stock |
(32,973 |
) |
(92,047 |
) |
(32,970 |
) |
|
|
Accumulated other comprehensive income |
77,080 |
159,166 |
331,377 |
||||
|
Total stockholders' equity |
3,437,298 |
3,480,670 |
3,397,047 |
||||
|
Non-controlling interest |
11,026 |
10,551 |
2,925 |
||||
|
Total equity |
3,448,324 |
3,491,221 |
3,399,972 |
||||
|
Total liabilities and equity |
$ 36,689,088 |
$ 34,497,543 |
$ 32,922,974 |
COMMERCE BANCSHARES, INC. and SUBSIDIARIES
AVERAGE BALANCE SHEETS
|
(Unaudited) (In thousands) |
For the Three Months Ended |
|||||||||
|
Dec. 31, |
Sep. 30, |
Jun. 30, |
Mar. 31, |
Dec. 31, |
||||||
|
ASSETS: |
||||||||||
|
Loans: |
||||||||||
|
Business |
$ 5,191,844 |
$ 5,437,498 |
$ 6,211,610 |
$ 6,532,921 |
$ 6,580,300 |
|||||
|
Real estate - construction and land |
1,228,237 |
1,168,566 |
1,088,433 |
1,091,969 |
1,032,891 |
|||||
|
Real estate - business |
3,003,459 |
2,982,847 |
3,014,955 |
3,022,979 |
3,029,799 |
|||||
|
Real estate - personal |
2,785,095 |
2,775,638 |
2,804,388 |
2,826,112 |
2,778,462 |
|||||
|
Consumer |
2,043,690 |
2,041,263 |
2,004,625 |
1,947,322 |
1,981,033 |
|||||
|
Revolving home equity |
276,464 |
281,689 |
287,031 |
299,371 |
316,895 |
|||||
|
Consumer credit card |
559,429 |
566,406 |
575,725 |
608,747 |
638,161 |
|||||
|
Overdrafts |
4,926 |
5,110 |
3,735 |
3,546 |
3,762 |
|||||
|
Total loans |
15,093,144 |
15,259,017 |
15,990,502 |
16,332,967 |
16,361,303 |
|||||
|
Allowance for credit losses on loans |
(162,428 |
) |
(172,112 |
) |
(200,801 |
) |
(220,512 |
) |
(235,484 |
) |
|
Net loans |
14,930,716 |
15,086,905 |
15,789,701 |
16,112,455 |
16,125,819 |
|||||
|
Loans held for sale |
11,203 |
16,021 |
23,389 |
35,814 |
30,577 |
|||||
|
Investment securities: |
||||||||||
|
U.S. government and federal agency obligations |
1,009,025 |
727,566 |
719,849 |
725,367 |
774,640 |
|||||
|
Government-sponsored enterprise obligations |
50,777 |
50,785 |
50,793 |
50,801 |
69,133 |
|||||
|
State and municipal obligations |
2,095,517 |
2,039,942 |
1,966,673 |
1,958,637 |
1,967,408 |
|||||
|
Mortgage-backed securities |
7,141,249 |
7,115,419 |
6,685,407 |
6,998,521 |
6,646,345 |
|||||
|
Asset-backed securities |
3,514,541 |
3,028,076 |
2,653,928 |
2,085,491 |
1,819,467 |
|||||
|
Other debt securities |
629,643 |
608,642 |
605,772 |
570,115 |
533,646 |
|||||
|
Unrealized gain on debt securities |
86,020 |
230,058 |
197,124 |
283,511 |
329,477 |
|||||
|
Total available for sale debt securities |
14,526,772 |
13,800,488 |
12,879,546 |
12,672,443 |
12,140,116 |
|||||
|
Trading debt securities |
46,513 |
32,238 |
34,955 |
32,320 |
28,040 |
|||||
|
Equity securities |
9,171 |
8,756 |
4,914 |
4,321 |
4,221 |
|||||
|
Other securities |
190,346 |
183,397 |
156,984 |
154,030 |
130,145 |
|||||
|
Total investment securities |
14,772,802 |
14,024,879 |
13,076,399 |
12,863,114 |
