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Commerce Bancshares, Inc. Reports Second Quarter Earnings Per Share Of $.96

KANSAS CITY, Mo.--(BUSINESS WIRE)--

Commerce Bancshares, Inc. (CBSH) announced earnings of $.96 per common share for the three months ended June 30, 2019, compared to $.96 per share in the same quarter last year and $.85 per share in the prior quarter. Net income attributable to Commerce Bancshares, Inc. for the second quarter of 2019 amounted to $108.0 million, compared to $110.3 million in the second quarter of 2018 and $97.1 million in the prior quarter. For the quarter, the return on average assets was 1.73%, the return on average common equity was 14.5% and the efficiency ratio was 55.9%.

For the six months ended June 30, 2019, earnings per common share totaled $1.81 compared to $1.84 for the first six months of 2018. Net income attributable to Commerce Bancshares, Inc. amounted to $205.1 million for the six months ended June 30, 2019 compared to $211.3 million in the comparable period last year. Year to date, the return on average assets was 1.66% and the return on average common equity was 14.1%.

In announcing these results, John Kemper, Chief Executive Officer, said, “We are pleased to report strong earnings this quarter, driven by the performance of our diversified, fee-based businesses, focus on credit quality, and prudent expense management. Fee income totaled $127.3 million this quarter and represented 38% of our total revenue. The growth in our fee-based businesses reflects our commitment to delivering innovative solutions and building well rounded banking relationships. Average loan growth was modest this quarter due to softening demand for consumer card and auto loans, offset by higher loan demand from commercial customers. We saw a surge in demand for residential mortgage loans this quarter, but we sell most of our production, which generates fee income instead of increasing our loan balances. Compared to the prior quarter, net interest income grew but included inflation income from our inflation-protected securities. Adjusted for this income, our net yield on earning assets decreased slightly, resulting mainly from a decline in commercial loan yields and slight growth in deposit costs, partly offset by increasing consumer loan yields. After significant margin growth beginning in 2017, the recent drop in forward rate expectations is putting downward pressure on net interest income and creating a significant headwind for banks like Commerce.”

Mr. Kemper continued, “This quarter net loan charge-offs totaled $11.3 million, compared to $11.7 million in the prior quarter and $10.0 million in the second quarter of 2018, as the overall credit environment remained favorable. In the current quarter, the ratio of annualized net loan charge-offs to average loans was .32%, compared to .34% in the previous quarter, and .29% in the second quarter of last year. Net loan charge-offs on commercial loans totaled $169 thousand this quarter and remained exceptionally low, while net loan charge-offs on personal banking loans decreased $182 thousand to $11.1 million. During the current quarter, the provision for loan losses exceeded net loan charge-offs by $500 thousand and totaled $11.8 million. The allowance for loan losses amounted to $161.2 million at June 30, 2019, or 1.13% of period end loans. Non-performing assets totaled $12.0 million this quarter and remained at very low levels.”

Total assets at June 30, 2019 were $25.8 billion, total loans were $14.3 billion, and total deposits were $19.8 billion. During the quarter, the Company paid a common cash dividend of $.26 per share, representing a 16.1% increase over the rate paid in 2018, and paid a 6% cash dividend on its preferred stock. The Company purchased 779,726 of its common shares this quarter.

Commerce Bancshares, Inc. is a registered bank holding company offering a full line of banking services, including investment management and securities brokerage. The Company currently operates banking facilities in nine key markets including St. Louis, Kansas City, Springfield, Central Missouri, Central Illinois, Wichita, Tulsa, Oklahoma City and Denver. The Company also maintains commercial offices in Dallas, Houston, Cincinnati, Nashville, Des Moines, Indianapolis, and Grand Rapids.

This financial news release, including management's discussion of second quarter results, is posted to the Company's web site at www.commercebank.com.

