CBSH Commerce Bancshares Inc

Commerce Bancshares, Inc. announced earnings of $1.01 per share for the three months ended December 31, 2024, compared to $.79 per share in the same quarter last year and $1.01 per share in the third quarter of 2024. Net income for the fourth quarter of 2024 amounted to $136.1 million, compared to $109.2 million in the fourth quarter of 2023 and $138.0 million in the prior quarter.

In announcing these results, John Kemper, President and Chief Executive Officer, said, “Our fourth quarter earnings were strong, reflecting our resilient balance sheet, diversified operating model, and well-controlled expenses.

“Net interest margin declined only one basis point to 3.49% in light of a declining rate environment. The repricing of our fixed-rate earning assets, coupled with lower deposit costs, largely offset lower variable rate loan yields. Additionally, growth in deposits and investment securities contributed to quarterly net interest income growth.

“Total non-interest income was 36.8% of total revenue. Trust fees were strong and experienced continued growth, up 14.6% over the same period last year.

“We continue to maintain ample levels of liquidity and capital, which positions us well moving into 2025. Book value per share increased 14.5% compared to the same period last year and our tangible common equity to tangible assets ratio grew 107 basis points to 9.92%.

“Credit quality remains excellent with non-accrual loans at .11% of total loans, flat when compared to the last two quarters.”

Fourth Quarter 2024 Financial Highlights:

• Net interest income was $266.6 million, a $4.3 million increase over the prior quarter. The net yield on interest earning assets decreased one basis point to 3.49%.

• Non-interest income totaled $155.4 million, an increase of $10.6 million over the same quarter last year.

• Trust fees grew $7.2 million, or 14.6%, compared to the same period last year, mostly due to higher private client fees.

• Non-interest expense totaled $235.7 million, a decrease of $15.5 million, or 6.2%, compared to the same quarter last year.

• Average loan balances totaled $17.1 billion, an increase of .3% compared to the prior quarter.

• Total average available for sale debt securities increased $475.7 million from the prior quarter to $9.1 billion, at fair value. During the fourth quarter of 2024, the unrealized loss on available for sale debt securities increased $204.2 million to $990.6 million, at period end.

• Total average deposits increased $588.1 million, or 2.4%, compared to the prior quarter. The average rate paid on interest bearing deposits in the current quarter was 1.87%.

• The ratio of annualized net loan charge-offs to average loans was .25% compared to .22% in the prior quarter.

• The allowance for credit losses on loans increased $1.9 million during the fourth quarter of 2024 to $162.7 million, and the ratio of the allowance for credit losses on loans to total loans was .95%, at December 31, 2024, compared to .94% at September 30, 2024.

• Total assets at December 31, 2024 were $32.0 billion, an increase of $503.0 million, or 1.6%, over the prior quarter.

• For the quarter, the return on average assets was 1.73%, the return on average equity was 15.97%, and the efficiency ratio was 55.8%.

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

For the Year Ended

(Unaudited)

(Dollars in thousands, except per share data)

 

Dec. 31,

2024

Sep. 30,

2024

Dec. 31,

2023

Dec. 31,

2024

Dec. 31,

2023

FINANCIAL SUMMARY

 

 

 

 

 

 

Net interest income

 

$266,647

 

$262,351

 

$248,421

 

$1,040,246

 

$998,129

 

Non-interest income

 

155,436

 

159,025

 

144,879

 

615,553

 

573,045

 

Total revenue

 

422,083

 

421,376

 

393,300

 

1,655,799

 

1,571,174

 

Investment securities gains (losses)

 

977

 

3,872

 

7,601

 

7,823

 

14,985

 

Provision for credit losses

 

13,508

 

9,140

 

5,879

 

32,903

 

35,451

 

Non-interest expense

 

235,718

 

237,600

 

251,254

 

951,229

 

930,982

 

Income before taxes

 

173,834

 

178,508

 

143,768

 

679,490

 

619,726

 

Income taxes

 

36,590

 

38,245

 

32,307

 

145,089

 

134,549

 

Non-controlling interest expense (income)

 

1,136

 

2,256

 

2,238

 

8,070

 

8,117

 

Net income attributable to Commerce Bancshares, Inc.

$136,108

 

$138,007

 

$109,223

 

$526,331

 

$477,060

 

Earnings per common share:

 

 

 

 

 

 

Net income — basic

 

$1.01

 

$1.02

 

$0.80

 

$3.88

 

$3.47

 

Net income — diluted

 

$1.01

 

$1.01

 

$0.79

 

$3.87

 

$3.46

 

Effective tax rate

 

21.19

%

21.70

%

22.83

%

21.61

%

22.00

%

Fully-taxable equivalent net interest income

 

$268,935

 

$264,638

 

$250,547

 

$1,049,463

 

$1,006,677

 

Average total interest earning assets (1)

 

$30,628,722

 

$30,051,845

 

$31,340,958

 

$30,266,008

 

$31,823,935

 

Diluted wtd. average shares outstanding

 

133,686,588

 

134,394,825

 

136,088,738

 

134,688,401

 

136,575,226

 

 

 

 

 

 

 

 

RATIOS

 

 

 

 

 

 

Average loans to deposits (2)

 

