33 unchanged sentences
• Net income and earnings per share — Net income attributable to Commerce Bancshares, Inc.
−Removed: was $530.8 million, an increase of 49.9% compared to the previous year.
+Added: was $488.4 million, a decrease of 8.0% compared to the previous year.
The return on average assets was 1.45% in 2022, and the return on average common equity was 17.31%.
−Removed: Diluted earnings per share increased 55.6% in 2021 compared to 2020.
+Added: Diluted earnings per share decreased 6.3% in 2022 compared to 2021.
• Total revenue — Total revenue is comprised of net interest income and non-interest income.
−Removed: Total revenue in 2021 increased $60.1 million, or 4.5%, from 2020, as net interest income grew $5.6 million, and non-interest income grew $54.5 million.
−Removed: Growth in net interest income resulted principally from a decrease in interest expense, while the increase in non-interest income in 2021 was mainly due to growth in trust fees and bank card fees.
−Removed: • Non-interest expense — Total non-interest expense increased 4.9% this year compared to 2020, mainly due to higher salaries and employee benefits expense, data processing and software expense and other non-interest expense.
−Removed: • Asset quality — Net loan charge-offs totaled $18.6 million in 2021, a decrease of $16.3 million from those recorded in 2020, and averaged .12% of loans compared to .22% in the previous year.
+Added: Total revenue in 2022 increased $92.9 million, or 6.7%, from 2021, as net interest income grew $106.8 million, and non-interest income decreased $13.9 million.
+Added: Growth in net interest income resulted principally from increases in interest income from investment securities and loans, partly offset by an increase in interest expense on deposits and borrowings.
+Added: The decrease in non-interest income in 2022 was mainly due to lower loan fees and sales income.
+Added: • Non-interest expense — Total non-interest expense increased 5.3% this year compared to 2021, mainly due to higher salaries and employee benefits expense and data processing and software expense.
+Added: • Asset quality — Net loan charge-offs totaled $19.1 million in 2022, an increase of $496 thousand from those recorded in 2021, and averaged .12% of loans in both 2022 and 2021.
Total non-performing assets, which include non-accrual loans and foreclosed real estate, amounted to $8.4 million at December 31, 2022, compared to $9.3 million at December 31, 2021, and represented .05% of loans outstanding at December 31, 2022.
3 unchanged sentences
Total shareholder return, including
+Added: Table of Conte nts
the change in stock price and dividend reinvestment, was 11.0%, 14.2%, and 10.4% over the past 5, 10, and 15 years, respectively.
34 unchanged sentences
(2) Revenue includes net interest income and non-interest income.
−Removed: (3) The efficiency ratio is calculated as non-interest expense (excluding intangibles amortization) as a percent of revenue.
+Added: (3) The efficiency ratio is calculated as non-interest expense (excluding intangibles amortization) as a percent of total revenue.
(4) The tangible common equity to tangible assets ratio is a measurement which management believes is a useful indicator of capital adequacy and utilization.
16 unchanged sentences
* Intangible assets other than mortgage servicing rights.
+Added: Table of Conte nts
Results of Operations
16 unchanged sentences
Net income attributable to Commerce Bancshares, Inc.
+Added: (net income) for 2022 was $488.4 million, a decrease of $42.4 million, or 8.0%, compared to $530.8 million in 2021.
+Added: Diluted income per common share was $ 3.85 in 2022, compared to $ 4.11 in 2021.
+Added: The decrease in net income resulted from an increase of $94.4 million in the provision for credit losses, as well as an increase of $42.9 million in non-interest expense and a decrease of $13.9 million in non-interest income.
+Added: These decreases to net income were partly offset by increases in net interest income of $106.8 million and a decrease in income tax expense of $13.4 million.
+Added: The return on average assets was 1.45% in 2022 compared to 1.55% in 2021, and the return on average common equity was 17.31% in 2022 compared to 15.37% in 2021.
+Added: At December 31, 2022, the ratio of tangible common equity to assets decreased to 7.32%, compared to 9.01% at year end 2021.
+Added: During 2022, net interest income grew mainly due to increases of $77.6 million in interest income earned on investment securities, due to higher average rates earned and higher average balances, and $75.5 million in interest income earned on loans, mainly due to higher average rates earned, partly offset by an increase in interest expense on deposits and borrowings of $43.9 million, due to higher average rates paid.
+Added: Total rates earned on average interest earning assets increased 41 basis points this year, while funding costs for deposits and borrowings increased 23 basis points.
+Added: The provision for credit losses increased in 2022 compared to 2021 due to a significant reduction in the allowance for credit losses on loans during 2021, which did not reoccur in 2022.
+Added: In addition, there was an increase in the liability for unfunded lending commitments during 2022, compared to a decrease in 2021.
+Added: Net loan charge-offs increased $496 thousand, mainly due to business loan net charge-offs in 2022, compared to net loan recoveries recorded in 2021, partly offset by lower credit card loan net charge-offs in 2022.
+Added: Non-interest income fell 2.5% in 2022, mainly due to a decrease in loan fees and sales income.
+Added: Net investment securities gains of $20.5 million were recorded in 2022 and were comprised mainly of net fair value gains on the Company's private equity investment portfolio, partly offset by losses on sales of available for sale securities.
+Added: Non-interest expense increased $42.9 million in 2022 compared to 2021, mainly due to higher salaries and benefits expense and data processing and software expense.
+Added: Net income attributable to Commerce Bancshares, Inc.
(net income) for 2021 was $530.8 million, an increase of $176.7 million, or 49.9%, compared to $354.1 million in 2020.
1 unchanged sentence
The increase in net income resulted from a decrease of $203.5 million in the provision for credit losses, as well as an increase of $54.5 million in non-interest income.
−Removed: These increases in net income were partly offset by increases in non-interest expense and income tax expense of $37.5 million and $58.4 million, respectively.
+Added: These increases to net income were partly offset by increases in non-interest expense and income tax expense of $37.5 million and $58.4 million, respectively.
The return on average assets was 1.55% in 2021 compared to 1.20% in 2020, and the return on average common equity was 15.37% in 2021 compared to 10.64% in 2020.
1 unchanged sentence
During 2021, net interest income grew mainly due to a decrease of $29.9 million in interest expense on deposits and borrowings, due to lower average rates paid, coupled with an increase of $19.5 million in interest income earned on investment securities, mainly due to higher average balances.
−Removed: These increases in net interest income were partly offset by a decline of $41.5 million in interest earned on loans, mainly due to lower rates earned.
−Removed: Total rates earned on average interest earning assets fell 53 basis points this year, while funding costs for deposits and borrowings decreased 19 basis points.
−Removed: The provision for credit losses decreased due to an improved credit outlook and the release of loan loss reserves provided for anticipated credit losses in the prior year, which did not occur.
+Added: These increases to net interest income were partly offset by a decline of $41.5 million in interest earned on loans, mainly due to lower rates earned.
+Added: Total rates earned on average interest earning assets fell 53 basis points in 2021, while funding costs for deposits and borrowings decreased 19 basis points.
+Added: The provision for credit losses decreased due to an improved credit outlook and the release of loan loss reserves provided for anticipated credit losses in
+Added: Table of Conte nts
+Added: 2020, which did not occur.
Net loan charge-offs decreased $16.3 million in 2021 compared to 2020, mainly due to lower credit card loan net charge-offs and net recoveries on business loans.
2 unchanged sentences
Non-interest expense increased $37.5 million in 2021 compared to 2020, largely due to higher salaries and benefits expense and data processing and software expense, as well as lower deferred loan origination costs and non-recurring litigation settlement costs recorded in the third quarter of 2021.
−Removed: Net income for 2020 was $354.1 million, a decrease of $67.2 million, or 15.9%, compared to $421.2 million in 2019.
−Removed: Diluted income per common share was $2.77 in 2020, compared to $3.25 in 2019.
