Exhibit 99.1
|
|
 CBSH |
1000 Walnut Street / Post Office Box 419248 / Kansas City, Missouri 64151-6248 / 816.234.2000 |
|
FOR IMMEDIATE RELEASE:
Tuesday, January 15, 2013
COMMERCE BANCSHARES, INC. ANNOUNCES FOURTH
QUARTER EARNINGS PER SHARE GROWTH OF 9%
Commerce Bancshares, Inc. announced earnings of $.72 per share for the three months ended December 31, 2012 compared to $.66 per share in the fourth quarter of 2011, or an increase of 9.1%. Net income for the fourth quarter amounted to $66.8 million, compared to $61.5 million in the same quarter last year and $66.0 million in the prior quarter. For the quarter, the return on average assets totaled 1.25%, the return on average equity was 11.6% and the efficiency ratio was 59.6%.
For the year ended December 31, 2012, earnings per share totaled $2.90 compared to $2.69 in 2011, or an increase of 7.8%. Net income amounted to $269.3 million in 2012 compared to $256.3 million for the same period last year, or an increase of $13.0 million. In 2012, the return on average assets was 1.30%, the return on average equity was 12.0% and the efficiency ratio was 59.3%.
In making this announcement, David W. Kemper, Chairman and CEO, said, “We were pleased to report record earnings in 2012 of over $269 million, which represents an increase of 5%. Current quarter results compared to the previous quarter reflected growth in net interest income, low credit costs and solid growth in both trust and bankcard fees. Strong growth in deposits coupled with continued new loan volumes and higher interest on inflation-protected securities enabled our net interest income to increase this quarter. Non-interest income increased $2.4 million this quarter compared to the previous quarter, and was up 10% compared to last year as a result of growth in commercial card fees of 25% and double digit growth in credit card and trust fee income. Expense growth this quarter was mainly centered in salaries and technology costs where we continued to make investments in our fee businesses. Average loans grew $174.5 million, or 2%, this quarter over the previous quarter from growth in both consumer and commercial lending activities while average deposits increased $720.7 million, or 4%. Record earnings over the last two years have strengthened our capital and liquidity and allowed us to pay a special dividend in December of $1.50 per share in advance of the higher tax rates now in effect.”
Further, Mr. Kemper noted, “Net loan charge-offs for the current quarter totaled $10.8 million, compared to $15.6 million in the fourth quarter of 2011 and $9.1 million in the previous quarter. Commercial net loan charge-offs increased $2.0 million this quarter compared to the previous quarter while consumer loan losses declined by 3% and totaled $8.8 million. During the current quarter, the provision for loan losses totaled $8.3 million, or $2.5 million less than net loan charge-offs, reflecting improved credit trends even as loan balances increased. Our allowance for loan losses amounted to $172.5 million this quarter, representing 3.4 times our non-performing loans. Total non-performing assets also decreased $8.6 million from the previous quarter to $64.9 million this quarter.”
(more)
Total assets at December 31, 2012 were $22.2 billion, total loans were $9.8 billion, and total deposits were $18.3 billion. During the quarter, the Company issued a 5% stock dividend and paid both a regular cash dividend of $.23 per share and a special cash dividend of $1.50 per share. The Company also repurchased approximately 774,000 shares of its common stock at an average price per share of $37.93 (per share price of $36.12 as adjusted for the 5% stock dividend).
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 in approximately 360 locations in Missouri, Illinois, Kansas, Oklahoma and Colorado. The Company also has operating subsidiaries involved in mortgage banking, credit related insurance, and private equity activities.
Summary of Non-Performing Assets and Past Due Loans
|
| | | | | | | | | | | | |
| (Dollars in thousands) | | 9/30/2012 | | 12/31/2012 | | 12/31/2011 |
| Non-Accrual Loans | | $ | 55,201 |
| | $ | 51,410 |
| | $ | 75,482 |
|
| Foreclosed Real Estate | | $ | 18,234 |
| | $ | 13,453 |
| | $ | 18,321 |
|
| Total Non-Performing Assets | | $ | 73,435 |
| | $ | 64,863 |
|
| $ | 93,803 |
|
| Non-Performing Assets to Loans | | .76 | % | | .66 | % | | 1.02 | % |
| Non-Performing Assets to Total Assets | | .35 | % | | .29 | % | | .45 | % |
| Loans 90 Days & Over Past Due — Still Accruing | | $ | 12,232 |
| | $ | 15,347 |
| | $ | 14,958 |
|
This financial news release, including management's discussion of fourth quarter results, is posted to the Company's web site at www.commercebank.com.
