Exhibit 99.1
|
| |
| CBSH |
| 1000 Walnut Street / Suite 700 / Kansas City, Missouri 64106 / 816.234.2000 |
|
FOR IMMEDIATE RELEASE:
Thursday, January 18, 2018
COMMERCE BANCSHARES, INC. REPORTS RECORD
FOURTH QUARTER EARNINGS OF $94 MILLION
Commerce Bancshares, Inc. announced record earnings of $.86 per common share for the three months ended December 31, 2017 compared to $.65 per share in the same quarter last year and $.67 per share in the prior quarter. Net income attributable to Commerce Bancshares, Inc. for the fourth quarter amounted to $94.4 million, compared to $71.6 million in the fourth quarter of 2016 and $74.6 million in the prior quarter. There were several extraordinary items which occurred in the 4th quarter, including a previously announced $25 million contribution of appreciated stock to the Commerce Bancshares Foundation and a one-time bonus to certain employees of approximately $3.3 million. These two items combined with adjustments for the new corporate tax legislation added $.12 per share for this period. For the quarter, the return on average assets was 1.50%, the return on average common equity was 14.2%, and the efficiency ratio was 67.9%.
For the year ended December 31, 2017, earnings per common share totaled $2.89 compared to $2.49 in 2016, or an increase of 16.1%. Net income attributable to Commerce Bancshares, Inc. for the year ended December 31, 2017 increased 16.0% to $319.4 million compared to $275.4 million last year. For the current year, the return on average assets was 1.28%, and the return on average common equity was 12.5%.
In announcing these results, David W. Kemper, Chairman and CEO, said, “Core earnings were strong this quarter driven by growth in net interest income, higher fee income, solid expense control and continued low credit losses. Our net interest margin continued to expand, driven by increased rates on both our loan and investment portfolios, while deposit costs remained stable. We saw strong growth from both our trust and commercial card businesses, which increased 12.9% and 14.3%, respectively, over the same quarter in the prior year. Non-interest expense increased just 2.3% over the same quarter last year when adjusted for the one-time bonus and foundation contribution, as we continue to focus on expenses. This quarter total average loans increased $183.0 million, or 5.3% annualized over the prior quarter, driven by growth in construction, business, business real estate, consumer and consumer credit card lending activities.”
(more)
Mr. Kemper added, “Credit quality remains strong, and capital and liquidity levels continue to be among the best in the banking industry. For the current quarter, net loan charge-offs totaled $11.0 million, up slightly over the prior quarter. This small increase was due mainly to growth in net loan charge-offs in business loans, offset by lower automobile loan net charge-offs. The ratio of annualized net loan charge-offs to average loans was .32% this quarter compared to .31% last quarter. Non-performing assets decreased this quarter to $12.7 million, or a decline of $2.0 million from the prior quarter. During the current quarter, the provision for loan losses exceeded net loan charge-offs by $1.7 million, and the allowance for loan losses amounted to $159.5 million, or 1.14% of period end loans.”
Total assets at December 31, 2017 were $24.8 billion, total loans were $14.0 billion, and total deposits were $20.4 billion. During the fourth quarter of 2017, the Company distributed a 5% stock dividend on its common stock. This quarter the Company also paid an annualized 6% cash dividend on its preferred stock and a cash dividend of $.214 per common share, as restated for the 5% stock dividend.
Commerce Bancshares, Inc. is a regional bank holding company offering a full range of financial products to consumers and commercial customers including personal banking, lending, mortgage banking, wealth management, brokerage and capital markets services. The Company currently operates in approximately 330 locations in the central United States and has a nationwide presence in the commercial payments industry.
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 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 Year Ended |
| (Unaudited) (Dollars in thousands, except per share data) | | December 31,
2017 | September 30,
2017 | December 31,
2016 | December 31,
2017 | December 31,
2016 |
| FINANCIAL SUMMARY | | |
| Net interest income | |
| $190,008 |
|
| $182,591 |
|
| $173,202 |
|
| $733,679 |
|
| $680,049 |
|
| Non-interest income | | 124,212 |
| 122,242 |
| 119,479 |
| 486,604 |