68.45

%

69.93

%

67.69

%

69.73

%

66.31

%

Return on total average assets

 

1.73

 

1.80

 

1.38

 

1.72

 

1.49

 

Return on average equity (3)

 

15.97

 

16.81

 

16.48

 

16.66

 

17.94

 

Non-interest income to total revenue

 

36.83

 

37.74

 

36.84

 

37.18

 

36.47

 

Efficiency ratio (4)

 

55.77

 

56.31

 

63.80

 

57.37

 

59.17

 

Net yield on interest earning assets

 

3.49

 

3.50

 

3.17

 

3.47

 

3.16

 

 

 

 

 

 

 

 

EQUITY SUMMARY

 

 

 

 

 

 

Cash dividends per share

 

$.257

 

$.257

 

$.245

 

$1.029

 

$.980

 

Cash dividends on common stock

 

$34,609

 

$34,794

 

$33,574

 

$139,503

 

$134,734

 

Book value per share (5)

 

$24.84

 

$25.62

 

$21.69

 

 

 

Market value per share (5)

 

$62.31

 

$56.57

 

$50.87

 

 

 

High market value per share

 

$72.75

 

$62.72

 

$54.05

 

 

 

Low market value per share

 

$54.01

 

$52.27

 

$38.96

 

 

 

Common shares outstanding (5)

 

134,152,172

 

134,797,835

 

136,684,850

 

 

 

Tangible common equity to tangible assets (6)

 

9.92

%

10.47

%

8.85

%

 

 

Tier I leverage ratio

 

12.26

%

12.31

%

11.25

%

 

 

 

 

 

 

 

 

 

OTHER QTD INFORMATION

 

 

 

 

 

 

Number of bank/ATM locations

 

243

 

244

 

257

 

 

 

Full-time equivalent employees

 

4,693

 

4,711

 

4,718

 

 

 

(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 2024.

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,

2024

Sep. 30,

2024

Jun. 30,

2024

Mar. 31,

2024

Dec. 31,

2023

Dec. 31,

2024

Dec. 31,

2023

Interest income

 

$369,405

 

$372,068

 

$369,363

 

$358,721

 

$362,609

 

$1,469,557

 

$1,381,291

 

Interest expense

 

102,758

 

109,717

 

107,114

 

109,722

 

114,188

 

429,311

 

383,162

 

Net interest income

 

266,647

 

262,351

 

262,249

 

248,999

 

248,421

 

1,040,246

 

998,129

 

Provision for credit losses

 

13,508

 

9,140

 

5,468

 

4,787

 

5,879

 

32,903

 

35,451

 

Net interest income after credit losses

253,139

 

253,211

 

256,781

 

244,212

 

242,542

 

1,007,343

 

962,678

 

NON-INTEREST INCOME

 

 

 

 

 

 

 

 

Trust fees

 

56,345

 

54,689

 

52,291

 

51,105

 

49,154

 

214,430

 

190,954

 

Bank card transaction fees

 

47,807

 

47,570

 

47,477

 

46,930

 

47,878

 

189,784

 

191,156

 

Deposit account charges and other fees

25,480

 

25,380

 

25,325

 

24,151

 

23,517

 

100,336

 

90,992

 

Capital market fees

 

5,129

 

5,995

 

4,760

 

3,892

 

4,269

 

19,776

 

14,100

 

Consumer brokerage services

 

4,636

 

4,619

 

4,478

 

4,408

 

3,641

 

18,141

 

17,223

 

Loan fees and sales

 

2,874

 

3,444

 

3,431

 

3,141

 

2,875

 

12,890

 

11,165

 

Other

 

13,165

 

17,328

 

14,482

 

15,221

 

13,545

 

60,196

 

57,455

 

Total non-interest income

 

155,436

 

159,025

 

152,244

 

148,848

 

144,879

 

615,553

 

573,045

 

INVESTMENT SECURITIES GAINS (LOSSES), NET

977

 

3,872

 

3,233

 

(259

)

7,601

 

7,823

 

14,985

 

NON-INTEREST EXPENSE

 

 

 

 

 

 

 

 

Salaries and employee benefits

 

153,819

 

153,122

 

149,120

 

151,801

 

147,456

 

607,862

 

584,063

 

Data processing and software

 

32,514

 

32,194

 

31,529

 

31,153

 

31,141

 

127,390

 

118,758

 

Net occupancy

 

13,694

 

13,411

 

12,544

 

13,574

 

13,927

 

53,223

 

53,629

 

Professional and other services

 

8,982

 

8,830

 

8,617

 

8,648

 

9,219

 

35,077

 

36,198

 

Marketing

 

5,683

 

7,278

 

5,356

 

4,036

 

6,505

 

22,353

 

24,511

 

Equipment

 

5,232

 

5,286

 

5,091

 

5,010

 

5,137

 

20,619

 

19,548

 

Supplies and communication

 

4,948

 

4,963

 

4,636

 

4,744

 

5,242

 

19,291

 

19,420

 

Deposit Insurance

 

3,181

 

2,930

 

2,354

 

8,017

 

20,304

 

16,482

 

33,163

 

Other

 

7,665

 

9,586

 

12,967

 

18,714

 

12,323

 

48,932

 

41,692

 

Total non-interest expense

 

235,718

 

237,600

 

232,214

 

245,697

 

251,254

 

951,229

 

930,982

 

Income before income taxes

 

173,834

 

178,508

 

180,044

 

147,104

 

143,768

 

679,490

 

619,726

 

Less income taxes

 

36,590

 

38,245

 

38,602

 

31,652

 

32,307

 

145,089

 

134,549

 

Net income

 

137,244

 

140,263

 

141,442

 

115,452

 

111,461

 

534,401

 

485,177

 

Less non-controlling interest expense (income)

1,136

 

2,256

 

1,889

 

2,789

 

2,238

 

8,070

 

8,117

 

Net income attributable to Commerce Bancshares, Inc.

