Recent Quotes View Full List My Watchlist Create Watchlist Indicators DJI Nasdaq Composite SPX Gold Crude Oil EL&P Market Index Markets Stocks ETFs Tools Overview News Currencies International Treasuries Commerce Bancshares, Inc. Reports First Quarter Earnings Per Share of $.86 By: Commerce Bancshares, Inc. via Business Wire April 16, 2024 at 06:00 AM EDT Commerce Bancshares, Inc. announced earnings of $.86 per share for the three months ended March 31, 2024, compared to $.91 per share in the same quarter last year and $.84 per share in the fourth quarter of 2023. Net income for the first quarter of 2024 amounted to $112.7 million, compared to $119.5 million in the first quarter of 2023 and $109.2 million in the prior quarter. “Commerce delivered a strong financial performance for the first quarter,” said John Kemper, President and Chief Executive Officer. “Our results are a reflection of fundamental strength and a diversified business model, and evidence of our ability to perform well through economic cycles. “Although interest rates continue to be elevated and put downward pressure on bank balance sheets, Commerce's net interest income grew slightly over the previous quarter and our net interest margin expanded 16 basis points. Interest-bearing deposit costs increased just four basis points over the previous quarter, a product of our high-quality deposit franchise. Non-interest income comprised 37.4% of total revenue. "Our liquidity and capital levels remain robust, and credit performance remains excellent, with non-accrual loans at .03% of total loans, down from .05% from the first quarter of last year." First Quarter 2024 Financial Highlights: Net interest income was $249.0 million, a $578 thousand increase over the prior quarter. The net yield on interest earning assets increased 16 basis points to 3.33%. Non-interest income totaled $148.8 million, an increase of $11.2 million compared to the same quarter last year. Trust fees grew $5.8 million, or 12.7% compared to the same period last year, mostly due to higher private client fees. Non-interest expense totaled $245.7 million, an increase of $21.6 million compared to the same quarter last year and included a $10.0 million litigation settlement expense and a $4.0 million accrual adjustment to the FDIC's insurance special assessment. Average loan balances totaled $17.1 billion and were flat compared to the prior quarter. Total average available for sale debt securities decreased $116.6 million from the prior quarter to $9.5 billion, at fair value. During the first quarter of 2024, the unrealized loss on available for sale debt securities increased $27.2 million to $1.2 billion, at period end. Total average deposits decreased $759.5 million, or 3.0%, compared to the prior quarter, and included $225.4 million of lower average brokered deposits, which paid off last quarter. The average rate paid on interest bearing deposits in the current quarter was 1.97%. The ratio of annualized net loan charge-offs to average loans was .21% compared to .19% in the prior quarter. The allowance for credit losses on loans decreased $1.9 million during the first quarter to $160.5 million, and the ratio of the allowance for credit losses on loans to total loans was .93% at March 31, 2024, compared to .94% at December 31, 2023. Total assets at March 31, 2024 were $30.4 billion, a decrease of $1.3 billion, or 4.2%, compared to the prior quarter. For the quarter, the return on average assets was 1.48%, the return on average equity was 15.39%, and the efficiency ratio was 61.7%. 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. Beyond the Midwest, Commerce also maintains commercial offices in Dallas, Houston, Cincinnati, Nashville, Des Moines, Indianapolis, and Grand Rapids and wealth offices in Dallas, Houston, and Naples. Commerce delivers high-touch service and sophisticated financial solutions at regional branches, commercial and wealth 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, 2024 Dec. 31, 2023 Mar. 31, 2023 FINANCIAL SUMMARY Net interest income $248,999 $248,421 $251,623 Non-interest income 148,848 144,879 137,612 Total revenue 397,847 393,300 389,235 Investment securities gains (losses) (259 ) 7,601 (306 ) Provision for credit losses 4,787 5,879 11,456 Non-interest expense 245,697 251,254 224,107 Income before taxes 147,104 143,768 153,366 Income taxes 31,652 32,307 32,813 Non-controlling interest expense 2,789 2,238 1,101 Net income attributable to Commerce Bancshares, Inc. $112,663 $109,223 $119,452 Earnings per common share: Net income — basic $0.87 $0.84 $0.91 Net income — diluted $0.86 $0.84 $0.91 Effective tax rate 21.93 % 22.83 % 21.55 % Fully-taxable equivalent net interest income $251,312 $250,547 $253,411 Average total interest earning assets (1) $30,365,774 $31,340,958 $31,568,594 Diluted wtd. average shares outstanding 129,185,903 129,608,322 130,471,930 RATIOS Average loans to deposits (2) 69.87 % 67.69 % 64.99 % Return on total average assets 1.48 1.38 1.54 Return on average equity (3) 15.39 16.48 18.75 Non-interest income to total revenue 37.41 36.84 35.35 Efficiency ratio (4) 61.67 63.80 57.49 Net yield on interest earning assets 3.33 3.17 3.26 EQUITY SUMMARY Cash dividends per share $.270 $.257 $.257 Cash dividends on common stock $35,140 $33,574 $33,759 Book value per share (5) $22.70 $22.77 $20.49 Market value per share (5) $53.20 $53.41 $55.57 High market value per share $55.64 $56.75 $66.86 Low market value per share $49.44 $40.91 $53.07 Common shares outstanding (5) 129,694,606 130,176,048 130,956,746 Tangible common equity to tangible assets (6) 9.24 % 8.85 % 7.92 % Tier I leverage ratio 11.75 % 11.25 % 10.61 % OTHER QTD INFORMATION Number of bank/ATM locations 254 257 275 Full-time equivalent employees 4,721 4,718 4,636 (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 2023. COMMERCE BANCSHARES, INC. and SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (Unaudited) (In thousands, except per share data) For the Three Months Ended Mar. 31, 2024 Dec. 31, 2023 Sep. 30, 2023 Jun. 30, 2023 Mar. 31, 2023 Interest income $358,721 $362,609 $361,162 $348,663 $308,857 Interest expense 109,722 114,188 112,615 99,125 57,234 Net interest income 248,999 248,421 248,547 249,538 251,623 Provision for credit losses 4,787 5,879 11,645 6,471 11,456 Net interest income after credit losses 244,212 242,542 236,902 243,067 240,167 NON-INTEREST INCOME Trust fees 51,105 49,154 49,207 47,265 45,328 Bank card transaction fees 46,930 47,878 46,899 49,725 46,654 Deposit account charges and other fees 24,151 23,517 23,090 22,633 21,752 Consumer brokerage services 4,408 3,641 3,820 4,677 5,085 Capital market fees 3,892 4,269 3,524 2,945 3,362 Loan fees and sales 3,141 2,875 2,966 2,735 2,589 Other 15,221 13,545 13,443 17,625 12,842 Total non-interest income 148,848 144,879 142,949 147,605 137,612 INVESTMENT SECURITIES GAINS (LOSSES), NET (259 ) 7,601 4,298 3,392 (306 ) NON-INTEREST EXPENSE Salaries and employee benefits 151,801 147,456 146,805 145,429 144,373 Data processing and software 31,153 31,141 30,744 28,719 28,154 Net occupancy 13,574 13,927 13,948 12,995 12,759 Deposit insurance 8,017 20,304 4,029 4,187 4,643 Equipment 5,010 5,137 4,697 4,864 4,850 Supplies and communication 4,744 5,242 4,963 4,625 4,590 Marketing 4,036 6,505 6,167 6,368 5,471 Other 27,362 21,542 16,657 20,424 19,267 Total non-interest expense 245,697 251,254 228,010 227,611 224,107 Income before income taxes 147,104 143,768 156,139 166,453 153,366 Less income taxes 31,652 32,307 33,439 35,990 32,813 Net income 115,452 111,461 122,700 130,463 120,553 Less non-controlling interest expense (income) 2,789 2,238 2,104 2,674 1,101 Net income attributable to Commerce Bancshares, Inc. $112,663 $109,223 $120,596 $127,789 $119,452 Net income per common share — basic $0.87 $0.84 $0.92 $0.97 $0.91 Net income per common share — diluted $0.86 $0.84 $0.92 $0.97 $0.91 OTHER INFORMATION Return on total average assets 1.48 % 1.38 % 1.49 % 1.56 % 1.54 % Return on average equity (1) 15.39 16.48 17.73 18.81 18.75 Efficiency ratio (2) 61.67 63.80 58.15 57.22 57.49 Effective tax rate 21.93 22.83 21.71 21.97 21.55 Net yield on interest earning assets 3.33 3.17 3.11 3.12 3.26 Fully-taxable equivalent net interest income $251,312 $250,547 $250,962 $251,757 $253,411 (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. The income statement above reflects the reclassification of non-interest income of $406 thousand and $1.1 million from other non-interest income to capital market fees for the second and third quarters of 2023. COMMERCE BANCSHARES, INC. and SUBSIDIARIES CONSOLIDATED BALANCE SHEETS - PERIOD END (Unaudited) (In thousands) Mar. 31, 2024 Dec. 31, 2023 Mar. 31, 2023 ASSETS Loans Business $5,994,974 $6,019,036 $5,704,467 Real estate — construction and land 1,497,647 1,446,764 1,437,419 Real estate — business 3,711,602 3,719,306 3,486,543 Real estate — personal 3,039,885 3,026,041 2,952,042 Consumer 2,119,308 2,077,723 2,094,389 Revolving home equity 322,523 319,894 295,478 Consumer credit card 564,388 589,913 558,669 Overdrafts 48,513 6,802 6,515 Total loans 17,298,840 17,205,479 16,535,522 Allowance for credit losses on loans (160,465 ) (162,395 ) (159,317 ) Net loans 17,138,375 17,043,084 16,376,205 Loans held for sale 2,328 4,177 6,162 Investment securities: Available for sale debt securities 9,141,695 9,684,760 11,228,616 Trading debt securities 56,716 28,830 41,584 Equity securities 12,852 12,701 12,528 Other securities 229,146 222,473 268,417 Total investment securities 9,440,409 9,948,764 11,551,145 Federal funds sold — 5,025 27,060 Securities purchased under agreements to resell 225,000 450,000 825,000 Interest earning deposits with banks 1,609,614 2,239,010 1,341,854 Cash and due from banks 291,040 443,147 351,210 Premises and equipment — net 467,377 469,059 428,169 Goodwill 146,539 146,539 138,921 Other intangible assets — net 13,918 14,179 14,918 Other assets 1,037,508 938,077 944,212 Total assets $30,372,108 $31,701,061 $32,004,856 LIABILITIES AND STOCKHOLDERS’ EQUITY Deposits: Non-interest bearing $7,513,464 $7,975,935 $8,685,234 Savings, interest checking and money market 14,463,211 14,512,273 14,419,741 Certificates of deposit of less than $100,000 997,979 930,432 468,667 Certificates of deposit of $100,000 and over 1,465,541 1,945,258 1,109,818 Total deposits 24,440,195 25,363,898 24,683,460 Federal funds purchased and securities sold under agreements to repurchase 2,505,576 2,908,815 2,784,559 Other borrowings 2,359 1,404 1,507,776 Other liabilities 460,089 462,714 346,649 Total liabilities 27,408,219 28,736,831 29,322,444 Stockholders’ equity: Common stock 655,322 655,322 629,319 Capital surplus 3,148,649 3,162,622 2,919,060 Retained earnings 130,706 53,183 117,313 Treasury stock (59,674 ) (35,599 ) (59,670 ) Accumulated other comprehensive income (loss) (931,027 ) (891,412 ) (940,498 ) Total stockholders’ equity 2,943,976 2,944,116 2,665,524 Non-controlling interest 19,913 20,114 16,888 Total equity 2,963,889 2,964,230 2,682,412 Total liabilities and equity $30,372,108 $31,701,061 $32,004,856 COMMERCE BANCSHARES, INC. and SUBSIDIARIES AVERAGE BALANCE SHEETS (Unaudited) (In thousands) For the Three Months Ended Mar. 31, 2024 Dec. 31, 2023 Sep. 30, 2023 Jun. 30, 2023 Mar. 31, 2023 ASSETS: Loans: Business $5,873,525 $5,861,229 $5,849,227 $5,757,388 $5,656,104 Real estate — construction and land 1,472,554 1,523,682 1,508,850 1,450,196 1,410,835 Real estate — business 3,727,643 3,644,589 3,642,010 3,540,851 3,478,382 Real estate — personal 3,031,193 3,027,664 2,992,500 2,960,962 2,933,750 Consumer 2,082,490 2,117,268 2,102,281 2,098,523 2,067,385 Revolving home equity 322,074 310,282 304,055 300,623 296,748 Consumer credit card 562,892 568,112 564,039 555,875 556,223 Overdrafts 7,696 5,258 5,341 4,630 4,449 Total loans 17,080,067 17,058,084 16,968,303 16,669,048 16,403,876 Allowance for credit losses on loans (161,891 ) (161,932 ) (158,335 ) (159,068 ) (150,117 ) Net loans 16,918,176 16,896,152 16,809,968 16,509,980 16,253,759 Loans held for sale 2,149 5,392 5,714 5,957 5,708 Investment securities: U.S. government