* * * * * * * * * * * * * * *
For additional information, contact
Jeffery Aberdeen, Controller
at PO Box 419248, Kansas City, MO
or by telephone at (816) 234-2081
Web Site: http://www.commercebank.com
Email: mymoney@commercebank.com
COMMERCE BANCSHARES, INC. and SUBSIDIARIES
FINANCIAL HIGHLIGHTS
|
| | | | | | | | | | | | | | | | |
| | | For the Three Months Ended | For the Year Ended |
| (Unaudited) | | September 30,
2012 | December 31,
2012 | December 31,
2011 | December 31,
2012 | December 31,
2011 |
FINANCIAL SUMMARY (In thousands, except per share data) | | |
| Net interest income | |
| $153,811 |
|
| $161,253 |
|
| $161,757 |
|
| $639,906 |
|
| $646,070 |
|
| Taxable equivalent net interest income | | 159,934 |
| 168,428 |
| 167,940 |
| 665,214 |
| 669,515 |
|
| Non-interest income | | 100,922 |
| 103,309 |
| 94,035 |
| 399,630 |
| 392,917 |
|
| Investment securities gains (losses), net | | 3,180 |
| (3,728 | ) | 4,942 |
| 4,828 |
| 10,812 |
|
| Provision for loan losses | | 5,581 |
| 8,326 |
| 12,143 |
| 27,287 |
| 51,515 |
|
| Non-interest expense | | 153,391 |
| 158,277 |
| 156,030 |
| 618,469 |
| 617,249 |
|
| Net income attributable to Commerce Bancshares, Inc. | | 66,006 |
| 66,791 |
| 61,504 |
| 269,329 |
| 256,343 |
|
| Cash dividends | | 20,165 |
| 150,789 |
| 19,504 |
| 211,608 |
| 79,140 |
|
| Net total loan charge-offs (recoveries) | | 9,082 |
| 10,826 |
| 15,649 |
| 39,287 |
| 64,521 |
|
| Business | | 202 |
| 791 |
| 650 |
| (2,497 | ) | 4,988 |
|
| Real estate — construction and land | | (102 | ) | (517 | ) | 2,624 |
| (283 | ) | 6,950 |
|
| Real estate — business | | (25 | ) | 1,799 |
| 731 |
| 5,108 |
| 3,563 |
|
| Consumer credit card | | 6,277 |
| 6,095 |
| 6,986 |
| 24,475 |
| 31,617 |
|
| Consumer | | 1,791 |
| 1,731 |
| 2,682 |
| 8,127 |
| 12,156 |
|
| Revolving home equity | | 314 |
| 187 |
| 884 |
| 1,804 |
| 1,667 |
|
| Real estate — personal | | 267 |
| 411 |
| 798 |
| 1,426 |
| 2,772 |
|
| Overdraft | | 358 |
| 329 |
| 294 |
| 1,127 |
| 808 |
|
| Per common share: | | | | | | |
| Net income — basic | |
| $.71 |
|
| $.73 |
|
| $.66 |
|
| $2.91 |
|
| $2.70 |
|
| Net income — diluted | |
| $.72 |
|
| $.72 |
|
| $.66 |
|
| $2.90 |
|
| $2.69 |
|
| Cash dividends | |
| $.219 |
|
| $1.648 |
|
| $.209 |
|
| $2.305 |
|
| $.834 |
|
| Diluted wtd. average shares o/s | | 91,552 |
| 90,999 |
| 93,086 |
| 91,894 |
| 94,712 |
|
| RATIOS | | | | | | |
Average loans to deposits (1) | | 56.89 | % | 55.53 | % | 56.01 | % | 55.80 | % | 59.15 | % |
| Return on total average assets | | 1.28 | % | 1.25 | % | 1.19 | % | 1.30 | % | 1.32 | % |
| Return on total average equity | | 11.57 | % | 11.62 | % | 11.39 | % | 12.00 | % | 12.15 | % |
Non-interest income to revenue (2) | | 39.62 | % | 39.05 | % | 36.76 | % | 38.44 | % | 37.82 | % |
Efficiency ratio (3) | | 59.99 | % | 59.62 | % | 60.71 | % | 59.26 | % | 59.10 | % |
| AT PERIOD END | | | | | | |
| Book value per share based on total equity | |
| $25.08 |
|
| $23.76 |
|
| $23.24 |
| | |
| Market value per share | |
| $38.41 |
|
| $35.06 |
|
| $36.30 |
| | |
| Allowance for loan losses as a percentage of loans | | 1.82 | % | 1.75 | % | 2.01 | % | | |
| Tier I leverage ratio | | 10.00 | % | 9.14 | % | 9.55 | % | | |
Tangible common equity to assets ratio (4) | | 10.47 | % | 9.25 | % | 9.91 | % | | |
| Common shares outstanding | | 91,988,811 |
| 91,414,306 |
| 93,399,774 |
| | |
| Shareholders of record | | 4,146 |
| 4,135 |
| 4,218 |
| | |
| Number of bank/ATM locations | | 362 |
| 362 |
| 363 |
| | |
| Full-time equivalent employees | | 4,707 |