$136,108

 

$138,007

 

$139,553

 

$112,663

 

$109,223

 

$526,331

 

$477,060

 

Net income per common share — basic

$1.01

 

$1.02

 

$1.03

 

$0.82

 

$0.80

 

$3.88

 

$3.47

 

Net income per common share — diluted

$1.01

 

$1.01

 

$1.03

 

$0.82

 

$0.79

 

$3.87

 

$3.46

 

 

 

 

 

 

 

 

 

 

OTHER INFORMATION

 

 

 

 

 

 

 

Return on total average assets

 

1.73

%

1.80

%

1.86

%

1.48

%

1.38

%

1.72

%

1.49

%

Return on average equity (1)

15.97

 

16.81

 

18.52

 

15.39

 

16.48

 

16.66

 

17.94

 

Efficiency ratio (2)

 

55.77

 

56.31

 

55.95

 

61.67

 

63.80

 

57.37

 

59.17

 

Effective tax rate

 

21.19

 

21.70

 

21.67

 

21.93

 

22.83

 

21.61

 

22.00

 

Net yield on interest earning assets

3.49

 

3.50

 

3.55

 

3.33

 

3.17

 

3.47

 

3.16

 

Fully-taxable equivalent net interest income

 

$268,935

 

$264,638

 

$264,578

 

$251,312

 

$250,547

 

$1,049,463

 

$1,006,677

 

(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.

COMMERCE BANCSHARES, INC. and SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS - PERIOD END

 

(Unaudited)

(In thousands)

 

Dec. 31,

2024

Sep. 30,

2024

Dec. 31,

2023

ASSETS

 

 

 

 

Loans

 

 

 

 

Business

 

$6,053,820

 

$6,048,328

 

$6,019,036

 

Real estate — construction and land

 

1,409,901

 

1,381,607

 

1,446,764

 

Real estate — business

 

3,661,218

 

3,586,999

 

3,719,306

 

Real estate — personal

 

3,058,195

 

3,043,391

 

3,026,041

 

Consumer

 

2,073,123

 

2,108,281

 

2,077,723

 

Revolving home equity

 

356,650

 

342,376

 

319,894

 

Consumer credit card

 

595,930

 

574,746

 

589,913

 

Overdrafts

 

11,266

 

4,272

 

6,802

 

Total loans

 

17,220,103

 

17,090,000

 

17,205,479

 

Allowance for credit losses on loans

 

(162,742

)

(160,839

)

(162,395

)

Net loans

 

17,057,361

 

16,929,161

 

17,043,084

 

Loans held for sale

 

3,242

 

1,707

 

4,177

 

Investment securities:

 

 

 

 

Available for sale debt securities

 

9,136,853

 

9,167,681

 

9,684,760

 

Trading debt securities

 

38,034

 

42,645

 

28,830

 

Equity securities

 

57,442

 

57,115

 

12,701

 

Other securities

 

230,051

 

216,543

 

222,473

 

Total investment securities

 

9,462,380

 

9,483,984

 

9,948,764

 

Federal funds sold

 

3,000

 

10

 

5,025

 

Securities purchased under agreements to resell

 

625,000

 

475,000

 

450,000

 

Interest earning deposits with banks

 

2,624,553

 

2,642,048

 

2,239,010

 

Cash and due from banks

 

748,357

 

507,941

 

443,147

 

Premises and equipment — net

 

475,275

 

469,986

 

469,059

 

Goodwill

 

146,539

 

146,539

 

146,539

 

Other intangible assets — net

 

13,632

 

13,722

 

14,179

 

Other assets

 

837,288

 

823,494

 

938,077

 

Total assets

 

$31,996,627

 

$31,493,592

 

$31,701,061

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

Deposits:

 

 

 

 

Non-interest bearing

 

$8,150,669

 

$7,396,153

 

$7,975,935

 

Savings, interest checking and money market

 

14,754,571

 

15,216,557

 

14,512,273

 

Certificates of deposit of less than $100,000

 

996,721

 

1,113,962

 

930,432

 

Certificates of deposit of $100,000 and over

 

1,391,683

 

1,511,120

 

1,945,258

 

Total deposits

 

25,293,644

 

25,237,792

 

25,363,898

 

Federal funds purchased and securities sold under agreements to repurchase

 

2,926,758

 

2,182,229

 

2,908,815

 

Other borrowings

 

56

 

10,201

 

1,404

 

Other liabilities

 

443,694

 

609,831

 

462,714

 

Total liabilities

 