and federal agency obligations 851,656 889,390 986,284 1,035,651 1,099,067 Government-sponsored enterprise obligations 55,652 55,661 55,676 55,751 87,086 State and municipal obligations 1,330,808 1,363,649 1,391,541 1,532,519 1,793,756 Mortgage-backed securities 5,902,328 6,022,502 6,161,348 6,316,224 6,454,408 Asset-backed securities 2,085,050 2,325,089 2,553,562 2,827,911 3,233,757 Other debt securities 503,204 510,721 514,787 519,988 528,941 Unrealized gain (loss) on debt securities (1,274,125 ) (1,595,845 ) (1,458,141 ) (1,331,002 ) (1,387,196 ) Total available for sale debt securities 9,454,573 9,571,167 10,205,057 10,957,042 11,809,819 Trading debt securities 40,483 37,234 35,044 46,493 45,757 Equity securities 12,768 12,249 12,230 12,335 12,458 Other securities 221,695 222,378 237,518 273,587 229,867 Total investment securities 9,729,519 9,843,028 10,489,849 11,289,457 12,097,901 Federal funds sold 599 1,194 2,722 7,484 38,978 Securities purchased under agreements to resell 340,934 450,000 712,472 824,974 825,000 Interest earning deposits with banks 1,938,381 2,387,415 2,337,744 2,284,162 809,935 Other assets 1,715,716 1,797,849 1,750,222 1,941,340 1,376,551 Total assets $30,645,474 $31,381,030 $32,108,691 $32,863,354 $31,407,832 LIABILITIES AND EQUITY: Non-interest bearing deposits $7,328,603 $7,748,654 $7,939,190 $8,224,475 $9,114,512 Savings 1,333,983 1,357,733 1,436,149 1,516,887 1,550,215 Interest checking and money market 13,215,270 13,166,783 13,048,199 12,918,399 13,265,485 Certificates of deposit of less than $100,000 976,804 1,097,224 1,423,965 1,075,110 415,367 Certificates of deposit of $100,000 and over 1,595,310 1,839,057 1,718,126 1,472,208 903,393 Total deposits 24,449,970 25,209,451 25,565,629 25,207,079 25,248,972 Borrowings: Federal funds purchased 328,216 473,534 508,851 507,165 493,721 Securities sold under agreements to repurchase 2,511,959 2,467,118 2,283,020 2,206,612 2,418,726 Other borrowings 76 179,587 685,222 1,617,952 551,267 Total borrowings 2,840,251 3,120,239 3,477,093 4,331,729 3,463,714 Other liabilities 410,310 421,402 367,741 598,915 112,052 Total liabilities 27,700,531 28,751,092 29,410,463 30,137,723 28,824,738 Equity 2,944,943 2,629,938 2,698,228 2,725,631 2,583,094 Total liabilities and equity $30,645,474 $31,381,030 $32,108,691 $32,863,354 $31,407,832 COMMERCE BANCSHARES, INC. and SUBSIDIARIES AVERAGE RATES (Unaudited) For the Three Months Ended Mar. 31, 2024 Dec. 31, 2023 Sep. 30, 2023 Jun. 30, 2023 Mar. 31, 2023 ASSETS: Loans: Business (1) 6.07 % 5.91 % 5.77 % 5.58 % 5.31 % Real estate — construction and land 8.40 8.34 8.17 7.92 7.33 Real estate — business 6.26 6.18 6.13 5.96 5.65 Real estate — personal 3.95 3.85 3.73 3.68 3.61 Consumer 6.40 6.21 5.97 5.63 5.31 Revolving home equity 7.70 7.70 7.76 7.55 7.03 Consumer credit card 14.11 13.83 13.77 13.77 13.68 Overdrafts — — — — — Total loans 6.27 6.15 6.02 5.84 5.56 Loans held for sale 7.49 9.93 10.55 10.17 10.30 Investment securities: U.S. government and federal agency obligations 2.08 2.32 2.31 3.42 1.90 Government-sponsored enterprise obligations 2.39 2.36 2.36 2.38 3.21 State and municipal obligations (1) 1.97 1.94 1.95 2.04 2.26 Mortgage-backed securities 2.19 2.05 2.06 2.09 2.06 Asset-backed securities 2.39 2.30 2.20 2.08 2.01 Other debt securities 1.93 1.85 1.75 1.86 1.93 Total available for sale debt securities 2.18 2.10 2.08 2.19 2.07 Trading debt securities (1) 5.30 5.05 5.11 4.53 4.59 Equity securities (1) 25.64 27.47 23.06 23.25 23.24 Other securities (1) 13.04 8.60 13.13 9.40 7.11 Total investment securities 2.44 2.27 2.33 2.37 2.18 Federal funds sold 6.71 6.65 6.56 5.63 5.09 Securities purchased under agreements to resell 1.93 1.64 2.08 1.99 1.94 Interest earning deposits with banks 5.48 5.47 5.39 5.14 4.67 Total interest earning assets 4.78 4.62 4.51 4.34 4.00 LIABILITIES AND EQUITY: Interest bearing deposits: Savings .06 .05 .05 .05 .05 Interest checking and money market 1.69 1.57 1.33 .93 .61 Certificates of deposit of less than $100,000 4.20 4.21 4.32 3.78 1.39 Certificates of deposit of $100,000 and over 4.56 4.55 4.37 3.93 2.98 Total interest bearing deposits 1.97 1.93 1.76 1.29 .71 Borrowings: Federal funds purchased 5.42 5.40 5.33 5.06 4.59 Securities sold under agreements to repurchase 3.43 3.25 3.20 3.09 2.93 Other borrowings — 5.45 5.30 5.24 4.94 Total borrowings 3.66 3.71 3.93 4.13 3.49 Total interest bearing liabilities 2.21 % 2.20 % 2.12 % 1.87 % 1.20 % Net yield on interest earning assets 3.33 % 3.17 % 3.11 % 3.12 % 3.26 % (1) Stated on a fully taxable-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, 2024 Dec. 31, 2023 Sep. 30, 2023 Jun. 30, 2023 Mar. 31, 2023 ALLOWANCE FOR CREDIT LOSSES ON LOANS Balance at beginning of period $162,395 $162,244 $158,685 $159,317 $150,136 Provision for credit losses on loans 6,947 8,170 13,343 5,864 15,948 Net charge-offs (recoveries): Commercial portfolio: Business 23 96 2,613 165 230 Real estate — construction and land — — — (115 ) — Real estate — business (141 ) 128 (15 ) (5 ) (4 ) (118 ) 224 2,598 45 226 Personal banking portfolio: Consumer credit card 6,435 5,325 4,716 4,687 4,325 Consumer 1,983 1,903 1,797 1,273 1,275 Overdraft 557 588 683 517 978 Real estate — personal 24 (11 ) (9 ) (6 ) (11 ) Revolving home equity (4 ) (10 ) (1 ) (20 ) (26 ) 8,995 7,795 7,186 6,451 6,541 Total net loan charge-offs 8,877 8,019 9,784 6,496 6,767 Balance at end of period $160,465 $162,395 $162,244 $158,685 $159,317 LIABILITY FOR UNFUNDED LENDING COMMITMENTS $23,086 $25,246 $27,537 $29,235 $28,628 NET CHARGE-OFF RATIOS (1) Commercial portfolio: Business — % .01 % .18 % .01 % .02 % Real estate — construction and land — — — (.03 ) — Real estate — business (.02 ) .01 — — — — .01 .09 — .01 Personal banking portfolio: Consumer credit card 4.60 3.72 3.32 3.38 3.15 Consumer .38 .36 .34 .24 .25 Overdraft 29.11 44.37 50.73 44.79 89.15 Real estate — personal — — — — — Revolving home equity — (.01 ) — (.03 ) (.04 ) .60 .51 .48 .44 .45 Total .21 % .19 % .23 % .16 % .17 % CREDIT QUALITY RATIOS Non-accrual loans to total loans .03 % .04 % .05 % .04 % .05 % Allowance for credit losses on loans to total loans .93 .94 .95 .94 .96 NON-ACCRUAL AND PAST DUE LOANS Non-accrual loans: Business $1,038 $3,622 $6,602 $4,732 $6,361 Real estate — business 1,246 60 76 153 171 Real estate — personal 1,523 1,653 1,531 1,276 1,269 Revolving home equity 1,977 1,977 — — — Total 5,784 7,312 8,209 6,161 7,801 Loans past due 90 days and still accruing interest $20,281 $21,864 $18,580 $15,351 $14,800 (1) Net charge-offs are annualized and calculated as a percentage of average loans (excluding loans held for sale). COMMERCE BANCSHARES, INC. Management Discussion of First Quarter Results March 31, 2024 For the quarter ended March 31, 2024, net income amounted to $112.7 million, compared to $109.2 million in the previous quarter and $119.5 million in the same quarter last year. The increase in net income compared to the previous quarter was primarily the result of lower non-interest expense and higher non-interest income, partly offset by net losses on investment securities. The net yield on interest earning assets increased 16 basis points over the previous quarter to 3.33%. Average loans increased $22.0 million over the previous quarter, while average deposits, borrowings and available for sale debt securities, at fair value, declined $759.5 million, $280.0 million, and $116.6 million, respectively. For the quarter, the return on average assets was 1.48%, the return on average equity was 15.39%, and the efficiency ratio was 61.7%. Balance Sheet Review During the 1st quarter of 2024, average loans totaled $17.1 billion, an increase of $22.0 million over the prior quarter, and increased $676.2 million, or 4.1%, over the same quarter last year. Compared to the previous quarter, average balances of business real estate loans grew $83.1 million, while construction and consumer loans declined $51.1 million and $34.8 million, respectively. During the current quarter, the Company sold certain fixed rate personal real estate loans totaling $7.4 million, compared to $8.7 million in the prior quarter. Total average available for sale debt securities decreased $116.6 million compared to the previous quarter to $9.5 billion, at fair value. The decrease in debt securities was mainly the result of lower average balances of asset-backed securities. During the 1st quarter of 2024, the unrealized loss on available for sale securities increased $27.2 million to $1.2 billion, at period end. Also during the 1st quarter of 2024, purchases of securities totaled $145.7 million with a weighted average yield of approximately 4.65%, and sales, maturities and pay downs were $655.0 million. At March 31, 2024, the duration of the available for sale investment portfolio was 4.2 years, and maturities and pay downs of approximately $1.6 billion are expected to occur during the next 12 months. The Company does not have any investment securities classified as held-to-maturity. Total average deposits decreased $759.5 million this quarter compared to the previous quarter. The decrease in deposits mostly resulted from lower average demand deposits of $420.1 million and lower average certificates of deposit of $364.2 million, which included lower brokered deposits of $225.4 million. Compared to the previous quarter, total average commercial deposits declined $743.8 million, while consumer and wealth deposits increased $138.8 million and $71.8 million, respectively. The average loans to deposits ratio was 69.9% in the current quarter and 67.7% in the prior quarter. The Company’s average borrowings, which included average customer repurchase agreements of $2.5 billion, decreased $280.0 million to $2.8 billion in the 1st quarter of 2024, mostly due to a decline of $179.3 million in average Federal Home Loan Bank (FHLB) borrowings. Net Interest Income Net interest income in the 1st quarter of 2024 amounted to $249.0 million, an increase of $578 thousand compared to the previous quarter. On a fully taxable-equivalent (FTE) basis, net interest income for the current quarter increased $765 thousand over the previous quarter to $251.3 million. The increase in net interest income was mostly due to higher interest earned on loans and investment securities and lower interest expense on deposits and borrowings, partly offset by lower interest income earned on deposits with banks. The net yield (FTE) on earning assets increased to 3.33%, from 3.17% in the prior quarter. Compared to the previous quarter, interest income on loans (FTE) increased $1.7 million, mostly due to higher average rates earned on business, consumer, and personal real estate loans. Interest income on loans also increased due to higher balances of business real estate loans, largely offset by lower balances of construction loans. The average yield (FTE) on the loan portfolio increased 12 basis points to 6.27% this quarter. Interest income on investment securities (FTE) increased $1.3 million compared to the prior quarter, mostly due to higher rates earned on other debt securities, partly offset by lower average balances of available for sale debt securities. Interest on other debt securities included dividend payments of $3.4 million from the Company’s private equity investments. Interest income earned on U.S. government and federal agency securities decreased due to lower average balances and lower average rates, which included the impact of $1.7 million in lower inflation income from Treasury inflation-protected securities this quarter. Additionally, the Company recorded a $2.0 million adjustment to premium amortization at March 31, 2024, which increased interest income to reflect slower forward prepayment speed estimates on mortgage-backed securities and was higher than the $629 thousand adjustment that increased interest income in the prior quarter. The average yield (FTE) on total investment securities was 2.44% in the current quarter, compared to 2.27% in the previous quarter. Compared to the previous quarter, interest income on deposits with banks decreased $6.5 million, mostly due to $449.0 