−Removed: The decline in net income resulted from an increase of $86.8 million in the provision for credit losses, as well as a decrease of $18.8 million in non-interest income.
−Removed: These decreases to net income were partly offset by increases of $8.6 million in net interest income and $7.4 million in investment securities gains, coupled with decreases of $21.8 million in income taxes and $1.7 million in non-controlling interest expense.
−Removed: The return on average assets was 1.20% in 2020 compared to 1.67 in 2019, and the return on average common equity was 10.64% in 2020 compared to 14.06% in 2019.
−Removed: At December 31, 2020, the ratio of tangible common equity to assets decreased to 9.92%, compared to 10.99% at year end 2019.
−Removed: As compared to 2019, the growth in net interest income in 2020 resulted mainly from an increase of $24.7 million in interest income on securities purchased under agreements to resell, mainly due to higher rates earned, coupled with a decrease of $60.6 million in interest expense on deposits and borrowings, due to lower rates paid.
−Removed: These increases in net interest income were partly offset by declines in interest earned on loans and investment securities, resulting mainly from lower yields.
−Removed: Total rates earned on average earning assets fell 76 basis points in 2020, while funding costs for deposits and borrowings decreased 41 basis points.
−Removed: The provision for credit losses totaled $137.2 million, reflecting an increase in the provision for credit losses on the Company's loan portfolio and liability for unfunded loan commitments, resulting from deteriorating economic conditions
−Removed: driven by the COVID-19 pandemic.
−Removed: Net loan charge-offs decreased $14.8 million in 2020 compared to 2019, mainly due to lower credit card loan net charge-offs.
−Removed: Non-interest income fell 3.6% in 2020, mainly due to a one-time gain of $11.5 million resulting from the sale of the Company's corporate trust business in the fourth quarter of 2019, coupled with a decline in net bank card fees.
−Removed: Net investment securities gains of $11.0 million were recorded in 2020 and were comprised mainly of net gains realized on sales of mortgage-backed securities.
−Removed: Non-interest expense grew $980 thousand in 2020 compared to 2019, largely due to higher salaries and benefits expense, mostly offset by higher deferred loan originations costs and lower supplies and communication expense and travel and entertainments expense.
The Company distributed a 5% stock dividend for the 29th consecutive year on December 19, 2022.
12 unchanged sentences
The level of the allowance for credit losses on loans and unfunded lending commitments reflects the Company's estimate of the losses expected in the loan portfolio and unfunded lending commitments over the assets’ contractual term.
−Removed: The allowance for credit loss is an estimate that is subject to uncertainty due to the various assumptions and judgements used in the estimation process.
+Added: The allowance for credit loss is an estimate that is subject to uncertainty due to the various assumptions and judgments used in the estimation process.
The allowance for credit losses is measured on a collective (pool) basis.
7 unchanged sentences
Adjustments to the allowance for credit losses are made by increases to or reductions in the provision for credit losses, which are reflected in the consolidated statements of income.
+Added: Table of Conte nts
Assumptions, Judgments, and Uncertainties:
7 unchanged sentences
Data points such as loan mix, level of loan balances outstanding, portfolio performance, line utilization trends and risk ratings change throughout the life of a portfolio which could cause changes to the expected credit losses.
−Removed: Qualitative factors not included in historical information or macroeconomic forecast require significant judgement to identify and determine how to apply to the estimate for credit losses.
+Added: Qualitative factors not included in historical information or macroeconomic forecast require significant judgment to identify and determine how to apply to the estimate for credit losses.
The qualitative factors continuously evolve in reaction to other changing assumptions, data inputs and industry trends.
17 unchanged sentences
These securities are placed on a watch list and cash flow analyses are prepared on an individual security basis.
−Removed: Credit impairment is determined using input factors such as contractual payments required, expected delinquency rates, credit support from other tranches, prepayment speeds, collateral loss severity rates, and various other information related to the underlying collateral.
+Added: Certain securities are analyzed using a projected cash flow model, discounted to present value, and compared to the current amortized cost bases of the securities.
+Added: The model uses input factors such as cash flow projections, contractual payments required, expected delinquency rates, credit support from other tranches, prepayment speeds, collateral loss severity rates (including loan to values), and various other information related to the underlying collateral.
+Added: Securities not analyzed using the cash flow model are analyzed by reviewing risk ratings, credit support agreements, and industry knowledge to project future cash flows and any possible credit impairment.
Impact if actual results differ from assumptions :
The allowance for credit losses represents management’s best estimate of expected credit losses in the available for sale debt portfolio, but significant deterioration in interest rates and economic
+Added: Table of Conte nts
conditions could result in a requirement for additional allowance.
32 unchanged sentences
Adjustments in the inputs and assumptions described above could significantly impact the fair values of the Company’s assets and liabilities and have a significant impact on our financial condition and results of operations.
+Added: Table of Conte nts
Net Interest Income
46 unchanged sentences
Federal funds purchased 42 1,777 1,819 (646) (131) (777)
−Removed: Securities purchased under agreements to resell
+Added: Securities sold under agreements to resell
31 22,362 22,393 1,366 (5,034) (3,668)
6 unchanged sentences
Net interest income totaled $942.2 million in 2022, increasing $106.8 million, or 12.8%, compared to $835.4 million in 2021.
−Removed: On a tax equivalent (T/E) basis, net interest income totaled $847.1 million, and increased $4.3 million over 2020.
+Added: On a fully taxable-equivalent (FTE) basis, net interest income totaled $951.8 million, and increased $104.7 million over 2021.
+Added: This growth was mainly due to an increase of $75.7 million in interest earned on loans, due to higher average rates paid and an increase of $76.9 million in interest earned on investment securities, due to higher rates and average balances, partly offset by an increase of $45.3 million in interest expense on deposits and borrowings, due to higher average rates paid.
+Added: The net yield on earning assets (FTE) was 2.85% in 2022 compared with 2.58% in 2021.
+Added: Table of Conte nts
+Added: During 2022, loan interest income (FTE) grew $75.7 million over 2021 mainly due to an increase in rates earned for all loan categories.
+Added: The average fully taxable-equivalent rate earned on the loan portfolio increased 51 basis points to 4.18% in 2022 compared to 3.67% in 2021.
+Added: The higher rates earned on the loan portfolio were mostly related to actions taken by the Federal Reserve to raise short-term interest rates, which caused most of the Company's variable rate loan portfolio to re-price higher.
+Added: Additionally, fixed rate loans were generally originated in 2022 at higher interest rates than the weighted-average of the portfolio of fixed rate loans.
+Added: The increase in interest rates earned was partly offset a decline in average loan balances of $102.4 million, or .7%, this year.
+Added: Increased interest earned on business real estate and construction and land loans was the main driver of overall higher interest income.
+Added: Business real estate loan interest grew $29.6 million in 2022 compared to 2021 as a result of an increase of 71 basis points in the average rate earned and higher average balances of $199.1 million, or 6.6%.
+Added: Interest earned on construction and land loans increased $21.2 million due to an increase of 147 basis points in the average rate earned and growth of $85.2 million, or 7.4%, in average balances.
+Added: Business loan interest income increased $11.3 million mainly due to a 49 basis point increase in the average rate earned, partly offset by a decrease of $462.1 million in average balances.
+Added: Average balances of business loans included average balances of $41.9 million in Paycheck Protection Program (PPP) loans at December 31, 2022, which was a decline of $812.2 million from balances of $854.1 billion at December 31, 2021.
+Added: Interest on personal real estate loans increased $2.6 million as the average balance grew $44.0 million and the average rate earned increased four basis points.
+Added: Interest on consumer loans grew $7.7 million over the prior year as the average rate earned increased 25 basis points and average balances were higher by $66.2 million.
+Added: Revolving home equity loan interest increased $2.8 million due to an increase of 108 basis points in the average rate earned, slightly offset by lower average balances of $5.8 million.