28,664,152

 

28,040,053

 

28,736,831

 

Stockholders’ equity:

 

 

 

 

Common stock

 

676,054

 

655,322

 

655,322

 

Capital surplus

 

3,380,370

 

3,154,300

 

3,162,622

 

Retained earnings

 

60,769

 

338,512

 

53,183

 

Treasury stock

 

(48,401

)

(139,149

)

(35,599

)

Accumulated other comprehensive income (loss)

 

(758,911

)

(576,904

)

(891,412

)

Total stockholders’ equity

 

3,309,881

 

3,432,081

 

2,944,116

 

Non-controlling interest

 

22,594

 

21,458

 

20,114

 

Total equity

 

3,332,475

 

3,453,539

 

2,964,230

 

Total liabilities and equity

 

$31,996,627

 

$31,493,592

 

$31,701,061

 

COMMERCE BANCSHARES, INC. and SUBSIDIARIES

AVERAGE BALANCE SHEETS

 

(Unaudited)

(In thousands)

For the Three Months Ended

Dec. 31,

2024

Sep. 30,

2024

Jun. 30,

2024

Mar. 31,

2024

Dec. 31,

2023

ASSETS:

 

 

 

 

 

Loans:

 

 

 

 

 

Business

$5,963,217

 

$5,966,797

 

$5,980,364

 

$5,873,525

 

$5,861,229

 

Real estate — construction and land

1,411,437

 

1,400,563

 

1,471,504

 

1,472,554

 

1,523,682

 

Real estate — business

3,636,026

 

3,580,772

 

3,666,057

 

3,727,643

 

3,644,589

 

Real estate — personal

3,047,494

 

3,047,563

 

3,044,943

 

3,031,193

 

3,027,664

 

Consumer

2,087,237

 

2,129,483

 

2,127,650

 

2,082,490

 

2,117,268

 

Revolving home equity

350,541

 

335,817

 

326,204

 

322,074

 

310,282

 

Consumer credit card

568,138

 

559,410

 

552,896

 

562,892

 

568,112

 

Overdrafts

5,628

 

5,460

 

4,856

 

7,696

 

5,258

 

Total loans

17,069,718

 

17,025,865

 

17,174,474

 

17,080,067

 

17,058,084

 

Allowance for credit losses on loans

(160,286

)

(158,003

)

(159,791

)

(161,891

)

(161,932

)

Net loans

16,909,432

 

16,867,862

 

17,014,683

 

16,918,176

 

16,896,152

 

Loans held for sale

2,080

 

2,448

 

2,455

 

2,149

 

5,392

 

Investment securities:

 

 

 

 

 

U.S. government and federal agency obligations

2,459,485

 

1,888,985

 

1,201,954

 

851,656

 

889,390

 

Government-sponsored enterprise obligations

55,428

 

55,583

 

55,634

 

55,652

 

55,661

 

State and municipal obligations

831,695

 

856,620

 

1,069,934

 

1,330,808

 

1,363,649

 

Mortgage-backed securities

4,905,187

 

5,082,091

 

5,553,656

 

5,902,328

 

6,022,502

 

Asset-backed securities

1,570,878

 

1,525,593

 

1,785,598

 

2,085,050

 

2,325,089

 

Other debt securities

221,076

 

224,528

 

364,828

 

503,204

 

510,721

 

Unrealized gain (loss) on debt securities

(896,346

)

(961,695

)

(1,272,127

)

(1,274,125

)

(1,595,845

)

Total available for sale debt securities

9,147,403

 

8,671,705

 

8,759,477

 

9,454,573

 

9,571,167

 

Trading debt securities

56,440

 

47,440

 

46,565

 

40,483

 

37,234

 

Equity securities

56,758

 

85,118

 

127,584

 

12,768

 

12,249

 

Other securities

222,529

 

217,377

 

228,403

 

221,695

 

222,378

 

Total investment securities

9,483,130

 

9,021,640

 

9,162,029

 

9,729,519

 

9,843,028

 

Federal funds sold

826

 

12

 

1,612

 

599

 

1,194

 

Securities purchased under agreements to resell

566,307

 

474,997

 

303,586

 

340,934

 

450,000

 

Interest earning deposits with banks

2,610,315

 

2,565,188

 

2,099,777

 

1,938,381

 

2,387,415

 

Other assets

1,701,822

 

1,648,321

 

1,651,808

 

1,715,716

 

1,797,849

 

Total assets

$31,273,912

 

$30,580,468

 

$30,235,950

 

$30,645,474

 

$31,381,030

 

 

 

 

 

 

 

LIABILITIES AND EQUITY:

 

 

 

 

 

Non-interest bearing deposits

$7,464,255

 

$7,284,834

 

$7,297,955

 

$7,328,603

 

$7,748,654

 

Savings

1,281,291

 

1,303,675

 

1,328,989

 

1,333,983

 

1,357,733

 

Interest checking and money market

13,679,666

 

13,242,398

 

13,162,118

 

13,215,270

 

13,166,783

 

Certificates of deposit of less than $100,000

1,061,783

 

1,055,683

 

1,003,798

 

976,804

 

1,097,224

 

Certificates of deposit of $100,000 and over

1,451,851

 

1,464,143

 

