Commerce Bancshares, Inc. announced earnings of $1.02 per share for the three months ended June 30, 2023, compared to $.92 per share in the same quarter last year and $.95 per share in the first quarter of 2023. Net income for the second quarter of 2023 amounted to $127.8 million, compared to $115.8 million in the second quarter of 2022 and $119.5 million in the prior quarter.
For the six months ended June 30, 2023, earnings per share totaled $1.97, compared to $1.84 for the first six months of 2022. Net income amounted to $247.2 million for the six months ended June 30, 2023, compared to $233.9 million in the comparable period last year. For the year to date, the return on average assets was 1.55%, and the return on average equity was 18.78%.
“Commerce delivered strong results in the second quarter,” said John Kemper, President and Chief Executive Officer. “Against a backdrop of elevated interest rates, the Company produced record revenues, showing strength in both our net interest and non-interest income categories. These results reflect the ability of our diversified business model to perform across economic cycles. Our low loan-to-deposit ratio positioned us to meet loan demand across our footprint and provided opportunities for our teams to welcome new customer relationships.”
On deposit balances, Kemper added, “Our customer deposits increased during the quarter, helping to accommodate loan growth. On top of this, the Company took steps to add short-term brokered deposit funding, increasing our liquidity cushion in the wake of the first quarter’s industry disruption. This short-term liquidity build impacted our net interest margin but was neutral to net interest income and reflects our conservative posture in times of economic uncertainty.
We are confident in our liquidity and capital levels, and credit performance remains excellent.”
Second Quarter 2023 Financial Highlights:
- Net interest income was $249.5 million, a $2.1 million decrease from the prior quarter. The net yield on interest earning assets decreased 14 basis points to 3.12%.
- Non-interest income totaled $147.6 million, an increase of $8.2 million compared to the same quarter last year.
- Non-interest expense totaled $227.6 million, an increase of $14.1 million compared to the same quarter last year.
- Average loan balances totaled $16.7 billion, an increase of $265.2 million, or 1.6%, over the prior quarter.
- Total average available for sale debt securities decreased 7.2%, or $852.8 million, from the prior quarter to $11.0 billion, at fair value. During the second quarter of 2023, the unrealized loss on available for sale securities increased $109.2 million to $1.4 billion, at period end.
- Period end deposits increased $1.2 billion, or 4.8%, over March 31, 2023. The average rate paid on interest bearing deposits in the current quarter was 1.29%.
- The ratio of annualized net loan charge-offs to average loans was .16% compared to .17% in the prior quarter.
- The allowance for credit losses on loans decreased $632 thousand during the second quarter to $158.7 million, and at June 30, 2023, the ratio of the allowance for credit losses on loans to total loans was .94%, compared to .96% at March 31, 2023.
- Total assets at June 30, 2023 were $32.8 billion, an increase of $826.4 million, or 2.6%, over the prior quarter.
- For the quarter, the return on average assets was 1.56%, the return on average equity was 18.81%, and the efficiency ratio was 57.2%.
Commerce Bancshares, Inc. is a regional bank holding company offering a full line of banking services through its subsidiaries, including payment solutions, investment management and securities brokerage. One of its subsidiaries, Commerce Bank, leverages nearly 160 years of proven strength and experience to help individuals and businesses solve financial challenges. In addition to offering payment solutions across the U.S., Commerce Bank currently operates full-service banking facilities across the Midwest including the St. Louis and Kansas City metropolitan areas, Springfield, Central Missouri, Central Illinois, Wichita, Tulsa, Oklahoma City, and Denver. It also maintains commercial offices in Dallas, Houston, Cincinnati, Nashville, Des Moines, Indianapolis, and Grand Rapids. Commerce delivers high-touch service and sophisticated financial solutions at regional branches, commercial offices, ATMs, online, mobile and through a 24/7 customer service line.
This financial news release and the supplementary Earnings Highlights presentation are available on the Company’s website at https://investor.commercebank.com/news-info/financial-news-releases/default.aspx.
