Exhibit 99.1
|
| |
| CBSH |
| 1000 Walnut Street / Suite 700 / Kansas City, Missouri 64106 / 816.234.2000 |
|
FOR IMMEDIATE RELEASE:
Thursday, July 13, 2017
COMMERCE BANCSHARES, INC. REPORTS SECOND
QUARTER GROWTH IN EARNINGS PER SHARE OF 14%
Commerce Bancshares, Inc. announced record earnings of $.75 per common share for the three months ended June 30, 2017 compared to $.66 per share in the same quarter last year and $.68 per share in the prior quarter. Net income attributable to Commerce Bancshares, Inc. for the second quarter of 2017 amounted to $79.0 million, compared to $69.9 million in the second quarter of 2016 and $71.5 million in the prior quarter. For the quarter, the return on average assets was 1.26%, the return on average common equity was 12.5% and the efficiency ratio was 60.2%.
For the six months ended June 30, 2017, earnings per common share totaled $1.43 compared to $1.28 for the first six months of 2016. Net income attributable to Commerce Bancshares, Inc. amounted to $150.5 million for the six months ended June 30, 2017 compared to $135.3 million last year, or an increase of 11.2%. For the current year to date, the return on average assets was 1.21% and the return on average common equity was 12.1%.
In making this announcement, David W. Kemper, Chairman and CEO, said, “We continued to see strong performance this quarter as top line revenue grew $10.6 million compared to the previous quarter while expenses declined and credit costs remained low. Our net interest margin grew to 3.19% this quarter reflecting increasing interest earned on our loan portfolio coupled with stable funding costs. Fee income also increased $6.0 million this quarter compared to the prior quarter as bank card, trust and deposit fees all showed meaningful increases. While total average loan balances were flat with the prior quarter, we expect to see commercial loan demand and seasonal consumer lending opportunities for the remainder of the year.”
Mr. Kemper added, “For the current quarter, net loan charge-offs totaled $10.8 million, compared to $9.2 million in the prior quarter and $7.5 million in the same quarter last year. The growth in net loan charge-offs was mainly the result of higher personal banking loan losses and a reduction in commercial loan recoveries this quarter. The ratio of annualized net loan charge-offs to average loans was .32% this quarter compared to .28% last quarter. Non-performing assets declined this quarter to $13.9 million. Overall, the credit environment remains favorable. During the current quarter, the provision for loan losses matched net loan charge-offs and the allowance for loan losses amounted to $157.8 million, or 1.16% of period end loans.”
Total assets at June 30, 2017 were $25.1 billion, total loans were $13.6 billion, and total deposits were $20.8 billion. During the quarter, the Company paid a common cash dividend of $.225 per share, representing a 5% increase over the rate paid in 2016, and also paid an annualized 6% cash dividend on its preferred stock.
(more)
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 330 locations in Missouri, Illinois, Kansas, Oklahoma and Colorado.
This financial news release, including management's discussion of second quarter results, is posted to the Company's web site at www.commercebank.com.
* * * * * * * * * * * * * * *
For additional information, contact
Jeffery Aberdeen, Controller
at 1000 Walnut Street, Suite 700
Kansas City, MO 64106
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 Six Months Ended |
| (Unaudited) (Dollars in thousands, except per share data) | | June 30,
2017 | March 31,
2017 | June 30,
2016 | June 30,
2017 | June 30,
2016 |
| FINANCIAL SUMMARY | | |
| Net interest income | |
| $182,807 |
|
| $178,273 |
|
| $171,829 |
|
| $361,080 |
|
| $335,604 |
|
| Non-interest income | | 123,084 |
| 117,066 |
| 116,570 |
| 240,150 |
| 235,594 |
|
| Total revenue | | 305,891 |
| 295,339 |
| 288,399 |
| 601,230 |
| 571,198 |
|
| Investment securities gains (losses), net | | 1,651 |
| (772 | ) | (744 | ) | 879 |
| (1,739 | ) |
| Provision for loan losses | | 10,758 |
| 11,128 |
| 9,216 |
| 21,886 |
| 18,655 |
|
| Non-interest expense | | 184,594 |
| 186,830 |
| 177,089 |
| 371,424 |
| 354,562 |
|
| Income before taxes | | 112,190 |
| 96,609 |
| 101,350 |
| 208,799 |
| 196,242 |
|
| Income taxes | | 33,201 |
| 24,907 |
| 31,542 |
| 58,108 |
| 60,912 |
|
| Non-controlling interest expense (income) | | 29 |
| 198 |
| (85 | ) | 227 |
| 63 |
|
| Net income attributable to Commerce Bancshares, Inc. | 78,960 |
| 71,504 |
| 69,893 |
| 150,464 |
| 135,267 |
|
| Preferred stock dividends | | 2,250 |
| 2,250 |
| 2,250 |