1,492,592

 

1,595,310

 

1,839,057

 

Total deposits

24,938,846

 

24,350,733

 

24,285,452

 

24,449,970

 

25,209,451

 

Borrowings:

 

 

 

 

 

Federal funds purchased

121,781

 

206,644

 

265,042

 

328,216

 

473,534

 

Securities sold under agreements to repurchase

2,445,956

 

2,351,870

 

2,254,849

 

2,511,959

 

2,467,118

 

Other borrowings

1,067

 

496

 

838

 

76

 

179,587

 

Total borrowings

2,568,804

 

2,559,010

 

2,520,729

 

2,840,251

 

3,120,239

 

Other liabilities

375,463

 

405,490

 

399,080

 

410,310

 

421,402

 

Total liabilities

27,883,113

 

27,315,233

 

27,205,261

 

27,700,531

 

28,751,092

 

Equity

3,390,799

 

3,265,235

 

3,030,689

 

2,944,943

 

2,629,938

 

Total liabilities and equity

$31,273,912

 

$30,580,468

 

$30,235,950

 

$30,645,474

 

$31,381,030

 

COMMERCE BANCSHARES, INC. and SUBSIDIARIES

AVERAGE RATES

 

(Unaudited)

For the Three Months Ended

Dec. 31,

2024

Sep. 30,

2024

Jun. 30,

2024

Mar. 31,

2024

Dec. 31,

2023

ASSETS:

 

 

 

 

 

Loans:

 

 

 

 

 

Business (1)

5.86

%

6.17

%

6.11

%

6.07

%

5.91

%

Real estate — construction and land

7.75

 

8.44

 

8.36

 

8.40

 

8.34

 

Real estate — business

6.01

 

6.28

 

6.26

 

6.26

 

6.18

 

Real estate — personal

4.17

 

4.10

 

4.04

 

3.95

 

3.85

 

Consumer

6.52

 

6.64

 

6.56

 

6.40

 

6.21

 

Revolving home equity

7.28

 

7.69

 

7.68

 

7.70

 

7.70

 

Consumer credit card

13.60

 

14.01

 

13.96

 

14.11

 

13.83

 

Overdrafts

—

 

—

 

—

 

—

 

—

 

Total loans

6.11

 

6.35

 

6.30

 

6.27

 

6.15

 

Loans held for sale

7.65

 

6.34

 

7.54

 

7.49

 

9.93

 

Investment securities:

 

 

 

 

 

U.S. government and federal agency obligations

3.86

 

3.68

 

5.04

 

2.08

 

2.32

 

Government-sponsored enterprise obligations

2.36

 

2.37

 

2.39

 

2.39

 

2.36

 

State and municipal obligations (1)

2.01

 

2.00

 

2.00

 

1.97

 

1.94

 

Mortgage-backed securities

2.17

 

1.95

 

2.09

 

2.19

 

2.05

 

Asset-backed securities

2.99

 

2.66

 

2.50

 

2.39

 

2.30

 

Other debt securities

2.11

 

2.07

 

2.01

 

1.93

 

1.85

 

Total available for sale debt securities

2.70

 

2.41

 

2.50

 

2.18

 

2.10

 

Trading debt securities (1)

4.26

 

4.52

 

4.95

 

5.30

 

5.05

 

Equity securities (1)

6.58

 

4.44

 

2.82

 

25.64

 

27.47

 

Other securities (1)

5.75

 

6.09

 

13.20

 

13.04

 

8.60

 

Total investment securities

2.80

 

2.52

 

2.75

 

2.44

 

2.27

 

Federal funds sold

5.78

 

—

 

6.74

 

6.71

 

6.65

 

Securities purchased under agreements to resell

3.57

 

3.53

 

3.21

 

1.93

 

1.64

 

Interest earning deposits with banks

4.78

 

5.43

 

5.48

 

5.48

 

5.47

 

Total interest earning assets

4.83

 

4.96

 

4.98

 

4.78

 

4.62

 

 

 

 

 

 

 

LIABILITIES AND EQUITY:

 

 

 

 

 

Interest bearing deposits:

 

 

 

 

 

Savings

.05

 

.07

 

.06

 

.06

 

.05

 

Interest checking and money market

1.63

 

1.74

 

1.73

 

1.69

 

1.57

 

Certificates of deposit of less than $100,000

3.91

 

4.17

 

4.22

 

4.20

 

4.21

 

Certificates of deposit of $100,000 and over

4.24

 

4.51

 

4.55

 

4.56

 

4.55

 

Total interest bearing deposits

1.87

 

2.00

 

1.99

 

1.97

 

1.93

 

Borrowings:

 

 

 

 

 

Federal funds purchased

4.71

 

5.38

 

5.42

 

5.42

 

5.40

 

Securities sold under agreements to repurchase

3.11

 

3.56

 

3.44

 

3.43

 

3.25

 

Other borrowings

3.36

 

4.81

 

3.84

 

—

 

5.45

 

Total borrowings

3.18

 

3.71

 

3.65

 

3.66

 

3.71

 

Total interest bearing liabilities

2.04

%

2.22

%

2.21

%

2.21

%

2.20

%

 

 

 

 

 

 