* * * * * * * * * * * * * * *
For additional information, contact
Matthew Burkemper, Investor Relations
at 8000 Forsyth, Mailstop: CBIR-1
Clayton, MO 63105
or by telephone at (314) 746-7485
Web Site: http://www.commercebank.com
Email: matthew.burkemper@commercebank.com

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)

 

June 30,
2019

March 31,
2019

June 30,
2018

June 30,
2019

June 30,
2018

FINANCIAL SUMMARY

 

 

Net interest income

 

$

 

211,634

 

$

 

203,488

 

$

 

210,959

 

$

 

415,122

 

$

 

403,851

 

Non-interest income

 

 

127,259

 

 

121,240

 

 

124,850

 

 

248,499

 

 

244,540

 

Total revenue

 

 

338,893

 

 

324,728

 

 

335,809

 

 

663,621

 

 

648,391

 

Investment securities gains (losses), net

 

 

(110

)

 

(925

)

 

(3,075

)

 

(1,035

)

 

2,335

 

Provision for loan losses

 

 

11,806

 

 

12,463

 

 

10,043

 

 

24,269

 

 

20,439

 

Non-interest expense

 

 

189,779

 

 

191,425

 

 

181,860

 

 

381,204

 

 

364,137

 

Income before taxes

 

 

137,198

 

 

119,915

 

 

140,831

 

 

257,113

 

 

266,150

 

Income taxes

 

 

28,899

 

 

22,860

 

 

29,507

 

 

51,759

 

 

52,765

 

Non-controlling interest expense (income)

 

 

328

 

 

(83

)

 

994

 

 

245

 

 

2,071

 

Net income attributable to Commerce Bancshares, Inc.

 

107,971

 

 

97,138

 

 

110,330

 

 

205,109

 

 

211,314

 

Preferred stock dividends

 

 

2,250

 

 

2,250

 

 

2,250

 

 

4,500

 

 

4,500

 

Net income available to common shareholders

$

 

105,721

 

$

 

94,888

 

$

 

108,080

 

$

 

200,609

 

$

 

206,814

 

Earnings per common share:

 

 

 

 

 

 

Net income — basic

 

$

 

.96

 

$

 

.85

 

$

 

.96

 

$

 

1.81

 

$

 

1.84

 

Net income — diluted

 

$

 

.96

 

$

 

.85

 

$

 

.96

 

$

 

1.81

 

$

 

1.84

 

Effective tax rate

 

 

21.11

%

 

19.05

%

 

21.10

%

 

20.15

%

 

19.98

%

Tax equivalent net interest income

 

$

 

215,203

 

$

 

207,104

 

$

 

215,775

 

$

 

422,307

 

$

 

412,413

 

Average total interest earning assets (1)

 

$

 

23,939,495

 

$

 

23,874,861

 

$

 

23,683,587

 

$

 

23,907,357

 

$

 

23,688,441

 

Diluted wtd. average shares outstanding

 

 

109,752,238

 

 

110,300,988

 

 

111,330,889

 

 

110,025,097

 

 

111,297,697

 

 

 

 

 

 

 

 

RATIOS

 

 

 

 

 

 

Average loans to deposits (2)

 

 

70.97

%

 

70.96

%

 

68.85

%

 

70.96

%

 

68.97

%

Return on total average assets

 

 

1.73

 

 

1.58

 

 

1.80

 

 

1.66

 

 

1.73

 

Return on average common equity (3)

 

 

14.46

 

 

13.64

 

 

16.78

 

 

14.06

 

 

16.19

 

Non-interest income to total revenue

 

 

37.55

 

 

37.34

 

 

37.18

 

 

37.45

 

 

37.71

 

Efficiency ratio (4)

 

 

55.88

 

 

58.76

 

 

54.06

 

 

57.29

 

 

56.06

 

Net yield on interest earning assets

 

 

3.61

 

 

3.52

 

 

3.65

 

 

3.56

 

 

3.51

 

 

 

 

 

 

 

 

EQUITY SUMMARY

 

 

 

 

 

 

Cash dividends per common share

 

$

 

.260

 

$

 

.260

 

$

 

.224

 

$

 

.520

 

$

 

.448

 

Cash dividends on common stock

 

$

 

28,682

 

$

 

28,858

 

$

 

25,096

 

$

 

57,540

 

$

 

50,202

 

Cash dividends on preferred stock

 

$

 

2,250

 

$

 

2,250

 

$

 

2,250

 

$

 

4,500

 

$

 

4,500

 

Book value per common share (5)

 

$

 

27.53

 

$

 

26.18

 

$

 

23.47

 

 

 

Market value per common share (5)

 

$

 

59.66

 

$

 

58.06

 

$

 

61.63

 

 

 

High market value per common share

 

$

 

61.96

 

$

 

64.02

 

$

 

64.21

 

 

 

Low market value per common share

 

$

 

56.63

 

$

 

55.62

 

$

 