| 474,392 |
|
| Total revenue | | 314,220 |
| 304,833 |
| 292,681 |
| 1,220,283 |
| 1,154,441 |
|
| Investment securities gains (losses), net | | 27,209 |
| (3,037 | ) | 3,651 |
| 25,051 |
| (53 | ) |
| Provision for loan losses | | 12,654 |
| 10,704 |
| 10,400 |
| 45,244 |
| 36,318 |
|
| Non-interest expense | | 213,688 |
| 184,572 |
| 181,261 |
| 769,684 |
| 717,065 |
|
| Income before taxes | | 115,087 |
| 106,520 |
| 104,671 |
| 430,406 |
| 401,005 |
|
| Income taxes | | 20,104 |
| 32,294 |
| 32,297 |
| 110,506 |
| 124,151 |
|
| Non-controlling interest expense (income) | | 628 |
| (338 | ) | 795 |
| 517 |
| 1,463 |
|
| Net income attributable to Commerce Bancshares, Inc. | 94,355 |
| 74,564 |
| 71,579 |
| 319,383 |
| 275,391 |
|
| Preferred stock dividends | | 2,250 |
| 2,250 |
| 2,250 |
| 9,000 |
| 9,000 |
|
| Net income available to common shareholders |
| $92,105 |
|
| $72,314 |
|
| $69,329 |
|
| $310,383 |
|
| $266,391 |
|
| Earnings per common share: | | | | | | |
| Net income — basic | |
| $.86 |
|
| $.68 |
|
| $.65 |
|
| $2.90 |
|
| $2.50 |
|
| Net income — diluted | |
| $.86 |
|
| $.67 |
|
| $.65 |
|
| $2.89 |
|
| $2.49 |
|
| Effective tax rate | | 17.56 | % | 30.22 | % | 31.09 | % | 25.71 | % | 31.07 | % |
| Tax equivalent net interest income | |
| $197,917 |
|
| $190,497 |
|
| $181,301 |
|
| $766,601 |
|
| $711,433 |
|
Average total interest earning assets (1) | | $ | 23,851,260 |
| $ | 23,790,684 |
| $ | 23,775,165 |
| $ | 23,957,929 |
| $ | 23,378,121 |
|
Diluted wtd. average shares outstanding
| | 105,976,402 |
| 105,981,083 |
| 105,586,262 |
| 105,927,203 |
| 105,523,631 |
|
| | | | | | | |
| RATIOS | | | | | | |
Average loans to deposits (2) | | 68.15 | % | 66.96 | % | 64.24 | % | 66.18 | % | 63.71 | % |
| Return on total average assets | | 1.50 |
| 1.19 |
| 1.14 |
| 1.28 |
| 1.12 |
|
Return on average common equity (3) | | 14.17 |
| 11.35 |
| 11.48 |
| 12.46 |
| 11.33 |
|
| Non-interest income to total revenue | | 39.53 |
| 40.10 |
| 40.82 |
| 39.88 |
| 41.09 |
|
Efficiency ratio (4) | | 67.91 |
| 60.44 |
| 61.82 |
| 62.97 |
| 61.98 |
|
| Net yield on interest earning assets | | 3.29 |
| 3.18 |
| 3.03 |
| 3.20 |
| 3.04 |
|
| | | | | | | |
| EQUITY SUMMARY | | | | | | |
| Cash dividends per common share | |
| $.214 |
|
| $.214 |
|
| $.204 |
|
| $.857 |
|
| $.816 |
|
| Cash dividends on common stock | |
| $22,897 |
|
| $22,906 |
|
| $21,776 |
|
| $91,619 |
|
| $87,070 |
|
| Cash dividends on preferred stock | |
| $2,250 |
|
| $2,250 |
|
| $2,250 |
|
| $9,000 |
|
| $9,000 |
|
Book value per common share (5) | |
| $24.14 |
|
| $23.99 |
|
| $22.12 |
| | |
Market value per common share (5) | |
| $55.84 |
|
| $55.02 |
|
| $55.06 |
| | |
| High market value per common share | |
| $57.91 |
|
| $56.42 |
|
| $56.40 |
| | |
| Low market value per common share | |
| $52.07 |
|
| $49.43 |
|
| $43.21 |
| | |
Common shares outstanding (5) | | 106,615,043 |
| 106,706,732 |
| 106,534,010 |
| | |
Tangible common equity to tangible assets (6) | | 9.84 | % | 9.72 | % | 8.66 | % | | |
| Tier I leverage ratio | | 10.39 | % | 10.16 | % | 9.55 | % | | |
| | | | | | | |
| OTHER QTD INFORMATION | | | | | | |
| Number of bank/ATM locations | | 327 |
| 334 |
| 336 |
| | |
| Full-time equivalent employees | | 4,800 |
| 4,811 |
| 4,784 |
| | |
| |
| (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 Year Ended |
(Unaudited) (In thousands, except per share data) | | December 31,
2017 | September 30,
2017 | June 30,
2017 | March 31,
2017 | December 31,
2016 | December 31,
2017 | December 31,
2016 |
| Interest income | |
| $201,572 |
|
| $194,244 |
|
| $193,594 |
|
| $187,997 |
|
| $181,498 |
|
| $777,407 |
|
| $713,052 |
|
| Interest expense | | 11,564 |
| 11,653 |
| 10,787 |
| 9,724 |
| 8,296 |
| 43,728 |
| 33,003 |
|
| Net interest income | | 190,008 |
| 182,591 |
| 182,807 |
| 178,273 |
| 173,202 |
| 733,679 |
| 680,049 |
|
| Provision for loan losses | | 12,654 |
| 10,704 |
| 10,758 |
| 11,128 |
| 10,400 |
| 45,244 |
| 36,318 |
|
| Net interest income after provision for loan losses | 177,354 |
| 171,887 |
| 172,049 |
| 167,145 |
| 162,802 |
| 688,435 |
| 643,731 |
|
| NON-INTEREST INCOME | | | | | | | | |
| Bank card transaction fees | | 47,717 |
| 44,521 |
| 44,999 |
| 43,204 |
| 45,338 |
| 180,441 |
| 181,879 |
|
| Trust fees | | 35,405 |
| 34,620 |
| 33,120 |
| 32,014 |
| 31,360 |
| 135,159 |
| 121,795 |
|
| Deposit account charges and other fees | 22,598 |
| 22,659 |
| 22,861 |
| 21,942 |
| 22,134 |
| 90,060 |
| 86,394 |
|
| Capital market fees | | 1,743 |
| 1,755 |
| 2,156 |
| 2,342 |
| 2,679 |
| 7,996 |
| 10,655 |
|
| Consumer brokerage services | | 3,576 |