Net yield on interest earning assets

3.49

%

3.50

%

3.55

%

3.33

%

3.17

%

(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

For the Year Ended

(Unaudited)

(In thousands, except ratios)

 

Dec. 31,

2024

Sep. 30,

2024

Jun. 30,

2024

Mar. 31,

2024

Dec. 31,

2023

Dec. 31,

2024

Dec. 31,

2023

ALLOWANCE FOR CREDIT LOSSES ON LOANS

 

 

 

 

 

 

 

 

Balance at beginning of period

 

$160,839

 

$158,557

 

$160,465

 

$162,395

 

$162,244

 

$162,395

 

$150,136

 

Provision for credit losses on loans

 

12,557

 

11,861

 

7,849

 

6,947

 

8,170

 

39,214

 

43,325

 

Net charge-offs (recoveries):

 

 

 

 

 

 

 

 

Commercial portfolio:

 

 

 

 

 

 

 

 

Business

 

335

 

114

 

622

 

23

 

96

 

1,094

 

3,104

 

Real estate — construction and land

 

—

 

—

 

—

 

—

 

—

 

—

 

(115

)

Real estate — business

 

50

 

(7

)

(8

)

(141

)

128

 

(106

)

104

 

 

 

385

 

107

 

614

 

(118

)

224

 

988

 

3,093

 

Personal banking portfolio:

 

 

 

 

 

 

 

 

Consumer credit card

 

6,557

 

6,273

 

6,746

 

6,435

 

5,325

 

26,011

 

19,053

 

Consumer

 

3,237

 

2,759

 

1,804

 

1,983

 

1,903

 

9,783

 

6,248

 

Overdraft

 

470

 

464

 

521

 

557

 

588

 

2,012

 

2,766

 

Real estate — personal

 

8

 

128

 

79

 

24

 

(11

)

239

 

(37

)

Revolving home equity

 

(3

)

(152

)

(7

)

(4

)

(10

)

(166

)

(57

)

 

 

10,269

 

9,472

 

9,143

 

8,995

 

7,795

 

37,879

 

27,973

 

Total net loan charge-offs

 

10,654

 

9,579

 

9,757

 

8,877

 

8,019

 

38,867

 

31,066

 

Balance at end of period

 

$162,742

 

$160,839

 

$158,557

 

$160,465

 

$162,395

 

$162,742

 

$162,395

 

LIABILITY FOR UNFUNDED LENDING COMMITMENTS

 

$18,935

 

$17,984

 

$20,705

 

$23,086

 

$25,246

 

 

 

 

 

 

 

 

 

 

 

 

NET CHARGE-OFF RATIOS (1)

 

 

 

 

 

 

 

 

Commercial portfolio:

 

 

 

 

 

 

 

 

Business

 

.02

%

.01

%

.04

%

—

%

.01

%

.02

%

.05

%

Real estate — construction and land

 

—

 

—

 

—

 

—

 

—

 

—

 

(.01

)

Real estate — business

 

.01

 

—

 

—

 

(.02

)

.01

 

—

 

—

 

 

 

.01

 

—

 

.02

 

—

 

.01

 

.01

 

.03

 

Personal banking portfolio:

 

 

 

 

 

 

 

 

Consumer credit card

 

4.59

 

4.46

 

4.91

 

4.60

 

3.72

 

4.64

 

3.40

 

Consumer

 

.62

 

.52

 

.34

 

.38

 

.36

 

.46

 

.30

 

Overdraft

 

33.22

 

33.81

 

43.15

 

29.11

 

44.37

 

34.06

 

56.19

 

Real estate — personal

 

—

 

.02

 

.01

 

—

 

—

 

.01

 

—

 

Revolving home equity

 

—

 

(.18

)

(.01

)

—

 

(.01

)

(.05

)

(.02

)

 

 

.67

 

.62

 

.61

 

.60

 

.51

 

.63

 

.47

 

Total

 

.25

%

.22

%

.23

%

.21

%

.19

%

.23

%

.19

%

 

 

 

 

 

 

 

 

 

CREDIT QUALITY RATIOS

 

 

 

 

 

 

 

 

Non-accrual loans to total loans

 

.11

%

.11

%

.11

%

.03

%

.04

%

 

 

Allowance for credit losses on loans to total loans

 

.95

 

.94

 

.92

 

.93

 

.94

 

 

 

 

 

 

 

 

 

 

 

 

NON-ACCRUAL AND PAST DUE LOANS

 

 

 

 

 

 

 

 

Non-accrual loans:

 

 

 

 

 

 

 

 

Business

 

$101

 

$354

 

$504

 

$1,038

 

$3,622

 

 

 

Real estate — construction and land

 

220

 

—

 

—

 

—

 

—

 

 

 

Real estate — business

 

14,954

 

14,944

 

15,050

 

1,246

 

60

 

 

 

Real estate — personal

 

1,026

 

1,144

 

1,772

 

1,523

 

1,653

 

 

 

Revolving home equity

 

1,977

 

1,977

 

1,977

 

1,977

 

1,977

 

 

 

Total

 

18,278

 

18,419

 

19,303

 

5,784

 

7,312

 

 

 

Loans past due 90 days and still accruing interest

$24,516

 

$21,986

 

