U.S. Markets closed

Commerce Bancshares, Inc. Reports Third Quarter Earnings Per Share of $1.03

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

Commerce Bancshares, Inc. (CBSH) announced record earnings of $1.03 per common share for the three months ended September 30, 2018 compared to $.67 per share in the same quarter last year and $1.01 per share in the prior quarter. Net income attributable to Commerce Bancshares, Inc. for the third quarter of 2018 amounted to $112.6 million, compared to $74.6 million in the third quarter of 2017 and $110.3 million in the prior quarter. For the quarter, the return on average assets was 1.81%, the return on average common equity was 16.4%, and the efficiency ratio was 55.7%.

For the nine months ended September 30, 2018, earnings per common share totaled $2.96 compared to $2.03 for the first nine months of 2017. Net income attributable to Commerce Bancshares, Inc. amounted to $323.9 million for the nine months ended September 30, 2018 compared to $225.0 million in the comparable period last year, an increase of 43.9%. Year to date, the return on average assets was 1.76% and the return on average common equity was 16.3%.

In announcing these results, John W. Kemper, CEO, said, “We are pleased to report record earnings driven by a strong economy, higher interest rates and growth in our fee-based businesses. Net interest income grew $3.8 million this quarter, excluding non-recurring equity dividends received in both the current and prior quarters, as the yield on our loan portfolio grew 10 basis points while funding costs remained mostly stable. Compared to the same period last year, fee income grew 5.8%, driven mainly by increases in bank card, trust and deposit fee income. Although total average loan balances were flat with the prior quarter, we continued to see growth in our construction and personal real estate loan portfolios. Also, patient health care and consumer credit card balances showed solid growth this quarter. Average deposits declined $135.6 million this quarter, but our strong liquidity has allowed us to be strategic in managing our overall funding costs.”

Mr. Kemper added, “Credit quality remains very strong as net loan charge-offs remained low, non-accrual loans declined and overall delinquencies have improved. For the current quarter, net loan charge-offs totaled $9.8 million, compared to $10.0 million in the prior quarter and $10.7 million in the same quarter last year. The decline in net loan charge-offs was mainly the result of lower consumer credit card losses this quarter, compared to the previous quarter. The ratio of annualized net loan charge-offs to average loans was .28% this quarter compared to .29% last quarter. Non-performing assets declined this quarter to $9.6 million, while the provision for loan losses totaled $10.0 million and the allowance for loan losses amounted to $159.7 million, or 1.14% of period end loans.”

Total assets at September 30, 2018 were $25.1 billion, total loans were $14.0 billion, and total deposits were $20.1 billion. During the quarter, the Company paid a common cash dividend of $.235 per share, representing a 9.8% increase over the rate paid in 2017, and also paid an annualized 6% cash dividend on its preferred stock.

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 third quarter results, is posted to the Company's web site at www.commercebank.com.

 
COMMERCE BANCSHARES, INC. and SUBSIDIARIES

FINANCIAL HIGHLIGHTS

 

    For the Three Months Ended     For the Nine Months Ended
(Unaudited) September 30,     June 30,     September 30, September 30,     September 30,
(Dollars in thousands, except per share data)     2018     2018     2017 2018     2017
FINANCIAL SUMMARY
Net interest income $207,754 $210,959 $182,591 $611,605 $543,671
Non-interest income 123,714       124,850       116,887   368,254       341,880  
Total revenue 331,468 335,809 299,478 979,859 885,551
Investment securities gains (losses), net 4,306 (3,075 ) (3,037 ) 6,641 (2,158 )
Provision for loan losses 9,999 10,043 10,704 30,438 32,590
Non-interest expense 185,059       181,860       179,217   549,196       535,484  
Income before taxes 140,716 140,831 106,520 406,866 315,319
Income taxes 26,647 29,507 32,294 79,412 90,402
Non-controlling interest expense (income) 1,493       994       (338 ) 3,564       (111 )
Net income attributable to Commerce Bancshares, Inc. 112,576 110,330 74,564 323,890 225,028
Preferred stock dividends 2,250       2,250       2,250   6,750       6,750  
Net income available to common shareholders $110,326       $108,080       $72,314   $317,140       $218,278  
Earnings per common share:
Net income — basic $1.03 $1.02 $.68 $2.97 $2.04
Net income — diluted $1.03 $1.01 $.67 $2.96

 

$2.03
Effective tax rate 19.14 % 21.10 % 30.22 % 19.69 % 28.66 %
Tax equivalent net interest income $211,368 $215,775 $190,497 $623,781 $568,684
Average total interest earning assets (1) $ 23,826,980 $ 23,683,587 $ 23,834,266 $ 23,735,128 $ 24,039,584
Diluted wtd. average shares outstanding     105,962,119       106,029,417       105,981,086   105,985,780       105,910,623  
 