12,302,522 |
|||||
|
Federal funds sold |
564 |
792 |
1,338 |
7 |
355 |
|||||
|
Securities purchased under agreements to resell |
1,669,835 |
1,633,205 |
937,372 |
849,999 |
849,998 |
|||||
|
Interest earning deposits with banks |
2,856,992 |
2,602,896 |
2,724,782 |
1,480,331 |
1,082,644 |
|||||
|
Other assets |
1,288,323 |
1,261,277 |
1,258,989 |
1,308,105 |
1,291,907 |
|||||
|
Total assets |
$ 35,530,435 |
$ 34,625,975 |
$ 33,811,970 |
$ 32,649,825 |
$ 31,683,822 |
|||||
|
LIABILITIES AND EQUITY: |
||||||||||
|
Non-interest bearing deposits |
$ 11,919,268 |
$ 11,475,113 |
$ 11,109,198 |
$ 10,438,637 |
$ 10,275,735 |
|||||
|
Savings |
1,507,199 |
1,484,923 |
1,474,391 |
1,333,177 |
1,234,481 |
|||||
|
Interest checking and money market |
13,873,985 |
13,343,180 |
13,283,481 |
12,970,629 |
12,198,928 |
|||||
|
Certificates of deposit of less than $100,000 |
441,920 |
464,367 |
491,446 |
516,728 |
542,212 |
|||||
|
Certificates of deposit of $100,000 and over |
1,105,480 |
1,289,665 |
1,354,685 |
1,230,075 |
1,339,301 |
|||||
|
Total deposits |
28,847,852 |
28,057,248 |
27,713,201 |
26,489,246 |
25,590,657 |
|||||
|
Borrowings: |
||||||||||
|
Federal funds purchased |
20,848 |
13,606 |
23,291 |
37,034 |
48,412 |
|||||
|
Securities sold under agreements to repurchase |
2,620,348 |
2,347,270 |
2,142,405 |
2,129,038 |
1,980,045 |
|||||
|
Other borrowings |
1,078 |
347 |
978 |
831 |
1,013 |
|||||
|
Total borrowings |
2,642,274 |
2,361,223 |
2,166,674 |
2,166,903 |
2,029,470 |
|||||
|
Other liabilities |
562,102 |
667,786 |
527,401 |
608,212 |
727,569 |
|||||
|
Total liabilities |
32,052,228 |
31,086,257 |
30,407,276 |
29,264,361 |
28,347,696 |
|||||
|
Equity |
3,478,207 |
3,539,718 |
3,404,694 |
3,385,464 |
3,336,126 |
|||||
|
Total liabilities and equity |
$ 35,530,435 |
$ 34,625,975 |
$ 33,811,970 |
$ 32,649,825 |
$ 31,683,822 |
COMMERCE BANCSHARES, INC. and SUBSIDIARIES
AVERAGE RATES
|
(Unaudited) |
For the Three Months Ended |
|||||||||
|
Dec. 31, |
Sep. 30, |
Jun. 30, |
Mar. 31, |
Dec. 31, |
||||||
|
ASSETS: |
||||||||||
|
Loans: |
||||||||||
|
Business(1) |
3.16 |
% |
3.43 |
% |
3.15 |
% |
3.09 |
% |
3.01 |
% |
|
Real estate - construction and land |
3.61 |
3.51 |
3.56 |
3.54 |
3.72 |
|||||
|
Real estate - business |
3.41 |
3.46 |
3.49 |
3.52 |
3.51 |
|||||
|
Real estate - personal |
3.21 |
3.27 |
3.31 |
3.40 |
3.44 |
|||||
|
Consumer |
3.65 |
3.71 |
3.84 |
4.02 |
4.07 |
|||||
|
Revolving home equity |
3.47 |
3.46 |
3.43 |
3.38 |
3.37 |
|||||
|
Consumer credit card |
11.06 |
11.29 |
11.22 |
10.97 |
11.60 |
|||||
|
Overdrafts |
- |
- |
- |
- |
- |
|||||
|
Total loans |
3.62 |
3.74 |
3.65 |
3.66 |
3.69 |
|||||
|
Loans held for sale |
5.10 |
4.63 |
4.20 |
3.44 |
3.54 |
|||||
|
Investment securities: |
||||||||||
|
U.S. government and federal agency obligations |
3.11 |