+Added: Interest on consumer credit card loans was higher by $558 thousand due to an increase of 72 basis points in the average rate earned, mostly offset by a decline of $30.3 million, or 5.3%, in average balances.
+Added: Fully taxable-equivalent interest income on total investment securities increased $76.9 million during 2022, as average balances grew $1.5 billion and the average rate earned increased 34 basis points.
+Added: The average rate on the total investment securities portfolio was 2.15% in 2022 compared to 1.81% in 2021, while the average balance of the total investment securities portfolio (excluding unrealized fair value adjustments on available for sale debt securities) was $14.9 billion in 2022 compared to an average balance of $13.5 billion in 2021.
+Added: The increase in interest income was mainly due to higher interest income earned on mortgage-backed, asset-backed and U.S.
+Added: government securities.
+Added: Interest earned on mortgage-backed securities increased $40.7 million due to a 59 basis point increase in the average rate earned.
+Added: The increase of $26.0 million in interest earned on asset-backed securities was due to an increase of 35 basis points in the average rate earned coupled with growth of $1.1 billion in average balances.
+Added: Interest earned on U.S.
+Added: government securities grew $8.2 million and was mainly impacted by growth of $7.3 million in inflation income on treasury inflation-protected securities (TIPS).
+Added: Average balances of U.S.
+Added: government securities increased $301.9 million, while the average rate earned declined 39 basis points.
+Added: Interest on securities purchased under resell agreements decreased $14.7 million compared to 2021 due to a decrease of 142 basis points in the average rate, partly offset by growth in average balances of $220.1 million.
+Added: Interest earned on deposits with banks increased $11.9 million over 2021, mainly due to a 98 basis point increase in the average rate earned, partly offset by a decline in average balances of $1.1 billion.
+Added: During 2022, interest expense on deposits increased $19.2 million over 2021 and resulted mainly from an 11 basis point increase in the overall average rate paid on deposits.
+Added: Interest expense on interest checking and money market accounts increased $18.0 million mainly due to higher rates paid, which grew 12 basis points, coupled with higher average balances of $1.1 billion.
+Added: Interest expense on certificates of deposit over $100,000 grew $1.3 million, mainly due to a 37 basis point increase in the average rate paid.
+Added: The overall rate paid on total deposits increased from .07% in 2021 to .18% in the current year.
+Added: Interest expense on borrowings increased $26.0 million mainly due to a 95 basis point increase in the rate paid on securities sold under repurchase agreements.
+Added: The overall average rate incurred on all interest bearing liabilities was .30% in 2022, compared to .07% in 2021.
+Added: Net interest income totaled $835.4 million in 2021, increasing $5.6 million, or .7%, compared to $829.8 million in 2020.
+Added: On a FTE basis, net interest income totaled $847.1 million, and increased $4.3 million over 2020.
This increase was mainly due to a decline of $29.9 million in interest expense on deposits and borrowings, due to lower average rates paid, coupled with an increase of $19.0 million in interest earned on investment securities, mainly due to higher average balances.
−Removed: These increases to net interest income (T/E) were partly offset by lower interest earned on loans, which declined $42.3 million, mainly due to lower rates earned.
−Removed: The net yield on earning assets (T/E) was 2.58% in 2021 compared with 2.99% in 2020.
−Removed: During 2021, loan interest income (T/E) fell $42.3 million from 2020 mainly due to a decline in rates earned for most loan categories and lower average business and consumer credit card loan balances.
−Removed: The average tax equivalent rate earned on the loan portfolio decreased 21 basis points to 3.67% in 2021 compared to 3.88% in 2020.
−Removed: Average loan balances decreased $232.5 million, or 1.5%, this year.
+Added: These increases to net interest income (FTE) were partly offset by lower interest earned on loans, which declined $42.3 million, mainly due to lower rates earned.
+Added: The net yield on earning assets (FTE) was 2.58% in 2021 compared with 2.99% in 2020.
+Added: Table of Conte nts
+Added: During 2021, loan interest income (FTE) fell $42.3 million from 2020 mainly due to a decline in rates earned for most loan categories and lower average business and consumer credit card loan balances.
+Added: The average fully taxable-equivalent rate earned on the loan portfolio decreased 21 basis points to 3.67% in 2021 compared to 3.88% in 2020.
+Added: Average loan balances decreased $232.5 million, or 1.5%, in 2021.
The decrease in consumer credit card loan interest income was the main driver of overall lower interest income.
1 unchanged sentence
Business loan interest income declined $9.3 million mainly due to a decrease of $548.7 million in average balances, partly offset by a 13 basis point increase in the average rate earned.
−Removed: Average balances of business loans included average balances of $854.1 million in Paycheck Protection Program (PPP) loans at December 31, 2021, which was a decline of $204.9 million from balances of $1.1 billion at December 31, 2020.
+Added: Average balances of business loans included average balances of $854.1 million in PPP loans at December 31, 2021, which was a decline of $204.9 million from balances of $1.1 billion at December 31, 2020.
The average rate earned on PPP loans increased 193 basis points to 4.81% in 2021 compared to 2.88% in 2020, partly offsetting the decline in average balances.
During 2021, the Company recognized $41.0 million in interest income on PPP loans.
−Removed: As of December 31, 2021, 93% of the PPP loans originated by the Company had been forgiven, and the Company expects almost all of the remaining loans to be forgiven in 2022.
+Added: As of December 31, 2021, 93% of the PPP loans originated by the Company had been forgiven.
Business real estate loan interest was lower by $5.8 million in 2021 compared to 2020 as a result of a decrease of 25 basis points in the average rate, partly offset by higher average balances of $46.9 million.
Interest on personal real estate loans decreased $2.6 million as the average rate earned declined 32 basis points, while average balances increased $178.4 million.
−Removed: Interest on consumer loans declined $9.7 million from the prior year as the average rate earned decreased 58 basis points, but was partly offset by growth in average balances of $42.4 million.
−Removed: These decreases to loan interest income (T/E) were partly offset by an increase of $2.1 million in interest earned on construction and land loans.
+Added: Interest on consumer loans declined $9.7 million from 2020 as the average rate earned decreased 58 basis points, but was partly offset by growth in average balances of $42.4 million.
+Added: These decreases to loan interest income (FTE) were partly offset by an increase of $2.1 million in interest earned on construction and land loans.
This increase resulted from higher average balances of $187.7 million, partly offset by a 48 basis point decrease in the average rate earned.
−Removed: Tax equivalent interest income on total investment securities increased $19.0 million during 2021, as average balances grew $3.2 billion, while the average rate earned decreased 38 basis points.
+Added: Fully taxable-equivalent interest income on total investment securities increased $19.0 million during 2021, as average balances grew $3.2 billion, while the average rate earned decreased 38 basis points.
The average rate on the total investment securities portfolio was 1.81% in 2021 compared to 2.19% in 2020, while the average balance of the total investment securities portfolio (excluding unrealized fair value adjustments on available for sale debt securities) was $13.5 billion in 2021 compared to an average balance of $10.3 billion in 2020.
2 unchanged sentences
Interest earned on U.S.
−Removed: government securities grew $15.5 million and was mainly impacted by growth of the same amount in inflation income on treasury inflation-protected securities (TIPS).
+Added: government securities grew $15.5 million and was mainly impacted by growth of the same amount in inflation income on TIPS.
Average balances of U.S.
9 unchanged sentences
Interest expense on certificates of deposit over $100,000 declined $10.4 million, mainly due to a 74 basis point decline in the average rate paid.
−Removed: The overall rate paid on total deposits decreased from .24% in 2020 to .07% in the current year.
−Removed: Interest expense on borrowings decreased $5.5 million mainly due to lower rates paid on securities sold under repurchase agreements, partly offset by higher average balances.