| 4,708 |
| 4,745 |
| | |
| OTHER QTD INFORMATION | | | | | | |
| High market value per share | |
| $40.70 |
|
| $38.70 |
|
| $36.83 |
| | |
| Low market value per share | |
| $35.91 |
|
| $34.69 |
|
| $29.99 |
| | |
| |
| (1) | Includes loans held for sale. |
| |
| (2) | Revenue includes net interest income and non-interest income. |
| |
| (3) | The efficiency ratio is calculated as non-interest expense (excluding intangibles amortization) as a percent of revenue. |
| |
| (4) | 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). |
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) | | September 30,
2012 | | December 31,
2012 | | December 31,
2011 | | December 31,
2012 | | December 31,
2011 |
| Interest income | |
| $163,194 |
| |
| $170,185 |
| |
| $173,223 |
| |
| $677,969 |
| |
| $697,971 |
|
| Interest expense | | 9,383 |
| | 8,932 |
| | 11,466 |
| | 38,063 |
| | 51,901 |
|
| Net interest income | | 153,811 |
| | 161,253 |
| | 161,757 |
| | 639,906 |
| | 646,070 |
|
| Provision for loan losses | | 5,581 |
| | 8,326 |
| | 12,143 |
| | 27,287 |
| | 51,515 |
|
| Net interest income after provision for loan losses | | 148,230 |
| | 152,927 |
| | 149,614 |
| | 612,619 |
| | 594,555 |
|
| NON-INTEREST INCOME | | | | | | | | | | |
| Bank card transaction fees | | 39,488 |
| | 41,542 |
| | 36,162 |
| | 154,197 |
| | 157,077 |
|
| Trust fees | | 23,681 |
| | 24,351 |
| | 22,095 |
| | 94,679 |
| | 88,313 |
|
| Deposit account charges and other fees | | 19,873 |
| | 20,301 |
| | 20,623 |
| | 79,485 |
| | 82,651 |
|
| Capital market fees | | 5,110 |
| | 4,075 |
| | 4,591 |
| | 21,066 |
| | 19,846 |
|
| Consumer brokerage services | | 2,441 |
| | 2,619 |
| | 2,142 |
| | 10,162 |
| | 10,018 |
|
| Loan fees and sales | | 1,358 |
| | 1,412 |
| | 1,647 |
| | 6,037 |
| | 7,580 |
|
| Other | | 8,971 |
| | 9,009 |
| | 6,775 |
| | 34,004 |
| | 27,432 |
|
| Total non-interest income | | 100,922 |
| | 103,309 |
| | 94,035 |
| | 399,630 |
| | 392,917 |
|
| INVESTMENT SECURITIES GAINS (LOSSES), NET | | | | | | | | | | |
| Impairment (losses) reversals on debt securities | | 5,989 |
| | (356 | ) | | (796 | ) | | 11,223 |
| | 2,190 |
|
| Noncredit-related losses (reversals) on securities not expected to be sold | | (6,546 | ) | | 93 |
| | 14 |
| | (12,713 | ) | | (4,727 | ) |
| Net impairment losses | | (557 | ) | �� | (263 | ) | | (782 | ) | | (1,490 | ) | | (2,537 | ) |
| Realized gains (losses) on sales and fair value adjustments | | 3,737 |
| | (3,465 | ) | | 5,724 |
| | 6,318 |
| | 13,349 |
|
| Investment securities gains (losses), net | | 3,180 |
| | (3,728 | ) | | 4,942 |
| | 4,828 |
| | 10,812 |
|
| NON-INTEREST EXPENSE | | | | | | | | | | |
| Salaries and employee benefits | | 89,292 |
| | 94,553 |
| | 88,010 |
| | 360,899 |
| | 345,325 |
|
| Net occupancy | | 11,588 |
| | 11,581 |
| | 11,674 |
| | 45,534 |
| | 46,434 |
|
| Equipment | | 4,976 |
| | 4,983 |
| | 5,583 |
| | 20,147 |
| | 22,252 |
|
| Supplies and communication | | 5,400 |
| | 5,641 |
| | 5,550 |
| | 22,321 |
| | 22,448 |
|
| Data processing and software | | 19,279 |
| | 18,768 |
| | 17,873 |
| | 73,798 |
| | 68,103 |
|
| Marketing | | 4,100 |
| | 2,715 |
| | 3,469 |
| | 15,106 |
| | 16,767 |
|
| Deposit insurance | | 2,608 |
| | 2,692 |
| | 2,680 |
| | 10,438 |
| | 13,123 |
|
| Debit overdraft litigation | | — |
| | — |
| | 7,400 |
| | — |
| | 18,300 |
|
| Other | | 16,148 |
| | 17,344 |
| | 13,791 |
| | 70,226 |
| | 64,497 |
|
| Total non-interest expense | | 153,391 |
| | 158,277 |
| | 156,030 |
| | 618,469 |