| 4,500 |
| 4,500 |
|
| Net income available to common shareholders |
| $76,710 |
|
| $69,254 |
|
| $67,643 |
|
| $145,964 |
|
| $130,767 |
|
| Earnings per common share: | | | | | | |
| Net income — basic | |
| $.75 |
|
| $.68 |
|
| $.67 |
|
| $1.43 |
|
| $1.29 |
|
| Net income — diluted | |
| $.75 |
|
| $.68 |
|
| $.66 |
|
| $1.43 |
|
| $1.28 |
|
| Effective tax rate | | 29.60 | % | 25.83 | % | 31.10 | % | 27.86 | % | 31.05 | % |
| Tax equivalent net interest income | |
| $190,865 |
|
| $187,322 |
|
| $179,592 |
|
| $378,187 |
|
| $351,017 |
|
Average total interest earning assets (1) | | $ | 23,990,273 |
| $ | 24,205,227 |
| $ | 23,252,289 |
| $ | 24,097,156 |
| $ | 23,292,311 |
|
Diluted wtd. average shares outstanding
| | 100,898,503 |
| 100,767,071 |
| 100,412,160 |
| 100,833,150 |
| 100,491,688 |
|
| | | | | | | |
| RATIOS | | | | | | |
Average loans to deposits (2) | | 65.25 | % | 64.39 | % | 63.45 | % | 64.82 | % | 63.13 | % |
| Return on total average assets | | 1.26 |
| 1.15 |
| 1.15 |
| 1.21 |
| 1.11 |
|
Return on average common equity (3) | | 12.48 |
| 11.74 |
| 11.69 |
| 12.12 |
| 11.44 |
|
| Non-interest income to total revenue | | 40.24 |
| 39.64 |
| 40.42 |
| 39.94 |
| 41.25 |
|
Efficiency ratio (4) | | 60.24 |
| 63.14 |
| 61.27 |
| 61.67 |
| 61.93 |
|
| Net yield on interest earning assets | | 3.19 |
| 3.14 |
| 3.11 |
| 3.16 |
| 3.03 |
|
| | | | | | | |
| EQUITY SUMMARY | | | | | | |
| Cash dividends per common share | |
| $.225 |
|
| $.225 |
|
| $.214 |
|
| $.450 |
|
| $.429 |
|
| Cash dividends on common stock | |
| $22,903 |
|
| $22,913 |
|
| $21,762 |
|
| $45,816 |
|
| $43,522 |
|
| Cash dividends on preferred stock | |
| $2,250 |
|
| $2,250 |
|
| $2,250 |
|
| $4,500 |
|
| $4,500 |
|
Book value per common share (5) | |
| $24.44 |
|
| $23.79 |
|
| $23.49 |
| | |
Market value per common share (5) | |
| $56.83 |
|
| $56.16 |
|
| $45.62 |
| | |
| High market value per common share | |
| $57.94 |
|
| $60.61 |
|
| $47.06 |
| | |
| Low market value per common share | |
| $52.02 |
|
| $53.15 |
|
| $40.93 |
| | |
Common shares outstanding (5) | | 101,616,435 |
| 101,668,824 |
| 101,388,869 |
| | |
Tangible common equity to tangible assets (6) | | 9.37 | % | 9.03 | % | 9.09 | % | | |
| Tier I leverage ratio | | 9.87 | % | 9.56 | % | 9.36 | % | | |
| | | | | | | |
| OTHER QTD INFORMATION | | | | | | |
| Number of bank/ATM locations | | 334 |
| 336 |
| 346 |
| | |
| Full-time equivalent employees | | 4,805 |
| 4,807 |
| 4,779 |
| | |
| |
| (1) | Excludes allowance for loan losses and unrealized gains/(losses) on available for sale 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. |
| |
| (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 Six Months Ended |
(Unaudited) (In thousands, except per share data) | | June 30,
2017 | March 31,
2017 | December 31,
2016 | September 30,
2016 | June 30,
2016 | June 30,
2017 | June 30,
2016 |
| Interest income | |
| $193,594 |
|
| $187,997 |
|
| $181,498 |
|
| $179,361 |
|
| $180,065 |
|
| $381,591 |
|
| $352,193 |
|
| Interest expense | | 10,787 |
| 9,724 |
| 8,296 |
| 8,118 |
| 8,236 |
| 20,511 |
| 16,589 |
|
| Net interest income | | 182,807 |
| 178,273 |
| 173,202 |
| 171,243 |
| 171,829 |
| 361,080 |
| 335,604 |
|
| Provision for loan losses | | 10,758 |
| 11,128 |
| 10,400 |
| 7,263 |
| 9,216 |
| 21,886 |
| 18,655 |
|
| Net interest income after provision for loan losses | 172,049 |
| 167,145 |
| 162,802 |
| 163,980 |
| 162,613 |
| 339,194 |
| 316,949 |
|
| NON-INTEREST INCOME | | | | | | | | |
| Bank card transaction fees | | 44,999 |
| 43,204 |
| 45,338 |
| 47,006 |
| 45,065 |
| 88,203 |
| 89,535 |
|
| Trust fees | | 33,120 |
| 32,014 |
| 31,360 |
| 30,951 |
| 30,241 |
| 65,134 |
| 59,484 |
|
| Deposit account charges and other fees | 22,861 |
| 21,942 |
| 22,134 |
| 22,241 |
| 21,328 |
| 44,803 |
| 42,019 |
|
| Capital market fees | | 2,156 |
| 2,342 |
| 2,679 |
| 2,751 |
| 2,500 |
| 4,498 |
| 5,225 |
|
| Consumer brokerage services | | 3,726 |
| 3,649 |
| 3,409 |
| 3,375 |
| 3,491 |
| 7,375 |
| 7,000 |
|
| Loan fees and sales | | 4,091 |
| 3,168 |
| 2,583 |
| 3,123 |
| 3,196 |
| 7,259 |
| 5,706 |
|
| Other | | 12,131 |
| 10,747 |
| 11,976 |
| 9,872 |
| 10,749 |
| 22,878 |
| 26,625 |
|
| Total non-interest income | | 123,084 |
| 117,066 |
| 119,479 |
| 119,319 |
| 116,570 |
| 240,150 |
| 235,594 |
|
| INVESTMENT SECURITIES GAINS (LOSSES), NET | 1,651 |
| (772 | ) | 3,651 |
| (1,965 | ) | (744 | ) | 879 |
| (1,739 | ) |
| NON-INTEREST EXPENSE | | | | | | | | |
| Salaries and employee benefits | | 108,829 |
| 112,369 |
| 108,639 |
| 107,004 |
| 104,808 |
| 221,198 |
| 211,667 |
|
| Net occupancy | | 11,430 |
| 11,443 |