| 3,679 |
| 3,726 |
| 3,649 |
| 3,409 |
| 14,630 |
| 13,784 |
|
| Loan fees and sales | | 3,099 |
| 3,590 |
| 4,091 |
| 3,168 |
| 2,583 |
| 13,948 |
| 11,412 |
|
| Other | | 10,074 |
| 11,418 |
| 12,131 |
| 10,747 |
| 11,976 |
| 44,370 |
| 48,473 |
|
| Total non-interest income | | 124,212 |
| 122,242 |
| 123,084 |
| 117,066 |
| 119,479 |
| 486,604 |
| 474,392 |
|
| INVESTMENT SECURITIES GAINS (LOSSES), NET | 27,209 |
| (3,037 | ) | 1,651 |
| (772 | ) | 3,651 |
| 25,051 |
| (53 | ) |
| NON-INTEREST EXPENSE | | | | | | | | |
| Salaries and employee benefits | | 115,741 |
| 111,382 |
| 108,829 |
| 112,369 |
| 108,639 |
| 448,321 |
| 427,310 |
|
| Net occupancy | | 11,280 |
| 11,459 |
| 11,430 |
| 11,443 |
| 11,529 |
| 45,612 |
| 46,290 |
|
| Equipment | | 4,692 |
| 4,491 |
| 4,776 |
| 4,609 |
| 4,884 |
| 18,568 |
| 19,141 |
|
| Supplies and communication | | 6,118 |
| 5,517 |
| 5,446 |
| 5,709 |
| 5,645 |
| 22,790 |
| 24,135 |
|
| Data processing and software | | 23,093 |
| 22,700 |
| 23,356 |
| 23,097 |
| 23,390 |
| 92,246 |
| 92,722 |
|
| Marketing | | 3,937 |
| 4,676 |
| 4,488 |
| 3,224 |
| 3,431 |
| 16,325 |
| 16,032 |
|
| Deposit insurance | | 3,444 |
| 3,479 |
| 3,592 |
| 3,471 |
| 3,443 |
| 13,986 |
| 13,327 |
|
| Community service | | 25,511 |
| 3,006 |
| 2,916 |
| 2,944 |
| 822 |
| 34,377 |
| 3,906 |
|
| Other | | 19,872 |
| 17,862 |
| 19,761 |
| 19,964 |
| 19,478 |
| 77,459 |
| 74,202 |
|
| Total non-interest expense | | 213,688 |
| 184,572 |
| 184,594 |
| 186,830 |
| 181,261 |
| 769,684 |
| 717,065 |
|
| Income before income taxes | | 115,087 |
| 106,520 |
| 112,190 |
| 96,609 |
| 104,671 |
| 430,406 |
| 401,005 |
|
| Less income taxes | | 20,104 |
| 32,294 |
| 33,201 |
| 24,907 |
| 32,297 |
| 110,506 |
| 124,151 |
|
| Net income | | 94,983 |
| 74,226 |
| 78,989 |
| 71,702 |
| 72,374 |
| 319,900 |
| 276,854 |
|
| Less non-controlling interest expense (income) | 628 |
| (338 | ) | 29 |
| 198 |
| 795 |
| 517 |
| 1,463 |
|
| Net income attributable to Commerce Bancshares, Inc. | 94,355 |
| 74,564 |
| 78,960 |
| 71,504 |
| 71,579 |
| 319,383 |
| 275,391 |
|
| Less preferred stock dividends | | 2,250 |
| 2,250 |
| 2,250 |
| 2,250 |
| 2,250 |
| 9,000 |
| 9,000 |
|
| Net income available to common shareholders |
| $92,105 |
|
| $72,314 |
|
| $76,710 |
|
| $69,254 |
|
| $69,329 |
|
| $310,383 |
|
| $266,391 |
|
| Net income per common share — basic |
| $.86 |
|
| $.68 |
|
| $.71 |
|
| $.65 |
|
| $.65 |
|
| $2.90 |
|
| $2.50 |
|
| Net income per common share — diluted |
| $.86 |
|
| $.67 |
|
| $.71 |
|
| $.65 |
|
| $.65 |
|
| $2.89 |
|
| $2.49 |
|
| | | | | | | | | |
| OTHER INFORMATION | | | | | | | | |
| Return on total average assets | | 1.50 | % | 1.19 | % | 1.26 | % | 1.15 | % | 1.14 | % | 1.28 | % | 1.12 | % |
Return on average common equity (1) | 14.17 |
| 11.35 |
| 12.48 |
| 11.74 |
| 11.48 |
| 12.46 |
| 11.33 |
|
Efficiency ratio (2) | | 67.91 |
| 60.44 |
| 60.24 |
| 63.14 |
| 61.82 |
| 62.97 |
| 61.98 |
|
| Effective tax rate | | 17.56 |
| 30.22 |
| 29.60 |
| 25.83 |
| 31.09 |
| 25.71 |
| 31.07 |
|
Net yield on interest earning assets
| 3.29 |
| 3.18 |
| 3.19 |
| 3.14 |
| 3.03 |
| 3.20 |
| 3.04 |
|
| Tax equivalent net interest income | |
| $197,917 |
|
| $190,497 |
|
| $190,865 |
|
| $187,322 |
|
| $181,301 |
|
| $766,601 |
|
| $711,433 |
|
| |
| (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) | | December 31,
2017 | September 30,
2017 | December 31,
2016 |
| ASSETS | | | | |
| Loans | | | | |
| Business | | $ | 4,958,554 |
| $ | 4,834,037 |
| $ | 4,776,365 |
|
| Real estate — construction and land | | 968,820 |
| 921,609 |
| 791,236 |
|
| Real estate — business | | 2,697,452 |
| 2,700,174 |
| 2,643,374 |
|
| Real estate — personal | | 2,062,787 |
| 2,029,302 |
| 2,010,397 |
|
| Consumer | | 2,104,487 |
| 2,113,438 |
| 1,990,801 |
|
| Revolving home equity | | 400,587 |
| 391,308 |
| 413,634 |
|
| Consumer credit card | | 783,864 |
| 752,379 |
| 776,465 |
|
| Overdrafts | | 7,123 |
| 3,245 |
| 10,464 |
|
| Total loans | | 13,983,674 |
| 13,745,492 |
| 13,412,736 |
|
| Allowance for loan losses | | (159,532 | ) | (157,832 | ) | (155,932 | ) |
| Net loans | | 13,824,142 |
| 13,587,660 |
| 13,256,804 |
|
| Loans held for sale | | 21,398 |
| 17,337 |
| 14,456 |
|
| Investment securities: | | | | |
| Available for sale | | 8,774,280 |
| 9,109,287 |
| 9,649,203 |
|
| Trading | | 18,269 |
| 24,605 |
| 22,225 |
|
| Non-marketable | | 100,758 |
| 99,268 |
| 99,558 |
|
| Total investment securities | | 8,893,307 |
| 9,233,160 |
| 9,770,986 |
|
| Federal funds sold and short-term securities purchased under agreements to resell | | 42,775 |