million of lower average balances. Interest expense decreased $4.5 million, mostly due to lower average balances of borrowings and deposits, partly offset by higher rates paid. The average rate paid on interest bearing deposits totaled 1.97% in the current quarter compared to 1.93% in the prior quarter. Interest expense on deposits decreased $1.2 million this quarter compared to the previous quarter. Interest expense on borrowings decreased $3.3 million, mostly due to a decline in average FHLB borrowings of $179.3 million and lower average balances of federal funds purchased. The overall rate paid on interest bearing liabilities was 2.21% in the current quarter compared to 2.20% in the prior quarter. Non-Interest Income In the 1st quarter of 2024, total non-interest income amounted to $148.8 million, an increase of $11.2 million compared to the same period last year and an increase of $4.0 million compared to the prior quarter. The increase in non-interest income compared to the same period last year was mainly due to higher trust fees, deposit account fees, and tax credit sales income. The increase in non-interest income compared to the prior quarter was mainly due to higher trust fees, brokerage fees, and tax credit sales income, partly offset by lower bank card fees. Total net bank card fees in the current quarter increased $276 thousand, or .6%, compared to the same period last year, and decreased $948 thousand compared to the prior quarter. Net corporate card fees increased $164 thousand, or .6%, over the same quarter of last year mainly due to higher interchange fees, partly offset by higher rewards expense. Net debit card fees increased $118 thousand, or 1.1%, mostly due to lower network expense. Net merchant fees decreased $104 thousand, or 1.9%, while net credit card fees increased $98 thousand, or 2.7%. Total net bank card fees this quarter were comprised of fees on corporate card ($27.5 million), debit card ($10.4 million), merchant ($5.2 million) and credit card ($3.8 million) transactions. In the current quarter, trust fees increased $5.8 million, or 12.7%, over the same period last year, mostly resulting from higher private client trust fees. Compared to the same period last year, deposit account fees increased $2.4 million, or 11.0%, mostly due to higher corporate cash management fees. Consumer brokerage fees decreased $677 thousand, or 13.3%. Other non-interest income increased compared to the same period last year primarily due to higher tax credit sales income of $1.5 million and cash sweep fees of $731 thousand. For the 1st quarter of 2024, non-interest income comprised 37.4% of the Company’s total revenue. Investment Securities Gains and Losses The Company recorded net securities losses of $259 thousand in the current quarter, compared to gains of $7.6 million in the prior quarter and losses of $306 thousand in the 1st quarter of 2023. Net securities losses in the current quarter primarily resulted from losses of $8.5 million realized on available for sale debt securities, partly offset by net fair value gains of $7.1 million in the Company’s portfolio of private equity investments. Non-Interest Expense Non-interest expense for the current quarter amounted to $245.7 million, compared to $224.1 million in the same period last year and $251.3 million in the prior quarter. The increase in non-interest expense compared to the same period last year was mainly due to litigation settlement expense as well as higher salaries and employee benefits expense, FDIC insurance expense, and data processing and software expense, partly offset by lower marketing expense. The decrease in non-interest expense compared to the prior quarter was mainly due to lower FDIC insurance expense and marketing expense, partly offset by higher litigation settlement expense and employee benefits expense. Compared to the 1st quarter of last year, salaries and employee benefits expense increased $7.4 million, or 5.1%, mostly due to higher full-time salaries expense of $5.8 million and higher employee benefits expense of $1.3 million. Full-time equivalent employees totaled 4,721 and 4,636 at March 31, 2024 and 2023, respectively. Compared to the same period last year, data processing and software expense increased $3.0 million due to higher bank card fees expense and increased costs for service providers. FDIC insurance expense increased $3.4 million, due to a $4.0 million accrual adjustment in the current quarter to the special assessment by the FDIC to replenish the Deposit Insurance Fund. These increases in expense were partly offset by lower marketing expense of $1.4 million. Other non-interest expense increased mainly due to $10.0 million in litigation settlement costs. Income Taxes The effective tax rate for the Company was 21.9% in the current quarter, 22.8% in the previous quarter, and 21.6% in the 1st quarter of 2023. Credit Quality Net loan charge-offs in the 1st quarter of 2024 amounted to $8.9 million, compared to $8.0 million in the prior quarter and $6.8 million in the same period last year. The ratio of annualized net loan charge-offs to total average loans was .21% in the current quarter, .19% in the previous quarter, and .17% in the 1st quarter of last year. Compared to the prior quarter, net loan charge-offs on personal banking loans increased $1.2 million to $9.0 million, mainly due to $1.1 million of higher consumer credit card loan net charge-offs. In the 1st quarter of 2024, annualized net loan charge-offs on average consumer credit card loans were 4.60%, compared to 3.72% in the previous quarter, and 3.15% in the same quarter last year. Consumer loan net charge-offs were .38% of average consumer loans in the current quarter, .36% in the prior quarter, and .25% in the same quarter last year. At March 31, 2024, the allowance for credit losses on loans totaled $160.5 million, or .93% of total loans, and decreased $1.9 million compared to the prior quarter. Additionally, the liability for unfunded lending commitments at March 31, 2024 was $23.1 million, a decrease of $2.2 million compared to the liability at December 31, 2023. At March 31, 2024, total non-accrual loans amounted to $5.8 million, a decrease of $1.5 million compared to the previous quarter. At March 31, 2024, the balance of non-accrual loans, which represented .03% of loans outstanding, included business loans of $1.0 million, revolving home equity loans of $2.0 million, personal real estate loans of $1.5 million, and business real estate loans of $1.2 million. Loans more than 90 days past due and still accruing interest totaled $20.3 million at March 31, 2024. Other During the 1st quarter of 2024, the Company paid a cash dividend of $.27 per common share, representing a 5.1% increase over the same period last year. The Company purchased 806,217 shares of treasury stock during the current quarter at an average price of $52.13. The Company owns 823,447 shares of Visa Class B-1 common stock, carried at zero value on the Company’s balance sheet as of March 31, 2024. On April 8, 2024, Visa, Inc. (“Visa”) announced the commencement of a public offering to exchange Class B-1 common stock for a combination of shares of Class B-2 common stock and Class C common stock (“Exchange Offer”). The Company tendered all of its Visa Class B-1 shares and is awaiting notification of acceptance of that tender and the closing of the Exchange Offer. If the Company’s tendered shares are accepted and the exchange occurs in the second quarter of 2024, the Company expects to record a significant gain during the second quarter of 2024 based on the conversion privilege of the Class C common stock and the closing price of Visa Class A common stock. A full description of the terms of the Exchange Offer is set forth in Visa’s related Issuer Tender Offer Statement on Schedule TO and Prospectus, each dated April 8, 2024, publicly filed with the U. S. Securities and Exchange Commission. 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. View source version on businesswire.com: https://www.businesswire.com/news/home/20240415507662/en/Contacts Matt Burkemper, Investor Relations (314) 746-7485 www.commercebank.com matthew.burkemper@commercebank.com Data & News supplied by www.cloudquote.io Stock quotes supplied by Barchart Quotes delayed at least 20 minutes. By accessing this page, you agree to the following Privacy Policy and Terms and Conditions.
Commerce Bancshares, Inc. Reports First Quarter Earnings Per Share of $.86 By: Commerce Bancshares, Inc. via Business Wire April 16, 2024 at 06:00 AM EDT Commerce Bancshares, Inc. announced earnings of $.86 per share for the three months ended March 31, 2024, compared to $.91 per share in the same quarter last year and $.84 per share in the fourth quarter of 2023. Net income for the first quarter of 2024 amounted to $112.7 million, compared to $119.5 million in the first quarter of 2023 and $109.2 million in the prior quarter. “Commerce delivered a strong financial performance for the first quarter,” said John Kemper, President and Chief Executive Officer. “Our results are a reflection of fundamental strength and a diversified business model, and evidence of our ability to perform well through economic cycles. “Although interest rates continue to be elevated and put downward pressure on bank balance sheets, Commerce's net interest income grew slightly over the previous quarter and our net interest margin expanded 16 basis points. Interest-bearing deposit costs increased just four basis points over the previous quarter, a product of our high-quality deposit franchise. Non-interest income comprised 37.4% of total revenue. "Our liquidity and capital levels remain robust, and credit performance remains excellent, with non-accrual loans at .03% of total loans, down from .05% from the first quarter of last year." First Quarter 2024 Financial Highlights: Net interest income was $249.0 million, a $578 thousand increase over the prior quarter. The net yield on interest earning assets increased 16 basis points to 3.33%. Non-interest income totaled $148.8 million, an increase of $11.2 million compared to the same quarter last year. Trust fees grew $5.8 million, or 12.7% compared to the same period last year, mostly due to higher private client fees. Non-interest expense totaled $245.7 million, an increase of $21.6 million compared to the same quarter last year and included a $10.0 million litigation settlement expense and a $4.0 million accrual adjustment to the FDIC's insurance special assessment. Average loan balances totaled $17.1 billion and were flat compared to the prior quarter. Total average available for sale debt securities decreased $116.6 million from the prior quarter to $9.5 billion, at fair value. During the first quarter of 2024, the unrealized loss on available for sale debt securities increased $27.2 million to $1.2 billion, at period end. Total average deposits decreased $759.5 million, or 3.0%, compared to the prior quarter, and included $225.4 million of lower average brokered deposits, which paid off last quarter. The average rate paid on interest bearing deposits in the current quarter was 1.97%. The ratio of annualized net loan charge-offs to average loans was .21% compared to .19% in the prior quarter. The allowance for credit losses on loans decreased $1.9 million during the first quarter to $160.5 million, and the ratio of the allowance for credit losses on loans to total loans was .93% at March 31, 2024, compared to .94% at December 31, 2023. Total assets at March 31, 2024 were $30.4 billion, a decrease of $1.3 billion, or 4.2%, compared to the prior quarter. For the quarter, the return on average assets was 1.48%, the return on average equity was 15.39%, and the efficiency ratio was 61.7%. 