5.74 |
5.52 |
2.54 |
2.63 |
|||||
|
Government-sponsored enterprise obligations |
2.30 |
2.30 |
2.33 |
2.36 |
2.23 |
|||||
|
State and municipal obligations(1) |
2.26 |
2.35 |
2.41 |
2.46 |
2.44 |
|||||
|
Mortgage-backed securities |
1.40 |
1.53 |
1.11 |
1.39 |
1.37 |
|||||
|
Asset-backed securities |
1.03 |
1.08 |
1.25 |
1.39 |
1.59 |
|||||
|
Other debt securities |
2.07 |
2.04 |
2.06 |
2.15 |
2.19 |
|||||
|
Total available for sale debt securities |
1.59 |
1.80 |
1.64 |
1.67 |
1.70 |
|||||
|
Trading debt securities(1) |
1.54 |
1.01 |
1.19 |
1.08 |
1.40 |
|||||
|
Equity securities (1) |
27.64 |
23.92 |
43.10 |
49.56 |
50.71 |
|||||
|
Other securities (1) |
18.39 |
7.46 |
11.90 |
5.26 |
10.03 |
|||||
|
Total investment securities |
1.82 |
1.89 |
1.78 |
1.72 |
1.81 |
|||||
|
Federal funds sold |
.70 |
.50 |
.60 |
- |
1.12 |
|||||
|
Securities purchased under agreements to resell |
1.62 |
2.19 |
4.46 |
5.31 |
5.24 |
|||||
|
Interest earning deposits with banks |
.15 |
.15 |
.11 |
.10 |
.10 |
|||||
|
Total interest earning assets |
2.47 |
2.62 |
2.64 |
2.76 |
2.86 |
|||||
|
LIABILITIES AND EQUITY: |
||||||||||
|
Interest bearing deposits: |
||||||||||
|
Savings |
.08 |
.08 |
.08 |
.08 |
.09 |
|||||
|
Interest checking and money market |
.04 |
.05 |
.05 |
.06 |
.07 |
|||||
|
Certificates of deposit of less than $100,000 |
.14 |
.18 |
.27 |
.37 |
.51 |
|||||
|
Certificates of deposit of $100,000 and over |
.14 |
.14 |
.20 |
.35 |
.47 |
|||||
|
Total interest bearing deposits |
.05 |
.06 |
.07 |
.09 |
.12 |
|||||
|
Borrowings: |
||||||||||
|
Federal funds purchased |
.11 |
.10 |
.05 |
.05 |
.07 |
|||||
|
Securities sold under agreements to repurchase |
.08 |
.08 |
.06 |
.06 |
.06 |
|||||
|
Other borrowings |
- |
1.14 |
.82 |
.98 |
- |
|||||
|
Total borrowings |
.08 |
.08 |
.06 |
.06 |
.06 |
|||||
|
Total interest bearing liabilities |
.06 |
% |
.06 |
% |
.07 |
% |
.09 |
% |
.11 |
% |
|
Net yield on interest earning assets |
2.43 |
% |
2.58 |
% |
2.60 |
% |
2.71 |
% |
2.80 |
% |
| (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 |
For the Year Ended |
||||||||||||||
|
(Unaudited) (In thousands, except per share data) |
Dec. 31, |
Sep. 30, |
Jun. 30, |
Mar. 31, |
Dec. 31, |
Dec. 31, |
Dec. 31, |
||||||||
|
ALLOWANCE FOR CREDIT LOSSES ON LOANS |
|||||||||||||||
|
Balance at beginning of period |
$162,775 |
$172,395 |
$200,527 |
$220,834 |
$236,360 |
$220,834 |
$160,682 |
||||||||
|
Adoption of ASU 2016-13 |
- |
- |
- |
- |
- |
- |
(21,039 |
) |
|||||||
|
Provision for credit losses on loans |
(8,474 |
) |
(5,961 |
) |
(27,433 |
) |
(10,355 |
) |
(7,510 |
) |
(52,223 |
) |
116,049 |
||
|
Net charge-offs (recoveries): |
|||||||||||||||
|
Commercial portfolio: |
|||||||||||||||
|
Business |
90 |
65 |
(4,909 |
) |
(4 |
) |
581 |
(4,758 |
) |
3,665 |
|||||
|
Real estate - construction and land |