−Removed: The overall average rate incurred on all interest bearing liabilities was .07% in 2021, compared to .26% in 2020.
−Removed: During 2020, net interest income totaled $829.8 million, increasing $8.6 million, or 1.0%, compared to $821.3 million in 2019.
−Removed: On a tax equivalent (T/E) basis, net interest income totaled $842.8 million, and increased $7.4 million over 2019.
−Removed: This increase was mainly due to a decline of $60.6 million in interest expense on deposits and borrowings, due to lower average rates paid, as well as an increase of $24.7 million in interest earned on securities purchased under agreements to resell.
−Removed: These increases to net interest income (T/E) were largely offset by lower interest earned on loans and investment securities, which declined $52.6 million and $20.5 million, respectively, mainly due to lower rates earned.
−Removed: The net yield on earning assets (T/E) was 2.99% in 2020 compared with 3.48% in 2019.
−Removed: During 2020, loan interest income (T/E) fell $52.6 million from 2019 mainly due to lower rates earned, partly offset by higher average balances for business, personal real estate, business real estate, consumer and construction and land loan categories.
−Removed: The average tax equivalent rate earned on the loan portfolio decreased 83 basis points to 3.88% in 2020 compared to 4.71% in 2019.
−Removed: The Federal Reserve lowered short-term interest rates during the first quarter of 2020, which impacted the Company's interest income on loans, as many of its loans contain variable interest rate terms.
−Removed: Partly offsetting lower interest rates were increases in average loan balances of $1.7 billion, or 11.8%, this year.
−Removed: The largest decrease in loan interest income (T/E) occurred in business real estate loans, which was lower by $17.6 million as a result of a decline in the average rate earned of 74 basis points, partly offset by growth of $100.1 million in average balances.
−Removed: Business loan interest income declined $6.1 million mainly due to an 81 basis point decrease in the average rate earned, partly offset by an increase of $1.2 billion in average balances.
−Removed: Average balances of business loans included average balances of $1.1 billion in PPP loans at December 31, 2020.
−Removed: Interest income on consumer credit card loans declined $15.1 million as a result of a decreases in the average balance of $96.0 million and the average rate of 49 basis points.
−Removed: Construction and land loan interest income decreased $11.1 million, mainly due to a 143 basis point decrease in the average rate earned, partly offset by growth in average balances of $47.6 million.
−Removed: Interest on consumer loans declined $6.3 million from the prior year as the average rate earned decreased 41 basis points, but was partly offset by growth in average balances of $36.3 million.
−Removed: These decreases to loan interest income (T/E) were partly offset by an increase of $9.2 million in interest earned on personal real estate loans.
−Removed: This increase resulted from higher average balances of $440.5 million, partly offset by a 31 basis point decrease in the average rate earned.
−Removed: Tax equivalent interest income on total investment securities decreased $20.5 million during 2020, as the average rate earned decreased 62 basis points, while average balances grew $1.5 billion.
−Removed: The average rate on the total investment securities portfolio was 2.19% in 2020 compared to 2.81% in 2019, while the average balance of the total investment securities portfolio (excluding unrealized fair value adjustments on available for sale debt securities) was $10.3 billion in 2020 compared to an average balance of $8.7 billion in 2019.
−Removed: The decrease in interest income was mainly due to lower interest income earned on mortgage-backed securities, asset-backed securities, U.S.
−Removed: government securities and government-sponsored enterprise (GSE) obligations.
−Removed: Interest income on mortgage-backed securities decreased $14.0 million, due to a decrease of 77 basis points in the average rate earned, partly offset by higher average balances of $1.1 billion.
−Removed: Interest on asset-backed securities decreased $7.7 million mainly due to a 70 basis point decrease in the average rate earned, partly offset by a $94.9 million increase in the average balance.
−Removed: Interest earned on U.S.
−Removed: government securities fell $3.6 million and was mainly impacted by a decline of $3.0 million in inflation income on TIPS.
−Removed: Average balances of U.S.
−Removed: government securities declined $70.2 million and the average rated earned decreased 24 basis points.
−Removed: Interest income on GSE's decreased $1.2 million, due to a decline in average balances of $86.3 million, partly offset by an increase of 80 basis points in the average rate earned.
−Removed: Partly offsetting these decreases in interest income was growth of $3.9 million and $1.8 million in interest earned on state and municipal obligations and other debt securities, respectively.
−Removed: The growth in interest earned on state and municipal obligations resulted mainly from an increase of $341.5 million in average balances, partly offset by a 44 basis point decrease in the average rate earned.
−Removed: Other debt securities interest increased due to growth of $111.4 million in average balances, partly offset by a decline of 27 basis points in the average rate earned.
−Removed: Interest on securities purchased under resell agreements increased $24.7 million in 2020 due to an increase in the average rate of 263 basis points, as these assets were structured with floor spreads to protect against falling interest rates.
−Removed: Of the $850.0 million in securities purchased under agreements to resell held by the Company throughout 2020, $450.0 million of those agreements matured in 2021.
−Removed: Interest earned on deposits with banks fell $4.4 million from 2019, mainly due to a 192 basis point decrease in the average rate earned, partly offset by an increase in average balances of $799.3 million.
−Removed: During 2020, interest expense on deposits decreased $37.3 million from 2019 and resulted mainly from a 30 basis point decrease in the overall average rate paid on deposits.
−Removed: Interest expense on interest checking and money market accounts decreased $21.9 million due to lower rates paid, which fell 21 basis points, while interest expense on certificates of deposit over $100,000 declined $14.0 million, mainly due to a 98 basis point decline in the average rate paid.
The overall rate paid on total deposits decreased from .24% in 2020 to .07% in 2021.
−Removed: Interest expense on borrowings decreased $23.4 million mainly due to lower rates paid on federal funds purchased and customer repurchase agreements.
+Added: Interest expense on borrowings decreased $5.5 million mainly due to lower rates paid on securities sold under repurchase agreements, partly offset by higher average balances.
The overall average rate incurred on all interest bearing liabilities was .07% in 2021, compared to .26% in 2020.
+Added: Table of Conte nts
Provision for Credit Losses
The provision for credit losses is comprised of provisions for credit losses on loans and for unfunded lending commitments and is recorded to adjust the allowance for credit losses on loans and the liability for unfunded lending commitments to a level deemed adequate by management based on the factors mentioned in the “Allowance for Credit Losses on Loans and Liability for Unfunded Lending Commitments” section of this discussion.
−Removed: The provision for credit losses was a recovery of $66.3 million in 2021, which was a decrease of $203.5 million from the 2020 provision of $137.2 million.
−Removed: The provision for credit losses on loans in 2021 was a recovery of $52.2 million, compared to a provision for credit losses on loans of $116.1 million in 2020.
−Removed: The allowance for credit losses on loans totaled $150.0 million at December 31, 2021, a decrease of $70.8 million compared to the prior year, and represented .99% of loans at year end 2021, compared to 1.35% at December 31, 2020.
−Removed: The provision for unfunded lending commitments was a recovery of $14.1 million during 2021, compared to a provision of $21.1 million in 2020, and the liability for unfunded lending commitments was $24.2 million at December 31, 2021, compared to $38.3 million at December 31, 2020.
+Added: The provision for credit losses was $28.1 million in 2022, an increase of $94.4 million over the 2021 provision, which was a recovery of $66.3 million.
+Added: The provision for credit losses on loans in 2022 was $19.2 million, compared to a recovery in the provision for credit losses on loans of $52.2 million in 2021.
+Added: The allowance for credit losses on loans totaled $150.1 million at December 31, 2022, an increase of $92 thousand compared to the prior year, and represented .92% of loans at year end 2022, compared to .99% at December 31, 2021.
+Added: The provision for unfunded lending commitments was $8.9 million during 2022, compared to a recovery of $14.1 million in 2021, and the liability for unfunded lending commitments was $33.1 million at December 31, 2022, compared to $24.2 million at December 31, 2021.