COMMERCE BANCSHARES, INC. and SUBSIDIARIES FINANCIAL HIGHLIGHTS | |||||||||||
For the Three Months Ended | For the Six Months Ended | ||||||||||
(Unaudited) (Dollars in thousands, except per share data) | Jun. 30,
|
Mar. 31,
|
Jun. 30,
| Jun. 30,
|
Jun. 30,
| ||||||
FINANCIAL SUMMARY | |||||||||||
Net interest income | $249,538 | $251,623 | $232,385 | $501,161 | $441,171 | ||||||
Non-interest income | 147,605 | 137,612 | 139,427 | 285,217 | 271,196 | ||||||
Total revenue | 397,143 | 389,235 | 371,812 | 786,378 | 712,367 | ||||||
Investment securities gains (losses) | 3,392 | (306 | ) | 1,029 | 3,086 | 8,192 | |||||
Provision for credit losses | 6,471 | 11,456 | 7,162 | 17,927 | (2,696 | ) | |||||
Non-interest expense | 227,611 | 224,107 | 213,505 | 451,718 | 419,153 | ||||||
Income before taxes | 166,453 | 153,366 | 152,174 | 319,819 | 304,102 | ||||||
Income taxes | 35,990 | 32,813 | 32,021 | 68,803 | 63,923 | ||||||
Non-controlling interest expense | 2,674 | 1,101 | 4,359 | 3,775 | 6,231 | ||||||
Net income attributable to Commerce Bancshares, Inc. | $127,789 | $119,452 | $115,794 | $247,241 | $233,948 | ||||||
Earnings per common share: | |||||||||||
Net income — basic | $1.03 | $0.95 | $0.92 | $1.98 | $1.84 | ||||||
Net income — diluted | $1.02 | $0.95 | $0.92 | $1.97 | $1.84 | ||||||
Effective tax rate | 21.97 | % | 21.55 | % | 21.66 | % | 21.77 | % | 21.46 | % | |
Fully-taxable equivalent net interest income | $251,757 | $253,411 | $235,010 | $505,168 | $446,403 | ||||||
Average total interest earning assets (1) | $32,412,084 | $31,568,594 | $33,839,655 | $ 31,992,669 | $34,385,339 | ||||||
Diluted wtd. average shares outstanding | 124,007,300 | 124,258,981 | 125,916,229 | 124,132,445 | 126,279,546 | ||||||
RATIOS | |||||||||||
Average loans to deposits (2) | 66.15 | % | 64.99 | % | 53.93 | % | 65.57 | % | 52.91 | % | |
Return on total average assets | 1.56 | 1.54 | 1.36 | 1.55 | 1.35 | ||||||
Return on average equity(3) | 18.81 | 18.75 | 16.29 | 18.78 | 15.28 | ||||||
Non-interest income to total revenue | 37.17 | 35.35 | 37.50 | 36.27 | 38.07 | ||||||
Efficiency ratio (4) | 57.22 | 57.49 | 57.29 | 57.35 | 58.72 | ||||||
Net yield on interest earning assets | 3.12 | 3.26 | 2.79 | 3.18 | 2.62 | ||||||
EQUITY SUMMARY | |||||||||||
Cash dividends per share | $.270 | $.270 | $.252 | $.540 | $.505 | ||||||
Cash dividends on common stock | $33,744 | $33,759 | $31,935 | $67,503 | $64,078 | ||||||
Book value per share (5) | $21.53 | $21.51 | $21.23 | ||||||||
Market value per share (5) | $48.70 | $58.35 | $62.52 | ||||||||
High market value per share | $58.97 | $70.20 | $70.78 | ||||||||
Low market value per share | $45.55 | $55.72 | $59.81 | ||||||||
Common shares outstanding (5) | 124,734,830 | 124,720,710 | 126,034,333 | ||||||||
Tangible common equity to tangible assets (6) | 7.70 | % | 7.92 | % | 7.56 | % | |||||
Tier I leverage ratio | 10.46 | % | 10.61 | % | 9.45 | % | |||||
OTHER QTD INFORMATION | |||||||||||
Number of bank/ATM locations | 272 | 275 | 279 | ||||||||
Full-time equivalent employees | 4,680 | 4,636 | 4,579 | ||||||||
(1) | Excludes allowance for credit losses on loans and unrealized gains/(losses) on available for sale debt securities. |
(2) | Includes loans held for sale. |
(3) | Annualized net income attributable to Commerce Bancshares, Inc. divided by average total equity. |
(4) | The efficiency ratio is calculated as non-interest expense (excluding intangibles amortization) as a percent of total revenue. |
(5) | As of period end. |
(6) | The tangible common equity ratio is a non-gaap ratio and is calculated as stockholders’ equity reduced by goodwill and other intangible assets (excluding mortgage servicing rights) divided by total assets reduced by goodwill and other intangible assets (excluding mortgage servicing rights). |
| All share and per share amounts have been restated to reflect the 5% stock dividend distributed in December 2022. | |
COMMERCE BANCSHARES, INC. and SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME | |||||||||||||||
(Unaudited) (In thousands, except per share data) | For the Three Months Ended | For the Six Months Ended | |||||||||||||
Jun. 30,
|
Mar. 31,
|
Dec. 31,
|
Sep. 30,
|
Jun. 30,
| Jun. 30,
|
Jun. 30,
| |||||||||
Interest income | $348,663 | $308,857 | $286,377 | $262,666 | $238,154 | $657,520 | $449,936 | ||||||||
Interest expense | 99,125 | 57,234 | 31,736 | 16,293 | 5,769 | 156,359 | 8,765 | ||||||||
Net interest income | 249,538 | 251,623 | 254,641 | 246,373 | 232,385 | 501,161 | 441,171 | ||||||||
Provision for credit losses | 6,471 | 11,456 | 15,477 | 15,290 | 7,162 | 17,927 | (2,696 | ) | |||||||
Net interest income after credit losses | 243,067 | 240,167 | 239,164 | 231,083 | 225,223 | 483,234 | 443,867 | ||||||||
NON-INTEREST INCOME | |||||||||||||||
Bank card transaction fees | 49,725 | 46,654 | 44,588 | 45,638 | 43,873 | 96,379 | 85,918 | ||||||||
Trust fees | 47,265 | 45,328 | 44,710 | 45,406 | 46,792 | 92,593 | 94,603 | ||||||||
Deposit account charges and other fees | 22,633 | 21,752 | 21,989 | 24,521 | 25,564 | 44,385 | 47,871 | ||||||||