| 11,529 |
| 12,366 |
| 11,092 |
| 22,873 |
| 22,395 |
|
| Equipment | | 4,776 |
| 4,609 |
| 4,884 |
| 4,842 |
| 4,781 |
| 9,385 |
| 9,415 |
|
| Supplies and communication | | 5,446 |
| 5,709 |
| 5,645 |
| 5,968 |
| 5,693 |
| 11,155 |
| 12,522 |
|
| Data processing and software | | 23,356 |
| 23,097 |
| 23,390 |
| 23,663 |
| 22,770 |
| 46,453 |
| 45,669 |
|
| Marketing | | 4,488 |
| 3,224 |
| 3,431 |
| 4,399 |
| 4,389 |
| 7,712 |
| 8,202 |
|
| Deposit insurance | | 3,592 |
| 3,471 |
| 3,443 |
| 3,576 |
| 3,143 |
| 7,063 |
| 6,308 |
|
| Other | | 22,677 |
| 22,908 |
| 20,300 |
| 19,424 |
| 20,413 |
| 45,585 |
| 38,384 |
|
| Total non-interest expense | | 184,594 |
| 186,830 |
| 181,261 |
| 181,242 |
| 177,089 |
| 371,424 |
| 354,562 |
|
| Income before income taxes | | 112,190 |
| 96,609 |
| 104,671 |
| 100,092 |
| 101,350 |
| 208,799 |
| 196,242 |
|
| Less income taxes | | 33,201 |
| 24,907 |
| 32,297 |
| 30,942 |
| 31,542 |
| 58,108 |
| 60,912 |
|
| Net income | | 78,989 |
| 71,702 |
| 72,374 |
| 69,150 |
| 69,808 |
| 150,691 |
| 135,330 |
|
| Less non-controlling interest expense (income) | 29 |
| 198 |
| 795 |
| 605 |
| (85 | ) | 227 |
| 63 |
|
| Net income attributable to Commerce Bancshares, Inc. | 78,960 |
| 71,504 |
| 71,579 |
| 68,545 |
| 69,893 |
| 150,464 |
| 135,267 |
|
| Less preferred stock dividends | | 2,250 |
| 2,250 |
| 2,250 |
| 2,250 |
| 2,250 |
| 4,500 |
| 4,500 |
|
| Net income available to common shareholders |
| $76,710 |
|
| $69,254 |
|
| $69,329 |
|
| $66,295 |
|
| $67,643 |
|
| $145,964 |
|
| $130,767 |
|
| Net income per common share — basic |
| $.75 |
|
| $.68 |
|
| $.68 |
|
| $.65 |
|
| $.67 |
|
| $1.43 |
|
| $1.29 |
|
| Net income per common share — diluted |
| $.75 |
|
| $.68 |
|
| $.68 |
|
| $.65 |
|
| $.66 |
|
| $1.43 |
|
| $1.28 |
|
| | | | | | | | | |
| OTHER INFORMATION | | | | | | | | |
| Return on total average assets | | 1.26 | % | 1.15 | % | 1.14 | % | 1.12 | % | 1.15 | % | 1.21 | % | 1.11 | % |
Return on average common equity (1) | 12.48 |
| 11.74 |
| 11.48 |
| 10.97 |
| 11.69 |
| 12.12 |
| 11.44 |
|
Efficiency ratio (2) | | 60.24 |
| 63.14 |
| 61.82 |
| 62.25 |
| 61.27 |
| 61.67 |
| 61.93 |
|
| Effective tax rate | | 29.60 |
| 25.83 |
| 31.09 |
| 31.10 |
| 31.10 |
| 27.86 |
| 31.05 |
|
Net yield on interest earning assets
| 3.19 |
| 3.14 |
| 3.03 |
| 3.08 |
| 3.11 |
| 3.16 |
| 3.03 |
|
| Tax equivalent net interest income | |
| $190,865 |
|
| $187,322 |
|
| $181,301 |
|
| $179,115 |
|
| $179,592 |
|
| $378,187 |
|
| $351,017 |
|
| |
| (1) | Annualized net income available to common shareholders divided by average total equity less preferred stock. |
| |
| (2) | The efficiency ratio is calculated as non-interest expense (excluding intangibles amortization) as a percent of revenue. |
COMMERCE BANCSHARES, INC. and SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS - PERIOD END
|
| | | | | | | | | | |
(Unaudited) (In thousands) | | June 30,
2017 | March 31,
2017 | June 30,
2016 |
| ASSETS | | | | |
| Loans | | | | |
| Business | | $ | 4,852,408 |
| $ | 4,888,011 |
| $ | 4,840,248 |
|
| Real estate — construction and land | | 848,152 |
| 846,904 |
| 819,896 |
|
| Real estate — business | | 2,727,349 |
| 2,710,595 |
| 2,399,271 |
|
| Real estate — personal | | 2,009,203 |
| 2,013,437 |
| 1,927,340 |
|
| Consumer | | 2,038,514 |
| 1,975,521 |
| 1,939,486 |
|
| Revolving home equity | | 403,387 |
| 396,542 |
| 408,301 |
|
| Consumer credit card | | 740,865 |
| 736,766 |
| 753,166 |
|
| Overdrafts | | 6,714 |
| 4,733 |
| 4,180 |
|
| Total loans | | 13,626,592 |
| 13,572,509 |
| 13,091,888 |
|
| Allowance for loan losses | | (157,832 | ) | (157,832 | ) | (153,832 | ) |
| Net loans | | 13,468,760 |
| 13,414,677 |
| 12,938,056 |
|
| Loans held for sale | | 22,002 |
| 15,559 |
| 33,254 |
|
| Investment securities: | | | | |
| Available for sale | | 9,439,701 |
| 9,671,975 |
| 9,221,346 |
|
| Trading | | 22,291 |
| 20,200 |
| 30,512 |
|
| Non-marketable | | 102,388 |
| 101,688 |
| 111,931 |
|
| Total investment securities | | 9,564,380 |
| 9,793,863 |
| 9,363,789 |
|
| Federal funds sold and short-term securities purchased under agreements to resell | | 16,520 |
| 2,205 |
| 13,725 |
|
| Long-term securities purchased under agreements to resell | | 625,000 |
| 725,000 |
| 825,000 |
|
| Interest earning deposits with banks | | 80,860 |
| 120,234 |
| 183,223 |
|
| Cash and due from banks | | 433,747 |
| 416,161 |
| 428,300 |
|
| Land, buildings and equipment — net | | 334,586 |
| 335,191 |
| 342,237 |
|
| Goodwill | | 138,921 |
| 138,921 |
| 138,921 |
|
| Other intangible assets — net | | 7,002 |
| 6,700 |
| 6,561 |
|
| Other assets | | 387,065 |
| 339,660 |