Non-Interest Income
(Dollars in thousands) 2022 2021 2020 '22-'21 '21-'20
−Removed: Bank card transaction fees
$ 184,719 $ 188,227 $ 160,637 (1.9) % 17.2 %
+Added: Bank card transaction fees
176,144 167,891 151,797 4.9 10.6
1 unchanged sentence
94,381 97,217 93,227 (2.9) 4.3
−Removed: Capital market fees
−Removed: 15,943 14,582 8,146 9.3 79.0
Consumer brokerage services
19,117 18,362 15,095 4.1 21.6
+Added: Capital market fees
+Added: 14,231 15,943 14,582 (10.7) 9.3
Loan fees and sales
10 unchanged sentences
(Dollars in thousands) 2022 2021 2020 '22-'21 '21-'20
−Removed: Net debit card fees
+Added: Net corporate card fees
100,012 91,701 82,374 9.1 11.3
−Removed: Net credit card fees
+Added: Net debit card fees
$ 40,968 $ 41,010 $ 37,644 (.1) % 8.9 %
1 unchanged sentence
20,604 20,036 18,386 2.8 9.0
−Removed: Net corporate card fees
+Added: Net credit card fees
14,560 15,144 13,393 (3.9) 13.1
1 unchanged sentence
$ 176,144 $ 167,891 $ 151,797 4.9 % 10.6 %
−Removed: Non-interest income totaled $560.4 million, an increase of $54.5 million, or 10.8%, compared to $505.9 million in 2020.
−Removed: Bank card fees increased $16.1 million, or 10.6%, over the prior year, due to increases in net corporate card fees of $9.3 million, net debit card fees of $3.4 million, net credit card fees of $1.8 million and net merchant fees of $1.7 million.
+Added: Non-interest income totaled $546.5 million, a decrease of $13.9 million, or 2.5%, compared to $560.4 million in 2021.
+Added: Trust fee income decreased $3.5 million, or 1.9%, as a result of lower institutional (down 7.0%), mutual fund (down 10.9%) and private client trust fees (down .3%).
+Added: Private client trust fees comprised 79.7% of trust fee income in 2022.
+Added: The market value of total customer trust assets totaled $60.3 billion at year end 2022, which was a decrease of 13.0% from year end 2021 balances.
+Added: Bank card fees increased $8.3 million, or 4.9%, over the prior year, mainly due to an increase in net corporate card fees of $8.3 million.
+Added: The growth in net corporate card fees over the prior year was mainly due to higher interchange income, partly offset by higher rewards expense.
+Added: Deposit account fees decreased $2.8 million, or 2.9%, mainly due to lower overdraft and return item fees of $4.2 million and personal account deposit fees of $1.2 million, partly offset by growth in corporate cash management fees of $2.5 million.
+Added: In 2022, corporate cash management fees comprised 55.6% of total deposit fees, while overdraft fees comprised 21.1% of total deposit fees.
+Added: In September 2022, the Company implemented enhancements to consumer checking accounts that eliminated return items fees and lowered overdraft fees.
+Added: Capital market fees decreased $1.7 million, or 10.7%, compared to the prior year, while revenue from consumer brokerage services increased $755 thousand, or 4.1%, mainly due to growth in annuity fees.
+Added: Loan fees and sales decreased $16.6 million, or 55.8%, mainly due to lower mortgage banking revenue.
+Added: Other non-interest income increased $1.8 million, or 4.1%, over the prior year mainly due to higher
+Added: Table of Conte nts
+Added: cash sweep commissions of $8.2 million and lease income of $1.3 million, income of $2.2 million from a life insurance death benefit recorded in the second quarter of 2022, a $2.6 million loss on an equity method investment recorded in 2021 and a lease impairment of $1.1 million recorded in 2021.
+Added: These increases were partly offset by gains of $5.6 million recorded mainly on the sales of branch properties last year.
+Added: In addition, a decrease of $6.6 million in fair value adjustments was recorded on the Company's deferred compensation plan assets, which are held in a trust, recorded as both an asset and a liability and affect both other income and other expense.
+Added: During 2021, non-interest income totaled $560.4 million, an increase of $54.5 million, or 10.8%, compared to $505.9 million in 2020.
+Added: Bank card fees increased $16.1 million, or 10.6%, over 2020, due to increases in net corporate card fees of $9.3 million, net debit card fees of $3.4 million, net credit card fees of $1.8 million and net merchant fees of $1.7 million.
The growth in net corporate and credit card fees over the prior year was due to higher interchange income, partly offset by higher rewards expense.
1 unchanged sentence
Net merchant fees were up due to an increase in merchant discount fees, partly offset by higher rewards expense.
−Removed: Trust fee income increased $27.6 million, or 17.2%, as a result of continued growth in private client trust fees (up 19.1%) and higher institutional trust fees (up 11.0%).
+Added: Trust fee income increased $27.6 million, or 17.2%, as a result of growth in private client trust fees (up 19.1%) and higher institutional trust fees (up 11.0%).
Private client trust fees comprised 78.4% of trust fee income in 2021.
2 unchanged sentences
In 2021, corporate cash management fees comprised 51.5% of total deposit fees, while overdraft fees comprised 24.8% of total deposit fees.
−Removed: Capital market fees grew $1.4 million, or 9.3%, compared to the prior year, while revenue from consumer brokerage services increased $3.3 million, or 21.6%, due to growth in advisory and annuity
+Added: Capital market fees grew $1.4 million, or 9.3%, compared to 2020, while revenue from consumer brokerage services increased $3.3 million, or 21.6%, due to growth in advisory and annuity fees.
Loan fees and sales increased $3.0 million, or 11.4%, mainly due to growth in mortgage banking revenue and loan commitment fees.
−Removed: Mortgage banking revenue was stronger in the first half of 2021 than during the second half of the year.
−Removed: As interest rates and competition for mortgage loans increased during 2021, loan fees and sales declined in the second half of 2021.
−Removed: Other non-interest income decreased $812 thousand, or 1.9%, from the prior year mainly due to lower cash sweep commissions of $7.9 million and a $2.2 million loss recorded on an equity method investment in 2021.
+Added: Other non-interest income decreased $812 thousand, or 1.9%, from 2020 mainly due to lower cash sweep commissions of $7.9 million and a $2.6 million loss recorded on an equity method investment in 2021.
These decreases were partly offset by gains of $5.6 million recorded mainly on sales of branch properties during 2021 and increases in interest rate swap fees and check sales and wire fees of $2.2 million and $1.0 million, respectively.
−Removed: During 2020, non-interest income totaled $505.9 million, a decrease of $18.8 million, or 3.6%, compared to $524.7 million in 2019.
−Removed: Bank card fees decreased $16.1 million, or 9.6%, from 2019, due to declines in net corporate card fees of $12.0 million, net debit card fees of $2.4 million, net merchant fees of $903 thousand and net credit card fees of $784 thousand.
−Removed: The decline in net corporate card fees from 2019 was due to lower transaction volume, partly offset by lower network and rewards expense.
−Removed: The decline in net credit and debit card fees was mainly due to lower interchange income.
−Removed: The decline in net credit card fees was partly offset by lower rewards expense.
−Removed: Net merchant fees fell due to lower merchant discount fees, partly offset by higher interchange income and lower network expense.
−Removed: Trust fee income increased $5.0 million, or 3.2%, as a result of growth in private client trust fees (up 4.3%), which comprised 77.2% of trust fee income in 2020.
−Removed: The market value of total customer trust assets totaled $61.2 billion at year end 2020, which was an increase of 7.9% over year end 2019 balances.
−Removed: Deposit account fees decreased $2.8 million, or 2.9%, mainly due to a decline of $7.6 million in overdraft and return item fees, partly offset by growth of $5.3 million in corporate cash management fees.