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. Beyond the Midwest, Commerce also maintains commercial offices in Dallas, Houston, Cincinnati, Nashville, Des Moines, Indianapolis, and Grand Rapids and wealth offices in Dallas, Houston, and Naples. Commerce delivers high-touch service and sophisticated financial solutions at regional branches, commercial and wealth 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, 2024 Dec. 31, 2023 Mar. 31, 2023 FINANCIAL SUMMARY Net interest income $248,999 $248,421 $251,623 Non-interest income 148,848 144,879 137,612 Total revenue 397,847 393,300 389,235 Investment securities gains (losses) (259 ) 7,601 (306 ) Provision for credit losses 4,787 5,879 11,456 Non-interest expense 245,697 251,254 224,107 Income before taxes 147,104 143,768 153,366 Income taxes 31,652 32,307 32,813 Non-controlling interest expense 2,789 2,238 1,101 Net income attributable to Commerce Bancshares, Inc. $112,663 $109,223 $119,452 Earnings per common share: Net income — basic $0.87 $0.84 $0.91 Net income — diluted $0.86 $0.84 $0.91 Effective tax rate 21.93 % 22.83 % 21.55 % Fully-taxable equivalent net interest income $251,312 $250,547 $253,411 Average total interest earning assets (1) $30,365,774 $31,340,958 $31,568,594 Diluted wtd. average shares outstanding 129,185,903 129,608,322 130,471,930 RATIOS Average loans to deposits (2) 69.87 % 67.69 % 64.99 % Return on total average assets 1.48 1.38 1.54 Return on average equity (3) 15.39 16.48 18.75 Non-interest income to total revenue 37.41 36.84 35.35 Efficiency ratio (4) 61.67 63.80 57.49 Net yield on interest earning assets 3.33 3.17 3.26 EQUITY SUMMARY Cash dividends per share $.270 $.257 $.257 Cash dividends on common stock $35,140 $33,574 $33,759 Book value per share (5) $22.70 $22.77 $20.49 Market value per share (5) $53.20 $53.41 $55.57 High market value per share $55.64 $56.75 $66.86 Low market value per share $49.44 $40.91 $53.07 Common shares outstanding (5) 129,694,606 130,176,048 130,956,746 Tangible common equity to tangible assets (6) 9.24 % 8.85 % 7.92 % Tier I leverage ratio 11.75 % 11.25 % 10.61 % OTHER QTD INFORMATION Number of bank/ATM locations 254 257 275 Full-time equivalent employees 4,721 4,718 4,636 (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 2023. COMMERCE BANCSHARES, INC. and SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (Unaudited) (In thousands, except per share data) For the Three Months Ended Mar. 31, 2024 Dec. 31, 2023 Sep. 30, 2023 Jun. 30, 2023 Mar. 31, 2023 Interest income $358,721 $362,609 $361,162 $348,663 $308,857 Interest expense 109,722 114,188 112,615 99,125 57,234 Net interest income 248,999 248,421 248,547 249,538 251,623 Provision for credit losses 4,787 5,879 11,645 6,471 11,456 Net interest income after credit losses 244,212 242,542 236,902 243,067 240,167 NON-INTEREST INCOME Trust fees 51,105 49,154 49,207 47,265 45,328 Bank card transaction fees 46,930 47,878 46,899 49,725 46,654 Deposit account charges and other fees 24,151 23,517 23,090 22,633 21,752 Consumer brokerage services 4,408 3,641 3,820 4,677 5,085 Capital market fees 3,892 4,269 3,524 2,945 3,362 Loan fees and sales 3,141 2,875 2,966 2,735 2,589 Other 15,221 13,545 13,443 17,625 12,842 Total non-interest income 148,848 144,879 142,949 147,605 137,612 INVESTMENT SECURITIES GAINS (LOSSES), NET (259 ) 7,601 4,298 3,392 (306 ) NON-INTEREST EXPENSE Salaries and employee benefits 151,801 147,456 146,805 145,429 144,373 Data processing and software 31,153 31,141 30,744 28,719 28,154 Net occupancy 13,574 13,927 13,948 12,995 12,759 Deposit insurance 8,017 20,304 4,029 4,187 4,643 Equipment 5,010 5,137 4,697 4,864 4,850 Supplies and communication 4,744 5,242 4,963 4,625 4,590 Marketing 4,036 6,505 6,167 6,368 5,471 Other 27,362 21,542 16,657 20,424 19,267 Total non-interest expense 245,697 251,254 228,010 227,611 224,107 Income before income taxes 147,104 143,768 156,139 166,453 153,366 Less income taxes 31,652 32,307 33,439 35,990 32,813 Net income 115,452 111,461 122,700 130,463 120,553 Less non-controlling interest expense (income) 2,789 2,238 2,104 2,674 1,101 Net income attributable to Commerce Bancshares, Inc. $112,663 $109,223 $120,596 $127,789 $119,452 Net income per common share — basic $0.87 $0.84 $0.92 $0.97 $0.91 Net income per common share — diluted $0.86 $0.84 $0.92 $0.97 $0.91 OTHER INFORMATION Return on total average assets 1.48 % 1.38 % 1.49 % 1.56 % 1.54 % Return on average equity (1) 15.39 16.48 17.73 18.81 18.75 Efficiency ratio (2) 61.67 63.80 58.15 57.22 57.49 Effective tax rate 21.93 22.83 21.71 21.97 21.55 Net yield on interest earning assets 3.33 3.17 3.11 3.12 3.26 Fully-taxable equivalent net interest income $251,312 $250,547 $250,962 $251,757 $253,411 (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. The income statement above reflects the reclassification of non-interest income of $406 thousand and $1.1 million from other non-interest income to capital market fees for the second and third quarters of 2023. COMMERCE BANCSHARES, INC. and SUBSIDIARIES CONSOLIDATED BALANCE SHEETS - PERIOD END (Unaudited) (In thousands) Mar. 31, 2024 Dec. 31, 2023 Mar. 31, 2023 ASSETS Loans Business $5,994,974 $6,019,036 $5,704,467 Real estate — construction and land 1,497,647 1,446,764 1,437,419 Real estate — business 3,711,602 3,719,306 3,486,543 Real estate — personal 3,039,885 3,026,041 2,952,042 Consumer 2,119,308 2,077,723 2,094,389 Revolving home equity 322,523 319,894 295,478 Consumer credit card 564,388 589,913 558,669 Overdrafts 48,513 6,802 6,515 Total loans 17,298,840 17,205,479 16,535,522 Allowance for credit losses on loans (160,465 ) (162,395 ) (159,317 ) Net loans 17,138,375 17,043,084 16,376,205 Loans held for sale 2,328 4,177 6,162 Investment securities: Available for sale debt securities 9,141,695 9,684,760 11,228,616 Trading debt securities 56,716 28,830 41,584 Equity securities 12,852 12,701 12,528 Other securities 229,146 222,473 268,417 Total investment securities 9,440,409 9,948,764 11,551,145 Federal funds sold — 5,025 27,060 Securities purchased under agreements to resell 225,000 450,000 825,000 Interest earning deposits with banks 1,609,614 2,239,010 1,341,854 Cash and due from banks 291,040 443,147 351,210 Premises and equipment — net 467,377 469,059 428,169 Goodwill 146,539 146,539 138,921 Other intangible assets — net 13,918 14,179 14,918 Other assets 1,037,508 938,077 944,212 Total assets $30,372,108 $31,701,061 $32,004,856 LIABILITIES AND STOCKHOLDERS’ EQUITY Deposits: Non-interest bearing $7,513,464 $7,975,935 $8,685,234 Savings, interest checking and money market 14,463,211 14,512,273 14,419,741 Certificates of deposit of less than $100,000 997,979 930,432 468,667 Certificates of deposit of $100,000 and over 1,465,541 1,945,258 1,109,818 Total deposits 24,440,195 25,363,898 24,683,460 Federal funds purchased and securities sold under agreements to repurchase 2,505,576 2,908,815 2,784,559 Other borrowings 2,359 1,404 1,507,776 Other liabilities 460,089 462,714 346,649 Total liabilities 27,408,219 28,736,831 29,322,444 Stockholders’ equity: Common stock 655,322 655,322 629,319 Capital surplus 3,148,649 3,162,622 2,919,060 Retained earnings 130,706 53,183 117,313 Treasury stock (59,674 ) (35,599 ) (59,670 ) Accumulated other comprehensive income (loss) (931,027 ) (891,412 ) (940,498 ) Total stockholders’ equity 2,943,976 2,944,116 2,665,524 Non-controlling interest 19,913 20,114 16,888 Total equity 2,963,889 2,964,230 2,682,412 Total liabilities and equity $30,372,108 $31,701,061 $32,004,856 COMMERCE BANCSHARES, INC. and SUBSIDIARIES AVERAGE BALANCE SHEETS (Unaudited) (In thousands) For the Three Months Ended Mar. 31, 2024 Dec. 31, 2023 Sep. 30, 2023 Jun. 30, 2023 Mar. 31, 2023 ASSETS: Loans: Business $5,873,525 $5,861,229 $5,849,227 $5,757,388 $5,656,104 Real estate — construction and land 1,472,554 1,523,682 1,508,850 1,450,196 1,410,835 Real estate — business 3,727,643 3,644,589 3,642,010 3,540,851 3,478,382 Real estate — personal 3,031,193 3,027,664 2,992,500 2,960,962 2,933,750 Consumer 2,082,490 2,117,268 2,102,281 2,098,523 2,067,385 Revolving home equity 322,074 310,282 304,055 300,623 296,748 Consumer credit card 562,892 568,112 564,039 555,875 556,223 Overdrafts 7,696 5,258 5,341 4,630 4,449 Total loans 17,080,067 17,058,084 16,968,303 16,669,048 16,403,876 Allowance for credit losses on loans (161,891 ) (161,932 ) (158,335 ) (159,068 ) (150,117 ) Net loans 16,918,176 16,896,152 16,809,968 16,509,980 16,253,759 Loans held for sale 2,149 5,392 5,714 5,957 5,708 Investment securities: U.S. government and federal agency obligations 851,656 889,390 986,284 1,035,651 1,099,067 Government-sponsored enterprise obligations 55,652 55,661 55,676 55,751 87,086 State and municipal obligations 1,330,808 1,363,649 1,391,541 1,532,519 1,793,756 Mortgage-backed securities 5,902,328 6,022,502 6,161,348 6,316,224 6,454,408 Asset-backed securities 2,085,050 2,325,089 2,553,562 2,827,911 3,233,757 Other debt securities 503,204 510,721 514,787 519,988 528,941 Unrealized gain (loss) on debt securities (1,274,125 ) (1,595,845 ) (1,458,141 ) (1,331,002 ) (1,387,196 ) Total available for sale debt securities 9,454,573 9,571,167 10,205,057 10,957,042 11,809,819 Trading debt securities 40,483 37,234 35,044 46,493 45,757 Equity securities 12,768 12,249 12,230 12,335 12,458 Other securities 221,695 222,378 237,518 273,587 229,867 Total investment securities 9,729,519 9,843,028 10,489,849 11,289,457 12,097,901 Federal funds sold 599 1,194 2,722 7,484 38,978 Securities purchased under agreements to resell 340,934 450,000 712,472 824,974 825,000 Interest earning deposits with banks 1,938,381 2,387,415 2,337,744 2,284,162 809,935 Other assets 1,715,716 1,797,849 1,750,222 1,941,340 1,376,551 Total assets $30,645,474 $31,381,030 $32,108,691 $32,863,354 $31,407,832 LIABILITIES AND EQUITY: Non-interest bearing deposits $7,328,603 $7,748,654 $7,939,190 $8,224,475 $9,114,512 Savings 1,333,983 1,357,733 1,436,149 1,516,887 1,550,215 Interest checking and money market 13,215,270 13,166,783 13,048,199 12,918,399 13,265,485 Certificates of deposit of less than $100,000 976,804 1,097,224 1,423,965 1,075,110 415,367 Certificates of deposit of $100,000 and over 1,595,310 1,839,057 1,718,126 1,472,208 903,393 Total deposits 24,449,970 25,209,451 25,565,629 25,207,079 25,248,972 Borrowings: Federal funds purchased 328,216 473,534 508,851 507,165 493,721 Securities sold under agreements to repurchase 2,511,959 2,467,118 2,283,020 2,206,612 2,418,726 Other borrowings 76 179,587 685,222 1,617,952 551,267 Total borrowings 2,840,251 3,120,239 3,477,093 4,331,729 3,463,714 Other liabilities 410,310 421,402 367,741 598,915 112,052 Total liabilities 27,700,531 28,751,092 29,410,463 30,137,723 28,824,738 Equity 2,944,943 2,629,938 2,698,228 2,725,631 2,583,094 Total liabilities and equity $30,645,474 $31,381,030 $32,108,691 $32,863,354 $31,407,832 COMMERCE BANCSHARES, INC. and SUBSIDIARIES AVERAGE RATES (Unaudited) For the Three Months Ended Mar. 31, 2024 Dec. 31, 2023 Sep. 30, 2023 Jun. 30, 2023 Mar. 31, 2023 ASSETS: Loans: Business (1) 6.07 % 5.91 % 5.77 % 5.58 % 5.31 % Real estate — construction and land 8.40 8.34 8.17 7.92 7.33 Real estate — business 6.26 6.18 6.13 5.96 5.65 Real estate — personal 3.95 3.85 3.73 3.68 3.61 Consumer 6.40 6.21 5.97 5.63 5.31 Revolving home equity 7.70 7.70 7.76 7.55 7.03 Consumer credit card 14.11 13.83 13.77 13.77 13.68 Overdrafts — — — — — Total loans 6.27 6.15 6.02 5.84 5.56 Loans held for sale 7.49 9.93 10.55 10.17 10.30 Investment securities: U.S. government and federal agency obligations 2.08 2.32 2.31 3.42 1.90 Government-sponsored enterprise obligations 2.39 2.36 2.36 2.38 3.21 State and municipal obligations (1) 1.97 1.94 1.95 2.04 2.26 Mortgage-backed securities 2.19 2.05 2.06 2.09 2.06 Asset-backed securities 2.39 2.30 2.20 2.08 2.01 Other debt securities 1.93 1.85 1.75 1.86 1.93 Total available for sale debt securities 2.18 2.10 2.08 2.19 2.07 Trading debt securities (1) 5.30 5.05 5.11 4.53 4.59 Equity securities (1) 25.64 27.47 23.06 23.25 23.24 Other securities (1) 13.04 8.60 13.13 9.40 7.11 Total investment securities 2.44 2.27 2.33 2.37 2.18 Federal funds sold 6.71 6.65 6.56 5.63 5.09 Securities purchased under agreements to resell 1.93 1.64 2.08 1.99 1.94 Interest earning deposits with banks 5.48 5.47 5.39 5.14 4.67 Total interest earning assets 4.78 4.62 4.51 4.34 4.00 LIABILITIES AND EQUITY: Interest bearing deposits: Savings .06 .05 .05 .05 .05 Interest