| 436,627 |
|
| Total assets | | $ | 25,078,843 |
| $ | 25,308,171 |
| $ | 24,709,693 |
|
| LIABILITIES AND STOCKHOLDERS’ EQUITY | | | | |
| Deposits: | | | | |
| Non-interest bearing | | $ | 7,314,506 |
| $ | 7,237,815 |
| $ | 6,906,265 |
|
| Savings, interest checking and money market | | 11,427,615 |
| 11,439,078 |
| 10,978,734 |
|
| Time open and C.D.’s of less than $100,000 | | 679,668 |
| 696,776 |
| 749,160 |
|
| Time open and C.D.’s of $100,000 and over | | 1,403,873 |
| 1,718,184 |
| 1,515,888 |
|
| Total deposits | | 20,825,662 |
| 21,091,853 |
| 20,150,047 |
|
| Federal funds purchased and securities sold under agreements to repurchase | | 1,256,444 |
| 1,321,149 |
| 1,632,272 |
|
| Other borrowings | | 101,903 |
| 101,975 |
| 103,878 |
|
| Other liabilities | | 266,627 |
| 229,629 |
| 296,675 |
|
| Total liabilities | | 22,450,636 |
| 22,744,606 |
| 22,182,872 |
|
| Stockholders’ equity: | | | | |
| Preferred stock | | 144,784 |
| 144,784 |
| 144,784 |
|
| Common stock | | 510,015 |
| 510,015 |
| 489,862 |
|
| Capital surplus | | 1,546,534 |
| 1,544,034 |
| 1,333,995 |
|
| Retained earnings | | 390,853 |
| 337,046 |
| 470,558 |
|
| Treasury stock | | (10,373 | ) | (7,588 | ) | (51,707 | ) |
| Accumulated other comprehensive income | | 42,070 |
| 30,412 |
| 134,424 |
|
| Total stockholders’ equity | | 2,623,883 |
| 2,558,703 |
| 2,521,916 |
|
| Non-controlling interest | | 4,324 |
| 4,862 |
| 4,905 |
|
| Total equity | | 2,628,207 |
| 2,563,565 |
| 2,526,821 |
|
| Total liabilities and equity | | $ | 25,078,843 |
| $ | 25,308,171 |
| $ | 24,709,693 |
|
COMMERCE BANCSHARES, INC. and SUBSIDIARIES
AVERAGE BALANCE SHEETS |
| | | | | | | | | | | | | | | |
(Unaudited) (In thousands) | For the Three Months Ended |
| June 30, 2017 | March 31, 2017 | December 31, 2016 | September 30, 2016 | June 30, 2016 |
| ASSETS: | | | | | |
| Loans: | | | | | |
| Business | $ | 4,827,439 |
| $ | 4,906,672 |
| $ | 4,731,405 |
| $ | 4,694,340 |
| $ | 4,691,476 |
|
| Real estate — construction and land | 862,479 |
| 828,017 |
| 821,048 |
| 821,422 |
| 789,329 |
|
| Real estate — business | 2,701,144 |
| 2,645,531 |
| 2,559,028 |
| 2,432,325 |
| 2,389,170 |
|
| Real estate — personal | 2,003,997 |
| 2,012,456 |
| 1,985,606 |
| 1,943,951 |
| 1,905,968 |
|
| Consumer | 1,997,761 |
| 1,974,894 |
| 1,978,154 |
| 1,947,956 |
| 1,927,925 |
|
| Revolving home equity | 399,730 |
| 405,432 |
| 415,429 |
| 411,832 |
| 413,198 |
|
| Consumer credit card | 731,471 |
| 747,783 |
| 757,618 |
| 750,412 |
| 738,130 |
|
| Overdrafts | 4,505 |
| 4,185 |
| 5,501 |
| 4,652 |
| 3,916 |
|
Total loans | 13,528,526 |
| 13,524,970 |
| 13,253,789 |
| 13,006,890 |
| 12,859,112 |
|
| Allowance for loan losses | (157,003 | ) | (155,328 | ) | (154,040 | ) | (153,517 | ) | (151,622 | ) |
| Net loans | 13,371,523 |
| 13,369,642 |
| 13,099,749 |
| 12,853,373 |
| 12,707,490 |
|
| Loans held for sale | 18,341 |
| 11,972 |
| 10,765 |
| 26,597 |
| 56,272 |
|
| Investment securities: | | | | | |
| U.S. government and federal agency obligations | 910,821 |
| 913,474 |
| 811,524 |
| 726,469 |
| 698,374 |
|
| Government-sponsored enterprise obligations | 450,362 |
| 450,489 |
| 445,544 |
| 481,573 |
| 666,354 |
|
| State and municipal obligations | 1,771,674 |
| 1,783,103 |
| 1,784,407 |
| 1,747,794 |
| 1,763,849 |
|
| Mortgage-backed securities | 3,708,124 |
| 3,760,294 |
| 3,656,695 |
| 3,366,292 |
| 3,394,466 |
|
| Asset-backed securities | 2,335,344 |
| 2,359,644 |
| 2,417,367 |
| 2,340,783 |
| 2,377,708 |
|
Other marketable securities | 326,398 |
| 332,643 |
| 333,236 |
| 334,747 |
| 337,572 |
|
| Unrealized gain on investment securities | 102,935 |
| 62,986 |
| 155,818 |
| 235,169 |
| 191,565 |
|
| Total available for sale securities | 9,605,658 |
| 9,662,633 |
| 9,604,591 |
| 9,232,827 |
| 9,429,888 |
|
Trading securities | 21,062 |
| 25,165 |
| 21,717 |
| 18,433 |
| 20,540 |
|
| Non-marketable securities | 101,790 |
| 100,740 |
| 105,420 |
| 113,954 |
| 116,103 |
|
| Total investment securities | 9,728,510 |
| 9,788,538 |
| 9,731,728 |
| 9,365,214 |
| 9,566,531 |
|
| Federal funds sold and short-term securities purchased under agreements to resell | 13,115 |
| 9,887 |
| 8,336 |
| 13,054 |
| 11,916 |
|
| Long-term securities purchased under agreements to resell | 665,655 |
| 725,001 |
| 724,998 |
| 766,302 |
| 824,999 |
|
| Interest earning deposits with banks | 139,061 |
| 207,845 |
| 201,367 |
| 207,944 |
| 125,024 |
|
| Other assets | 1,106,528 |
| 1,139,402 |
| 1,153,982 |
| 1,151,549 |
| 1,113,214 |
|
| Total assets | $ | 25,042,733 |
| $ | 25,252,287 |
| $ | 24,930,925 |
| $ | 24,384,033 |
| $ | 24,405,446 |
|
| | | | | |