−Removed: In 2020, corporate cash management fees comprised 50.2% of total deposit fees, while overdraft fees comprised 24.6% of total deposit fees.
−Removed: Capital market fees grew $6.4 million, or 79.0%, compared to 2019, mostly due to higher sales volume, while consumer brokerage services fees fell $709 thousand, or 4.5%.
−Removed: Loan fees and sales increased $10.9 million, or 69.2%, mainly due to growth in mortgage banking revenue.
−Removed: Mortgage banking revenue totaled $20.7 million in 2020 compared to $10.8 million in 2019 and increased as a result of higher loan originations in 2020.
−Removed: Other non-interest income decreased $21.7 million, or 33.1%, mainly due to a one-time gain of $11.5 million resulting from the sale of the Company's corporate trust business in the fourth quarter of 2019.
−Removed: In addition, cash sweep commissions and interest rate swap fees decreased $2.1 million and $4.4 million, respectively.
+Added: Table of Conte nts
Investment Securities Gains (Losses), Net
1 unchanged sentence
Net gains (losses) on sales of available for sale debt securities $ (20,273) $ (3,284) $ 21,096
−Removed: Net gains on sales and fair value adjustments of equity securities 187 39 3,606
−Removed: Net gains (losses) on sales and fair value adjustments of private equity investments 33,156 (10,103) 367
−Removed: Other — — (133)
+Added: Net gains on sales of equity securities
+Added: Fair value adjustments on equity securities, net
+Added: Net gains (losses) on sales of private equity investments
+Added: (2,128) 1,452 —
+Added: Fair value adjustments of private equity investments 43,833 31,704 (10,103)
Total investment securities gains, net
3 unchanged sentences
The gains and losses on private equity investments include fair value adjustments, in addition to gains and losses realized upon disposition.
−Removed: The portions of private equity investment gains and losses that are attributable to minority interests are reported as non-controlling interest in the consolidated statements of income, and resulted in expense of $6.5 million in 2021, compared to income of $1.4 million in 2020 and expense of $348 thousand in 2019.
+Added: The portions of private equity investment gains and losses that are attributable to minority interests are reported as non-controlling interest in the consolidated statements of income, and resulted in expense of $8.5 million in 2022 and $6.5 million in 2021, compared to income of $1.4 million in 2020.
+Added: Net securities gains of $20.5 million were recorded in 2022, which included net gains of $43.8 million in fair value adjustments on private equity investments.
+Added: This increase was partly offset by losses of $20.3 million realized on sales resulting from the Company's sale of approximately $105 million (book value) in bonds, mainly mortgage-backed and corporate bond securities, net losses of $2.1 million on sales of private equity investments, and net losses of $943 thousand in fair value adjustments on equity securities.
Net securities gains of $30.1 million were recorded in 2021, which included $1.5 million in net gains realized on sales of private equity investments, net gains totaling $31.7 million of fair value adjustments on private equity investments, and $187 thousand of fair value adjustments on equity investments.
2 unchanged sentences
These gains were offset by net losses totaling $10.1 million of fair value adjustments on private equity investments.
−Removed: Net securities gains of $3.6 million were recorded in 2019, which included $214 thousand in net losses realized on bond sales resulting from the Company's sale of approximately $400 million (book value) of bonds, mainly municipal securities, treasuries and asset-backed securities.
−Removed: Net securities gains also included $3.3 million in gains from sales of equity investments, net gains of $344 thousand in fair value adjustments on equity investments, and a $1.1 million in gain from the sale of a private equity investment.
−Removed: These gains were offset by net losses totaling $727 thousand of fair value adjustments on private equity investments.
+Added: Table of Conte nts
Non-Interest Expense
3 unchanged sentences
82,787 78,010 76,900 6.1 1.4
+Added: Data processing and software
+Added: 110,692 101,792 95,325 8.7 6.8
Net occupancy
3 unchanged sentences
18,101 17,118 17,419 5.7 (1.7)
−Removed: Data processing and software
23,827 21,856 19,734 9.0 10.8
73,634 73,613 57,429 — 28.2
−Removed: 73,613 57,429 73,046 28.2 (21.4)
Total non-interest expense
7 unchanged sentences
Non-interest expense was $848.8 million in 2022, an increase of $42.9 million, or 5.3%, over the previous year.
+Added: Salaries and benefits expense increased $28.8 million, or 5.5%, mainly due to higher costs for full-time salaries, incentive compensation, stock compensation, payroll taxes and 401(k) expense.
+Added: Salaries expense included expense of $5.4 million for special bonuses paid to non-incentivized full-time and part-time employees in 2022.
+Added: Full-time equivalent employees totaled 4,594 at December 31, 2022, compared to 4,567 at December 31, 2021.
+Added: Data processing and software expense increased $8.9 million, or 8.7%, primarily due to higher bank card processing fees, software amortization and expense, and increased costs for service providers.
+Added: Net occupancy expense increased $932 thousand, or 1.9%, mainly due to higher depreciation, utilities and outside services expense, partly offset by lower real estate taxes expense.
+Added: Equipment expense increased $1.3 million, or 7.0%, mainly due to higher depreciation and equipment service contract expense, while marketing expense increased $2.0 million, or 9.0%.
+Added: Supplies and communication expense increased $983 thousand, or 5.7%, mainly due to higher postage and courier expense and bank card reissuance fees, partly offset by lower data network expense.
+Added: Other non-interest expense increased slightly over 2021.
+Added: Higher costs for travel and entertainment expense (up $5.1 million), insurance expense (up $1.9 million), depreciation expense on leased assets (up $958 thousand) and airplane expense (up $864 thousand) were offset by $8.2 million in non-recurring litigation settlement costs recorded in 2021.
+Added: In addition, the previously mentioned fair value adjustments on the Company's deferred compensation plan assets decreased $6.6 million from the prior year.
+Added: In 2021, non-interest expense was $805.9 million, an increase of $37.5 million, or 4.9%, over 2020.
Salaries and benefits expense increased $12.3 million, or 2.4%, mainly due to higher incentive compensation and healthcare expense, partly offset by lower salaries expense.
4 unchanged sentences
Data processing and software expense increased $6.5 million, or 6.8%, primarily due to higher costs for service providers, bank card processing fees and software expense, while marketing expense increased $2.1 million, or 10.8%.
−Removed: Other non-interest expense increased $16.2 million, or 28.2%, over the prior year mainly due to $8.2 million in non-recurring litigation settlement costs recorded in the third quarter of 2021.
−Removed: In addition, deferred origination costs declined $3.5 million and deposit insurance expense increased $1.3 million.
+Added: Other non-interest expense increased $16.2 million, or 28.2%, over 2020 mainly due to $8.2 million in non-recurring litigation settlement costs mentioned above.
+Added: In addition, deferred loan origination costs declined $3.5 million and deposit insurance expense increased $1.3 million.
These increases were partly offset by a reduction in impairment expense of $3.6 million on the Company's mortgage servicing rights.
−Removed: In 2020, non-interest expense was $768.4 million in 2020, an increase of $980 thousand, or .1%, over 2019.
−Removed: Salaries and benefits expense increased $20.1 million, or 4.1%, mainly due to higher costs for full-time salaries and incentive compensation.
−Removed: Full-time salaries expense increased due to growth in commercial, information technology, wealth management and other support unit salaries expense, while incentive compensation saw increases in mortgage, capital markets, and in association with the origination of PPP loans.
−Removed: Full-time equivalent employees totaled 4,766 at December 31, 2020, reflecting a 1.9% decrease from 2019.
−Removed: Occupancy expense decreased $512 thousand, or 1.1%, mainly due to lower utilities and outside services expense, partly offset by higher building depreciation expense.
−Removed: Equipment expense decreased $222 thousand, or 1.2%, while supplies and communication expense decreased $3.0 million, or 14.6%, as a result of lower supplies, postage and bank card issuance fees.