55.11

 

 

 

Common shares outstanding (5)

 

 

109,927,645

 

 

110,696,250

 

 

111,944,745

 

 

 

Tangible common equity to tangible assets (6)

 

 

11.25

%

 

11.06

%

 

10.18

%

 

 

Tier I leverage ratio

 

 

11.75

%

 

11.67

%

 

11.18

%

 

 

 

 

 

 

 

 

 

OTHER QTD INFORMATION

 

 

 

 

 

 

Number of bank/ATM locations

 

 

319

 

 

319

 

 

322

 

 

 

Full-time equivalent employees

 

 

4,857

 

 

4,841

 

 

4,797

 

 

 

(1)

Excludes allowance for loan losses and unrealized gains/(losses) on available for sale debt securities.

(2)

Includes loans held for sale.

(3)

Annualized net income available to common shareholders divided by average total equity less preferred stock.

(4)

The efficiency ratio is calculated as non-interest expense (excluding intangibles amortization) as a percent of revenue.

(5)

As of period end.

(6)

The tangible common equity ratio is calculated as stockholders’ equity reduced by preferred stock, goodwill and other intangible assets (excluding mortgage servicing rights) divided by total assets reduced by goodwill and other intangible assets (excluding mortgage servicing rights).

All share and per share amounts have been restated to reflect the 5% stock dividend distributed in December 2018.

 

COMMERCE BANCSHARES, INC. and SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

 

For the Three Months Ended

For the Six Months Ended

(Unaudited)
(In thousands, except per share data)

June 30,
2019

March 31,
2019

December 31,
2018

September 30,
2018

June 30,
2018

June 30,
2019

June 30,
2018

Interest income

$

238,412

 

$

227,865

 

$

232,832

 

$

224,751

 

$

225,623

 

$

466,277

 

$

431,618

 

Interest expense

 

26,778

 

 

24,377

 

 

20,612

 

 

16,997

 

 

14,664

 

 

51,155

 

 

27,767

 

Net interest income

 

211,634

 

 

203,488

 

 

212,220

 

 

207,754

 

 

210,959

 

 

415,122

 

 

403,851

 

Provision for loan losses

 

11,806

 

 

12,463

 

 

12,256

 

 

9,999

 

 

10,043

 

 

24,269

 

 

20,439

 

Net interest income after provision for loan losses

 

199,828

 

 

191,025

 

 

199,964

 

 

197,755

 

 

200,916

 

 

390,853

 

 

383,412

 

NON-INTEREST INCOME

 

 

 

 

 

 

 

Bank card transaction fees

 

42,646

 

 

39,644

 

 

44,481

 

 

42,427

 

 

43,215

 

 

82,290

 

 

84,668

 

Trust fees

 

38,375

 

 

37,256

 

 

37,466

 

 

37,400

 

 

37,036

 

 

75,631

 

 

73,098

 

Deposit account charges and other fees

 

23,959

 

 

23,018

 

 

23,887

 

 

23,755

 

 

23,893

 

 

46,977

 

 

46,875

 

Capital market fees

 

1,944

 

 

1,879

 

 

1,843

 

 

1,595

 

 

1,992

 

 

3,823

 

 

4,283

 

Consumer brokerage services

 

3,888

 

 

3,747

 

 

4,184

 

 

3,884

 

 

3,971

 

 

7,635

 

 

7,739

 

Loan fees and sales

 

4,238

 

 

3,309

 

 

3,053

 

 

3,579

 

 

3,229

 

 

7,547

 

 

6,091

 

Other

 

12,209

 

 

12,387

 

 

18,173

 

 

11,074

 

 

11,514

 

 

24,596

 

 

21,786

 

Total non-interest income

 

127,259

 

 

121,240

 

 

133,087

 

 

123,714

 

 

124,850

 

 

248,499

 

 

244,540

 

INVESTMENT SECURITIES GAINS (LOSSES), NET

 

(110

)

 

(925

)

 

(7,129

)

 

4,306

 

 

(3,075

)

 

(1,035

)

 

2,335

 

NON-INTEREST EXPENSE

 

 

 

 

 

 

 

Salaries and employee benefits

 

120,062

 

 

122,128

 

 

120,517

 

 

116,194

 

 

115,589

 

 

242,190

 

 

231,483

 

Net occupancy

 

11,145

 

 

11,501

 

 

11,711

 

 

11,631

 