| LIABILITIES AND EQUITY: | | | | | |
| Non-interest bearing deposits | $ | 7,065,849 |
| $ | 7,246,698 |
| $ | 7,307,407 |
| $ | 7,096,218 |
| $ | 6,885,889 |
|
| Savings | 831,038 |
| 795,695 |
| 773,304 |
| 778,663 |
| 787,478 |
|
| Interest checking and money market | 10,667,042 |
| 10,603,988 |
| 10,512,268 |
| 10,210,744 |
| 10,287,923 |
|
| Time open & C.D.’s of less than $100,000 | 688,047 |
| 705,135 |
| 722,775 |
| 740,729 |
| 758,703 |
|
| Time open & C.D.’s of $100,000 and over | 1,510,001 |
| 1,671,125 |
| 1,333,764 |
| 1,435,001 |
| 1,635,892 |
|
| Total deposits | 20,761,977 |
| 21,022,641 |
| 20,649,518 |
| 20,261,355 |
| 20,355,885 |
|
| Borrowings: | | | | | |
| Federal funds purchased and securities sold under agreements to repurchase | 1,363,031 |
| 1,356,316 |
| 1,284,916 |
| 1,163,728 |
| 1,211,892 |
|
| Other borrowings | 105,311 |
| 102,011 |
| 101,412 |
| 102,769 |
| 104,649 |
|
| Total borrowings | 1,468,342 |
| 1,458,327 |
| 1,386,328 |
| 1,266,497 |
| 1,316,541 |
|
| Other liabilities | 203,139 |
| 234,144 |
| 346,900 |
| 306,306 |
| 260,179 |
|
| Total liabilities | 22,433,458 |
| 22,715,112 |
| 22,382,746 |
| 21,834,158 |
| 21,932,605 |
|
| Equity | 2,609,275 |
| 2,537,175 |
| 2,548,179 |
| 2,549,875 |
| 2,472,841 |
|
| Total liabilities and equity | $ | 25,042,733 |
| $ | 25,252,287 |
| $ | 24,930,925 |
| $ | 24,384,033 |
| $ | 24,405,446 |
|
COMMERCE BANCSHARES, INC. and SUBSIDIARIES
AVERAGE RATES |
| | | | | | | | | | | |
| (Unaudited) | For the Three Months Ended | |
| June 30, 2017 | March 31, 2017 | December 31, 2016 | September 30, 2016 | June 30, 2016 | |
| ASSETS: | | | | | | |
| Loans: | | | | | | |
Business (1) | 3.21 | % | 3.02 | % | 2.91 | % | 2.87 | % | 2.90 | % | |
| Real estate — construction and land | 4.30 |
| 3.85 |
| 3.64 |
| 3.48 |
| 3.46 |
| |
| Real estate — business | 3.74 |
| 3.63 |
| 3.61 |
| 3.63 |
| 3.69 |
| |
| Real estate — personal | 3.72 |
| 3.74 |
| 3.69 |
| 3.73 |
| 3.76 |
| |
| Consumer | 3.94 |
| 3.89 |
| 3.85 |
| 3.91 |
| 3.80 |
| |
| Revolving home equity | 3.84 |
| 3.64 |
| 3.50 |
| 3.56 |
| 3.59 |
| |
| Consumer credit card | 11.90 |
| 11.66 |
| 11.38 |
| 11.56 |
| 11.54 |
| |
| Overdrafts | — |
| — |
| — |
| — |
| — |
| |
| Total loans | 4.06 |
| 3.92 |
| 3.85 |
| 3.86 |
| 3.86 |
| |
| Loans held for sale | 5.75 |
| 6.64 |
| 5.77 |
| 5.00 |
| 4.95 |
| |
| Investment securities: | | | | | | |
| U.S. government and federal agency obligations | 2.52 |
| 2.09 |
| 2.18 |
| 2.43 |
| 3.48 |
| |
| Government-sponsored enterprise obligations | 1.59 |
| 1.58 |
| 1.54 |
| 2.24 |
| 3.03 |
| |
State and municipal obligations (1) | 3.61 |
| 3.65 |
| 3.57 |
| 3.60 |
| 3.60 |
| |
| Mortgage-backed securities | 2.35 |
| 2.38 |
| 2.40 |
| 2.38 |
| 2.36 |
| |
| Asset-backed securities | 1.72 |
| 1.63 |
| 1.52 |
| 1.48 |
| 1.45 |
| |
Other marketable securities (1) | 2.76 |
| 2.82 |
| 2.95 |
| 2.74 |
| 2.77 |
| |
| Total available for sale securities | 2.42 |
| 2.38 |
| 2.36 |
| 2.39 |
| 2.51 |
| |
Trading securities (1) | 2.70 |
| 2.77 |
| 2.40 |
| 2.42 |
| 2.27 |
| |
Non-marketable securities (1) | 11.49 |
| 21.08 |
| 5.42 |
| 10.24 |
| 8.03 |
| |
| Total investment securities | 2.52 |
| 2.58 |
| 2.39 |
| 2.49 |
| 2.58 |
| |
| Federal funds sold and short-term securities purchased under agreements to resell | 1.13 |
| .94 |
| .72 |
| .61 |
| .64 |
| |
| Long-term securities purchased under agreements to resell | 2.22 |
| 2.12 |
| 1.86 |
| 1.73 |
| 1.64 |
| |
| Interest earning deposits with banks | 1.04 |
| .77 |
| .56 |
| .51 |
| .49 |
| |
| Total interest earning assets | 3.37 |
| 3.30 |
| 3.17 |
| 3.22 |
| 3.25 |
| |
| | | | | | | |
| LIABILITIES AND EQUITY: | | | | | | |
| Interest bearing deposits: | | | | | | |
| Savings | .12 |
| .13 |
| .12 |
| .12 |
| .11 |
| |
| Interest checking and money market | .15 |
| .14 |
| .13 |
| .13 |
| .13 |
| |
| Time open & C.D.’s of less than $100,000 | .39 |
| .37 |
| .37 |
| .37 |
| .38 |
| |
| Time open & C.D.’s of $100,000 and over | .75 |
| .67 |
| .60 |
| .61 |
| .58 |
| |
| Total interest bearing deposits | .23 |
| .21 |
| .19 |
| .20 |
| .20 |
| |
| Borrowings: | | | | | | |
| Federal funds purchased and securities sold under agreements to repurchase | .60 |
| .46 |
| .30 |
| .25 |
| .24 |
| |
| Other borrowings | 3.47 |
| 3.53 |
| 3.54 |
| 3.51 |
| 3.49 |
| |
| Total borrowings | .81 |
| .67 |
| .54 |
| .51 |
| .50 |
| |
| Total interest bearing liabilities | .29 | % | .26 | % | .22 | % | .22 | % | .22 | % | |
| | | | | | | |
| Net yield on interest earning assets | 3.19 | % | 3.14 | % | 3.03 | % | 3.08 | % | 3.11 | % | |
(1) Stated on a tax equivalent basis using a federal income tax rate of 35%.