- |
- |
- |
1 |
(2 |
) |
1 |
(3 |
) |
||||||
|
Real estate - business |
6 |
(5 |
) |
(85 |
) |
20 |
(7 |
) |
(64 |
) |
(47 |
) |
|||
|
96 |
60 |
(4,994 |
) |
17 |
572 |
(4,821 |
) |
3,615 |
|||||||
|
Personal banking portfolio: |
|||||||||||||||
|
Consumer credit card |
2,964 |
2,908 |
5,155 |
8,981 |
5,975 |
20,008 |
25,979 |
||||||||
|
Consumer |
919 |
496 |
378 |
763 |
1,160 |
2,556 |
4,444 |
||||||||
|
Overdraft |
375 |
243 |
148 |
153 |
335 |
919 |
1,277 |
||||||||
|
Real estate - personal |
(71 |
) |
(26 |
) |
(16 |
) |
15 |
(18 |
) |
(98 |
) |
(291 |
) |
||
|
Revolving home equity |
(26 |
) |
(22 |
) |
28 |
23 |
(8 |
) |
3 |
(166 |
) |
||||
|
4,161 |
3,599 |
5,693 |
9,935 |
7,444 |
23,388 |
31,243 |
|||||||||
|
Total net loan charge-offs |
4,257 |
3,659 |
699 |
9,952 |
8,016 |
18,567 |
34,858 |
||||||||
|
Balance at end of period |
$150,044 |
$162,775 |
$172,395 |
$200,527 |
$220,834 |
$150,044 |
$220,834 |
||||||||
|
LIABILITY FOR UNFUNDED LENDING COMMITMENTS |
$24,204 |
$22,784 |
$24,208 |
$42,430 |
$38,307 |
||||||||||
|
NET CHARGE-OFF RATIOS (1) |
|||||||||||||||
|
Commercial portfolio: |
|||||||||||||||
|
Business |
.01 |
% |
- |
% |
(.32 |
%) |
- |
% |
.04 |
% |
(.08 |
%) |
.06 |
% |
|
|
Real estate - construction and land |
- |
- |
- |
- |
- |
- |
- |
||||||||
|
Real estate - business |
- |
- |
(.01 |
) |
- |
- |
- |
- |
|||||||
|
- |
- |
(.19 |
) |
- |
.02 |
(.05 |
) |
.04 |
|||||||
|
Personal banking portfolio: |
|||||||||||||||
|
Consumer credit card |
2.10 |
2.04 |
3.59 |
5.98 |
3.72 |
3.47 |
3.88 |
||||||||
|
Consumer |
.18 |
.10 |
.08 |
.16 |
.23 |
.13 |
.23 |
||||||||
|
Overdraft |
30.20 |
18.87 |
15.89 |
17.50 |
35.43 |
21.20 |
38.11 |
||||||||
|
Real estate - personal |
(.01 |
) |
- |
- |
- |
- |
- |
(.01 |
) |
||||||
|
Revolving home equity |
(.04 |
) |
(.03 |
) |
.04 |
.03 |
(.01 |
) |
- |
(.05 |
) |
||||
|
.29 |
.25 |
.40 |
.71 |
.52 |
.41 |
.56 |
|||||||||
|
Total |
.11 |
% |
.10 |
% |
.02 |
% |
.25 |
% |
.19 |
% |
.12 |
% |
.22 |
% |
|
|
CREDIT QUALITY RATIOS |
|||||||||||||||
|
Non-accrual loans to total loans |
.06 |
% |
.07 |
% |
.07 |
% |
.14 |
% |
.16 |
% |
|||||
|
Allowance for credit losses on loans to total loans(2) |
.99 |
1.07 |
1.10 |
1.22 |
1.35 |
||||||||||
|
NON-ACCRUAL AND PAST DUE LOANS |
|||||||||||||||
|
Non-accrual loans: |
|||||||||||||||
|
Business |
$7,312 |
$8,293 |
$8,839 |
$20,215 |
$22,524 |
||||||||||
|
Real estate - construction and land |
- |
- |
- |
- |
- |
||||||||||
|
Real estate - business |
214 |
577 |
655 |
1,572 |
2,230 |
||||||||||
|
Real estate - personal |
1,631 |
1,551 |
1,672 |
1,719 |
1,786 |
||||||||||
|
Total |
9,157 |
10,421 |
11,166 |
23,506 |
26,540 |
||||||||||
|
Loans past due 90 days and still accruing interest |
$11,726 |
$10,496 |
$12,338 |
$21,512 |
$22,190 |