RATIOS
Average loans to deposits (2) 69.28 % 68.85 % 66.96 % 69.07 % 65.53 %
Return on total average assets 1.81 1.80 1.19 1.76 1.20
Return on average common equity (3) 16.43 16.78 11.35 16.27 11.85
Non-interest income to total revenue 37.32 37.18 39.03 37.58 38.61
Efficiency ratio (4) 55.73 54.06 59.73 55.95 60.35
Net yield on interest earning assets     3.52       3.65       3.17   3.51       3.16  
 
EQUITY SUMMARY
Cash dividends per common share $.235 $.235 $.214 $.705 $.643
Cash dividends on common stock $25,059 $25,096 $22,906 $75,261 $68,722
Cash dividends on preferred stock $2,250 $2,250 $2,250 $6,750       $6,750  
Book value per common share (5) $25.03 $24.64 $23.99
Market value per common share (5) $66.02 $64.71 $55.02
High market value per common share $72.55 $67.42 $56.42
Low market value per common share $64.32 $57.87 $49.43
Common shares outstanding (5) 106,372,470 106,614,043 106,706,732
Tangible common equity to tangible assets (6) 10.10 % 10.18 % 9.72 %
Tier I leverage ratio     11.38 %     11.18 %     10.16 %
 
OTHER QTD INFORMATION
Number of bank/ATM locations 322 322 334
Full-time equivalent employees     4,797       4,797       4,811  

(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).

 
 
COMMERCE BANCSHARES, INC. and SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

 

    For the Three Months Ended     For the Nine Months Ended
(Unaudited) September 30,     June 30,     March 31,     December 31,     September 30, September 30,     September 30,
(In thousands, except per share data)     2018     2018     2018     2017     2017 2018     2017
Interest income $224,751 $225,623 $205,995 $201,572 $194,244 $656,369 $575,835
Interest expense 16,997       14,664       13,103       11,564       11,653   44,764       32,164  
Net interest income 207,754 210,959 192,892 190,008 182,591 611,605 543,671
Provision for loan losses 9,999       10,043       10,396       12,654       10,704   30,438       32,590  
Net interest income after provision for loan losses 197,755       200,916       182,496       177,354       171,887   581,167       511,081  
NON-INTEREST INCOME
Bank card transaction fees 42,427 43,215 41,453 42,888 39,166 127,095 112,212
Trust fees 37,400 37,036 36,062 35,405 34,620 110,498 99,754
Deposit account charges and other fees 23,755 23,893 22,982 22,598 22,659 70,630 67,462
Capital market fees 1,595 1,992 2,291 1,743 1,755 5,878 6,253
Consumer brokerage services 3,884 3,971 3,768 3,576 3,679 11,623 11,054
Loan fees and sales 3,579 3,229 2,862 3,099 3,590 9,670 10,849
Other 11,074       11,514       10,272       10,074       11,418   32,860       34,296  
Total non-interest income 123,714       124,850       119,690       119,383       116,887   368,254       341,880  
INVESTMENT SECURITIES GAINS (LOSSES), NET 4,306 (3,075 ) 5,410 27,209 (3,037 ) 6,641 (2,158 )
NON-INTEREST EXPENSE
Salaries and employee benefits 116,194 115,589 115,894 115,741 111,382 347,677 332,580
Net occupancy 11,631 11,118 11,584 11,280 11,459 34,333 34,332
Equipment 4,592 4,594 4,431 4,692 4,491 13,617 13,876
Supplies and communication 5,103 5,126 5,313 6,118 5,517 15,542 16,672
Data processing and software 22,056 21,016 20,690 21,090 19,968 63,762 59,908
Marketing 4,999 5,142 4,805 3,937 4,676 14,946 12,388
Deposit insurance 3,167 3,126 3,457 3,444 3,479 9,750 10,542
Community service 580 656 729 25,511 3,006 1,965 8,866
Other 16,737       15,493       15,374       17,046       15,239   47,604       46,320  
Total non-interest expense 185,059       181,860       182,277       208,859       179,217   549,196       535,484  
Income before income taxes 140,716 140,831 125,319 115,087 106,520 406,866 315,319
Less income taxes 26,647       29,507       23,258       20,104       32,294   79,412       90,402  
Net income 114,069 111,324 102,061 94,983 74,226 327,454 224,917
Less non-controlling interest expense (income) 1,493       994       1,077       628       (338 ) 3,564       (111 )
Net income attributable to Commerce Bancshares, Inc. 112,576 110,330 100,984 94,355 74,564 323,890 225,028
Less preferred stock dividends 2,250       2,250       2,250       2,250       2,250   6,750       6,750  
Net income available to common shareholders $110,326       $108,080       $98,734       $92,105       $72,314   $317,140       $218,278  
Net income per common share — basic $1.03       $1.02       $.92       $.86       $.68   $2.97       $2.04  
Net income per common share — diluted     $1.03       $1.01       $.92       $.86       $.67   $2.96       $2.03  
 