|
| | | | | | | | | | | | | | | | | | | | | |
COMMERCE BANCSHARES, INC. and SUBSIDIARIES
|
| CREDIT QUALITY |
| | | | | | | | |
| | For the Three Months Ended | For the Six Months Ended |
| (Unaudited) (In thousands, except per share data) | June 30, 2017 | March 31, 2017 | December 31, 2016 | September 30, 2016 | June 30, 2016 | June 30, 2017 | June 30, 2016 |
| ALLOWANCE FOR LOAN LOSSES | | | | | | | |
| Balance at beginning of period | $ | 157,832 |
| $ | 155,932 |
| $ | 154,532 |
| $ | 153,832 |
| $ | 152,132 |
| $ | 155,932 |
| $ | 151,532 |
|
| Provision for losses | 10,758 |
| 11,128 |
| 10,400 |
| 7,263 |
| 9,216 |
| 21,886 |
| 18,655 |
|
| Net charge-offs (recoveries): | | | | | | | |
| Commercial portfolio: | | | | | | | |
| Business | 318 |
| 97 |
| 268 |
| (50 | ) | (65 | ) | 415 |
| 398 |
|
| Real estate — construction and land | (207 | ) | (535 | ) | (882 | ) | (2,312 | ) | (507 | ) | (742 | ) | (518 | ) |
| Real estate — business | (10 | ) | (39 | ) | 97 |
| (106 | ) | (1,030 | ) | (49 | ) | (1,272 | ) |
| | 101 |
| (477 | ) | (517 | ) | (2,468 | ) | (1,602 | ) | (376 | ) | (1,392 | ) |
| Personal banking portfolio: | | | | | | | |
| Consumer credit card | 7,750 |
| 7,148 |
| 6,506 |
| 6,356 |
| 6,650 |
| 14,898 |
| 12,568 |
|
| Consumer | 2,642 |
| 2,096 |
| 2,427 |
| 2,240 |
| 1,781 |
| 4,738 |
| 4,380 |
|
| Overdraft | 292 |
| 435 |
| 379 |
| 434 |
| 307 |
| 727 |
| 526 |
|
| Real estate — personal | (131 | ) | 19 |
| (38 | ) | (78 | ) | 305 |
| (112 | ) | 110 |
|
| Revolving home equity | 104 |
| 7 |
| 243 |
| 79 |
| 75 |
| 111 |
| 163 |
|
| | 10,657 |
| 9,705 |
| 9,517 |
| 9,031 |
| 9,118 |
| 20,362 |
| 17,747 |
|
| Total net loan charge-offs | 10,758 |
| 9,228 |
| 9,000 |
| 6,563 |
| 7,516 |
| 19,986 |
| 16,355 |
|
| Balance at end of period | $ | 157,832 |
| $ | 157,832 |
| $ | 155,932 |
| $ | 154,532 |
| $ | 153,832 |
| $ | 157,832 |
| $ | 153,832 |
|
| | | | | | | | |
| NET CHARGE-OFF RATIOS* | | | | | | | |
| Commercial portfolio: | | | | | | | |
| Business | .03 | % | .01 | % | .02 | % | — | % | (.01 | )% | .02 | % | .02 | % |
| Real estate — construction and land | (.10 | ) | (.26 | ) | (.43 | ) | (1.12 | ) | (.26 | ) | (.18 | ) | (.14 | ) |
| Real estate — business | — |
| (.01 | ) | .02 |
| (.02 | ) | (.17 | ) | — |
| (.11 | ) |
| | — |
| (.02 | ) | (.03 | ) | (.12 | ) | (.08 | ) | (.01 | ) | (.04 | ) |
| Personal banking portfolio: | | | | | | | |
| Consumer credit card | 4.25 |
| 3.88 |
| 3.42 |
| 3.37 |
| 3.62 |
| 4.06 |
| 3.39 |
|
| Consumer | .53 |
| .43 |
| .49 |
| .46 |
| .37 |
| .48 |
| .46 |
|
| Overdraft | 26.00 |
| 42.15 |
| 27.41 |
| 37.11 |
| 31.53 |
| 33.73 |
| 24.35 |
|
| Real estate — personal | (.03 | ) | — |
| (.01 | ) | (.02 | ) | .06 |
| (.01 | ) | .01 |
|
| Revolving home equity | .10 |
| .01 |
| .23 |
| .08 |
| .07 |
| .06 |
| .08 |
|
| | .83 |
| .77 |
| .74 |
| .71 |
| .74 |
| .80 |
| .71 |
|
| Total | .32 | % | .28 | % | .27 | % | .20 | % | .24 | % | .30 | % | .26 | % |
| | | | | | | | |
| CREDIT QUALITY RATIOS | | | | | | | |
| Non-performing assets to total loans | .10 | % | .11 | % | .11 | % | .13 | % | .20 | % | | |
| Non-performing assets to total assets | .06 |
| .06 |
| .06 |
| .07 |
| .11 |
| | |
| Allowance for loan losses to total loans | 1.16 |
| 1.16 |
| 1.16 |
| 1.17 |
| 1.18 |
| | |
| | | | | | | | |
| NON-PERFORMING ASSETS | | | | | | | |
| Non-accrual loans: | | | | | | | |
| Business | $ | 6,330 |
| $ | 7,935 |
| $ | 8,682 |
| $ | 8,758 |
| $ | 12,716 |
| | |
| Real estate — construction and land | 544 |
| 585 |
| 564 |
| 1,310 |
| 2,170 |
| | |
| Real estate — business | 1,833 |
| 1,764 |
| 1,634 |
| 1,920 |
| 5,236 |
| | |
| Real estate — personal | 3,504 |
| 3,368 |
| 3,403 |
| 3,634 |
| 4,293 |
| | |
| Consumer | 1,151 |
| 1,151 |
| — |
| — |
| — |
| | |
| Revolving home equity | — |
| — |
| — |
| 23 |
| 109 |
| | |
| Total | 13,362 |
| 14,803 |
| 14,283 |
| 15,645 |
| 24,524 |
| | |
| Foreclosed real estate | 515 |
| 387 |
| 366 |
| 950 |
| 1,609 |
| | |
| Total non-performing assets | $ | 13,877 |
| $ | 15,190 |
| $ | 14,649 |
| $ | 16,595 |
| $ | 26,133 |
| | |
| Loans past due 90 days and still accruing interest | $ | 14,630 |
| $ | 14,908 |
| $ | 16,396 |
| $ | 16,916 |
| $ | 15,892 |
| | |
COMMERCE BANCSHARES, INC.