$18,566

 

$20,281

 

$21,864

 

 

 

(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 Fourth Quarter Results December 31, 2024

For the quarter ended December 31, 2024, net income amounted to $136.1 million, compared to $138.0 million in the previous quarter and $109.2 million in the same quarter last year. The decrease in net income compared to the previous quarter was primarily the result of lower non-interest income and net investment securities gains coupled with higher provision expense, partly offset by higher net interest income and lower non-interest expense. The net yield on interest earning assets decreased one basis point compared to the previous quarter to 3.49%. Average available for sale debt securities, at fair value, increased $475.7 million, while deposits, and loans increased $588.1 million and $43.9 million, respectively, over the prior quarter. For the quarter, the return on average assets was 1.73%, the return on average equity was 15.97%, and the efficiency ratio was 55.8%.

Balance Sheet Review

During the 4th quarter of 2024, average loans totaled $17.1 billion, an increase of $43.9 million compared to the prior quarter, and flat compared to the same quarter last year. Compared to the previous quarter, average balances of business real estate grew $55.3 million, while average consumer loans declined $42.2 million. During the current quarter, the Company sold certain fixed rate personal real estate loans totaling $21.9 million, compared to $22.6 million in the prior quarter.

Total average available for sale debt securities increased $475.7 million over the previous quarter to $9.1 billion, at fair value. The increase in debt securities was mainly the result of higher average balances of U.S. government and federal agency obligations, partly offset by lower average balances of mortgage-backed securities. During the 4th quarter of 2024, the unrealized loss on available for sale debt securities increased $204.2 million to $990.6 million, at period end. Also, during the 4th quarter of 2024, purchases of available for sale debt securities totaled $573.1 million with a weighted average yield of approximately 4.45%, and sales, maturities and pay downs of available for sale debt securities were $405.0 million. At December 31, 2024, the duration of the available for sale investment portfolio was 4.0 years, and maturities and pay downs of approximately $1.6 billion are expected to occur during the next 12 months.

Total average deposits increased $588.1 million this quarter over the previous quarter. The increase in deposits mostly resulted from growth of $437.3 million and $179.4 million in interest checking and money market deposit average balances and demand deposit average balances, respectively. Compared to the previous quarter, total average commercial, trust, and consumer deposits grew $503.0 million, $60.0 million, and $21.5 million, respectively. The average loans to deposits ratio was 68.5% in the current quarter and 69.9% in the prior quarter. The Company’s average borrowings, which included average customer repurchase agreements of $2.4 billion, increased $9.8 million to $2.6 billion in the 4th quarter of 2024.

Net Interest Income

Net interest income in the 4th quarter of 2024 amounted to $266.6 million, an increase of $4.3 million over the previous quarter. On a fully taxable-equivalent (FTE) basis, net interest income for the current quarter increased $4.3 million over the previous quarter to $268.9 million. The increase in net interest income was mostly due to higher interest income on investment securities and lower interest expense on deposits and borrowings, partly offset by lower interest income on loans and deposits with banks. The net yield (FTE) on earning assets decreased to 3.49%, from 3.50% in the prior quarter.

Compared to the previous quarter, interest income on loans (FTE) decreased $9.5 million, mostly due to lower average rates earned on most loan categories. The average yield (FTE) on the loan portfolio decreased 24 basis points to 6.11% this quarter.

Interest income on investment securities (FTE) increased $9.7 million compared to the prior quarter, mostly due to higher average balances and rates earned on U.S. government and federal agency securities. Interest income earned on U.S. government and federal agency securities included the impact of $176 thousand in higher inflation income from Treasury inflation-protected securities compared to previous quarter. Additionally, the Company recorded a $2.3 million adjustment to premium amortization at December 31, 2024, which increased interest income to reflect slower forward prepayment speed estimates on mortgage-backed securities. This increase was higher than the $286 thousand adjustment decreasing interest income in the prior quarter. The average yield (FTE) on total investment securities was 2.80% in the current quarter, compared to 2.52% in the previous quarter.

Compared to the previous quarter, interest income on deposits with banks decreased $3.7 million, mainly due to lower average rates. Interest earned on securities purchased under agreements to resell increased $873 thousand mostly due to higher average balances.

Interest expense decreased $7.0 million compared to the previous quarter, mainly due to lower average rates on deposits and borrowings, partly offset by higher average deposit balances. Interest expense on borrowings decreased $3.3 million due to lower average rates. Interest expense on deposits decreased $3.7 million due to lower average rates, partly offset by higher average balances. The average rate paid on interest bearing deposits totaled 1.87% in the current quarter compared to 2.00% in the prior quarter. The overall rate paid on interest bearing liabilities was 2.04% in the current quarter and 2.22% in the prior quarter.

Non-Interest Income

In the 4th quarter of 2024, total non-interest income amounted to $155.4 million, an increase of $10.6 million, or 7.3%, over the same period last year and a decrease of $3.6 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 and deposit account fees. These increases were partly offset by a decrease of $1.8 million in fair value adjustments recorded on the company’s deferred compensation plan, which are held in a trust and recorded as both an asset and liability, affecting both other income and other expense. The decrease in non-interest income compared to the prior quarter was mainly due to lower gains on sales of real estate and lower deferred compensation adjustments, partly offset by higher trust fees and tax credit sales income.