| | 617,249 |
|
| Income before income taxes | | 98,941 |
| | 94,231 |
| | 92,561 |
| | 398,608 |
| | 381,035 |
|
| Less income taxes | | 32,155 |
| | 27,628 |
| | 29,514 |
| | 127,169 |
| | 121,412 |
|
| Net income | | 66,786 |
| | 66,603 |
| | 63,047 |
| | 271,439 |
| | 259,623 |
|
| Less non-controlling interest expense (income) | | 780 |
| | (188 | ) | | 1,543 |
| | 2,110 |
| | 3,280 |
|
| Net income attributable to Commerce Bancshares, Inc. | |
| $66,006 |
| |
| $66,791 |
| |
| $61,504 |
| |
| $269,329 |
| |
| $256,343 |
|
| Net income per common share — basic | |
| $.71 |
| |
| $.73 |
| |
| $.66 |
| |
| $2.91 |
| |
| $2.70 |
|
| Net income per common share — diluted | |
| $.72 |
| |
| $.72 |
| |
| $.66 |
| |
| $2.90 |
| |
| $2.69 |
|
COMMERCE BANCSHARES, INC. and SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
|
| | | | | | | | | | | | |
(Unaudited) (In thousands) | | September 30,
2012 | | December 31,
2012 | | December 31,
2011 |
| ASSETS | | | | | | |
| Loans | |
| $9,638,645 |
| |
| $9,831,384 |
| |
| $9,177,478 |
|
| Allowance for loan losses | | (175,032 | ) | | (172,532 | ) | | (184,532 | ) |
| Net loans | | 9,463,613 |
| | 9,658,852 |
| | 8,992,946 |
|
| Loans held for sale | | 8,741 |
| | 8,827 |
| | 31,076 |
|
| Investment securities: | | | | | | |
| Available for sale | | 9,020,951 |
| | 9,522,248 |
| | 9,224,702 |
|
| Trading | | 13,595 |
| | 28,837 |
| | 17,853 |
|
| Non-marketable | | 117,540 |
| | 118,650 |
| | 115,832 |
|
| Total investment securities | | 9,152,086 |
| | 9,669,735 |
| | 9,358,387 |
|
| Short-term federal funds sold and securities purchased under agreements to resell | | 10,475 |
| | 27,595 |
| | 11,870 |
|
| Long-term securities purchased under agreements to resell | | 850,000 |
| | 1,200,000 |
| | 850,000 |
|
| Interest earning deposits with banks | | 132,144 |
| | 179,164 |
| | 39,853 |
|
| Cash and due from banks | | 426,742 |
| | 573,066 |
| | 465,828 |
|
| Land, buildings and equipment — net | | 350,040 |
| | 357,612 |
| | 360,146 |
|
| Goodwill | | 125,585 |
| | 125,585 |
| | 125,585 |
|
| Other intangible assets — net | | 5,804 |
| | 5,300 |
| | 7,714 |
|
| Other assets | | 353,539 |
| | 353,853 |
| | 405,962 |
|
| Total assets | | $ | 20,878,769 |
| | $ | 22,159,589 |
| | $ | 20,649,367 |
|
| LIABILITIES AND STOCKHOLDERS’ EQUITY | | | | | | |
| Deposits: | | | | | | |
| Non-interest bearing | |
| $5,814,932 |
| |
| $6,299,903 |
| |
| $5,377,549 |
|
| Savings, interest checking and money market | | 9,025,688 |
| | 9,817,943 |
| | 8,933,941 |
|
| Time open and C.D.’s of less than $100,000 | | 1,094,215 |
| | 1,074,618 |
| | 1,166,104 |
|
| Time open and C.D.’s of $100,000 and over | | 914,795 |
| | 1,156,189 |
| | 1,322,289 |
|
| Total deposits | | 16,849,630 |
| | 18,348,653 |
| | 16,799,883 |
|
| Federal funds purchased and securities sold under agreements to repurchase | | 1,257,949 |
| | 1,083,550 |
| | 1,256,081 |
|
| Other borrowings | | 103,744 |
| | 103,710 |
| | 111,817 |
|
| Other liabilities | | 360,374 |
| | 452,102 |
| | 311,225 |
|
| Total liabilities | | 18,571,697 |
| | 19,988,015 |
| | 18,479,006 |
|
| Stockholders’ equity: | | | | | | |
| Preferred stock | | — |
| | — |
| | — |
|
| Common stock | | 446,387 |
| | 458,646 |
| | 446,387 |
|
| Capital surplus | | 1,033,515 |
| | 1,102,507 |
| | 1,042,065 |
|
| Retained earnings | | 717,138 |
| | 477,210 |
| | 575,419 |
|
| Treasury stock | | (60,644 | ) | | (7,580 | ) | | (8,362 | ) |
| Accumulated other comprehensive income | | 166,040 |
| | 136,344 |
| | 110,538 |
|
