Commerce Bancshares, Inc. Reports Fourth Quarter Earnings Per Share Of $1.04

KANSAS CITY, Mo., January 19, 2023--(BUSINESS WIRE)--Commerce Bancshares, Inc. announced earnings of $1.04 per share for the three months ended December 31, 2022, compared to $.90 per share in the same quarter last year and $.97 per share in the third quarter of 2022. Net income for the fourth quarter of 2022 amounted to $131.6 million, compared to $114.9 million in the fourth quarter of 2021 and $122.8 million in the prior quarter.

"The company delivered strong results in the fourth quarter," said John Kemper, President and Chief Executive Officer. "Loan growth, margin expansion, and resilient fee-based income all contributed to record quarterly revenue. Taking stock of where we are and looking ahead into 2023, the strength of our deposit franchise and our long-term, conservative and disciplined approach to credit and capital management position us well in an uncertain environment.

"Our results would not be possible without our talented team members and their unwavering commitment to our purpose and culture. Our results are a reflection of the way our team works collaboratively, communicates, and strives toward the shared goal of helping our customers focus on what matters most."

Fourth Quarter 2022 Financial Highlights:

• Net interest income was $254.6 million, an $8.3 million increase over the prior quarter. The net yield on interest earning assets increased 17 basis points to 3.18%.

• Non-interest income totaled $136.8 million, a decrease of $1.7 million compared to the prior quarter.

• Non-interest expense totaled $216.7 million, an increase of $3.9 million compared to the prior quarter.

• Average loan balances totaled $15.9 billion, an increase of $239.0 million, or 1.5%, over the prior quarter.

• Total average available for sale debt securities decreased 7.9%, or $1.1 billion, from the prior quarter to $12.4 billion, at fair value. Purchases of securities during the quarter totaled $145.3 million, with a weighted average yield of approximately 5.05%.

• Average deposits declined $1.1 billion, or 4.1%, from the prior quarter. The average rate paid on interest bearing deposits was .40%.

• The ratio of annualized net loan charge-offs to average loans was .14% compared to .12% in the prior quarter.

• Non-accrual loans totaled $8.3 million compared to $7.2 million in the prior quarter. Non-accrual loans were .05% of total loans.

• The allowance for credit losses on loans increased $6.8 million during the fourth quarter to $150.1 million, and at December 31, 2022, the ratio of the allowance for credit losses on loans to total loans was .92%, compared to .90% at September 30, 2022.

• The Company purchased 332,178 shares of its common stock this quarter at an average price of $70.15.

• Total assets at December 31, 2022 were $31.9 billion, a decrease of $726.7 million, or 2.2%, from the prior quarter.

• For the quarter, the return on average assets was 1.65%, the return on average equity was 21.88%, and the efficiency ratio was 55.3%.