 

11,118

 

 

22,646

 

 

22,702

 

Equipment

 

4,790

 

 

4,471

 

 

4,508

 

 

4,592

 

 

4,594

 

 

9,261

 

 

9,025

 

Supplies and communication

 

5,275

 

 

5,162

 

 

5,095

 

 

5,103

 

 

5,126

 

 

10,437

 

 

10,439

 

Data processing and software

 

23,248

 

 

22,260

 

 

22,216

 

 

22,056

 

 

21,016

 

 

45,508

 

 

41,706

 

Marketing

 

6,015

 

 

5,900

 

 

5,602

 

 

4,999

 

 

5,142

 

 

11,915

 

 

9,947

 

Deposit insurance

 

1,693

 

 

1,710

 

 

1,796

 

 

3,167

 

 

3,126

 

 

3,403

 

 

6,583

 

Community service

 

641

 

 

803

 

 

480

 

 

580

 

 

656

 

 

1,444

 

 

1,385

 

Other

 

16,910

 

 

17,490

 

 

16,700

 

 

16,737

 

 

15,493

 

 

34,400

 

 

30,867

 

Total non-interest expense

 

189,779

 

 

191,425

 

 

188,625

 

 

185,059

 

 

181,860

 

 

381,204

 

 

364,137

 

Income before income taxes

 

137,198

 

 

119,915

 

 

137,297

 

 

140,716

 

 

140,831

 

 

257,113

 

 

266,150

 

Less income taxes

 

28,899

 

 

22,860

 

 

26,537

 

 

26,647

 

 

29,507

 

 

51,759

 

 

52,765

 

Net income

 

108,299

 

 

97,055

 

 

110,760

 

 

114,069

 

 

111,324

 

 

205,354

 

 

213,385

 

Less non-controlling interest expense (income)

 

328

 

 

(83

)

 

1,108

 

 

1,493

 

 

994

 

 

245

 

 

2,071

 

Net income attributable to Commerce Bancshares, Inc.

 

107,971

 

 

97,138

 

 

109,652

 

 

112,576

 

 

110,330

 

 

205,109

 

 

211,314

 

Less preferred stock dividends

 

2,250

 

 

2,250

 

 

2,250

 

 

2,250

 

 

2,250

 

 

4,500

 

 

4,500

 

Net income available to common shareholders

$

105,721

 

$

94,888

 

$

107,402

 

$

110,326

 

$

108,080

 

$

200,609

 

$

206,814

 

Net income per common share — basic

$

.96

 

$

.85

 

$

.96

 

$

.99

 

$

.96

 

$

1.81

 

$

1.84

 

Net income per common share — diluted

$

.96

 

$

.85

 

$

.96

 

$

.98

 

$

.96

 

$

1.81

 

$

1.84

 

 

 

 

 

 

 

 

 

OTHER INFORMATION

 

 

 

 

 

 

 

Return on total average assets

 

1.73

%

 

1.58

%

 

1.75

%

 

1.81

%

 

1.80

%

 

1.66

%

 

1.73

%

Return on average common equity (1)

 

14.46

 

 

13.64

 

 

15.85

 

 

16.43

 

 

16.78

 

 

14.06

 

 

16.19

 

Efficiency ratio (2)

 

55.88

 

 

58.76

 

 

54.53

 

 

55.73

 

 

54.06

 

 

57.29

 

 

56.06

 

Effective tax rate

 

21.11

 

 

19.05

 

 

19.49

 

 

19.14

 

 

21.10

 

 

20.15

 

 

19.98

 

Net yield on interest earning assets

 

3.61

 

 

3.52

 

 

3.58

 

 

3.52

 

 

3.65

 

 

3.56

 

 

3.51

 

Tax equivalent net interest income

$

215,203

 

$

207,104

 

$

216,281

 

$

211,368

 

$

215,775

 

$

422,307

 

$

412,413

 

(1)

Annualized net income available to common shareholders divided by average total equity less preferred stock.

(2)

The efficiency ratio is calculated as non-interest expense (excluding intangibles amortization) as a percent of revenue.

...