| Total stockholders’ equity | | 2,302,436 |
| | 2,167,127 |
| | 2,166,047 |
|
| Non-controlling interest | | 4,636 |
| | 4,447 |
| | 4,314 |
|
| Total equity | | 2,307,072 |
| | 2,171,574 |
| | 2,170,361 |
|
| Total liabilities and equity | | $ | 20,878,769 |
| | $ | 22,159,589 |
| | $ | 20,649,367 |
|
COMMERCE BANCSHARES, INC. and SUBSIDIARIES
AVERAGE BALANCE SHEETS — AVERAGE RATES AND YIELDS |
| | | | | | | | | | | | | | | | | | | | |
(Unaudited) (Dollars in thousands) | For the Three Months Ended |
| September 30, 2012 | | December 31, 2012 | | December 31, 2011 |
| | Average Balance | | Avg. Rates Earned/Paid | | Average Balance | | Avg. Rates Earned/Paid | | Average Balance | | Avg. Rates Earned/Paid |
| ASSETS: | | | | | | | | | | | |
| Loans: | | | | | | | | | | | |
Business (A) | $ | 3,018,475 |
| | 3.39 | % | | $ | 3,041,700 |
| | 3.29 | % | | $ | 2,819,598 |
| | 3.53 | % |
| Real estate — construction and land | 339,908 |
| | 4.30 |
| | 345,608 |
| | 4.11 |
| | 386,738 |
| | 4.52 |
|
| Real estate — business | 2,182,584 |
| | 4.39 |
| | 2,200,088 |
| | 4.33 |
| | 2,162,052 |
| | 4.67 |
|
| Real estate — personal | 1,523,148 |
| | 4.31 |
| | 1,571,860 |
| | 4.15 |
| | 1,421,296 |
| | 4.64 |
|
| Consumer | 1,205,318 |
| | 5.54 |
| | 1,272,831 |
| | 5.35 |
| | 1,111,299 |
| | 6.08 |
|
| Revolving home equity | 444,076 |
| | 4.17 |
| | 436,671 |
| | 4.13 |
| | 464,694 |
| | 4.24 |
|
| Consumer credit card | 730,104 |
| | 11.83 |
| | 748,754 |
| | 11.42 |
| | 733,712 |
| | 11.62 |
|
| Overdrafts | 5,353 |
| | — |
| | 5,908 |
| | — |
| | 7,101 |
| | — |
|
Total loans (B) | 9,448,966 |
| | 4.76 |
| | 9,623,420 |
| | 4.64 |
| | 9,106,490 |
| | 5.01 |
|
| Loans held for sale | 8,753 |
| | 3.86 |
| | 8,818 |
| | 3.74 |
| | 36,987 |
| | 2.55 |
|
| Investment securities: | | | | | | | | | | | |
| U.S. government and federal agency obligations | 329,172 |
| | (.07 | ) | (C) | 341,537 |
| | 5.11 |
| | 328,641 |
| | 2.49 |
|
| Government-sponsored enterprise obligations | 276,505 |
| | 1.65 |
| | 400,387 |
| | 1.72 |
| | 305,003 |
| | 1.93 |
|
State and municipal obligations (A) | 1,387,624 |
| | 3.89 |
| | 1,531,754 |
| | 3.67 |
| | 1,239,330 |
| | 4.16 |
|
| Mortgage-backed securities | 3,766,602 |
| | 2.62 |
| | 3,447,995 |
| | 2.79 |
| | 4,453,362 |
| | 2.71 |
|
| Asset-backed securities | 2,878,941 |
| | 1.10 |
| | 3,157,988 |
| | .99 |
| | 2,645,538 |
| | 1.12 |
|
Other marketable securities (A) | 121,596 |
| | 4.50 |
| | 138,066 |
| | 5.35 |
| | 164,545 |
| | 5.39 |
|
Total available for sale securities (B) | 8,760,440 |
| | 2.21 |
| | 9,017,727 |
| | 2.39 |
| | 9,136,419 |
| | 2.46 |
|
Trading securities (A) | 24,337 |
| | 2.34 |
| | 20,771 |
| | 2.01 |
| | 19,785 |
| | 2.87 |
|
Non-marketable securities (A) | 117,210 |
| | 7.54 |
| | 118,802 |
| | 17.51 |
| | 110,486 |
| | 10.81 |
|
| Total investment securities | 8,901,987 |
| | 2.29 |
| | 9,157,300 |
| | 2.59 |
| | 9,266,690 |
| | 2.56 |
|
| Short-term federal funds sold and securities purchased under agreements to resell | 19,400 |
| | .49 |
| | 10,371 |
| | .46 |
| | 10,162 |
| | .39 |
|
| Long-term securities purchased under agreements to resell | 847,829 |
| | 2.31 |
| | 1,021,741 |
| | 2.10 |
| | 850,000 |
| | 1.97 |
|
| Interest earning deposits with banks | 81,139 |
| | .20 |
| | 208,930 |
| | .25 |
| | 122,953 |
| | .25 |
|
| Total interest earning assets | 19,308,074 |
| | 3.49 |
| | 20,030,580 |
| | 3.52 |
| | 19,393,282 |
| | 3.67 |
|
Non-interest earning assets (B) | 1,209,295 |
| | | | 1,234,609 |
| | | | 1,121,569 |
| | |