| 32,630 |
| 15,470 |
|
| Long-term securities purchased under agreements to resell | | 700,000 |
| 700,000 |
| 725,000 |
|
| Interest earning deposits with banks | | 30,631 |
| 105,422 |
| 272,275 |
|
| Cash and due from banks | | 438,439 |
| 461,724 |
| 494,690 |
|
| Land, buildings and equipment — net | | 335,110 |
| 335,348 |
| 337,705 |
|
| Goodwill | | 138,921 |
| 138,921 |
| 138,921 |
|
| Other intangible assets — net | | 7,618 |
| 7,388 |
| 6,709 |
|
| Other assets | | 401,074 |
| 359,551 |
| 608,408 |
|
| Total assets | | $ | 24,833,415 |
| $ | 24,979,141 |
| $ | 25,641,424 |
|
| LIABILITIES AND STOCKHOLDERS’ EQUITY | | | | |
| Deposits: | | | | |
| Non-interest bearing | | $ | 7,158,962 |
| $ | 7,536,127 |
| $ | 7,429,398 |
|
| Savings, interest checking and money market | | 11,499,620 |
| 11,091,200 |
| 11,430,789 |
|
| Time open and C.D.’s of less than $100,000 | | 634,646 |
| 657,891 |
| 713,075 |
|
| Time open and C.D.’s of $100,000 and over | | 1,132,218 |
| 1,158,555 |
| 1,527,833 |
|
| Total deposits | | 20,425,446 |
| 20,443,773 |
| 21,101,095 |
|
| Federal funds purchased and securities sold under agreements to repurchase | | 1,507,138 |
| 1,408,984 |
| 1,723,905 |
|
| Other borrowings | | 1,758 |
| 102,553 |
| 102,049 |
|
| Other liabilities | | 180,889 |
| 319,354 |
| 213,243 |
|
| Total liabilities | | 22,115,231 |
| 22,274,664 |
| 23,140,292 |
|
| Stockholders’ equity: | | | | |
| Preferred stock | | 144,784 |
| 144,784 |
| 144,784 |
|
| Common stock | | 535,407 |
| 510,015 |
| 510,015 |
|
| Capital surplus | | 1,815,360 |
| 1,548,318 |
| 1,552,454 |
|
| Retained earnings | | 221,374 |
| 440,261 |
| 292,849 |
|
| Treasury stock | | (14,473 | ) | (9,895 | ) | (15,294 | ) |
| Accumulated other comprehensive income | | 14,108 |
| 67,061 |
| 10,975 |
|
| Total stockholders’ equity | | 2,716,560 |
| 2,700,544 |
| 2,495,783 |
|
| Non-controlling interest | | 1,624 |
| 3,933 |
| 5,349 |
|
| Total equity | | 2,718,184 |
| 2,704,477 |
| 2,501,132 |
|
| Total liabilities and equity | | $ | 24,833,415 |
| $ | 24,979,141 |
| $ | 25,641,424 |
|
COMMERCE BANCSHARES, INC. and SUBSIDIARIES
AVERAGE BALANCE SHEETS |
| | | | | | | | | | | | | | | |
(Unaudited) (In thousands) | For the Three Months Ended |
| December 31, 2017 | September 30, 2017 | June 30, 2017 | March 31, 2017 | December 31, 2016 |
| ASSETS: | | | | | |
| Loans: | | | | | |
| Business | $ | 4,818,419 |
| $ | 4,777,222 |
| $ | 4,827,439 |
| $ | 4,906,672 |
| $ | 4,731,405 |
|
| Real estate — construction and land | 948,043 |
| 887,596 |
| 862,479 |
| 828,017 |
| 821,048 |
|
| Real estate — business | 2,720,356 |
| 2,710,453 |
| 2,701,144 |
| 2,645,531 |
| 2,559,028 |
|
| Real estate — personal | 2,044,651 |
| 2,017,264 |
| 2,003,997 |
| 2,012,456 |
| 1,985,606 |
|
| Consumer | 2,100,762 |
| 2,070,398 |
| 1,997,761 |
| 1,974,894 |
| 1,978,154 |
|
| Revolving home equity | 394,231 |
| 395,212 |
| 399,730 |
| 405,432 |
| 415,429 |
|
| Consumer credit card | 756,544 |
| 739,692 |
| 731,471 |
| 747,783 |
| 757,618 |
|
| Overdrafts | 5,295 |
| 4,373 |
| 4,505 |
| 4,185 |
| 5,501 |
|
Total loans | 13,788,301 |
| 13,602,210 |
| 13,528,526 |
| 13,524,970 |
| 13,253,789 |
|
| Allowance for loan losses | (157,026 | ) | (156,909 | ) | (157,003 | ) | (155,328 | ) | (154,040 | ) |
| Net loans | 13,631,275 |
| 13,445,301 |
| 13,371,523 |
| 13,369,642 |
| 13,099,749 |
|
| Loans held for sale | 18,158 |
| 21,227 |
| 18,341 |
| 11,972 |
| 10,765 |
|
| Investment securities: | | | | | |
| U.S. government and federal agency obligations | 917,664 |
| 917,808 |
| 910,821 |
| 913,474 |
| 811,524 |
|
| Government-sponsored enterprise obligations | 452,104 |
| 456,668 |
| 450,362 |
| 450,489 |
| 445,544 |
|
| State and municipal obligations | 1,630,660 |
| 1,699,365 |
| 1,771,674 |
| 1,783,103 |
| 1,784,407 |
|
| Mortgage-backed securities | 3,949,933 |
| 3,718,697 |
| 3,708,124 |
| 3,760,294 |
| 3,656,695 |
|
| Asset-backed securities | 1,622,778 |
| 2,025,415 |
| 2,335,344 |
| 2,359,644 |
| 2,417,367 |
|
Other marketable securities | 356,319 |
| 327,634 |
| 326,398 |
| 332,643 |
| 333,236 |
|
| Unrealized gain on investment securities | 111,930 |
| 116,873 |
| 102,935 |
| 62,986 |
| 155,818 |
|
| Total available for sale securities | 9,041,388 |
| 9,262,460 |
| 9,605,658 |
| 9,662,633 |
| 9,604,591 |
|
Trading securities | 20,401 |
| 21,149 |
| 21,062 |
| 25,165 |
| 21,717 |
|
| Non-marketable securities | 97,704 |
| 102,995 |
| 101,790 |
| 100,740 |
| 105,420 |
|
| Total investment securities | 9,159,493 |
| 9,386,604 |
| 9,728,510 |
| 9,788,538 |
| 9,731,728 |
|