COMMERCE BANCSHARES, INC. and SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS - PERIOD END

(Unaudited)
(In thousands)

 

June 30,
2019

March 31,
2019

June 30,
2018

ASSETS

 

 

 

 

Loans

 

 

 

 

Business

 

$

 

5,257,682

 

$

 

5,175,541

 

$

 

4,990,298

 

Real estate — construction and land

 

 

909,784

 

 

925,269

 

 

967,151

 

Real estate — business

 

 

2,867,831

 

 

2,859,614

 

 

2,727,580

 

Real estate — personal

 

 

2,160,515

 

 

2,125,087

 

 

2,102,586

 

Consumer

 

 

1,927,623

 

 

1,893,212

 

 

2,012,644

 

Revolving home equity

 

 

357,406

 

 

364,010

 

 

374,557

 

Consumer credit card

 

 

776,333

 

 

772,396

 

 

775,214

 

Overdrafts

 

 

3,074

 

 

5,593

 

 

4,081

 

Total loans

 

 

14,260,248

 

 

14,120,722

 

 

13,954,111

 

Allowance for loan losses

 

 

(161,182

)

 

(160,682

)

 

(159,532

)

Net loans

 

 

14,099,066

 

 

13,960,040

 

 

13,794,579

 

Loans held for sale

 

 

20,067

 

 

20,085

 

 

20,352

 

Investment securities:

 

 

 

 

Available for sale debt securities

 

 

8,682,303

 

 

8,627,890

 

 

8,412,376

 

Trading debt securities

 

 

36,508

 

 

30,427

 

 

31,156

 

Equity securities

 

 

4,744

 

 

4,694

 

 

4,444

 

Other securities

 

 

130,038

 

 

129,504

 

 

112,309

 

Total investment securities

 

 

8,853,593

 

 

8,792,515

 

 

8,560,285

 

Federal funds sold and short-term securities purchased under agreements to resell

 

 

 

250

 

 

31,500

 

Long-term securities purchased under agreements to resell

 

 

700,000

 

 

700,000

 

 

700,000

 

Interest earning deposits with banks

 

 

492,318

 

 

166,077

 

 

114,947

 

Cash and due from banks

 

 

456,192

 

 

428,018

 

 

386,339

 

Premises and equipment — net

 

 

363,554

 

 

362,679

 

 

331,782

 

Goodwill

 

 

138,921

 

 

138,921

 

 

138,921

 

Other intangible assets — net

 

 

8,763

 

 

8,511

 

 

8,083

 

Other assets

 

 

639,700

 

 

456,375

 

 

437,954

 

Total assets

 

$

 

25,772,174

 

$

 

25,033,471

 

$

 

24,524,742

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

Deposits:

 

 

 

 

Non-interest bearing

 

$

 

6,274,838

 

$

 

6,298,724

 

$

 

6,876,756

 

Savings, interest checking and money market

 

 

11,452,849

 

 

11,799,346

 

 

11,761,832

 

Certificates of deposit of less than $100,000

 

 

613,505

 

 

599,289

 

 

603,629

 

Certificates of deposit of $100,000 and over

 

 

1,488,416

 

 

1,276,994

 

 

1,079,340

 

Total deposits

 

 

19,829,608

 

 

19,974,353

 

 

20,321,557

 

Federal funds purchased and securities sold under agreements to repurchase

 

 

2,394,294

 

 

1,722,751

 

 

1,166,759

 

Other borrowings

 

 

4,510

 

 

2,022

 

 

9,291

 

Other liabilities

 

 

372,399

 

 

291,132

 

 

255,752

 

Total liabilities

 

 

22,600,811

 

 

21,990,258

 

 

21,753,359

 

Stockholders’ equity:

 

 

 

 

Preferred stock

 

 

144,784

 

 

144,784

 

 

144,784

 

Common stock

 

 

559,432

 

 

559,432

 

 

535,407

 

Capital surplus

 

 

2,077,491

 

 

2,074,912

 

 

1,804,057

 

Retained earnings

 

 

384,232

 

 

307,193

 

 

408,374

 

Treasury stock

 

 

(106,106

)

 

(60,547

)

 

(15,854

)

Accumulated other comprehensive income (loss)

 

 

108,898

 

 

11,981

 

 

(108,781

)

Total stockholders’ equity

 

 

3,168,731

 

 

3,037,755

 

 

2,767,987

 

Non-controlling interest

 

 

2,632

 

 

5,458

 

 

3,396

 

Total equity

 

 

3,171,363

 

 

3,043,213

 

 

2,771,383

 

Total liabilities and equity

 

$

 

25,772,174

 

$

 

25,033,471

 

$