| Total assets | $ | 20,517,369 |
| | | | $ | 21,265,189 |
| | | | $ | 20,514,851 |
| | |
| LIABILITIES AND EQUITY: | | | | | | | | | | | |
| Interest bearing deposits: | | | | | | | | | | | |
| Savings | $ | 581,819 |
| | .15 |
| | $ | 581,174 |
| | .13 |
| | $ | 529,027 |
| | .17 |
|
| Interest checking and money market | 8,401,165 |
| | .21 |
| | 8,638,073 |
| | .19 |
| | 8,068,003 |
| | .29 |
|
| Time open & C.D.’s of less than $100,000 | 1,101,399 |
| | .70 |
| | 1,083,492 |
| | .68 |
| | 1,186,324 |
| | .75 |
|
| Time open & C.D.’s of $100,000 and over | 1,004,708 |
| | .69 |
| | 1,030,184 |
| | .65 |
| | 1,367,472 |
| | .59 |
|
| Total interest bearing deposits | 11,089,091 |
| | .30 |
| | 11,332,923 |
| | .28 |
| | 11,150,826 |
| | .37 |
|
| Borrowings: | | | | | | | | | | | |
| Federal funds purchased and securities sold under agreements to repurchase | 1,217,036 |
| | .07 |
| | 1,130,210 |
| | .07 |
| | 1,147,421 |
| | .05 |
|
| Other borrowings | 108,819 |
| | 3.11 |
| | 103,766 |
| | 3.25 |
| | 112,024 |
| | 3.26 |
|
| Total borrowings | 1,325,855 |
| | .32 |
| | 1,233,976 |
| | .33 |
| | 1,259,445 |
| | .33 |
|
| Total interest bearing liabilities | 12,414,946 |
| | .30 | % | | 12,566,899 |
| | .28 | % | | 12,410,271 |
| | .37 | % |
| Non-interest bearing deposits | 5,536,274 |
| | | | 6,013,165 |
| | | | 5,173,106 |
| | |
| Other liabilities | 296,178 |
| | | | 399,160 |
| | | | 789,564 |
| | |
| Equity | 2,269,971 |
| | | | 2,285,965 |
| | | | 2,141,910 |
| | |
| Total liabilities and equity | $ | 20,517,369 |
| | | | $ | 21,265,189 |
| | | | $ | 20,514,851 |
| | |
| Net interest income (T/E) | $ | 159,934 |
| | | | $ | 168,428 |
| | | | $ | 167,940 |
| | |
| Net yield on interest earning assets | | | 3.30 | % | | | | 3.35 | % | | | | 3.44 | % |
(A) Stated on a tax equivalent basis using a federal income tax rate of 35%.
(B) The allowance for loan losses and unrealized gains/(losses) on available for sale securities are included in non-interest earning assets.
(C) Includes ($1.4 million) in inflation income on U.S. Treasury inflation-protected securities in the third quarter of 2012.
COMMERCE BANCSHARES, INC.
Management Discussion of Fourth Quarter Results
December 31, 2012
For the quarter ended December 31, 2012, net income attributable to Commerce Bancshares, Inc. (net income) amounted to $66.8 million, an increase of $5.3 million over the same quarter last year, and an increase of $785 thousand compared to the previous quarter. The slight increase in net income over the previous quarter resulted mainly from higher net interest income and fees totaling a combined $9.8 million, but offset by a higher provision for loan losses of $2.7 million, net securities losses of $3.7 million and growth in non-interest expense of $4.9 million. For the current quarter, the return on average assets was 1.25%, the return on average equity was 11.62%, and the efficiency ratio was 59.62%.
Compared to the same quarter last year, net interest income (tax equivalent) increased by $488 thousand to $168.4 million, while non-interest income increased $9.3 million to $103.3 million. The securities losses this quarter resulted mainly from private equity activities and compared to net gains of $4.9 million in the 4th quarter of 2011. Non-interest expense for the current quarter totaled $158.3 million, a slight increase over the same period last year. The provision for loan losses totaled $8.3 million, representing a decrease of $3.8 million from the amount recorded in the same quarter last year.