checking and money market 1.69 1.57 1.33 .93 .61 Certificates of deposit of less than $100,000 4.20 4.21 4.32 3.78 1.39 Certificates of deposit of $100,000 and over 4.56 4.55 4.37 3.93 2.98 Total interest bearing deposits 1.97 1.93 1.76 1.29 .71 Borrowings: Federal funds purchased 5.42 5.40 5.33 5.06 4.59 Securities sold under agreements to repurchase 3.43 3.25 3.20 3.09 2.93 Other borrowings — 5.45 5.30 5.24 4.94 Total borrowings 3.66 3.71 3.93 4.13 3.49 Total interest bearing liabilities 2.21 % 2.20 % 2.12 % 1.87 % 1.20 % Net yield on interest earning assets 3.33 % 3.17 % 3.11 % 3.12 % 3.26 % (1) Stated on a fully taxable-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, 2024 Dec. 31, 2023 Sep. 30, 2023 Jun. 30, 2023 Mar. 31, 2023 ALLOWANCE FOR CREDIT LOSSES ON LOANS Balance at beginning of period $162,395 $162,244 $158,685 $159,317 $150,136 Provision for credit losses on loans 6,947 8,170 13,343 5,864 15,948 Net charge-offs (recoveries): Commercial portfolio: Business 23 96 2,613 165 230 Real estate — construction and land — — — (115 ) — Real estate — business (141 ) 128 (15 ) (5 ) (4 ) (118 ) 224 2,598 45 226 Personal banking portfolio: Consumer credit card 6,435 5,325 4,716 4,687 4,325 Consumer 1,983 1,903 1,797 1,273 1,275 Overdraft 557 588 683 517 978 Real estate — personal 24 (11 ) (9 ) (6 ) (11 ) Revolving home equity (4 ) (10 ) (1 ) (20 ) (26 ) 8,995 7,795 7,186 6,451 6,541 Total net loan charge-offs 8,877 8,019 9,784 6,496 6,767 Balance at end of period $160,465 $162,395 $162,244 $158,685 $159,317 LIABILITY FOR UNFUNDED LENDING COMMITMENTS $23,086 $25,246 $27,537 $29,235 $28,628 NET CHARGE-OFF RATIOS (1) Commercial portfolio: Business — % .01 % .18 % .01 % .02 % Real estate — construction and land — — — (.03 ) — Real estate — business (.02 ) .01 — — — — .01 .09 — .01 Personal banking portfolio: Consumer credit card 4.60 3.72 3.32 3.38 3.15 Consumer .38 .36 .34 .24 .25 Overdraft 29.11 44.37 50.73 44.79 89.15 Real estate — personal — — — — — Revolving home equity — (.01 ) — (.03 ) (.04 ) .60 .51 .48 .44 .45 Total .21 % .19 % .23 % .16 % .17 % CREDIT QUALITY RATIOS Non-accrual loans to total loans .03 % .04 % .05 % .04 % .05 % Allowance for credit losses on loans to total loans .93 .94 .95 .94 .96 NON-ACCRUAL AND PAST DUE LOANS Non-accrual loans: Business $1,038 $3,622 $6,602 $4,732 $6,361 Real estate — business 1,246 60 76 153 171 Real estate — personal 1,523 1,653 1,531 1,276 1,269 Revolving home equity 1,977 1,977 — — — Total 5,784 7,312 8,209 6,161 7,801 Loans past due 90 days and still accruing interest $20,281 $21,864 $18,580 $15,351 $14,800 (1) Net charge-offs are annualized and calculated as a percentage of average loans (excluding loans held for sale). COMMERCE BANCSHARES, INC. Management Discussion of First Quarter Results March 31, 2024 For the quarter ended March 31, 2024, net income amounted to $112.7 million, compared to $109.2 million in the previous quarter and $119.5 million in the same quarter last year. The increase in net income compared to the previous quarter was primarily the result of lower non-interest expense and higher non-interest income, partly offset by net losses on investment securities. The net yield on interest earning assets increased 16 basis points over the previous quarter to 3.33%. Average loans increased $22.0 million over the previous quarter, while average deposits, borrowings and available for sale debt securities, at fair value, declined $759.5 million, $280.0 million, and $116.6 million, respectively. For the quarter, the return on average assets was 1.48%, the return on average equity was 15.39%, and the efficiency ratio was 61.7%. Balance Sheet Review During the 1st quarter of 2024, average loans totaled $17.1 billion, an increase of $22.0 million over the prior quarter, and increased $676.2 million, or 4.1%, over the same quarter last year. Compared to the previous quarter, average balances of business real estate loans grew $83.1 million, while construction and consumer loans declined $51.1 million and $34.8 million, respectively. During the current quarter, the Company sold certain fixed rate personal real estate loans totaling $7.4 million, compared to $8.7 million in the prior quarter. Total average available for sale debt securities decreased $116.6 million compared to the previous quarter to $9.5 billion, at fair value. The decrease in debt securities was mainly the result of lower average balances of asset-backed securities. During the 1st quarter of 2024, the unrealized loss on available for sale securities increased $27.2 million to $1.2 billion, at period end. Also during the 1st quarter of 2024, purchases of securities totaled $145.7 million with a weighted average yield of approximately 4.65%, and sales, maturities and pay downs were $655.0 million. At March 31, 2024, the duration of the available for sale investment portfolio was 4.2 years, and maturities and pay downs of approximately $1.6 billion are expected to occur during the next 12 months. The Company does not have any investment securities classified as held-to-maturity. Total average deposits decreased $759.5 million this quarter compared to the previous quarter. The decrease in deposits mostly resulted from lower average demand deposits of $420.1 million and lower average certificates of deposit of $364.2 million, which included lower brokered deposits of $225.4 million. Compared to the previous quarter, total average commercial deposits declined $743.8 million, while consumer and wealth deposits increased $138.8 million and $71.8 million, respectively. The average loans to deposits ratio was 69.9% in the current quarter and 67.7% in the prior quarter. The Company’s average borrowings, which included average customer repurchase agreements of $2.5 billion, decreased $280.0 million to $2.8 billion in the 1st quarter of 2024, mostly due to a decline of $179.3 million in average Federal Home Loan Bank (FHLB) borrowings. Net Interest Income Net interest income in the 1st quarter of 2024 amounted to $249.0 million, an increase of $578 thousand compared to the previous quarter. On a fully taxable-equivalent (FTE) basis, net interest income for the current quarter increased $765 thousand over the previous quarter to $251.3 million. The increase in net interest income was mostly due to higher interest earned on loans and investment securities and lower interest expense on deposits and borrowings, partly offset by lower interest income earned on deposits with banks. The net yield (FTE) on earning assets increased to 3.33%, from 3.17% in the prior quarter. Compared to the previous quarter, interest income on loans (FTE) increased $1.7 million, mostly due to higher average rates earned on business, consumer, and personal real estate loans. Interest income on loans also increased due to higher balances of business real estate loans, largely offset by lower balances of construction loans. The average yield (FTE) on the loan portfolio increased 12 basis points to 6.27% this quarter. Interest income on investment securities (FTE) increased $1.3 million compared to the prior quarter, mostly due to higher rates earned on other debt securities, partly offset by lower average balances of available for sale debt securities. Interest on other debt securities included dividend payments of $3.4 million from the Company’s private equity investments. Interest income earned on U.S. government and federal agency securities decreased due to lower average balances and lower average rates, which included the impact of $1.7 million in lower inflation income from Treasury inflation-protected securities this quarter. Additionally, the Company recorded a $2.0 million adjustment to premium amortization at March 31, 2024, which increased interest income to reflect slower forward prepayment speed estimates on mortgage-backed securities and was higher than the $629 thousand adjustment that increased interest income in the prior quarter. The average yield (FTE) on total investment securities was 2.44% in the current quarter, compared to 2.27% in the previous quarter. Compared to the previous quarter, interest income on deposits with banks decreased $6.5 million, mostly due to $449.0 million of lower average balances. Interest expense decreased $4.5 million, mostly due to lower average balances of borrowings and deposits, partly offset by higher rates paid. The average rate paid on interest bearing deposits totaled 1.97% in the current quarter compared to 1.93% in the prior quarter. Interest expense on deposits decreased $1.2 million this quarter compared to the previous quarter. Interest expense on borrowings decreased $3.3 million, mostly due to a decline in average FHLB borrowings of $179.3 million and lower average balances of federal funds purchased. The overall rate paid on interest bearing liabilities was 2.21% in the current quarter compared to 2.20% in the prior quarter. Non-Interest Income In the 1st quarter of 2024, total non-interest income amounted to $148.8 million, an increase of $11.2 million compared to the same period last year and an increase of $4.0 million compared to the prior quarter. The increase in non-interest income compared to the same period last year was mainly due to higher trust fees, deposit account fees, and tax credit sales income. The increase in non-interest income compared to the prior quarter was mainly due to higher trust fees, brokerage fees, and tax credit sales income, partly offset by lower bank card fees. Total net bank card fees in the current quarter increased $276 thousand, or .6%, compared to the same period last year, and decreased $948 thousand compared to the prior quarter. Net corporate card fees increased $164 thousand, or .6%, over the same quarter of last year mainly due to higher interchange fees, partly offset by higher rewards expense. Net debit card fees increased $118 thousand, or 1.1%, mostly due to lower network expense. Net merchant fees decreased $104 thousand, or 1.9%, while net credit card fees increased $98 thousand, or 2.7%. Total net bank card fees this quarter were comprised of fees on corporate card ($27.5 million), debit card ($10.4 million), merchant ($5.2 million) and credit card ($3.8 million) transactions. In the current quarter, trust fees increased $5.8 million, or 12.7%, over the same period last year, mostly resulting from higher private client trust fees. Compared to the same period last year, deposit account fees increased $2.4 million, or 11.0%, mostly due to higher corporate cash management fees. Consumer brokerage fees decreased $677 thousand, or 13.3%. Other non-interest income increased compared to the same period last year primarily due to higher tax credit sales income of $1.5 million and cash sweep fees of $731 thousand. For the 1st quarter of 2024, non-interest income comprised 37.4% of the Company’s total revenue. Investment Securities Gains and Losses The Company recorded net securities losses of $259 thousand in the current quarter, compared to gains of $7.6 million in the prior quarter and losses of $306 thousand in the 1st quarter of 2023. Net securities losses in the current quarter primarily resulted from losses of $8.5 million realized on available for sale debt securities, partly offset by net fair value gains of $7.1 million in the Company’s portfolio of private equity investments. Non-Interest Expense Non-interest expense for the current quarter amounted to $245.7 million, compared to $224.1 million in the same period last year and $251.3 million in the prior quarter. The increase in non-interest expense compared to the same period last year was mainly due to litigation settlement expense as well as higher salaries and employee benefits expense, FDIC insurance expense, and data processing and software expense, partly offset by lower marketing expense. The decrease in non-interest expense compared to the prior quarter was mainly due to lower FDIC insurance expense and marketing expense, partly offset by higher litigation settlement expense and employee benefits expense. Compared to the 1st quarter of last year, salaries and employee benefits