−Removed: Data processing and software expense increased $2.4 million, or 2.6%, primarily due to higher costs for service providers and software expense, partly offset by lower bank card processing fees, while marketing expense decreased $2.2 million, or 9.9%.
−Removed: Other non-interest expense decreased $15.6 million, or 21.4%, from 2019 mainly due to higher deferred origination costs (up $3.7 million) and lower travel and entertainment (down $8.7 million) and education expense (down $1.2 million).
−Removed: These decreases were partly offset by higher deposit insurance expense (up $1.2 million), as well as higher impairment expense (up $1.8 million) and amortization (up $2.4 million) on the Company's mortgage servicing rights.
Income tax expense was $132.4 million in 2022, compared to $145.7 million in 2021 and $87.3 million in 2020.
The effective tax rate, including the effect of non-controlling interest, was 21.3% in 2022 compared to 21.5% in 2021 and 19.8% in 2020.
−Removed: The increase in effective tax rate in 2021 compared to 2020 was primarily driven by higher net income before taxes.
Additional information about income tax expense is provided in Note 9 to the consolidated financial statements.
+Added: Table of Conte nts
Financial Condition
20 unchanged sentences
$ 16,303,131 $ 15,176,359
−Removed: The contractual maturities of the loan portfolio at December 31, 2021, and a breakdown of those loans between fixed rate and floating rate loans are as follows.
+Added: The table below presents contractual maturities of the loan portfolio, based on payment due dates, as well as a breakdown of fixed rate and floating rate loans at December 31, 2022.
Principal Payments Due
23 unchanged sentences
$ 4,461,189 $ 8,057,311 $ 2,649,744 $ 1,134,887 $ 16,303,131
+Added: Table of Conte nts
The following table shows loan balances at December 31, 2022, segregated between those with fixed interest rates and those with variable rates that fluctuate with an index.
12 unchanged sentences
$ 7,229,620 $ 9,073,511 $ 16,303,131 55.7 %
−Removed: Total loans at December 31, 2021 were $15.2 billion, a decrease of $1.2 billion, or 7.1%, over balances at December 31, 2020.
−Removed: The decline in loans during 2021 occurred in the business, consumer credit card, revolving home equity and personal real estate loan categories, while construction, consumer, business real estate and overdraft loan categories increased from the prior year.
−Removed: Business loans decreased $1.2 billion, or 19.0%, mainly due to a $1.2 billion decline in PPP loan balances.
−Removed: As of December 31, 2021, 93% of PPP loan balances have been forgiven.
−Removed: Excluding PPP loans, business loans increased $204.5 million, or 4.1%, over balances at December 31, 2020.
−Removed: Lease lending and tax-advantaged lending, included within Business loans, declined during 2021, but these declines were partly offset by growth in commercial card lending.
+Added: Total loans at December 31, 2022 were $16.3 billion, an increase of $1.1 billion, or 7.4%, over balances at December 31, 2021.
+Added: The increase in loans during 2022 occurred in all categories over the previous year.
+Added: Business loans increased $358.2 million, or 6.8%, mainly due to a $374 million increase in commercial and industrial loans.
+Added: Excluding declines in PPP loan balances, which decreased $121.1 million during 2022, business loans increased $479.3 million, or 9.0%.
+Added: As of December 31, 2022, nearly 100% of PPP loan balances have been forgiven.
+Added: Lease lending and commercial card lending, included within business loans, also increased during 2022, but the increase was partly offset by a decline in tax-advantaged lending.
Construction loans increased $242.8 million, or 21.7% mainly due to growth in commercial construction lending.
−Removed: Business real estate loans increased $32.7 million, or 1.1%, due mainly to increases in multi-family, owner-occupied, and industrial lending, while hotel and senior living lending declined.
−Removed: Personal real estate loans declined $14.6 million, or .5%.
+Added: Business real estate loans increased $348.1 million, or 11.4%, due mainly to increases in industrial and office building lending, while owner-occupied, multi-family, and senior living lending declined.
+Added: Personal real estate loans increased $112.7 million, or 4.0%.
The Company sells certain long-term fixed rate mortgage loans to the secondary market, and loan sales in 2022 totaled $111.3 million, compared to $547.1 million in 2021.
−Removed: C onsumer loans increased $81.7 million, or 4.2%, mainly due to growth in private banking lending.
−Removed: Other vehicle and equipment lending (mostly comprised of motorcycle loans) also increased, offset by declines in auto lending, fixed rate home equity loans and continued run off of marine and recreational vehicle loan balances.
−Removed: Consumer credit card loans decreased $79.7 million, or 12.2%, and revolving home equity loan balances declined $31.1 million, or 10.1%, compared to balances at year end 2020.
+Added: Consumer loans increased $26.9 million, or 1.3%, mainly due to growth in private banking lending.
+Added: Health services financing and fixed rate home equity loans also increased, offset by declines in auto lending, other vehicle and equipment lending (mostly comprised of motorcycle loans), and continued run off of marine and recreational vehicle loan balances.
+Added: Consumer credit card loans increased $8.6 million, or 1.5%, and revolving home equity loan balances increased $21.3 million, or 7.7%, compared to balances at year end 2021.
The Company currently holds approximately 31% of its loan portfolio in the Kansas City market, 25% in the St.
7 unchanged sentences
Commercial Loans
−Removed: Total business loans amounted to $5.3 billion at December 31, 2021 and include loans used mainly to fund customer accounts receivable, inventories, and capital expenditures.
+Added: Total business loans amounted to $5.7 billion at December 31, 2022 and includes loans used mainly to fund customer accounts receivable, inventories, and capital expenditures.
The business loan portfolio includes tax-advantaged loans and leases which carry tax-free interest rates.
These loans totaled $618.1 million at December 31, 2022, a decrease of $111.8 million, or 15.3%, from December 31, 2021 balances.
−Removed: In addition to tax-advantaged leases, the business loan portfolio also includes other direct financing and sales type leases totaling $536.9 million at December 31, 2021, a decrease of $47.4 million, or 8.1%, from December 31, 2020.
+Added: In addition to tax-advantaged leases, the business loan portfolio also includes other direct financing and sales type leases totaling $614.7 million at December 31, 2022, an increase of $75.4 million, or 14.0%, from December 31, 2021.
These loans are used by commercial customers to finance capital purchases ranging from computer equipment to office and transportation equipment.
−Removed: Additionally, the Company has outstanding oil and gas energy-related loans totaling $260.6 million at December 31, 2021, which are further discussed within the Oil and Gas Energy Lending section of
−Removed: the Risk Elements of Loan Portfolio section located within Management's Discussion and Analysis of Financial Condition and Results of Operations.
+Added: Additionally, the Company has outstanding oil and gas energy-related loans totaling $296.4 million at December 31, 2022, which are further discussed within the Oil and Gas Energy Lending section of the Risk Elements of Loan Portfolio section located within Management's Discussion and Analysis of Financial Condition and
+Added: Table of Conte nts
+Added: Results of Operations.
Also included in the business portfolio are corporate card loans, which totaled $367.3 million at December 31, 2022 and are made in conjunction with the Company’s corporate card business for corporate trade purchases.
4 unchanged sentences
Consistent with management’s strategy and emphasis upon relationship banking, most borrowing customers also maintain deposit accounts and utilize other banking services.
−Removed: N et loan recoveries in this category totaled $4.8 million in 2021 compared to net loan charge-offs of $3.7 million in 2020 .
+Added: Net loan charge-offs in this category totaled $1.1 million in 2022 compared to net loan recoveries of $4.8 million in 2021.
Non-accrual business loans were $6.8 million (.1% of business loans) at December 31, 2022 compared to $7.3 million at December 31, 2021.