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 almost 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 Year Ended
(Unaudited) (Dollars in thousands, except per share data)		Dec. 31, 2022		Sep. 30, 2022		Dec. 31, 2021		Dec. 31, 2022		Dec. 31, 2021
FINANCIAL SUMMARY
Net interest income		$254,641		$246,373		$207,657		$942,185		$835,424
Non-interest income		136,825		138,514		147,699		546,535		560,393
Total revenue		391,466		384,887		355,356		1,488,720		1,395,817
Investment securities gains (losses)		8,904		3,410		(9,706	)	20,506		30,059
Provision for credit losses		15,477		15,290		(7,054	)	28,071		(66,326	)
Non-interest expense		216,740		212,884		203,582		848,777		805,901
Income before taxes		168,153		160,123		149,122		632,378		686,301
Income taxes		34,499		33,936		33,764		132,358		145,711
Non-controlling interest expense		2,026		3,364		452		11,621		9,825
Net income attributable to Commerce Bancshares, Inc.		$131,628		$122,823		$114,906		$488,399		$530,765
Earnings per common share:
Net income — basic		$1.05		$0.97		$0.90		$3.86		$4.12
Net income — diluted		$1.04		$0.97		$0.90		$3.85		$4.11
Effective tax rate		20.77	%	21.65	%	22.71	%	21.32	%	21.54	%
Fully-taxable equivalent net interest income		$256,675		$248,737		$210,424		$951,815		$847,116
Average total interest earning assets (1)		$31,991,224		$32,807,393		$34,318,520		$ 33,384,162		$32,874,701
Diluted wtd. average shares outstanding		124,589,323		125,116,585		127,282,556		125,560,387		128,038,042
RATIOS
Average loans to deposits (2)		59.73	%	56.40	%	52.36	%	55.41	%	56.46	%
Return on total average assets		1.65		1.48		1.28		1.45		1.55
Return on average equity (3)		21.88		17.84		13.11		17.31		15.37
Non-interest income to total revenue		34.95		35.99		41.56		36.71		40.15
Efficiency ratio (4)		55.26		55.19		57.29		56.90		57.64
Net yield on interest earning assets		3.18		3.01		2.43		2.85		2.58
EQUITY SUMMARY
Cash dividends per share		$.252		$.252		$.238		$1.010		$.952
Cash dividends on common stock		$31,648		$31,740		$30,489		$127,466		$122,693
Book value per share (5)		$19.85		$18.91		$27.05
Market value per share (5)		$68.07		$63.01		$65.47
High market value per share		$72.60		$70.45		$68.10
Low market value per share		$63.17		$61.14		$61.76
Common shares outstanding (5)		124,999,100		125,329,198		127,508,571
Tangible common equity to tangible assets (6)		7.32	%	6.80	%	9.01	%
Tier I leverage ratio		10.34	%	9.87	%	9.13	%
OTHER QTD INFORMATION
Number of bank/ATM locations		275		277		287
Full-time equivalent employees		4,594		4,595		4,567

(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 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 Year Ended
		Dec. 31, 2022		Sep. 30, 2022		Jun. 30, 2022		Mar. 31, 2022		Dec. 31, 2021		Dec. 31, 2022		Dec. 31, 2021
Interest income		$286,377		$262,666		$238,154		$211,782		$210,479		$998,979		$848,290
Interest expense		31,736		16,293		5,769		2,996		2,822		56,794		12,866
Net interest income		254,641		246,373		232,385		208,786		207,657		942,185		835,424
Provision for credit losses		15,477		15,290		7,162		(9,858	)	(7,054	)	28,071		(66,326	)
Net interest income after credit losses		239,164		231,083		225,223		218,644		214,711		914,114		901,750
NON-INTEREST INCOME
Trust fees		44,710		45,406		46,792		47,811		48,893		184,719		188,227
Bank card transaction fees		44,588		45,638		43,873		42,045		44,773		176,144		167,891
Deposit account charges and other fees		21,989		24,521		25,564		22,307		25,493		94,381		97,217
Consumer brokerage services		4,518		5,085		5,068		4,446		4,878		19,117		18,362
Capital market fees		3,386		3,393		3,327		4,125		3,841		14,231		15,943
Loan fees and sales		2,566		3,094		3,246		4,235		5,248		13,141		29,720
Other		15,068		11,377		11,557		6,800		14,573		44,802		43,033
Total non-interest income		136,825		138,514		139,427		131,769		147,699		546,535		560,393
INVESTMENT SECURITIES GAINS (LOSSES), NET		8,904		3,410		1,029		7,163		(9,706	)	20,506		30,059
NON-INTEREST EXPENSE
Salaries and employee benefits		138,458		137,393		142,243		135,953		132,640		554,047		525,248
Data processing and software		27,991		28,050		27,635		27,016		25,777		110,692		101,792
Net occupancy		11,774		12,544		12,503		12,296		12,308		49,117		48,185
Equipment		5,021		5,036		4,734		4,568		4,691		19,359		18,089
Supplies and communication		4,446		4,581		4,361		4,713		4,430