| Federal funds sold and short-term securities purchased under agreements to resell | 27,017 |
| 23,807 |
| 13,115 |
| 9,887 |
| 8,336 |
|
| Long-term securities purchased under agreements to resell | 699,999 |
| 662,490 |
| 665,655 |
| 725,001 |
| 724,998 |
|
| Interest earning deposits with banks | 270,222 |
| 211,219 |
| 139,061 |
| 207,845 |
| 201,367 |
|
| Other assets | 1,157,289 |
| 1,122,230 |
| 1,106,528 |
| 1,139,402 |
| 1,153,982 |
|
| Total assets | $ | 24,963,453 |
| $ | 24,872,878 |
| $ | 25,042,733 |
| $ | 25,252,287 |
| $ | 24,930,925 |
|
| | | | | |
| LIABILITIES AND EQUITY: | | | | | |
| Non-interest bearing deposits | $ | 7,257,102 |
| $ | 7,135,703 |
| $ | 7,065,849 |
| $ | 7,246,698 |
| $ | 7,307,407 |
|
| Savings | 821,908 |
| 829,197 |
| 831,038 |
| 795,695 |
| 773,304 |
|
| Interest checking and money market | 10,416,221 |
| 10,387,212 |
| 10,667,042 |
| 10,603,988 |
| 10,512,268 |
|
| Time open & C.D.’s of less than $100,000 | 644,951 |
| 667,710 |
| 688,047 |
| 705,135 |
| 722,775 |
|
| Time open & C.D.’s of $100,000 and over | 1,119,352 |
| 1,326,290 |
| 1,510,001 |
| 1,671,125 |
| 1,333,764 |
|
| Total deposits | 20,259,534 |
| 20,346,112 |
| 20,761,977 |
| 21,022,641 |
| 20,649,518 |
|
| Borrowings: | | | | | |
| Federal funds purchased and securities sold under agreements to repurchase | 1,625,828 |
| 1,500,987 |
| 1,363,031 |
| 1,356,316 |
| 1,284,916 |
|
| Other borrowings | 42,060 |
| 101,904 |
| 105,311 |
| 102,011 |
| 101,412 |
|
| Total borrowings | 1,667,888 |
| 1,602,891 |
| 1,468,342 |
| 1,458,327 |
| 1,386,328 |
|
| Other liabilities | 312,172 |
| 251,714 |
| 203,139 |
| 234,144 |
| 346,900 |
|
| Total liabilities | 22,239,594 |
| 22,200,717 |
| 22,433,458 |
| 22,715,112 |
| 22,382,746 |
|
| Equity | 2,723,859 |
| 2,672,161 |
| 2,609,275 |
| 2,537,175 |
| 2,548,179 |
|
| Total liabilities and equity | $ | 24,963,453 |
| $ | 24,872,878 |
| $ | 25,042,733 |
| $ | 25,252,287 |
| $ | 24,930,925 |
|
COMMERCE BANCSHARES, INC. and SUBSIDIARIES
AVERAGE RATES |
| | | | | | | | | | | |
| (Unaudited) | For the Three Months Ended | |
| December 31, 2017 | September 30, 2017 | June 30, 2017 | March 31, 2017 | December 31, 2016 | |
| ASSETS: | | | | | | |
| Loans: | | | | | | |
Business (1) | 3.32 | % | 3.25 | % | 3.21 | % | 3.02 | % | 2.91 | % | |
| Real estate — construction and land | 4.41 |
| 4.31 |
| 4.30 |
| 3.85 |
| 3.64 |
| |
| Real estate — business | 3.90 |
| 3.85 |
| 3.74 |
| 3.63 |
| 3.61 |
| |
| Real estate — personal | 3.72 |
| 3.72 |
| 3.72 |
| 3.74 |
| 3.69 |
| |
| Consumer | 4.07 |
| 4.02 |
| 3.94 |
| 3.89 |
| 3.85 |
| |
| Revolving home equity | 4.06 |
| 4.03 |
| 3.84 |
| 3.64 |
| 3.50 |
| |
| Consumer credit card | 11.90 |
| 12.03 |
| 11.90 |
| 11.66 |
| 11.38 |
| |
| Overdrafts | — |
| — |
| — |
| — |
| — |
| |
| Total loans | 4.18 |
| 4.13 |
| 4.06 |
| 3.92 |
| 3.85 |
| |
| Loans held for sale | 5.55 |
| 5.36 |
| 5.75 |
| 6.64 |
| 5.77 |
| |
| Investment securities: | | | | | | |
| U.S. government and federal agency obligations | 2.60 |
| 1.40 |
| 2.52 |
| 2.09 |
| 2.18 |
| |
| Government-sponsored enterprise obligations | 1.69 |
| 1.61 |
| 1.59 |
| 1.58 |
| 1.54 |
| |
State and municipal obligations (1) | 3.60 |
| 3.57 |
| 3.61 |
| 3.65 |
| 3.57 |
| |
| Mortgage-backed securities | 2.38 |
| 2.36 |
| 2.35 |
| 2.38 |
| 2.40 |
| |
| Asset-backed securities | 1.94 |
| 1.82 |
| 1.72 |
| 1.63 |
| 1.52 |
| |
Other marketable securities (1) | 2.86 |
| 2.73 |
| 2.76 |
| 2.82 |
| 2.95 |
| |
| Total available for sale securities | 2.53 |
| 2.35 |
| 2.42 |
| 2.38 |
| 2.36 |
| |
Trading securities (1) | 2.63 |
| 2.51 |
| 2.70 |
| 2.77 |
| 2.40 |
| |
Non-marketable securities (1) | 8.08 |
| 6.46 |
| 11.49 |
| 21.08 |
| 5.42 |
| |
| Total investment securities | 2.59 |
| 2.39 |
| 2.52 |
| 2.58 |
| 2.39 |
| |
| Federal funds sold and short-term securities purchased under agreements to resell | 1.35 |
| 1.30 |
| 1.13 |
| .94 |
| .72 |
| |
| Long-term securities purchased under agreements to resell | 2.36 |
| 2.28 |
| 2.22 |
| 2.12 |
| 1.86 |
| |
| Interest earning deposits with banks | 1.18 |
| 1.24 |
| 1.04 |
| .77 |
| .56 |
| |
| Total interest earning assets | 3.48 |
| 3.37 |
| 3.37 |
| 3.30 |
| 3.17 |
| |
| | | | | | | |
| LIABILITIES AND EQUITY: | | | | | | |
| Interest bearing deposits: | | | | | | |
| Savings | .12 |
| .12 |
| .12 |
| .13 |
| .12 |
| |
| Interest checking and money market | .17 |
| .16 |
| .15 |
| .14 |
| .13 |
| |
| Time open & C.D.’s of less than $100,000 | .40 |
| .40 |
| .39 |
| .37 |
| .37 |
| |
| Time open & C.D.’s of $100,000 and over | .88 |
| .83 |
| .75 |
| .67 |
| .60 |
| |
| Total interest bearing deposits | .24 |