expense increased $7.4 million, or 5.1%, mostly due to higher full-time salaries expense of $5.8 million and higher employee benefits expense of $1.3 million. Full-time equivalent employees totaled 4,721 and 4,636 at March 31, 2024 and 2023, respectively. Compared to the same period last year, data processing and software expense increased $3.0 million due to higher bank card fees expense and increased costs for service providers. FDIC insurance expense increased $3.4 million, due to a $4.0 million accrual adjustment in the current quarter to the special assessment by the FDIC to replenish the Deposit Insurance Fund. These increases in expense were partly offset by lower marketing expense of $1.4 million. Other non-interest expense increased mainly due to $10.0 million in litigation settlement costs. Income Taxes The effective tax rate for the Company was 21.9% in the current quarter, 22.8% in the previous quarter, and 21.6% in the 1st quarter of 2023. Credit Quality Net loan charge-offs in the 1st quarter of 2024 amounted to $8.9 million, compared to $8.0 million in the prior quarter and $6.8 million in the same period last year. The ratio of annualized net loan charge-offs to total average loans was .21% in the current quarter, .19% in the previous quarter, and .17% in the 1st quarter of last year. Compared to the prior quarter, net loan charge-offs on personal banking loans increased $1.2 million to $9.0 million, mainly due to $1.1 million of higher consumer credit card loan net charge-offs. In the 1st quarter of 2024, annualized net loan charge-offs on average consumer credit card loans were 4.60%, compared to 3.72% in the previous quarter, and 3.15% in the same quarter last year. Consumer loan net charge-offs were .38% of average consumer loans in the current quarter, .36% in the prior quarter, and .25% in the same quarter last year. At March 31, 2024, the allowance for credit losses on loans totaled $160.5 million, or .93% of total loans, and decreased $1.9 million compared to the prior quarter. Additionally, the liability for unfunded lending commitments at March 31, 2024 was $23.1 million, a decrease of $2.2 million compared to the liability at December 31, 2023. At March 31, 2024, total non-accrual loans amounted to $5.8 million, a decrease of $1.5 million compared to the previous quarter. At March 31, 2024, the balance of non-accrual loans, which represented .03% of loans outstanding, included business loans of $1.0 million, revolving home equity loans of $2.0 million, personal real estate loans of $1.5 million, and business real estate loans of $1.2 million. Loans more than 90 days past due and still accruing interest totaled $20.3 million at March 31, 2024. Other During the 1st quarter of 2024, the Company paid a cash dividend of $.27 per common share, representing a 5.1% increase over the same period last year. The Company purchased 806,217 shares of treasury stock during the current quarter at an average price of $52.13. The Company owns 823,447 shares of Visa Class B-1 common stock, carried at zero value on the Company’s balance sheet as of March 31, 2024. On April 8, 2024, Visa, Inc. (“Visa”) announced the commencement of a public offering to exchange Class B-1 common stock for a combination of shares of Class B-2 common stock and Class C common stock (“Exchange Offer”). The Company tendered all of its Visa Class B-1 shares and is awaiting notification of acceptance of that tender and the closing of the Exchange Offer. If the Company’s tendered shares are accepted and the exchange occurs in the second quarter of 2024, the Company expects to record a significant gain during the second quarter of 2024 based on the conversion privilege of the Class C common stock and the closing price of Visa Class A common stock. A full description of the terms of the Exchange Offer is set forth in Visa’s related Issuer Tender Offer Statement on Schedule TO and Prospectus, each dated April 8, 2024, publicly filed with the U. S. Securities and Exchange Commission. 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. View source version on businesswire.com: https://www.businesswire.com/news/home/20240415507662/en/Contacts Matt Burkemper, Investor Relations (314) 746-7485 www.commercebank.com matthew.burkemper@commercebank.com
Commerce Bancshares, Inc. announced earnings of $.86 per share for the three months ended March 31, 2024, compared to $.91 per share in the same quarter last year and $.84 per share in the fourth quarter of 2023. Net income for the first quarter of 2024 amounted to $112.7 million, compared to $119.5 million in the first quarter of 2023 and $109.2 million in the prior quarter. “Commerce delivered a strong financial performance for the first quarter,” said John Kemper, President and Chief Executive Officer. “Our results are a reflection of fundamental strength and a diversified business model, and evidence of our ability to perform well through economic cycles. “Although interest rates continue to be elevated and put downward pressure on bank balance sheets, Commerce's net interest income grew slightly over the previous quarter and our net interest margin expanded 16 basis points. Interest-bearing deposit costs increased just four basis points over the previous quarter, a product of our high-quality deposit franchise. Non-interest income comprised 37.4% of total revenue. "Our liquidity and capital levels remain robust, and credit performance remains excellent, with non-accrual loans at .03% of total loans, down from .05% from the first quarter of last year." First Quarter 2024 Financial Highlights: Net interest income was $249.0 million, a $578 thousand increase over the prior quarter. The net yield on interest earning assets increased 16 basis points to 3.33%. Non-interest income totaled $148.8 million, an increase of $11.2 million compared to the same quarter last year. Trust fees grew $5.8 million, or 12.7% compared to the same period last year, mostly due to higher private client fees. Non-interest expense totaled $245.7 million, an increase of $21.6 million compared to the same quarter last year and included a $10.0 million litigation settlement expense and a $4.0 million accrual adjustment to the FDIC's insurance special assessment. Average loan balances totaled $17.1 billion and were flat compared to the prior quarter. Total average available for sale debt securities decreased $116.6 million from the prior quarter to $9.5 billion, at fair value. During the first quarter of 2024, the unrealized loss on available for sale debt securities increased $27.2 million to $1.2 billion, at period end. Total average deposits decreased $759.5 million, or 3.0%, compared to the prior quarter, and included $225.4 million of lower average brokered deposits, which paid off last quarter. The average rate paid on interest bearing deposits in the current quarter was 1.97%. The ratio of annualized net loan charge-offs to average loans was .21% compared to .19% in the prior quarter. The allowance for credit losses on loans decreased $1.9 million during the first quarter to $160.5 million, and the ratio of the allowance for credit losses on loans to total loans was .93% at March 31, 2024, compared to .94% at December 31, 2023. Total assets at March 31, 2024 were $30.4 billion, a decrease of $1.3 billion, or 4.2%, compared to the prior quarter. For the quarter, the return on average assets was 1.48%, the return on average equity was 15.39%, and the efficiency ratio was 61.7%. 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. Beyond the Midwest, Commerce also maintains commercial offices in Dallas, Houston, Cincinnati, Nashville, Des Moines, Indianapolis, and Grand Rapids and wealth offices in Dallas, Houston, and Naples. Commerce delivers high-touch service and sophisticated financial solutions at regional branches, commercial and wealth 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, 2024 Dec. 31, 2023 Mar. 31, 2023 FINANCIAL SUMMARY Net interest income $248,999 $248,421 $251,623 Non-interest income 148,848 144,879 137,612 Total revenue 397,847 393,300 389,235 Investment securities gains (losses) (259 ) 7,601 (306 ) Provision for credit losses 4,787 5,879 11,456 Non-interest expense 245,697 251,254 224,107 Income before taxes 147,104 143,768 153,366 Income taxes 31,652 32,307 32,813 Non-controlling interest expense 2,789 2,238 1,101 Net income attributable to Commerce Bancshares, Inc. $112,663 $109,223 $119,452 Earnings per common share: Net income — basic $0.87 $0.84 $0.91 Net income — diluted $0.86 $0.84 $0.91 Effective tax rate 21.93 % 22.83 % 21.55 % Fully-taxable equivalent net interest income $251,312 $250,547 $253,411 Average total interest earning assets (1) $30,365,774 $31,340,958 $31,568,594 Diluted wtd. average shares outstanding 129,185,903 129,608,322 130,471,930 RATIOS Average loans to deposits (2) 69.87 % 67.69 % 64.99 % Return on total average assets 1.48 1.38 1.54 Return on average equity (3) 15.39 16.48 18.75 Non-interest income to total revenue 37.41 36.84 35.35 Efficiency ratio (4) 61.67 63.80 57.49 Net yield on interest earning assets 3.33 3.17 3.26 EQUITY SUMMARY Cash dividends per share $.270 $.257 $.257 Cash dividends on common stock $35,140 $33,574 $33,759 Book value per share (5) $22.70 $22.77 $20.49 Market value per share (5) $53.20 $53.41 $55.57 High market value per share $55.64 $56.75 $66.86 Low market value per share $49.44 $40.91 $53.07 Common shares outstanding (5) 129,694,606 130,176,048 130,956,746 Tangible common equity to tangible assets (6) 9.24 % 8.85 % 7.92 % Tier I leverage ratio 11.75 % 11.25 % 10.61 % OTHER QTD INFORMATION Number of bank/ATM locations 254 257 275 Full-time equivalent employees 4,721 4,718 4,636 (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 2023. COMMERCE BANCSHARES, INC. and SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (Unaudited) (In thousands, except per share data) For the Three Months Ended Mar. 31, 2024 Dec. 31, 2023 Sep. 30, 2023 Jun. 30, 2023 Mar. 31, 2023 Interest income $358,721 $362,609 $361,162 $348,663 $308,857 Interest expense 109,722 114,188 112,615 99,125 57,234 Net interest income 248,999 248,421 248,547 249,538 251,623 Provision for credit losses 4,787 5,879 11,645 6,471 11,456 Net interest income after credit losses 244,212 242,542 236,902 243,067 240,167 NON-INTEREST INCOME Trust fees 51,105 49,154 49,207 47,265 45,328 Bank card transaction fees 46,930 47,878 46,899 49,725 46,654 Deposit account charges and other fees 24,151 23,517 23,090 22,633 21,752 Consumer brokerage services 4,408 3,641 3,820 4,677 5,085 Capital market fees 3,892 4,269 3,524 2,945 3,362 Loan fees and sales 3,141 2,875 2,966 2,735 2,589 Other 15,221 13,545 13,443 17,625 12,842 Total non-interest income 148,848 144,879 142,949 147,605 137,612 INVESTMENT SECURITIES GAINS (LOSSES), NET (259 ) 7,601 4,298 3,392 (306 ) NON-INTEREST EXPENSE Salaries and employee benefits 151,801 147,456 146,805 145,429 144,373 Data processing and software 31,153 31,141 30,744 28,719 28,154 Net occupancy 13,574 13,927 13,948 12,995 12,759 Deposit insurance 8,017 20,304 4,029 4,187 4,643 Equipment 5,010 5,137 4,697 4,864 4,850 Supplies and communication 4,744 5,242 4,963 4,625 4,590 Marketing 4,036 6,505 6,167 6,368 5,471 Other 27,362 21,542 16,657 20,424 19,267 Total non-interest expense 245,697 251,254 228,010 227,611 224,107 Income before income taxes 147,104 143,768 156,139 166,453 153,366 Less income taxes 31,652 32,307 33,439 35,990 32,813 Net income 115,452 111,461 122,700 130,463 120,553 Less non-controlling interest expense (income) 2,789 2,238 2,104 2,674 1,101 Net income attributable to Commerce Bancshares, Inc. $112,663 $109,223 $120,596 $127,789 $119,452 Net income per common share — basic $0.87 $0.84 $0.92 $0.97 $0.91 Net income per common share — diluted $0.86 $0.84 $0.92 $0.97 $0.91 OTHER INFORMATION Return on total average assets 1.48 % 1.38 % 1.49 % 1.56 % 1.54 % Return on average equity (1) 15.39 16.48 17.73 18.81 18.75 Efficiency ratio (2) 61.67 63.80 58.15 57.22 57.49 Effective tax rate 21.93 22.83 21.71 21.97 21.55 Net yield on interest earning assets 3.33 3.17 3.11 