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Commerce Bancshares, Inc. Reports Fourth Quarter Earnings Per Share Of $1.11

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Commerce Bancshares, Inc. announced earnings of $1.11 per share for the three months ended December 31, 2020, compared to $.88 per common share in the same quarter last year and $1.06 per common share in the prior quarter. Net income attributable to Commerce Bancshares, Inc. (net income) for the fourth quarter of 2020 amounted to $129.9 million, compared to $106.9 million in the fourth quarter of 2019 and $132.4 million in the prior quarter. For the quarter, the return on average assets was 1.63%, the return on average equity was 15.49%, and the efficiency ratio was 56.7%.

For the year ended December 31, 2020, earnings per common share totaled $2.91 compared to $3.41 in 2019. Net income attributable to Commerce Bancshares, Inc. amounted to $354.1 million in 2020 compared to $421.2 million last year. For the current year, the return on average assets was 1.20%, and the return on average common equity was 10.64%.

In announcing these results, John Kemper, Chief Executive Officer, said, “Commerce had a strong quarter to close out 2020. While economic uncertainty remains top of mind, overall economic conditions, most notably unemployment, continued to improve in the fourth quarter at a pace that exceeded economic forecasts. These factors, coupled with a forecast projecting an economic recovery, resulted in a decrease in the allowance for credit losses. Our portfolio of private equity investments saw unrealized gains recorded this quarter, partially offsetting unrealized losses recorded in the first half of 2020 and reflecting improvement in the overall economy. Although net interest margins continue to be pressured from a challenging interest rate environment, our fee-based businesses are rebounding from mid-year lows and provide us with a source of revenue diversification. Bank card and deposit account fees grew from last quarter with an increase in spending activity. Loan fees and sales, driven by our mortgage banking business, continued to be strong this quarter and increased 161 percent compared to the fourth quarter of 2019. Trust fees reached another record quarter, reflecting not only higher market values, but also the results of investments we’ve made across our wealth business. Non-interest expense grew .6% compared to the same quarter last year and remained well-controlled. Compared to the previous quarter, average deposits grew $843.3 million, or 3.4%, well surpassing our expectations. While deposit balances grew this quarter, loan demand was mixed. Average loan balances in construction, business real estate, and personal real estate grew, while lower demand for business loans kept total average loan balances relatively flat.”

Mr. Kemper continued, “This quarter, net loan charge-offs totaled $8.0 million, compared to $7.6 million in the prior quarter and $15.2 million in the fourth quarter of 2019. The ratio of annualized net loan charge-offs to average loans was .19% in the current quarter, .18% in the prior quarter and .42% in the fourth quarter of last year. Net loan charge-offs on commercial loans totaled $572 thousand this quarter compared to $194 thousand in the prior quarter. Non-performing assets decreased this quarter from $40.3 million to $26.6 million. At December 31, 2020, the allowance for credit losses on loans decreased to $220.8 million.”

Total assets at December 31, 2020 were $32.9 billion, total loans were $16.3 billion, and total deposits were $26.9 billion. During the fourth quarter of 2020, the Company distributed a 5% stock dividend on its common stock. The Company also paid a cash dividend of $.257 per share, as restated for the 5% stock dividend.

Commerce Bancshares, Inc. is a regional bank holding company offering a full line of banking services, including payment solutions, investment management and securities brokerage. Commerce Bank, a subsidiary of Commerce Bancshares, Inc., leverages more than 150 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, including management's discussion of fourth 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 Year Ended

(Unaudited)
(Dollars in thousands, except per share data)

 

December 31,
2020

September 30,
2020

December 31,
2019

December 31,
2020

December 31,
2019

FINANCIAL SUMMARY

 

 

Net interest income

 

$209,763

 

$215,962

 

$202,659

 

$829,847

 

$821,293

 

Non-interest income

 

135,117

 

129,572

 

143,461

 

505,867

 

524,703

 

Total revenue

 

344,880

 

345,534

 

346,120

 

1,335,714

 

1,345,996

 

Investment securities gains (losses), net

 

12,307

 

16,155

 

(248)

 

11,032

 

3,626

 

Provision for credit losses

 

(4,403)

 

3,101

 

15,206

 

137,190

 

50,438

 

Non-interest expense

 

196,310

 

190,858

 

195,174

 

768,378

 

767,398

 

Income before taxes

 

165,280

 

167,730

 

135,492

 

441,178

 

531,786

 

Income taxes

 

33,084

 

34,375

 

28,214

 

87,293

 

109,074

 

Non-controlling interest (income) expense

 

2,307

 

907

 

398

 

(172)

 

1,481

 

Net income attributable to Commerce Bancshares, Inc.