Balance Sheet Review
During the 4th quarter of 2012, average loans, including loans held for sale, increased $174.5 million compared to the previous quarter and increased $488.8 million, or 5.3%, compared to the same period last year. The increase in average loans over the previous quarter resulted from increases in most lending categories including growth in business (up $23.2 million), business real estate and construction (up $23.2 million), personal real estate (up $48.7 million) and consumer loans (up $67.5 million, mainly in automobile and fixed rate home equity loans). Consumer credit card loans also increased on average by $18.7 million. Growth in business loans mainly resulted from higher leasing activities while demand for construction and business real estate loans improved this quarter with modest loan growth. Demand for consumer automobile lending remained strong as average outstanding balances grew by $91.5 million. However, marine and RV loans, included in the consumer loan portfolio, continued to run off this quarter by $21.0 million, while home equity lines of credit also declined by $7.4 million.
Total available for sale investment securities (excluding fair value adjustments) averaged $9.0 billion this quarter, up $257.3 million when compared to the previous quarter. Purchases of new securities, totaling $1.3 billion in the 4th quarter of 2012, were offset by maturities and pay downs of $734.9 million. At December 31, 2012, the duration of the investment portfolio was 2.4 years, and maturities and pay downs of approximately $2.2 billion are expected to occur during the next 12 months.
Total average deposits increased $720.7 million, or 4.3%, during the 4th quarter of 2012 compared to the previous quarter. This increase in average deposits resulted mainly from growth in business demand (increase of $429.3 million) and money market (increase of $222.6 million) accounts. Certificate of deposit (CD) accounts also increased slightly mainly from growth in short-term jumbo CD's. Overall, $411.9 million of the deposit growth this quarter came from commercial deposits while the remaining $308.8 million in deposit growth was mostly from private banking
and retail banking customers. The average loans to deposits ratio in the current quarter was 55.5%, compared to 56.9% in the previous quarter.
During the current quarter, the Company's average borrowings declined $91.9 million compared to the previous quarter, mainly due to lower federal funds purchased this quarter.
Net Interest Income
Net interest income (tax equivalent) in the 4th quarter of 2012 amounted to $168.4 million compared with $159.9 million in the previous quarter, or an increase of $8.5 million. Net interest income this quarter increased slightly compared to the 4th quarter of last year. During the 4th quarter of 2012, the net yield on earning assets (tax equivalent) was 3.35%, compared with 3.30% in the previous quarter and 3.44% in the same period last year.
The increase in net interest income (tax equivalent) in the 4th quarter of 2012 compared to the previous quarter was mainly due to an increase in inflation interest of $4.5 million on the Company's inflation-protected securities as a result of the higher Consumer Price Indices published this quarter, on which this interest is based. Inflation income totaled $3.1 million this quarter. Also, the Company received a special dividend on a private equity investment this quarter totaling $2.2 million; however, a related offsetting fair value adjustment of $1.4 million was recorded on the same investment in net securities losses.
Compared to the previous quarter, interest on loans declined $937 thousand (tax-equivalent) as a result of lower average rates of 12 basis points offset by higher balances. The average rate on investment securities increased 30 basis points to 2.59% partly due to the higher inflation and dividend income mentioned above coupled with higher overall average balances. Also, rates on mortgage-backed securities increased due to lower premium amortization (reduction in amortization expense of $1.7 million) as prepayment speeds slowed.
Interest expense on deposits declined $412 thousand in the 4th quarter of 2012 compared with the previous quarter as overall rates declined slightly. Interest expense on borrowings also declined slightly.
Non-Interest Income
In the 4th quarter of 2012, total non-interest income amounted to $103.3 million, an increase of $9.3 million, or 9.9%, compared to the same period last year. Also, current quarter non-interest income increased $2.4 million when compared to amounts recorded in the previous quarter. The increase in non-interest income over the same period last year was mainly due to an increase in bank card fees, coupled with growth in trust fees and higher tax credit fee income.
Total bank card fees in the current quarter increased $5.4 million, or 14.9%, over the same period last year as a result of a 25.3% increase in corporate card fees, which totaled $18.9 million this quarter. Merchant and credit card fees also grew by 7.8% and 10.3%, respectively, reflecting increased holiday sales volumes and a 5th billing weekend in December not present in 2011. Debit card fees grew by 5.3% and totaled $8.8 million this quarter.
COMMERCE BANCSHARES, INC.
Management Discussion of Fourth Quarter Results
December 31, 2012
Trust fees for the quarter increased 10.2% compared to the same period last year, resulting mainly from growth in private client (up 10.5%) and institutional (up 12.3%) trust fees. Deposit account fees declined $322 thousand, or 1.6%, compared to last year as overdraft fees declined by $1.1 million, but were offset by growth in various other deposit fees of $986 thousand, or 38.8%. Capital market fees declined $516 thousand with low interest rates reducing correspondent bank demand for bonds this quarter. Other non-interest income grew by $2.2 million this quarter compared to the same period last year partly due to higher fees on sales of tax credits, which grew by $577 thousand, and additional swap fee income of $225 thousand. Also, in the 4th quarter of 2011 the Company wrote down the value of certain banking properties held for sale by $874 thousand, which did not reoccur this quarter.