3.12 3.26 Fully-taxable equivalent net interest income $251,312 $250,547 $250,962 $251,757 $253,411 (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. The income statement above reflects the reclassification of non-interest income of $406 thousand and $1.1 million from other non-interest income to capital market fees for the second and third quarters of 2023. COMMERCE BANCSHARES, INC. and SUBSIDIARIES CONSOLIDATED BALANCE SHEETS - PERIOD END (Unaudited) (In thousands) Mar. 31, 2024 Dec. 31, 2023 Mar. 31, 2023 ASSETS Loans Business $5,994,974 $6,019,036 $5,704,467 Real estate — construction and land 1,497,647 1,446,764 1,437,419 Real estate — business 3,711,602 3,719,306 3,486,543 Real estate — personal 3,039,885 3,026,041 2,952,042 Consumer 2,119,308 2,077,723 2,094,389 Revolving home equity 322,523 319,894 295,478 Consumer credit card 564,388 589,913 558,669 Overdrafts 48,513 6,802 6,515 Total loans 17,298,840 17,205,479 16,535,522 Allowance for credit losses on loans (160,465 ) (162,395 ) (159,317 ) Net loans 17,138,375 17,043,084 16,376,205 Loans held for sale 2,328 4,177 6,162 Investment securities: Available for sale debt securities 9,141,695 9,684,760 11,228,616 Trading debt securities 56,716 28,830 41,584 Equity securities 12,852 12,701 12,528 Other securities 229,146 222,473 268,417 Total investment securities 9,440,409 9,948,764 11,551,145 Federal funds sold — 5,025 27,060 Securities purchased under agreements to resell 225,000 450,000 825,000 Interest earning deposits with banks 1,609,614 2,239,010 1,341,854 Cash and due from banks 291,040 443,147 351,210 Premises and equipment — net 467,377 469,059 428,169 Goodwill 146,539 146,539 138,921 Other intangible assets — net 13,918 14,179 14,918 Other assets 1,037,508 938,077 944,212 Total assets $30,372,108 $31,701,061 $32,004,856 LIABILITIES AND STOCKHOLDERS’ EQUITY Deposits: Non-interest bearing $7,513,464 $7,975,935 $8,685,234 Savings, interest checking and money market 14,463,211 14,512,273 14,419,741 Certificates of deposit of less than $100,000 997,979 930,432 468,667 Certificates of deposit of $100,000 and over 1,465,541 1,945,258 1,109,818 Total deposits 24,440,195 25,363,898 24,683,460 Federal funds purchased and securities sold under agreements to repurchase 2,505,576 2,908,815 2,784,559 Other borrowings 2,359 1,404 1,507,776 Other liabilities 460,089 462,714 346,649 Total liabilities 27,408,219 28,736,831 29,322,444 Stockholders’ equity: Common stock 655,322 655,322 629,319 Capital surplus 3,148,649 3,162,622 2,919,060 Retained earnings 130,706 53,183 117,313 Treasury stock (59,674 ) (35,599 ) (59,670 ) Accumulated other comprehensive income (loss) (931,027 ) (891,412 ) (940,498 ) Total stockholders’ equity 2,943,976 2,944,116 2,665,524 Non-controlling interest 19,913 20,114 16,888 Total equity 2,963,889 2,964,230 2,682,412 Total liabilities and equity $30,372,108 $31,701,061 $32,004,856 COMMERCE BANCSHARES, INC. and SUBSIDIARIES AVERAGE BALANCE SHEETS (Unaudited) (In thousands) For the Three Months Ended Mar. 31, 2024 Dec. 31, 2023 Sep. 30, 2023 Jun. 30, 2023 Mar. 31, 2023 ASSETS: Loans: Business $5,873,525 $5,861,229 $5,849,227 $5,757,388 $5,656,104 Real estate — construction and land 1,472,554 1,523,682 1,508,850 1,450,196 1,410,835 Real estate — business 3,727,643 3,644,589 3,642,010 3,540,851 3,478,382 Real estate — personal 3,031,193 3,027,664 2,992,500 2,960,962 2,933,750 Consumer 2,082,490 2,117,268 2,102,281 2,098,523 2,067,385 Revolving home equity 322,074 310,282 304,055 300,623 296,748 Consumer credit card 562,892 568,112 564,039 555,875 556,223 Overdrafts 7,696 5,258 5,341 4,630 4,449 Total loans 17,080,067 17,058,084 16,968,303 16,669,048 16,403,876 Allowance for credit losses on loans (161,891 ) (161,932 ) (158,335 ) (159,068 ) (150,117 ) Net loans 16,918,176 16,896,152 16,809,968 16,509,980 16,253,759 Loans held for sale 2,149 5,392 5,714 5,957 5,708 Investment securities: U.S. government and federal agency obligations 851,656 889,390 986,284 1,035,651 1,099,067 Government-sponsored enterprise obligations 55,652 55,661 55,676 55,751 87,086 State and municipal obligations 1,330,808 1,363,649 1,391,541 1,532,519 1,793,756 Mortgage-backed securities 5,902,328 6,022,502 6,161,348 6,316,224 6,454,408 Asset-backed securities 2,085,050 2,325,089 2,553,562 2,827,911 3,233,757 Other debt securities 503,204 510,721 514,787 519,988 528,941 Unrealized gain (loss) on debt securities (1,274,125 ) (1,595,845 ) (1,458,141 ) (1,331,002 ) (1,387,196 ) Total available for sale debt securities 9,454,573 9,571,167 10,205,057 10,957,042 11,809,819 Trading debt securities 40,483 37,234 35,044 46,493 45,757 Equity securities 12,768 12,249 12,230 12,335 12,458 Other securities 221,695 222,378 237,518 273,587 229,867 Total investment securities 9,729,519 9,843,028 10,489,849 11,289,457 12,097,901 Federal funds sold 599 1,194 2,722 7,484 38,978 Securities purchased under agreements to resell 340,934 450,000 712,472 824,974 825,000 Interest earning deposits with banks 1,938,381 2,387,415 2,337,744 2,284,162 809,935 Other assets 1,715,716 1,797,849 1,750,222 1,941,340 1,376,551 Total assets $30,645,474 $31,381,030 $32,108,691 $32,863,354 $31,407,832 LIABILITIES AND EQUITY: Non-interest bearing deposits $7,328,603 $7,748,654 $7,939,190 $8,224,475 $9,114,512 Savings 1,333,983 1,357,733 1,436,149 1,516,887 1,550,215 Interest checking and money market 13,215,270 13,166,783 13,048,199 12,918,399 13,265,485 Certificates of deposit of less than $100,000 976,804 1,097,224 1,423,965 1,075,110 415,367 Certificates of deposit of $100,000 and over 1,595,310 1,839,057 1,718,126 1,472,208 903,393 Total deposits 24,449,970 25,209,451 25,565,629 25,207,079 25,248,972 Borrowings: Federal funds purchased 328,216 473,534 508,851 507,165 493,721 Securities sold under agreements to repurchase 2,511,959 2,467,118 2,283,020 2,206,612 2,418,726 Other borrowings 76 179,587 685,222 1,617,952 551,267 Total borrowings 2,840,251 3,120,239 3,477,093 4,331,729 3,463,714 Other liabilities 410,310 421,402 367,741 598,915 112,052 Total liabilities 27,700,531 28,751,092 29,410,463 30,137,723 28,824,738 Equity 2,944,943 2,629,938 2,698,228 2,725,631 2,583,094 Total liabilities and equity $30,645,474 $31,381,030 $32,108,691 $32,863,354 $31,407,832 COMMERCE BANCSHARES, INC. and SUBSIDIARIES AVERAGE RATES (Unaudited) For the Three Months Ended Mar. 31, 2024 Dec. 31, 2023 Sep. 30, 2023 Jun. 30, 2023 Mar. 31, 2023 ASSETS: Loans: Business (1) 6.07 % 5.91 % 5.77 % 5.58 % 5.31 % Real estate — construction and land 8.40 8.34 8.17 7.92 7.33 Real estate — business 6.26 6.18 6.13 5.96 5.65 Real estate — personal 3.95 3.85 3.73 3.68 3.61 Consumer 6.40 6.21 5.97 5.63 5.31 Revolving home equity 7.70 7.70 7.76 7.55 7.03 Consumer credit card 14.11 13.83 13.77 13.77 13.68 Overdrafts — — — — — Total loans 6.27 6.15 6.02 5.84 5.56 Loans held for sale 7.49 9.93 10.55 10.17 10.30 Investment securities: U.S. government and federal agency obligations 2.08 2.32 2.31 3.42 1.90 Government-sponsored enterprise obligations 2.39 2.36 2.36 2.38 3.21 State and municipal obligations (1) 1.97 1.94 1.95 2.04 2.26 Mortgage-backed securities 2.19 2.05 2.06 2.09 2.06 Asset-backed securities 2.39 2.30 2.20 2.08 2.01 Other debt securities 1.93 1.85 1.75 1.86 1.93 Total available for sale debt securities 2.18 2.10 2.08 2.19 2.07 Trading debt securities (1) 5.30 5.05 5.11 4.53 4.59 Equity securities (1) 25.64 27.47 23.06 23.25 23.24 Other securities (1) 13.04 8.60 13.13 9.40 7.11 Total investment securities 2.44 2.27 2.33 2.37 2.18 Federal funds sold 6.71 6.65 6.56 5.63 5.09 Securities purchased under agreements to resell 1.93 1.64 2.08 1.99 1.94 Interest earning deposits with banks 5.48 5.47 5.39 5.14 4.67 Total interest earning assets 4.78 4.62 4.51 4.34 4.00 LIABILITIES AND EQUITY: Interest bearing deposits: Savings .06 .05 .05 .05 .05 Interest checking and money market 1.69 1.57 1.33 .93 .61 Certificates of deposit of less than $100,000 4.20 4.21 4.32 3.78 1.39 Certificates of deposit of $100,000 and over 4.56 4.55 4.37 3.93 2.98 Total interest bearing deposits 1.97 1.93 1.76 1.29 .71 Borrowings: Federal funds purchased 5.42 5.40 5.33 5.06 4.59 Securities sold under agreements to repurchase 3.43 3.25 3.20 3.09 2.93 Other borrowings — 5.45 5.30 5.24 4.94 Total borrowings 3.66 3.71 3.93 4.13 3.49 Total interest bearing liabilities 2.21 % 2.20 % 2.12 % 1.87 % 1.20 % Net yield on interest earning assets 3.33 % 3.17 % 3.11 % 3.12 % 3.26 % (1) Stated on a fully taxable-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, 2024 Dec. 31, 2023 Sep. 30, 2023 Jun. 30, 2023 Mar. 31, 2023 ALLOWANCE FOR CREDIT LOSSES ON LOANS Balance at beginning of period $162,395 $162,244 $158,685 $159,317 $150,136 Provision for credit losses on loans 6,947 8,170 13,343 5,864 15,948 Net charge-offs (recoveries): Commercial portfolio: Business 23 96 2,613 165 230 Real estate — construction and land — — — (115 ) — Real estate — business (141 ) 128 (15 ) (5 ) (4 ) (118 ) 224 2,598 45 226 Personal banking portfolio: Consumer credit card 6,435 5,325 4,716 4,687 4,325 Consumer 1,983 1,903 1,797 1,273 1,275 Overdraft 557 588 683 517 978 Real estate — personal 24 (11 ) (9 ) (6 ) (11 ) Revolving home equity (4 ) (10 ) (1 ) (20 ) (26 ) 8,995 7,795 7,186 6,451 6,541 Total net loan charge-offs 8,877 8,019 9,784 6,496 6,767 Balance at end of period $160,465 $162,395 $162,244 $158,685 $159,317 LIABILITY FOR UNFUNDED LENDING COMMITMENTS $23,086 $25,246 $27,537 $29,235 $28,628 NET CHARGE-OFF RATIOS (1) Commercial portfolio: Business — % .01 % .18 % .01 % .02 % Real estate — construction and land — — — (.03 ) — Real estate — business (.02 ) .01 — — — — .01 .09 — .01 Personal banking portfolio: Consumer credit card 4.60 3.72 3.32 3.38 3.15 Consumer .38 .36 .34 .24 .25 Overdraft 29.11 44.37 50.73 44.79 89.15 Real estate — personal — — — — — Revolving home equity — (.01 ) — (.03 ) (.04 ) .60 .51 .48 .44 .45 Total .21 % .19 % .23 % .16 % .17 % CREDIT QUALITY RATIOS Non-accrual loans to total loans .03 % .04 % .05 % .04 % .05 % Allowance for credit losses on loans to total loans .93 .94 .95 .94 .96 NON-ACCRUAL AND PAST DUE LOANS Non-accrual loans: Business $1,038 $3,622 $6,602 $4,732 $6,361 Real estate — business 1,246 60 76 153 171 Real estate — personal 1,523 1,653 1,531 1,276 1,269 Revolving home equity 1,977 1,977 — — — Total 5,784 7,312 8,209 6,161 7,801 Loans past due 90 days and still accruing interest $20,281 $21,864 $18,580 $15,351 $14,800 (1) Net charge-offs are annualized and calculated as a percentage of average loans (excluding loans held for sale). COMMERCE BANCSHARES, INC. Management Discussion of First Quarter Results March 31, 2024 For the quarter ended March 31, 2024, net income amounted to $112.7 million, compared to $109.2 million in the previous quarter and $119.5 million in the same quarter last year. The increase in net income compared to the previous quarter was primarily the result of lower non-interest expense and higher non-interest income, partly offset by net losses on investment securities. The net yield on interest earning assets increased 16 basis points over the previous quarter to 3.33%. Average loans increased $22.0 million over the previous quarter, while average deposits, borrowings and available for sale debt securities, at fair value, declined $759.5 million, $280.0 million, and $116.6 million, respectively. For the quarter, the return on average assets was 1.48%, the return on average equity was 15.39%, and the efficiency ratio was 61.7%. Balance Sheet Review During the 1st quarter of 2024, average loans totaled $17.1 billion, an increase of $22.0 million over the prior quarter, and increased $676.2 million, or 4.1%, over the same quarter last year. Compared to the previous quarter, average balances of business real estate loans grew $83.1 million, while construction and consumer loans declined $51.1 million and $34.8 million, respectively. During the current quarter, the Company sold certain fixed rate personal real estate loans totaling $7.4 million, compared to $8.7 million in the prior quarter. Total average available for sale debt securities decreased $116.6 