| (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 1.00% and 1.10% as of December 31, 2021 and September 30, 2021, respectively. |
COMMERCE BANCSHARES, INC.
Management Discussion of Fourth Quarter Results
December 31, 2021
For the quarter ended December 31, 2021, net income attributable to Commerce Bancshares, Inc. (net income) amounted to $114.9 million, compared to $122.6 million in the previous quarter and $129.9 million in the same quarter last year. The decrease in net income compared to the previous quarter was primarily the result of net investment securities losses recorded this quarter compared to net gains recorded in the prior quarter and lower net interest income, partly offset by higher non-interest income and lower non-interest expense. The net yield on interest earning assets declined 15 basis points to 2.43%. Average loans declined $165.9 million compared to the previous quarter, while average available for sale debt securities grew $726.3 million, and average deposits increased $790.6 million. For the quarter, the return on average assets was 1.28%, the return on average equity was 13.11%, and the efficiency ratio was 57.3%.
Balance Sheet Review
During the 4th quarter of 2021, average loans totaled $15.1 billion, a decrease of $165.9 million from the prior quarter, and declined $1.3 billion, or 7.8%, from the same quarter last year. Compared to the previous quarter, average balances of business loans declined $245.7 million (includes a decline of $356.1 million in Paycheck Protection Program (PPP) loan balances). This decline was partially offset by growth in construction and business real estate loans of $59.7 million and $20.6 million, respectively. While period end loans only increased $28.0 million compared to the prior quarter, PPP loan balances decreased $178.8 million this quarter and totaled $129.2 million at December 31, 2021. Excluding PPP loans, period end business loans increased $204.5 million. As of December 31, 2021, 99% of round 1 and 73% of round 2 PPP loan balances have been forgiven. During the current quarter, the Company sold certain fixed rate personal real estate loans totaling $85.3 million, compared to $119.3 million in the prior quarter.
Total average available for sale debt securities increased $726.3 million over the previous quarter to $14.5 billion, at fair value. The increase in investment securities was mainly the result of growth in asset-backed and U.S. government securities. During the current quarter, purchases of securities totaled $1.4 billion with a weighted average yield of approximately 1.27%. Sales, maturities and pay downs were $956.5 million. At December 31, 2021, the duration of the investment portfolio was 3.2 years, and maturities and pay downs of approximately $3.0 billion are expected to occur during the next 12 months.