129,889

 

132,448

 

106,880

 

354,057

 

421,231

 

Preferred stock dividends

 

—

 

7,466

 

2,250

 

11,966

 

9,000

 

Net income available to common shareholders

$129,889

 

$124,982

 

$104,630

 

$342,091

 

$412,231

 

Earnings per common share:

 

 

 

 

 

 

Net income — basic

 

$1.11

 

$1.06

 

$.89

 

$2.91

 

$3.42

 

Net income — diluted

 

$1.11

 

$1.06

 

$.88

 

$2.91

 

$3.41

 

Effective tax rate

 

20.30

%

20.61

%

20.88

%

19.78

%

20.57

%

Tax equivalent net interest income

 

$213,017

 

$219,118

 

$206,156

 

$842,790

 

$835,421

 

Average total interest earning assets (1)

 

$

30,297,922

 

$

29,352,970

 

$

24,372,575

 

$

28,143,048

 

$

24,034,631

 

Diluted wtd. average shares outstanding

 

116,507,841

 

116,444,157

 

117,611,663

 

116,584,015

 

119,769,634

 

 

 

 

 

 

 

 

RATIOS

 

 

 

 

 

 

Average loans to deposits (2)

 

64.05

%

66.23

%

71.73

%

67.73

%

71.54

%

Return on total average assets

 

1.63

 

1.71

 

1.65

 

1.20

 

1.67

 

Return on average common equity (3)

 

15.49

 

15.21

 

13.90

 

10.64

 

14.06

 

Non-interest income to total revenue

 

39.18

 

37.50

 

41.45

 

37.87

 

38.98

 

Efficiency ratio (4)

 

56.68

 

55.00

 

56.29

 

57.19

 

56.87

 

Net yield on interest earning assets

 

2.80

 

2.97

 

3.36

 

2.99

 

3.48

 

 

 

 

 

 

 

 

EQUITY SUMMARY

 

 

 

 

 

 

Cash dividends per common share

 

$.257

 

$.257

 

$.236

 

$1.029

 

$.943

 

Cash dividends on common stock

 

$30,178

 

$30,174

 

$27,933

 

$120,818

 

$113,466

 

Cash dividends on preferred stock (7)

 

$—

 

$7,466

 

$2,250

 

$11,966

 

$9,000

 

Book value per common share (5)

 

$29.03

 

$28.23

 

$25.43

 

 

 

Market value per common share (5)

 

$65.70

 

$53.61

 

$64.70

 

 

 

High market value per common share

 

$68.09

 

$59.13

 

$65.38

 

 

 

Low market value per common share

 

$52.10

 

$50.50

 

$51.96

 

 

 

Common shares outstanding (5)

 

117,138,431

 

117,109,209

 

117,738,126

 

 

 

Tangible common equity to tangible assets (6)

 

9.92

%

10.11

%

10.99

%

 

 

Tier I leverage ratio

 

9.45

%

9.39

%

11.38

%

 

 

 

 

 

 

 

 

 

OTHER QTD INFORMATION

 

 

 

 

 

 

Number of bank/ATM locations

 

306

 

308

 

316

 

 

 

Full-time equivalent employees

 

4,766

 

4,825

 

4,858

 

 

 

(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 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).

(7) 

For the period ended September 30, 2020, preferred stock dividends includes $5.2 million related to the preferred stock redemption. The $5.2 million is the excess of the redemption costs over the book value of the preferred stock and is considered a dividend.

All share and per share amounts have been restated to reflect the 5% stock dividend distributed in December 2020.

COMMERCE BANCSHARES, INC. and SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

 

 

For the Three Months Ended

For the Year Ended

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

 

December 31,
2020

September 30,
2020

June 30,
2020

March 31,
2020

December 31,
2019

December 31,
2020

December 31,
2019

Interest income

 

$214,726

 

 

$223,114

 

$213,323

 

 

$221,485

 

 

$226,665

 

 

$872,648

 

 

$924,685

 

Interest expense

 

4,963

 

 

7,152

 

10,266

 

 

20,420

 

 

24,006

 

 

42,801

 

 

103,392

 

Net interest income

 

209,763

 

 

215,962

 

203,057

 

 

201,065

 

 

202,659

 

 

829,847

 

 

821,293

 

Provision for credit losses

 

(4,403

)

 

3,101

 

80,539

 

 

57,953

 

 

15,206

 

 

137,190

 

 

50,438

 

Net interest income after credit losses

214,166

 

 

212,861

 

122,518

 

 

143,112

 

 

187,453

 

 

692,657

 

 

770,855

 

NON-INTEREST INCOME

 

 

 

 

 

 

 

 

Bank card transaction fees

 

39,979

 

 

37,873

 

33,745

 

 

40,200

 

 

41,079

 

 

151,797

 

 

167,879

 

Trust fees

 

41,961

 

 

40,769

 

37,942

 

 

39,965

 

 

40,405

 

 

160,637

 

 

155,628

 

Deposit account charges and other fees

24,164

 

 

23,107

 

22,279

 

 

23,677

 

 

24,974

 

 

93,227

 

 

95,983

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