| .24 |
| .23 |
| .21 |
| .19 |
| |
| Borrowings: | | | | | | |
| Federal funds purchased and securities sold under agreements to repurchase | .83 |
| .75 |
| .60 |
| .46 |
| .30 |
| |
| Other borrowings | 3.59 |
| 3.53 |
| 3.47 |
| 3.53 |
| 3.54 |
| |
| Total borrowings | .90 |
| .93 |
| .81 |
| .67 |
| .54 |
| |
| Total interest bearing liabilities | .31 | % | .31 | % | .29 | % | .26 | % | .22 | % | |
| | | | | | | |
| Net yield on interest earning assets | 3.29 | % | 3.18 | % | 3.19 | % | 3.14 | % | 3.03 | % | |
(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 Year Ended |
| (Unaudited) (In thousands, except per share data) | December 31, 2017 | September 30, 2017 | June 30, 2017 | March 31, 2017 | December 31, 2016 | December 31, 2017 | December 31, 2016 |
| ALLOWANCE FOR LOAN LOSSES | | | | | | | |
| Balance at beginning of period | $ | 157,832 |
| $ | 157,832 |
| $ | 157,832 |
| $ | 155,932 |
| $ | 154,532 |
| $ | 155,932 |
| $ | 151,532 |
|
| Provision for losses | 12,654 |
| 10,704 |
| 10,758 |
| 11,128 |
| 10,400 |
| 45,244 |
| 36,318 |
|
| Net charge-offs (recoveries): | | | | | | | |
| Commercial portfolio: | | | | | | | |
| Business | 768 |
| 195 |
| 318 |
| 97 |
| 268 |
| 1,378 |
| 616 |
|
| Real estate — construction and land | (87 | ) | (362 | ) | (207 | ) | (535 | ) | (882 | ) | (1,191 | ) | (3,712 | ) |
| Real estate — business | (48 | ) | (106 | ) | (10 | ) | (39 | ) | 97 |
| (203 | ) | (1,281 | ) |
| | 633 |
| (273 | ) | 101 |
| (477 | ) | (517 | ) | (16 | ) | (4,377 | ) |
| Personal banking portfolio: | | | | | | | |
| Consumer credit card | 7,724 |
| 7,631 |
| 7,750 |
| 7,148 |
| 6,506 |
| 30,253 |
| 25,430 |
|
| Consumer | 2,184 |
| 3,057 |
| 2,642 |
| 2,096 |
| 2,427 |
| 9,979 |
| 9,047 |
|
| Overdraft | 376 |
| 445 |
| 292 |
| 435 |
| 379 |
| 1,548 |
| 1,339 |
|
| Real estate — personal | (56 | ) | (137 | ) | (131 | ) | 19 |
| (38 | ) | (305 | ) | (6 | ) |
| Revolving home equity | 93 |
| (19 | ) | 104 |
| 7 |
| 243 |
| 185 |
| 485 |
|
| | 10,321 |
| 10,977 |
| 10,657 |
| 9,705 |
| 9,517 |
| 41,660 |
| 36,295 |
|
| Total net loan charge-offs | 10,954 |
| 10,704 |
| 10,758 |
| 9,228 |
| 9,000 |
| 41,644 |
| 31,918 |
|
| Balance at end of period | $ | 159,532 |
| $ | 157,832 |
| $ | 157,832 |
| $ | 157,832 |
| $ | 155,932 |
| $ | 159,532 |
| $ | 155,932 |
|
| | | | | | | | |
| NET CHARGE-OFF RATIOS* | | | | | | | |
| Commercial portfolio: | | | | | | | |
| Business | .06 | % | .02 | % | .03 | % | .01 | % | .02 | % | .03 | % | .01 | % |
| Real estate — construction and land | (.04 | ) | (.16 | ) | (.10 | ) | (.26 | ) | (.43 | ) | (.14 | ) | (.48 | ) |
| Real estate — business | (.01 | ) | (.02 | ) | — |
| (.01 | ) | .02 |
| (.01 | ) | (.05 | ) |
| | .03 |
| (.01 | ) | — |
| (.02 | ) | (.03 | ) | — |
| (.06 | ) |
| Personal banking portfolio: | | | | | | | |
| Consumer credit card | 4.05 |
| 4.09 |
| 4.25 |
| 3.88 |
| 3.42 |
| 4.07 |
| 3.39 |
|
| Consumer | .41 |
| .59 |
| .53 |
| .43 |
| .49 |
| .49 |
| .46 |
|
| Overdraft | 28.17 |
| 40.37 |
| 26.00 |
| 42.15 |
| 27.41 |
| 33.71 |
| 28.42 |
|
| Real estate — personal | (.01 | ) | (.03 | ) | (.03 | ) | — |
| (.01 | ) | (.02 | ) | — |
|
| Revolving home equity | .09 |
| (.02 | ) | .10 |
| .01 |
| .23 |
| .05 |
| .12 |
|
| | .77 |
| .83 |
| .83 |
| .77 |
| .74 |
| .80 |
| .72 |
|
| Total | .32 | % | .31 | % | .32 | % | .28 | % | .27 | % | .31 | % | .25 | % |
| | | | | | | | |
| CREDIT QUALITY RATIOS | | | | | | | |
| Non-performing assets to total loans | .09 | % | .11 | % | .10 | % | .11 | % | .11 | % | | |
| Non-performing assets to total assets | .05 |
| .06 |
| .06 |
| .06 |
| .06 |
| | |
| Allowance for loan losses to total loans | 1.14 |
| 1.15 |
| 1.16 |
| 1.16 |
| 1.16 |
| | |
| | | | | | | | |
| NON-PERFORMING ASSETS | | | | | | | |
| Non-accrual loans: | | | | | | | |
| Business | $ | 5,947 |
| $ | 6,821 |
| $ | 6,330 |
| $ | 7,935 |
| $ | 8,682 |
| | |
| Real estate — construction and land | 5 |
| 533 |
| 544 |
| 585 |
| 564 |
| | |
| Real estate — business | 2,736 |
| 2,346 |
| 1,833 |
| 1,764 |
| 1,634 |
| | |
| Real estate — personal | 2,461 |
| 2,863 |
| 3,504 |
| 3,368 |
| 3,403 |
| | |
| Consumer | 834 |
| 1,077 |
| 1,151 |
| 1,151 |
| — |
| | |
| Total | 11,983 |
| 13,640 |
| 13,362 |
| 14,803 |
| 14,283 |
| | |
| Foreclosed real estate | 681 |
| 1,063 |
| 515 |
| 387 |
| 366 |
| | |
| Total non-performing assets | $ | 12,664 |
| $ | 14,703 |
| $ | 13,877 |
| $ | 15,190 |
| $ | 14,649 |
| | |
| Loans past due 90 days and still accruing interest | $ | 18,127 |
| $ | 16,464 |
| $ | 14,630 |
| $ | 14,908 |
| $ | 16,396 |
| | |
COMMERCE BANCSHARES, INC.