Total average deposits increased $790.6 million this quarter compared to the previous quarter. The increase in deposits mostly resulted from growth in interest checking and money market deposits and demand deposits of $530.8 million and $444.2 million, respectively. Certificate of deposit balances declined $206.6 million. Compared to the previous quarter, total average commercial and consumer deposits grew $612.1 million and $203.8 million, respectively. The average loans to deposits ratio was 52.4% in the current quarter and 54.4% in the prior quarter. The Company's average borrowings, which include customer repurchase agreements, were $2.6 billion in the 4th quarter of 2021 and $2.4 billion in the prior quarter.
Net Interest Income
Net interest income in the 4th quarter of 2021 amounted to $207.7 million, a decrease of $6.4 million compared to the previous quarter. On a tax equivalent basis, net interest income for the current quarter decreased $6.4 million compared to the previous quarter to $210.4 million. The decrease in net interest income was mainly due to lower income earned on loans and securities purchased under agreements to resell, partially offset by higher income earned on investment securities. The net yield on earning assets (tax equivalent) decreased to 2.43%, compared to 2.58% in the prior quarter.
Compared to the previous quarter, interest income on loans (tax equivalent) decreased $6.1 million, mostly due to $5.3 million of lower income recognized from PPP loans this quarter. Interest on construction loans grew due to higher yields and average loan balances, but was offset by lower consumer card yields and average loan balances. The yield on PPP loans increased from 7.73% to 10.80% this quarter. Excluding PPP loans, the yield on business loans was 2.83% in the 4th quarter of 2021 compared to 2.92% in the prior quarter. The average tax-equivalent yield on the loan portfolio decreased 12 basis points to 3.62% this quarter.
Interest income on investment securities (tax equivalent) increased $1.7 million compared to the prior quarter, due to higher average balances, partly offset by lower rates earned. Interest income earned on U.S. government and federal agency securities decreased, as lower average rates earned, including the impact of $2.9 million of lower inflation income from Treasury inflation-protected securities, more than offset higher average balances. This decrease was partly offset by $5.5 million in dividends received from private equity portfolio investments this quarter. At December 31, 2021, the Company recorded a $2.6 million adjustment to premium amortization, which increased interest income this quarter to reflect moderately slower forward prepayment speed estimates on mortgage-backed securities. The yield on total investment securities was 1.82% in the current quarter, compared to 1.89% in the previous quarter.
The average rate paid on interest bearing deposits totaled .05% in the 4th quarter of 2021, compared .06% in the prior quarter. Interest expense on deposits decreased $172 thousand this quarter compared to the previous quarter mainly due to lower rates paid on money market accounts and certificate of deposit accounts. The overall rate paid on interest bearing liabilities was .06% in both the current and prior quarters.
Non-Interest Income
In the 4th quarter of 2021, total non-interest income amounted to $147.7 million, an increase of $12.6 million, or 9.3%, compared to the same period last year and increased $10.2 million compared to the prior quarter. The increase in non-interest income over the same period last year was mainly due to growth in trust fees and bank card fees, partially offset by lower loan fees and sales.
Total net bank card fees in the current quarter increased $4.8 million, or 12.0%, over the same period last year, and increased $2.0 million compared to the prior quarter. Net corporate card fees increased $3.6 million, or 17.0%, over the same quarter of last year mainly due to higher interchange fee income, partly offset by higher rewards expense. Net debit card fees increased $955 thousand, or 9.8%, mainly due to higher interchange fees. Net merchant income increased $104 thousand, or 2.0%, and net credit card fees increased $111 thousand, or 3.0%. Total net bank card fees this quarter were comprised of fees on corporate card ($25.0 million), debit card ($10.7 million), merchant ($5.3 million) and credit card ($3.8 million) transactions.
In the current quarter, trust fees increased $6.9 million, or 16.5%, over the same period last year, resulting mostly from higher private client fee income. Compared to the same period last year, deposit account fees increased $1.3 million, or 5.5%, mainly due to higher overdraft and return item fees and corporate cash management fees. Loan fees and sales, mostly mortgage banking revenue, declined $3.8 million, or 41.9%, compared to amounts recorded in the same quarter last year. Consumer brokerage fees increased $882 thousand, or 22.1%, compared to the same quarter last year.