Total net bank card fees in the current quarter decreased $71 thousand, or .1%, compared to the same period last year, and increased $237 thousand compared to the prior quarter. Net corporate card fees decreased $1.4 million, or 4.9%, compared to the same quarter of last year mainly due to lower fees, partly offset by lower rewards expense. Net merchant fees increased $383 thousand, or 6.8%, mainly due to higher fees. Net debit card fees increased $187 thousand, or 1.7%, while net credit card fees increased $718 thousand, or 20.3%, mostly due to higher interchange fees and lower rewards expense. Total net bank card fees this quarter were comprised of fees on corporate card ($26.2 million), debit card ($11.4 million), merchant ($6.0 million) and credit card ($4.3 million) transactions.

In the current quarter, trust fees increased $7.2 million, or 14.6%, over the same period last year, mostly resulting from higher private client fees. Compared to the same period last year, deposit account fees increased $2.0 million, or 8.3%, mostly due to higher corporate cash management fees, while capital market fees increased $860 thousand, or 20.1%, mostly due to higher trading securities income.

Other non-interest income decreased slightly compared to the same period last year primarily due to the deferred compensation adjustment previously mentioned, partly offset by higher tax credit sales income of $1.7 million. For the 4th quarter of 2024, non-interest income comprised 36.8% of the Company’s total revenue.

Investment Securities Gains and Losses

The Company recorded net securities gains of $977 thousand in the current quarter, compared to gains of $3.9 million in the prior quarter and gains of $7.6 million in the 4th quarter of 2023. Net securities gains in the current quarter resulted from net fair value adjustments of $3.9 million on the Company’s portfolio of private equity investments. These net gains were partly offset by losses of $3.3 million on sales of available for sale debt securities.

Non-Interest Expense

Non-interest expense for the current quarter amounted to $235.7 million, compared to $251.3 million in the same period last year and $237.6 million in the prior quarter. The decrease in non-interest expense compared to the same period last year was mainly due to lower deposit insurance expense, partly offset by higher salaries and employee benefits expense and higher data processing and software expense. The decrease in non-interest expense compared to the prior quarter was mainly due to lower marketing expense and a lower deferred compensation adjustment.

Compared to the 4th quarter of last year, salaries and employee benefits expense increased $6.4 million, or 4.3%, mostly due to higher full-time salaries expense of $3.0 million, incentive compensation of $2.7 million, and medical expense of $1.1 million. Full-time equivalent employees totaled 4,693 and 4,718 at December 31, 2024 and 2023, respectively.

Compared to the same period last year, deposit insurance expense decreased $17.1 million, mostly due to a $16.0 million accrual in the prior year of a one-time special assessment by the FDIC to replenish the Deposit Insurance Fund. Data processing and software expense increased $1.4 million compared to the same period last year due to higher costs for service providers.

Income Taxes

The effective tax rate for the Company was 21.2% in the current quarter, 21.7% in the prior quarter, and 22.8% in the 4th quarter of 2023. The decrease in the effective tax rate compared to the same quarter last year was mostly due to lower state and local income taxes.

Credit Quality

Net loan charge-offs in the 4th quarter of 2024 amounted to $10.7 million, compared to $9.6 million in the prior quarter, and $8.0 million in the same period last year. The ratio of annualized net loan charge-offs to total average loans was .25% in the current quarter, and .22% in the previous quarter, and .19% in the same quarter of last year. Compared to the prior quarter, net loan charge-offs on consumer credit card and consumer loans increased $284 thousand and $478 thousand, respectively.

In the 4th quarter of 2024, annualized net loan charge-offs on average consumer credit card loans were 4.59%, compared to 4.46% in the previous quarter and 3.72% in the same quarter last year. Consumer loan net charge-offs were .62% of average consumer loans in the current quarter, .52% in the prior quarter, and .36% in the same quarter last year.

At December 31, 2024, the allowance for credit losses on loans totaled $162.7 million, or .95% of total loans, and increased $1.9 million compared to the prior quarter. Additionally, the liability for unfunded lending commitments at December 31, 2024 was $18.9 million, an increase of $951 thousand compared to the liability at September 30, 2024.

At December 31, 2024, total non-accrual loans amounted to $18.3 million, a decrease of $141 thousand compared to the previous quarter. At December 31, 2024, the balance of non-accrual loans, which represented .11% of loans outstanding, included business loans of $101 thousand, revolving home equity loans of $2.0 million, personal real estate loans of $1.0 million, construction loans of $220 thousand, and business real estate loans of $15.0 million. Loans more than 90 days past due and still accruing interest totaled $24.5 million at December 31, 2024.

Other

During the 4th quarter of 2024, the Company distributed a 5% stock dividend on its common stock and paid a cash dividend of $.27 per common share, representing a 5.1% increase over the same period last year. The Company purchased 683,528 shares of treasury stock during the current quarter at an average price of $67.88.

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. Additional information about risks and uncertainties is included in the “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” sections within the Company's Annual Report on Form 10-K.

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Matt Burkemper, Investor Relations (314) 746-7485 www.commercebank.com matthew.burkemper@commercebank.com