Management Discussion of Second Quarter Results
June 30, 2017
For the quarter ended June 30, 2017, net income attributable to Commerce Bancshares, Inc. (net income) amounted to $79.0 million, compared to $71.5 million in the previous quarter and $69.9 million in the same quarter last year. Earnings per share totaled $.75 this quarter, or an increase of 13.6% compared to the same period last year. Quarterly average loans increased slightly over the previous quarter, while average deposits decreased $260.7 million. Compared to the previous quarter, net interest income increased $4.5 million while non-interest income increased $6.0 million. Non-interest expense decreased $2.2 million this quarter but included expense of $2.3 million related to the contribution of appreciated securities to a related foundation, similar to a contribution made in the prior quarter. The provision for loan losses totaled $10.8 million, a decline of $370 thousand from the previous quarter, while net securities gains of $1.7 million mainly related to fair value adjustments on the securities contributed to the foundation, as noted above. The effective income tax rate totaled 29.6% this quarter compared to 25.8% in the prior quarter. The lower 1st quarter rate was mainly due to a change in accounting for equity-based compensation. For the current quarter, the return on total average assets was 1.26%, the return on average common equity was 12.5%, and the efficiency ratio was 60.2%.
Balance Sheet Review
During the 2nd quarter of 2017, average loans totaled $13.5 billion, up slightly over the prior quarter, and grew $631.5 million, or 4.9%, over the same period last year. Compared to the previous quarter, average business real estate and construction loans grew by $55.6 million and $34.5 million, respectively, while business loans declined by $79.2 million. Demand for business real estate loans continued in the 2nd quarter while additional advances on construction projects grew construction loan balances. The decline in business loans resulted mainly from several large loan pay-offs and a reduction in line of credit usage, especially from the Company’s agribusiness customers whose borrowings were down approximately $43 million. Consumer loans grew $22.9 million on growth from private banking, healthcare and automobile lending activities. During the current quarter, the Company sold certain fixed rate personal real estate loans totaling $54.7 million, compared to $33.0 million in the prior quarter.
During the 2nd quarter of 2017, total average available for sale investment securities decreased $57.0 million to $9.6 billion, at fair value. This small decline in investment securities was mainly the result of lower average balances of municipal, mortgage-backed and asset-backed securities. Purchases of securities this quarter totaled $191.7 million and were offset by sales, maturities and pay downs of $433.4 million. Current quarter purchases consisted mainly of mortgage and asset-backed securities. At June 30, 2017, the duration of the investment portfolio was 2.8 years, and maturities and pay downs of approximately $1.6 billion are expected to occur during the next 12 months.
Total average deposits decreased $260.7 million, or 5.0% (annualized), this quarter compared to the previous quarter. The decrease in average deposits resulted mainly from a decline in certificates of deposit (decrease of $178.2 million), business demand (decrease of $201.9 million), and government demand (decrease of $34.2 million) accounts, offset by growth in personal demand deposit, savings and interest checking (combined increase of $116.4 million) and money market (increase of $29.3 million) accounts. Compared to the previous quarter, total average commercial and private banking deposits decreased $218.7 million
and $144.0 million, respectively, while consumer deposits grew $115.3 million. The average loans to deposits ratio was 65.3% in the current quarter and 64.4% in the prior quarter. Compared to the previous quarter, the Company’s average borrowings totaled $1.5 billion, a slight increase over the prior quarter’s balance.
Net Interest Income
Net interest income (tax equivalent) in the 2nd quarter of 2017 amounted to $190.9 million compared with $187.3 million in the previous quarter. Net interest income (tax equivalent) for the current quarter increased $11.3 million compared to the 2nd quarter of last year. During the current quarter, the net yield on earning assets (tax equivalent) was 3.19%, compared with 3.14% in the previous quarter and 3.11% in the same period last year. The increase in net interest income (tax equivalent) in the current quarter compared to the prior quarter was due mainly to higher interest income on loans, partly offset by lower investment securities interest and an increase in interest expense of $1.1 million.
Compared to the previous quarter, interest on loans (tax equivalent) increased $6.0 million, as a result of higher loan yields on virtually all loan products, especially variable rate commercial loans. Overall, the average yield on the loan portfolio increased this quarter to 4.06% compared to 3.92% in the previous quarter.
Interest on investment securities (tax equivalent) declined $1.4 million from the previous quarter, partly because the prior quarter included one-time interest payments of $2.7 million received on a private equity investment that did not re-occur this quarter. Also, the adjustment for premium amortization expense on changing prepayment speeds for mortgage-backed securities was not material this quarter. Total inflation income on treasury inflation-protected securities (TIPS) totaled $2.9 million in the current quarter and $1.9 million in the previous quarter. The yield on total investment securities was 2.52% in the current quarter compared to 2.58% in the prior quarter.
Interest expense on deposits increased $541 thousand this quarter compared with the previous quarter due mainly to higher rates on certificates of deposit (CD’s) and money market accounts, but offset by lower average CD balances. Borrowing costs increased $522 thousand this quarter mostly due to higher rates paid on customer repurchase agreements and overnight federal funds purchased. Overall rates paid on interest bearing liabilities increased 3 basis points to .29% this quarter.