Other non-interest income increased over the same period last year mainly due to a $3.7 million gain on the sale of land recorded this quarter, $818 thousand of higher tax credit sales fees, and $774 thousand of higher swap fees, partially offset by lower cash sweep commissions of $710 thousand. For the 4th quarter of 2021, non-interest income comprised 41.6% of the Company's total revenue.
Investment Securities Gains and Losses
The Company recorded investment net losses of $9.7 million in the current quarter, compared to net gains of $13.1 million in the prior quarter and net gains of $12.3 million in the 4th quarter of 2020. Net losses on investments in the current quarter primarily resulted from net fair value losses of $6.5 million in the Company's private equity investment portfolio, in part due to $5.5 million in dividends paid by portfolio companies mentioned above, which reduced the fair value of the investments.
Non-Interest Expense
Non-interest expense for the current quarter amounted to $203.6 million, compared to $196.3 million in the same period last year and $211.6 million in the prior quarter. The increase in non-interest expense compared to the same period last year was mainly due to higher salaries expense, data processing and software expense, and travel and entertainment expense. The decrease in non-interest expense compared to the prior quarter was mainly due to litigation settlement expense in the prior quarter that did not reoccur.
Compared to the 4th quarter of last year, salaries and employee benefits expense increased $2.7 million, mostly due to higher full-time salaries expense. Incentive compensation was also higher, while employee benefits expense was flat. Full-time equivalent employees totaled 4,567 and 4,766 at December 31, 2021 and 2020, respectively.
Compared to the same period last year, data processing and software expense increased $1.5 million due to higher bank card processing fees and increased costs for service providers this quarter. Additionally, other non-interest expense increased $1.7 million, mainly due to an increase of $1.3 million in travel and entertainment expense.
Income Taxes
The effective tax rate for the Company was 22.7% in the current quarter, 22.0% in the previous quarter, and 20.3% in the 4th quarter of 2020.
Credit Quality
Net loan charge-offs in the 4th quarter of 2021 amounted to $4.3 million, compared to $3.7 million in the prior quarter and $8.0 million in the same period last year. The ratio of annualized net loan charge-offs to total average loans was .11% in the current quarter, .10% in the previous quarter, and .19% in the 4th quarter of last year. Net loan charge-offs on personal banking loans increased $562 thousand to $4.2 million.
In the 4th quarter of 2021, annualized net loan charge-offs on average consumer credit card loans were 2.10%, compared to 2.04% in the previous quarter, and 3.72% in the same quarter last year. Consumer loan net charge-offs were .18% of average consumer loans in the current quarter, .10% in the prior quarter and .23% in the same quarter last year.
During the 4th quarter of 2021, the economy continued to recover from the pandemic and the economic forecast utilized in the allowance for credit loss model also continued to improve. This improvement, coupled with other model inputs, resulted in a decrease in the allowance for credit losses as of December 31, 2021. At December 31, 2021, the allowance for credit losses on loans totaled $150.0 million, or .99% of total loans and 1.00% of total loans excluding PPP loans. Additionally, the liability for unfunded lending commitments at December 31, 2021 was $24.2 million, an increase of $1.4 million over the liability at September 30, 2021.
At December 31, 2021, total non-accrual loans amounted to $9.2 million, a decrease of $1.3 million from the previous quarter. At December 31, 2021, the balance of non-accrual loans, which represented .06% of loans outstanding, included business loans of $7.3 million, personal real estate loans of $1.6 million, and business real estate loans of $214 thousand. Loans more than 90 days past due and still accruing interest totaled $11.7 million at December 31, 2021.
Other
During the 4th quarter of 2021, the Company distributed a 5% stock dividend on its common stock and paid a cash dividend of $.25 per common share (as restated for the stock dividend), representing a 2.1% increase over the same period last year. The Company purchased 696,367 shares of treasury stock during the current quarter at an average price of $70.81.
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.
Matt Burkemper, Investor Relations
(314) 746-7485
www.commercebank.com
[email protected]