Management Discussion of Fourth Quarter Results
December 31, 2017
For the quarter ended December 31, 2017, net income attributable to Commerce Bancshares, Inc. (net income) amounted to $94.4 million, compared to $74.6 million in the previous quarter and $71.6 million in the same quarter last year. In the current quarter, the Company recorded contribution expense of $25.0 million for the donation of appreciated securities to a related foundation. This donation was offset by a $24.4 million gain recorded on the donated securities and the recognition of $9.3 million in tax benefits on this transaction. This contribution represents a continuation of a strategy employed in previous quarters this year. The Company also announced that as of December 31, 2017, one-time discretionary bonuses totaling $3.3 million would be paid to approximately 75% of all employees. Also, as part of the enactment of the new tax legislation, tax benefits of $6.8 million were recorded, mostly as a result of revaluing deferred tax assets and liabilities to the new lower tax rates.
Quarterly average loans increased $183.0 million over the previous quarter, while average deposits decreased $86.6 million. Compared to the previous quarter, net interest income increased $7.4 million, while non-interest income grew $2.0 million. Non-interest expense, exclusive of the foundation contribution and one-time bonuses, increased 1.8% over the prior quarter. The provision for loan losses totaled $12.7 million, up $2.0 million over the previous quarter. For the current quarter, the return on total average assets was 1.50%, the return on average common equity was 14.2%, and the efficiency ratio was 67.9%.
Balance Sheet Review
During the 4th quarter of 2017, average loans totaled $13.8 billion, up 5.3% (annualized) over the prior quarter, and grew $541.9 million, or 4.1%, over the same period last year. Compared to the previous quarter, average construction and business loans grew $60.4 million and $41.2 million, respectively. Together, business real estate and personal real estate loans increased a combined $37.3 million, while consumer loans increased $30.4 million this quarter. Growth in construction loans was solid this quarter as advances on existing projects continued, while growth in business loans resulted from several large new borrowers. Line of credit utilization was mostly in line with the prior quarter at approximately 36% of total approved lines of credit. The increase in consumer loans was mainly due to growth of $19.1 million in patient health care loans, coupled with growth in private banking loans. During the current quarter, the Company sold certain fixed rate personal real estate loans totaling $48.0 million, compared to $64.1 million in the prior quarter.
During the 4th quarter of 2017, total average available for sale investment securities decreased $221.1 million to $9.0 billion, at fair value. The decline in investment securities was mainly the result of lower average balances of asset-backed and municipal securities due to sales, paydowns and maturities of these securities that were not re-invested, offset by higher average balances of mortgage-backed securities. Purchases of securities this quarter totaled $669.8 million and were offset by sales, maturities and pay downs of $913.4 million. At December 31, 2017, the duration of the investment portfolio was 3.0 years, and maturities and pay downs of approximately $1.4 billion are expected to occur during the next 12 months.
Total average deposits decreased $86.6 million, or 1.7% (annualized), this quarter compared to the previous quarter. The decrease in average deposits resulted mainly from a decline in
certificates of deposit (decrease of $229.7 million), money market (decrease of $35.7 million), and personal demand (decrease of $52.0 million). These declines were offset by growth in business demand (increase of $210.1 million), and interest checking (increase of $64.8 million) deposit accounts. Compared to the previous quarter, total average consumer and private banking deposits decreased $15.7 million and $69.6 million, respectively, while commercial deposits grew slightly. The average loans to deposits ratio was 68.2% in the current quarter and 67.0% in the prior quarter. The Company’s average borrowings totaled $1.7 billion, an increase of $65.0 million over the prior quarter’s balance, mostly due to higher customer repurchase agreement balances.
Net Interest Income
Net interest income (tax equivalent) in the 4th quarter of 2017 amounted to $197.9 million compared with $190.5 million in the previous quarter, an increase of $7.4 million. Net interest income (tax equivalent) for the current quarter increased $16.6 million, or 9.2%, compared to the 4th quarter of last year. During the current quarter, the net yield on earning assets (tax equivalent) was 3.29%, compared with 3.18% in the previous quarter and 3.03% 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 growth in interest on loans, a slight decline in interest expense, and an increase in inflation income of $2.7 million on the Company’s treasury inflation-protected securities (TIPS). Excluding the effects of inflation income on both the current and prior quarters, the net interest margin would have increased 7 basis points.
Compared to the previous quarter, interest on loans (tax equivalent) increased $3.6 million, as a result of higher loan yields and average balances on most loan products. The average yield on the loan portfolio increased 5 basis points this quarter to 4.18%, compared to 4.13% in the previous quarter.
Interest on investment securities (tax equivalent) increased $3.2 million over the previous quarter, due to growth in inflation income mentioned above, but offset by lower average securities balances, especially in asset-backed and municipal securities. The adjustment for premium amortization expense on changing prepayment speeds for mortgage-backed securities increased interest income $655 thousand this quarter, due to a higher overall interest rate environment. Total inflation income on TIPS totaled $3.2 million in the current quarter and $447 thousand in the previous quarter. The yield on total investment securities was 2.59% in the current quarter compared to 2.39% in the prior quarter.
Interest costs on deposits remained low and totaled 24 basis points in the 4th quarter of 2017, unchanged from the prior quarter. Interest expense on deposits declined $124 thousand this quarter compared with the previous quarter due mainly to lower average balances of certificates of deposit. Borrowing costs increased $35 thousand this quarter mostly due to higher average rates paid on customer repurchase agreements. The overall rate paid on interest-bearing liabilities was .31%, the same as in the prior quarter.
Non-Interest Income
In the 4th quarter of 2017, total non-interest income amounted to $124.2 million, an increase of $4.7 million, or 4.0%, compared to the same period last year. Also, current quarter non-interest income increased $2.0 million compared to the prior quarter. The increase
COMMERCE BANCSHARES, INC.
Management Discussion of Fourth Quarter Results
December 31, 2017
in non-interest income over the same period last year was mainly due to growth in trust, bank card, deposit, and loan fee income, but was offset by lower swap and capital market fee income.