Non-Interest Income
In the 2nd quarter of 2017, total non-interest income amounted to $123.1 million, an increase of $6.5 million, or 5.6%, compared to the same period last year. Also, current quarter non-interest income increased $6.0 million compared to the previous quarter. The increase in non-interest income over the same period last year was mainly due to growth in trust, deposit and loan fee income, coupled with gains on sales of branch properties and equipment leased by customers.
Total bank card fees in the current quarter decreased slightly from the same period last year but increased $1.8 million compared to the prior quarter. The decrease from the same period last year was mainly the result of a decline in merchant fees of $614 thousand offset by 3% growth in both debit and credit card fees. Commercial card fees increased slightly over the same period last year. Total
COMMERCE BANCSHARES, INC.
Management Discussion of Second Quarter Results
June 30, 2017
bank card fees this quarter were comprised of fees on corporate card ($21.9 million), debit card ($10.3 million), merchant ($6.3 million) and credit card ($6.5 million) transactions.
In the current quarter, trust fees increased $2.9 million, or 9.5%, over the same period last year, resulting mainly from growth in private client customer fee income. Compared to the same period last year, deposit account fees increased $1.5 million, or 7.2%, as a result of growth in deposit account, overdraft and corporate cash management fees.
During the 2nd quarter of 2017, loan fees and sales grew 28.0% over the same quarter in the previous year to $4.1 million, due to higher mortgage banking revenue related to the Company’s fixed rate residential mortgage sale program. Also, consumer brokerage fees increased $235 thousand, or 6.7%. Included in other non-interest income are fees from the sales of interest rate swaps, which declined $289 thousand this quarter, while fees from the sales of tax credits this quarter increased $521 thousand over the same period last year and totaled $721 thousand. This quarter, the Company sold branch properties for a combined gain of $860 thousand, and sales of equipment leased by customers resulted in a gain of $824 thousand at lease termination. Non-interest income comprised 40.2% of the Company’s total revenue this quarter.
Investment Securities Gains and Losses
The Company recorded net securities gains of $1.7 million this quarter, compared with net losses of $772 thousand last quarter and net losses of $744 thousand in the same period last year. Net gains in the current quarter resulted mainly from a gain of $2.2 million related to the Company’s contribution of appreciated securities mentioned above.
Non-Interest Expense
Non-interest expense for the current quarter amounted to $184.6 million compared to $177.1 million in the same period last year, an increase of 4.2%. The increase was mainly due to higher costs for salaries and benefits and occupancy. Non-interest expense this quarter also included contribution expense of $2.3 million related to the donation of appreciated securities mentioned above. Exclusive of this amount, non-interest expense would have grown 3.0% over amounts recorded in the same period last year.
Compared to the 2nd quarter of last year, salaries and benefits expense increased $4.0 million, or 3.8%. Salaries expense grew by 4.5% mainly due to higher full-time salaries and incentive compensation costs. Benefits expense totaled $15.8 million, slightly higher than in the same period last year as increases in payroll taxes and 401(k) expense were offset by lower medical costs. Growth in total salaries expense compared to the previous year resulted mainly from increased staffing costs in commercial and consumer banking, commercial payments, residential mortgage, and information technology business units. Full-time equivalent employees totaled 4,805 and 4,779 at June 30, 2017 and 2016, respectively.
The increase in occupancy costs of 3.0% was mostly due to branch maintenance costs, while supplies and communication, marketing and equipment costs were well controlled. The donation of appreciated securities to a related foundation was similar to the donation made in the prior quarter and increased non-interest expense, but resulted in a pre-tax loss of $97 thousand (due to a related offsetting securities gain) and tax benefits of $873
thousand. The Company intends to repeat this strategy in subsequent quarters this year at similar amounts.
Income Taxes
The effective tax rate for the Company was 29.6% in the current quarter, 25.8% in the previous quarter, and 31.1% in the 2nd quarter of 2016. The lower effective tax rate and related tax expense in the prior quarter resulted from a change in the accounting rules for equity-based compensation effective January 1, 2017, which lowered tax expense in the previous quarter by approximately $4.5 million. These tax benefits are expected to be seasonally higher in the 1st quarter of each year when the majority of the Company’s equity compensation vests.
Credit Quality
Net loan charge-offs in the 2nd quarter of 2017 amounted to $10.8 million, compared to $9.2 million in the prior quarter and $7.5 million in the same period last year. The ratio of annualized net loan charge-offs to total average loans was .32% in the current quarter compared to .28% in the previous quarter and .24% in the 2nd quarter of last year. During the 2nd quarter of 2017, the Company recorded net charge-offs on commercial loans of $101 thousand, compared to net recoveries of $477 thousand in the prior quarter. Net loan charge-offs on personal banking loans totaled $10.7 million in the current quarter and $9.7 million in the previous quarter.
In the 2nd quarter of 2017, annualized net loan charge-offs on average consumer credit card loans were 4.25%, compared with 3.88% in the previous quarter and 3.62% in the same period last year. Consumer loan net charge-offs were .53% of average consumer loans in the current quarter, .43% in the prior quarter and .37% in the same quarter last year. This quarter, the provision for loan losses matched net loan charge-offs, and at June 30, 2017, the allowance totaled $157.8 million, or 1.16% of total loans.
At June 30, 2017, total non-performing assets amounted to $13.9 million, a decrease of $1.3 million from the previous quarter. Non-performing assets are comprised of non-accrual loans and foreclosed real estate ($13.4 million and $515 thousand, respectively, at June 30, 2017). At June 30, 2017, the balance of non-accrual loans, which represented .10% of loans outstanding, included business loans of $6.3 million, business real estate loans of $1.8 million, personal real estate loans of $3.5 million and consumer loans of $1.2 million. Loans more than 90 days past due and still accruing interest totaled $14.6 million at June 30, 2017.
Other
During the 2nd quarter of 2017, the Company paid a cash dividend of $.225 per common share and also paid a cash dividend of $2.3 million on its preferred stock. The Company purchased 61,611 shares of treasury stock during the current quarter at an average price of $54.27.
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.