Investment Securities Gains and Losses
Net securities losses, related mostly to private equity fair value adjustments, amounted to $3.7 million in the 4th quarter of 2012, compared to net gains of $3.2 million in the previous quarter and net gains of $4.9 million in the same quarter last year. The current quarter included unrealized net losses of $3.9 million on these private equity investments, coupled with a reduction to minority interest expense related to these losses totaling $461 thousand which is included in non-controlling interest expense. Year to date net gains and fair value adjustments on private equity investments totaled $6.0 million in 2012 compared with $13.2 million in 2011.
Also during the current quarter, the Company recorded credit-related impairment losses of $263 thousand on certain non-agency guaranteed mortgage-backed securities identified as other-than-temporarily impaired, compared to losses of $557 thousand in the previous quarter and $782 thousand in the same quarter last year. The cumulative credit-related impairment on these bonds totaled $11.3 million at quarter end. At December 31, 2012, the fair value of non-agency guaranteed mortgage-backed securities identified as other-than-temporarily impaired totaled $101.7 million, compared to $124.8 million at December 31, 2011.
Non-Interest Expense
Non-interest expense for the current quarter amounted to $158.3 million, an increase of $2.2 million over the same quarter last year and an increase of $4.9 million compared to the previous quarter. Compared to the 4th quarter of last year, salaries and benefits expense increased $6.5 million, or 7.4%, mainly due to an increase in salary costs of $2.0 million, or 3.4%, coupled with higher incentives paid which included a $1.1 million increase due to timing changes on expense for several commercial card incentive plans. Nearly half of the increased salaries costs resulted from staff investments in the trust, commercial card and mortgage servicing areas. Medical costs also increased by $1.2 million, or 29.2%, this quarter compared to last year as self-insured claims increased. Full-time equivalent employees totaled 4,708 and 4,745 at December 31, 2012 and 2011, respectively.
Compared to the 4th quarter of last year, occupancy, equipment and marketing expense declined $1.4 million on a combined basis mainly due to lower depreciation and reductions in property repairs and marketing expenditures. Data processing and software costs grew by $895 thousand, or 5.0%. This growth included higher data processing and bank card-related costs, but was partly offset by the renegotiation of a new merchant processing contract, which reduced 4th quarter costs by $523 thousand. Other non-interest
expense in the 4th quarter of 2011 included the reversal of a VISA indemnification obligation of $3.1 million (lowering expense) that did not reoccur in 2012.
Income Taxes
The effective tax rate for the Company was 29.3% in the current quarter, compared with 32.8% in the previous quarter and 32.4% in the 4th quarter of 2011. The lower rate in the current quarter resulted partly from tax benefits on the special dividend paid in the 4th quarter to the Company's employee stock ownership plan.
Credit Quality
Net loan charge-offs in the 4th quarter of 2012 amounted to $10.8 million, compared with $9.1 million in the prior quarter and $15.6 million in the 4th quarter of last year. The ratio of annualized net loan charge-offs to total average loans was .45% in the current quarter compared to .38% in the previous quarter.
For the 4th quarter of 2012, annualized net loan charge-offs on average consumer credit card loans amounted to 3.24%, compared with 3.42% in the previous quarter and 3.78% in the same period last year. Consumer loan net charge-offs for the quarter amounted to .54% of average consumer loans, compared to .59% in the previous quarter and .96% in the same quarter last year. The provision for loan losses for the current quarter totaled $8.3 million, an increase of $2.7 million over the previous quarter and $3.8 million lower than in the same period last year. The current quarter provision for loan losses was $2.5 million less than net loan charge-offs for the current quarter, as credit quality in the loan portfolio continued to improve. As a result, the allowance for loan losses was reduced to $172.5 million. At December 31, 2012 the allowance was 1.75% of total loans, excluding loans held for sale, and was 336% of total non-accrual loans.
At December 31, 2012, total non-performing assets amounted to $64.9 million, a decrease of $8.6 million from the previous quarter. Non-performing assets are comprised of non-accrual loans ($51.4 million) and foreclosed real estate ($13.5 million). At December 31, 2012, the balance of non-accrual loans, which represented .52% of loans outstanding, included business real estate loans of $17.3 million, construction and land loans of $13.7 million and business loans of $13.1 million. Loans more than 90 days past due and still accruing interest totaled $15.3 million at December 31, 2012.
Other
During the quarter ended December 31, 2012, the Company paid a 5% stock dividend and also paid a special cash dividend of $1.50 per share in addition to its normal cash dividend of $.23 per share. The Company also purchased approximately 774,000 shares of treasury stock at an average cost of $37.93 per share (per share price of $36.12 as adjusted for the 5% stock dividend).
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 statement.