Total bank card fees in the current quarter increased $2.4 million, or 5.2%, over the same period last year and increased $3.2 million compared to the prior quarter. The increase over the same period last year was mainly the result of growth in corporate card fees of $3.1 million and higher debit and credit card fee income, but was offset by a decline in merchant fees of $1.0 million. As reported in prior quarters, the decline in merchant fees resulted from the loss of several large customers over the last twelve months. Total bank card fees this quarter were comprised of fees on corporate card ($24.9 million), debit card ($10.2 million), merchant ($5.9 million) and credit card ($6.7 million) transactions.
In the current quarter, trust fees increased $4.0 million, or 12.9%, over the same period last year, resulting mainly from growth in both private client and institutional trust fee income. Compared to the same period last year, deposit account fees increased $464 thousand, or 2.1%, due to growth in both deposit and overdraft fees, partially offset by lower corporate cash management fees.
During the 4th quarter of 2017, cash sweep fees grew 20.3% to $2.0 million compared to the same period last year, and loan fees and sales grew $516 thousand, or 20.0%, on increased sales of residential mortgages. Swap fee income, however, declined $2.0 million on lower origination volume and capital market fees declined $936 thousand on lower sales volumes, mainly to correspondent bank customers. Non-interest income comprised 39.5% of the Company’s total revenue this quarter.
Investment Securities Gains and Losses
The Company recorded net securities gains of $27.2 million this quarter, compared with net losses of $3.0 million last quarter and net gains of $3.7 million in the same period last year. Net securities gains in the current quarter resulted mainly from unrealized fair value gains of $2.2 million in the Company’s private equity investment portfolio, and a gain of $24.4 million related to the Company’s contribution of appreciated securities mentioned above. The Company also sold certain equity securities for a gain of $10.1 million this quarter, offset by sales of other investment securities at a loss of $9.7 million.
Non-Interest Expense
Non-interest expense for the current quarter amounted to $213.7 million compared to $181.3 million in the same period last year. Excluding the effects of the contribution of appreciated securities to a related foundation and the one-time discretionary bonus, non-interest expense grew 2.3%, and was up slightly over the prior quarter. The increase over the same period last year was mainly due to higher costs for salaries and benefits and the contribution of appreciated securities (expense of $25.0 million this quarter), but was offset by lower operating costs such as occupancy, data processing, and other bank card network costs.
Compared to the 4th quarter of last year, salaries and benefits expense increased $7.1 million, or 6.5%. Salaries expense grew $6.3 million, mainly due to higher incentive compensation costs, including the discretionary bonus of $3.3 million mentioned above. Benefits expense totaled $16.0 million, reflecting an increase of 5.3% mainly due to higher medical costs. Growth in full-time salaries expense compared to the previous year resulted mainly
from increased staffing costs in commercial and consumer, information technology and other supporting business units. Full-time equivalent employees totaled 4,800 and 4,784 at December 31, 2017 and 2016, respectively.
The decline in occupancy costs of 2.2% was mainly due to demolition costs for a branch facility in the 4th quarter of 2016, which did not recur in the current quarter. Data processing costs declined $297 thousand this quarter mainly due to lower bank card processing costs of $1.3 million offset by higher software costs. Other bank card network related costs (included in other non-interest expense) declined $1.0 million, but were offset by an increase in rewards expense of $416 thousand. The decline in total bank card related expense was mainly the result of a new vendor contract negotiated in the 3rd quarter of 2017. Compared to the same period last year, supplies and communication and marketing costs increased $473 thousand and $506 thousand, respectively. The $25.0 million donation of appreciated securities to a related foundation this quarter increased community service costs by $24.7 million, but resulted in a pre-tax loss of $638 thousand (due to a related offsetting securities gain) and tax benefits of $9.3 million. The Company has completed this donation strategy, contributing over $32 million in 2017, which will not be repeated in future years.
Income Taxes
The effective tax rate for the Company was 17.6% in the current quarter, 30.2% in the previous quarter, and 31.09% in the 4th quarter of 2016. Included in the current quarter were income tax benefits of $9.3 million related to the $25.0 million contribution of appreciated securities. In addition, an income tax benefit of $6.8 million was recorded, mainly to reflect the reduction in income tax rates on the Company’s deferred tax assets and liabilities as a result of the enactment of the new federal tax reform legislation in December 2017. The Company’s effective tax rate in 2018 is likely to be reduced to a range of 19-21% as a result of this new tax legislation.
Credit Quality
Net loan charge-offs in the 4th quarter of 2017 amounted to $11.0 million, compared to $10.7 million in the prior quarter and $9.0 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 .31% in the previous quarter and .27% in the 4th quarter of last year. During the 4th quarter of 2017, the Company recorded net loan charge-offs on commercial loans of $633 thousand, compared to net loan recoveries of $273 thousand in the prior quarter. Net loan charge-offs on personal banking loans totaled $10.3 million in the current quarter and $11.0 million in the previous quarter.
In the 4th quarter of 2017, annualized net loan charge-offs on average consumer credit card loans were 4.05%, compared to 4.09% in the previous quarter and 3.42% in the same period last year. Consumer loan net charge-offs were .41% of average consumer loans in the current quarter, .59% in the prior quarter and .49% in the same quarter last year. This quarter, the provision for loan losses exceeded net loan charge-offs by $1.7 million, and at December 31, 2017, the allowance totaled $159.5 million, or 1.14% of total loans.
At December 31, 2017, total non-performing assets amounted to $12.7 million, a decrease of $2.0 million from the previous quarter.
COMMERCE BANCSHARES, INC.
Management Discussion of Fourth Quarter Results
December 31, 2017
Non-performing assets are comprised of non-accrual loans and foreclosed real estate ($12.0 million and $681 thousand, respectively). At December 31, 2017, the balance of non-accrual loans, which represented .09% of loans outstanding, included business loans of $5.9 million, business real estate loans of $2.7 million, personal real estate loans of $2.5 million and consumer loans of $834 thousand. Loans more than 90 days past due and still accruing interest totaled $18.1 million at December 31, 2017.
Other
During the 4th quarter of 2017, the Company distributed a 5% stock dividend on its common stock. The Company paid a cash dividend of $.214 per common share and also paid an annualized 6% cash dividend on its preferred stock. The Company purchased 114,822 shares of treasury stock during the current quarter at an average price of $56.18.
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.