million compared to the previous quarter to $9.5 billion, at fair value. The decrease in debt securities was mainly the result of lower average balances of asset-backed securities. During the 1st quarter of 2024, the unrealized loss on available for sale securities increased $27.2 million to $1.2 billion, at period end. Also during the 1st quarter of 2024, purchases of securities totaled $145.7 million with a weighted average yield of approximately 4.65%, and sales, maturities and pay downs were $655.0 million. At March 31, 2024, the duration of the available for sale investment portfolio was 4.2 years, and maturities and pay downs of approximately $1.6 billion are expected to occur during the next 12 months. The Company does not have any investment securities classified as held-to-maturity. Total average deposits decreased $759.5 million this quarter compared to the previous quarter. The decrease in deposits mostly resulted from lower average demand deposits of $420.1 million and lower average certificates of deposit of $364.2 million, which included lower brokered deposits of $225.4 million. Compared to the previous quarter, total average commercial deposits declined $743.8 million, while consumer and wealth deposits increased $138.8 million and $71.8 million, respectively. The average loans to deposits ratio was 69.9% in the current quarter and 67.7% in the prior quarter. The Company’s average borrowings, which included average customer repurchase agreements of $2.5 billion, decreased $280.0 million to $2.8 billion in the 1st quarter of 2024, mostly due to a decline of $179.3 million in average Federal Home Loan Bank (FHLB) borrowings. Net Interest Income Net interest income in the 1st quarter of 2024 amounted to $249.0 million, an increase of $578 thousand compared to the previous quarter. On a fully taxable-equivalent (FTE) basis, net interest income for the current quarter increased $765 thousand over the previous quarter to $251.3 million. The increase in net interest income was mostly due to higher interest earned on loans and investment securities and lower interest expense on deposits and borrowings, partly offset by lower interest income earned on deposits with banks. The net yield (FTE) on earning assets increased to 3.33%, from 3.17% in the prior quarter. Compared to the previous quarter, interest income on loans (FTE) increased $1.7 million, mostly due to higher average rates earned on business, consumer, and personal real estate loans. Interest income on loans also increased due to higher balances of business real estate loans, largely offset by lower balances of construction loans. The average yield (FTE) on the loan portfolio increased 12 basis points to 6.27% this quarter. Interest income on investment securities (FTE) increased $1.3 million compared to the prior quarter, mostly due to higher rates earned on other debt securities, partly offset by lower average balances of available for sale debt securities. Interest on other debt securities included dividend payments of $3.4 million from the Company’s private equity investments. Interest income earned on U.S. government and federal agency securities decreased due to lower average balances and lower average rates, which included the impact of $1.7 million in lower inflation income from Treasury inflation-protected securities this quarter. Additionally, the Company recorded a $2.0 million adjustment to premium amortization at March 31, 2024, which increased interest income to reflect slower forward prepayment speed estimates on mortgage-backed securities and was higher than the $629 thousand adjustment that increased interest income in the prior quarter. The average yield (FTE) on total investment securities was 2.44% in the current quarter, compared to 2.27% in the previous quarter. Compared to the previous quarter, interest income on deposits with banks decreased $6.5 million, mostly due to $449.0 million of lower average balances. Interest expense decreased $4.5 million, mostly due to lower average balances of borrowings and deposits, partly offset by higher rates paid. The average rate paid on interest bearing deposits totaled 1.97% in the current quarter compared to 1.93% in the prior quarter. Interest expense on deposits decreased $1.2 million this quarter compared to the previous quarter. Interest expense on borrowings decreased $3.3 million, mostly due to a decline in average FHLB borrowings of $179.3 million and lower average balances of federal funds purchased. The overall rate paid on interest bearing liabilities was 2.21% in the current quarter compared to 2.20% in the prior quarter. Non-Interest Income In the 1st quarter of 2024, total non-interest income amounted to $148.8 million, an increase of $11.2 million compared to the same period last year and an increase of $4.0 million compared to the prior quarter. The increase in non-interest income compared to the same period last year was mainly due to higher trust fees, deposit account fees, and tax credit sales income. The increase in non-interest income compared to the prior quarter was mainly due to higher trust fees, brokerage fees, and tax credit sales income, partly offset by lower bank card fees. Total net bank card fees in the current quarter increased $276 thousand, or .6%, compared to the same period last year, and decreased $948 thousand compared to the prior quarter. Net corporate card fees increased $164 thousand, or .6%, over the same quarter of last year mainly due to higher interchange fees, partly offset by higher rewards expense. Net debit card fees increased $118 thousand, or 1.1%, mostly due to lower network expense. Net merchant fees decreased $104 thousand, or 1.9%, while net credit card fees increased $98 thousand, or 2.7%. Total net bank card fees this quarter were comprised of fees on corporate card ($27.5 million), debit card ($10.4 million), merchant ($5.2 million) and credit card ($3.8 million) transactions. In the current quarter, trust fees increased $5.8 million, or 12.7%, over the same period last year, mostly resulting from higher private client trust fees. Compared to the same period last year, deposit account fees increased $2.4 million, or 11.0%, mostly due to higher corporate cash management fees. Consumer brokerage fees decreased $677 thousand, or 13.3%. Other non-interest income increased compared to the same period last year primarily due to higher tax credit sales income of $1.5 million and cash sweep fees of $731 thousand. For the 1st quarter of 2024, non-interest income comprised 37.4% of the Company’s total revenue. Investment Securities Gains and Losses The Company recorded net securities losses of $259 thousand in the current quarter, compared to gains of $7.6 million in the prior quarter and losses of $306 thousand in the 1st quarter of 2023. Net securities losses in the current quarter primarily resulted from losses of $8.5 million realized on available for sale debt securities, partly offset by net fair value gains of $7.1 million in the Company’s portfolio of private equity investments. Non-Interest Expense Non-interest expense for the current quarter amounted to $245.7 million, compared to $224.1 million in the same period last year and $251.3 million in the prior quarter. The increase in non-interest expense compared to the same period last year was mainly due to litigation settlement expense as well as higher salaries and employee benefits expense, FDIC insurance expense, and data processing and software expense, partly offset by lower marketing expense. The decrease in non-interest expense compared to the prior quarter was mainly due to lower FDIC insurance expense and marketing expense, partly offset by higher litigation settlement expense and employee benefits expense. Compared to the 1st quarter of last year, salaries and employee benefits expense increased $7.4 million, or 5.1%, mostly due to higher full-time salaries expense of $5.8 million and higher employee benefits expense of $1.3 million. Full-time equivalent employees totaled 4,721 and 4,636 at March 31, 2024 and 2023, respectively. Compared to the same period last year, data processing and software expense increased $3.0 million due to higher bank card fees expense and increased costs for service providers. FDIC insurance expense increased $3.4 million, due to a $4.0 million accrual adjustment in the current quarter to the special assessment by the FDIC to replenish the Deposit Insurance Fund. These increases in expense were partly offset by lower marketing expense of $1.4 million. Other non-interest expense increased mainly due to $10.0 million in litigation settlement costs. Income Taxes The effective tax rate for the Company was 21.9% in the current quarter, 22.8% in the previous quarter, and 21.6% in the 1st quarter of 2023. Credit Quality Net loan charge-offs in the 1st quarter of 2024 amounted to $8.9 million, compared to $8.0 million in the prior quarter and $6.8 million in the same period last year. The ratio of annualized net loan charge-offs to total average loans was .21% in the current quarter, .19% in the previous quarter, and .17% in the 1st quarter of last year. Compared to the prior quarter, net loan charge-offs on personal banking loans increased $1.2 million to $9.0 million, mainly due to $1.1 million of higher consumer credit card loan net charge-offs. In the 1st quarter of 2024, annualized net loan charge-offs on average consumer credit card loans were 4.60%, compared to 3.72% in the previous quarter, and 3.15% in the same quarter last year. Consumer loan net charge-offs were .38% of average consumer loans in the current quarter, .36% in the prior quarter, and .25% in the same quarter last year. At March 31, 2024, the allowance for credit losses on loans totaled $160.5 million, or .93% of total loans, and decreased $1.9 million compared to the prior quarter. Additionally, the liability for unfunded lending commitments at March 31, 2024 was $23.1 million, a decrease of $2.2 million compared to the liability at December 31, 2023. At March 31, 2024, total non-accrual loans amounted to $5.8 million, a decrease of $1.5 million compared to the previous quarter. At March 31, 2024, the balance of non-accrual loans, which represented .03% of loans outstanding, included business loans of $1.0 million, revolving home equity loans of $2.0 million, personal real estate loans of $1.5 million, and business real estate loans of $1.2 million. Loans more than 90 days past due and still accruing interest totaled $20.3 million at March 31, 2024. Other During the 1st quarter of 2024, the Company paid a cash dividend of $.27 per common share, representing a 5.1% increase over the same period last year. The Company purchased 806,217 shares of treasury stock during the current quarter at an average price of $52.13. The Company owns 823,447 shares of Visa Class B-1 common stock, carried at zero value on the Company’s balance sheet as of March 31, 2024. On April 8, 2024, Visa, Inc. (“Visa”) announced the commencement of a public offering to exchange Class B-1 common stock for a combination of shares of Class B-2 common stock and Class C common stock (“Exchange Offer”). The Company tendered all of its Visa Class B-1 shares and is awaiting notification of acceptance of that tender and the closing of the Exchange Offer. If the Company’s tendered shares are accepted and the exchange occurs in the second quarter of 2024, the Company expects to record a significant gain during the second quarter of 2024 based on the conversion privilege of the Class C common stock and the closing price of Visa Class A common stock. A full description of the terms of the Exchange Offer is set forth in Visa’s related Issuer Tender Offer Statement on Schedule TO and Prospectus, each dated April 8, 2024, publicly filed with the U. S. Securities and Exchange Commission. 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. View source version on businesswire.com: https://www.businesswire.com/news/home/20240415507662/en/
Matt Burkemper, Investor Relations (314) 746-7485 www.commercebank.com matthew.burkemper@commercebank.com