OTHER INFORMATION
Return on total average assets 1.81 % 1.80 % 1.66 % 1.50 % 1.19 % 1.76 % 1.20 %
Return on average common equity (1) 16.43 16.78 15.58 14.17 11.35 16.27 11.85
Efficiency ratio (2) 55.73 54.06 58.21 67.40 59.73 55.95 60.35
Effective tax rate 19.14 21.10 18.72 17.56 30.22 19.69 28.66
Net yield on interest earning assets 3.52 3.65 3.37 3.29 3.17 3.51 3.16
Tax equivalent net interest income     $211,368       $215,775       $196,638       $197,917       $190,497   $623,781       $568,684  

(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)

    September 30,
2018
    June 30,
2018
    September 30,
2017
ASSETS            
Loans
Business $ 4,966,722 $ 4,990,298 $ 4,834,037
Real estate — construction and land 999,691 967,151 921,609
Real estate — business 2,726,042 2,727,580 2,700,174
Real estate — personal 2,120,672 2,102,586 2,029,302
Consumer 1,967,465 2,012,644 2,113,438
Revolving home equity 375,322 374,557 391,308
Consumer credit card 788,111 775,214 752,379
Overdrafts 11,534       4,081       3,245  
Total loans 13,955,559       13,954,111       13,745,492  
Allowance for loan losses (159,732 )     (159,532 )     (157,832 )
Net loans 13,795,827       13,794,579       13,587,660  
Loans held for sale 16,890 20,352 17,337
Investment securities:
Available for sale debt securities 8,674,986 8,412,376 9,025,765
Trading debt securities 19,676 31,156 24,605
Equity securities 4,467 4,444 85,283
Other securities 127,120       112,309       97,507  
Total investment securities 8,826,249       8,560,285       9,233,160  
Federal funds sold and short-term securities purchased under agreements to resell 14,375 31,500 32,630
Long-term securities purchased under agreements to resell 700,000 700,000 700,000
Interest earning deposits with banks 334,752 114,947 105,422
Cash and due from banks 443,004 386,339 461,724
Land, buildings and equipment — net 331,869 331,782 335,348
Goodwill 138,921 138,921 138,921
Other intangible assets — net 8,470 8,083 7,388
Other assets 452,035       437,954       359,551  
Total assets $ 25,062,392       $ 24,524,742       $ 24,979,141  
LIABILITIES AND STOCKHOLDERS’ EQUITY
Deposits:
Non-interest bearing $ 6,728,605 $ 6,876,756 $ 7,536,127
Savings, interest checking and money market 11,733,057 11,761,832 11,091,200
Time open and C.D.’s of less than $100,000 585,765 603,629 657,891
Time open and C.D.’s of $100,000 and over 1,086,193       1,079,340       1,158,555  
Total deposits 20,133,620       20,321,557       20,443,773  
Federal funds purchased and securities sold under agreements to repurchase 1,862,117 1,166,759 1,408,984
Other borrowings 1,534 9,291 102,553
Other liabilities 257,311       255,752       319,354  
Total liabilities 22,254,582       21,753,359       22,274,664  
Stockholders’ equity:
Preferred stock 144,784 144,784 144,784
Common stock 535,407 535,407 510,015
Capital surplus 1,804,031 1,804,057 1,548,318
Retained earnings 493,641 408,374 440,261
Treasury stock (33,174 ) (15,854 ) (9,895 )
Accumulated other comprehensive income (loss) (141,596 )     (108,781 )     67,061  
Total stockholders’ equity 2,803,093 2,767,987 2,700,544
Non-controlling interest 4,717       3,396       3,933  
Total equity 2,807,810       2,771,383       2,704,477  
Total liabilities and equity     $ 25,062,392       $ 24,524,742       $ 24,979,141  
 
 
null
   

COMMERCE BANCSHARES, INC. and SUBSIDIARIES

AVERAGE BALANCE SHEETS

       
(Unaudited)

(In thousands)

For the Three Months Ended
   

September 30,
2018

   

June 30,
2018

   

March 31,
2018

   

December 31,
2017

   

September 30,
2017

ASSETS:                
Loans:
Business $ 4,926,063 $ 4,962,171 $ 4,934,621 $ 4,818,419 $ 4,777,222
Real estate — construction and land 992,045 971,854 951,930 948,043 887,596
Real estate — business 2,732,968 2,726,697 2,733,812 2,720,356 2,710,453
Real estate — personal 2,110,945 2,078,972 2,062,083 2,044,651 2,017,264
Consumer 1,984,643 2,025,585 2,072,168 2,100,762 2,070,398
Revolving home equity 373,819 378,366 392,727 394,231 395,212
Consumer credit card 774,512 754,199 757,692 756,544 739,692
Overdrafts 4,704       4,497       4,628       5,295       4,373  
Total loans 13,899,699       13,902,341       13,909,661       13,788,301       13,602,210  
Allowance for loan losses (158,840 )     (158,664 )     (158,779 )     (157,026 )     (156,909 )
Net loans 13,740,859       13,743,677       13,750,882       13,631,275       13,445,301  
Loans held for sale 18,201 22,202