1 unchanged sentence
The portfolio of loans in this category amounted to $1.4 billion at December 31, 2022, an increase of $242.8 million, or 21.7%, from the prior year and comprised 8.3% of the Company’s total loan portfolio.
−Removed: Commercial construction and land development loans totaled $971.1 million, or 86.8% of total construction loans at December 31, 2021.
+Added: Commercial construction and land development loans totaled $1.2 billion, or 86.2% of total construction loans at December 31, 2022.
These loans increased $201.6 million from 2021 year end balances, driving the growth in the total construction portfolio.
8 unchanged sentences
Additional information about business real estate loans by borrower is disclosed within the Real Estate - Business Loans section of the Risk Elements of Loan Portfolio section located within Management's Discussion and Analysis of Financial Condition and Results of Operations.
−Removed: At December 31, 2021, balances of non-accrual loans amounted to $214 thousand, less than .1% of business real estate loans, down from $2.2 million at year end 2020.
+Added: At December 31, 2022, balances of non-accrual loans amounted to $189 thousand, less than .1% of business real estate loans, down from $214 thousand at year end 2021.
The Company experienced net loan recoveries of $20 thousand in 2022, compared to net loan recoveries of $64 thousand in 2021.
4 unchanged sentences
The Company originates both adjustable and fixed rate mortgage loans, and at December 31, 2022, 33% of the portfolio was comprised of adjustable rate loans, while 67% was comprised of fixed rate loans.
−Removed: The Company does not purchase any loans from outside parties or brokers and has never maintained no-document products.
+Added: The Company does not purchase any loans from outside parties or brokers.
The Company originates certain mortgage loans with the intent to sell to the secondary market, generally FNMA or FHLMC conforming fixed rate loans.
The remaining loans are originated with the intent to hold to maturity.
−Removed: Of the $1.3 billion of mortgage loans originated in 2021, $547.1 million were sold to the secondary market.
+Added: Of the $699 million of mortgage loans originated in 2022, $111.3 million were sold to the secondary market.
This compares to $1.3 billion of mortgage loans originated and $547.1 million of loans sold to the secondary market in 2021.
−Removed: The increase in loan sales during 2021 compared to 2020 was partly due to the Company temporarily pausing loan sales for the second quarter of 2020.
+Added: The decrease in loan sales during 2022 compared to 2021 was partly due to lower demand for mortgage loans, as well as the Company's temporary pause on loan sales in late 2022.
The Company has experienced lower credit losses on loans in this category than many others in the industry and believes this is partly because of its conservative underwriting culture and the fact that it does not purchase loans from brokers.
+Added: Table of Conte nts
recoveries in 2022 totaled $74 thousand, and net loan recoveries were $98 thousand in 2021.
4 unchanged sentences
Total consumer loans increased $26.9 million at year end 2022 compared to year end 2021.
−Removed: Growth of $109.6 million in private banking loans was supplemented by increases in other executive lines of credit and motorcycle loans.
−Removed: These increases in consumer loan balances were partially offset by declines of $24.5 million in automobile loans, $19.3 million in fixed rate home equity loans, $7.3 million in marine and RV loans, and $1.5 million in patient healthcare financing.
+Added: Growth of $77.6 million in private banking loans was supplemented by increases in patient healthcare financing and fixed rate home equity loans.
+Added: These increases in consumer loan balances were partially offset by declines of $56.8 million in automobile loans and $19.2 million in motorcycle loans.
Net charge-offs on total consumer loans were $3.8 million in 2022, compared to $2.6 million in 2021, averaging .18% and .13% of consumer loans in 2022 and 2021, respectively.
4 unchanged sentences
The underwriting terms for the home equity line product permit borrowing availability, in the aggregate, generally up to 80% or 90% of the appraised value of the collateral property at the time of origination.
−Removed: Net loan charge-offs were nearly zero in 2021, compared to net loan recoveries of $166 thousand in 2020.
+Added: Net loan recoveries were $60 thousand in 2022, compared to net loan charge-offs of nearly zero in 2021.
Consumer Credit Card
6 unchanged sentences
Loans Held for Sale
−Removed: At December 31, 2021 , loans held for sale were comprised of certain long-term fixed rate personal real estate loans and loans extended to students while attending colleges and universities.
−Removed: The personal real estate loans are carried at fair value and totaled $5.6 million at December 31, 2021.
+Added: At December 31, 2022, loans held for sale were comprised of certain loans extended to students while attending colleges and universities.
The student loans, carried at the lower of cost or fair value, totaled $4.9 million at December 31, 2022.
−Removed: Both of these portfolios are further discussed in Note 2 to the consolidated financial statements.
+Added: This portfolio is further discussed in Note 2 to the consolidated financial statements.
+Added: Table of Conte nts
Allowance for Credit Losses on Loans and Liability for Unfunded Lending Commitments
4 unchanged sentences
These non-accrual loans are evaluated individually for impairment based on factors such as payment history, borrower financial condition and collateral.
−Removed: For collateral dependent loans, appraisals of collateral (including exit costs) are normally obtained annually but discounted based on date last received and market conditions.
+Added: For collateral dependent loans, appraisals of collateral (including exit costs) are normally obtained annually but discounted based on the date last received and market conditions.
From these evaluations of expected cash flows and collateral values, specific allowances are determined.
5 unchanged sentences
These changes in the forecast cause fluctuations in the allowance for credit losses on loans and the liability for unfunded lending commitments.
−Removed: The Company uses its best judgment to assess the macro-economic forecast and internal loss data in estimating the allowance for credit losses on loans and the liability for unfunded lending commitments.
+Added: The Company uses judgment to assess the macro-economic forecast and internal loss data in estimating the allowance for credit losses on loans and the liability for unfunded lending commitments.
These estimates are subject to periodic refinement based on changes in the underlying external and internal data.
4 unchanged sentences
At December 31, 2022, the allowance for credit losses on loans was $150.1 million, compared to $150.0 million at December 31, 2021.
−Removed: The allowance for credit losses related to commercial loans decreased $23.8 million during 2021, due to decreases in the allowance for business and construction loans of $19.7 million and $4.7 million, respectively.
−Removed: Compared to December 31, 2020, the allowance for credit losses on consumer credit card, personal real estate, and consumer loans decreased $38.5 million, $3.0 million, and $5.2 million, respectively.
−Removed: These large decreases resulted from an improved forecast utilized in the Company’s estimate of future credit losses at December 31, 2021, coupled with lower than projected net loan charge-offs during the year.
−Removed: The allowance for credit losses at December 31, 2020 included an uncertain economic projection defined by high unemployment and other business and personal disruptions caused by COVID-19.
−Removed: Through various governmental stimulus programs and improvements in the public health crisis due to the development and increasing availability of a COVID-19 vaccine, the projected net charge-offs were not realized and the economic forecast improved, thus allowing the release of the allowance for credit losses during 2021.
−Removed: As a result, the provision for credit losses, which includes the provision for loans and unfunded lending commitments, was a benefit of $66.3 million for the year, compared to a provision of $137.2 million in 2020.
+Added: The allowance for credit losses related to commercial loans increased $5.5 million during 2022, due to increases in the allowance for construction and business loans of $5.6 million and $2.4 million, respectively, partly offset by a decrease in the allowance for business real estate loans of $2.5 million.
+Added: The increase in the allowance for credit losses on the commercial portfolio is due to an increase in outstanding loan balances, partially offset by a reduction in certain pandemic-related reserves, as those uncertainties and concerns began to resolve.
+Added: Compared to December 31, 2021, the allowance for credit losses on consumer credit card loans decreased $10.6 million, due to the changing forecast, as concerns related to COVID-19 lessened.
+Added: This decrease was partly offset by a $4.7 million increase in the allowance for personal real estate loans, as prepayment speeds slowed, extending the estimated average life of the loans and increasing the related allowance.
+Added: T he provision for credit losses, which includes the provision for loans and unfunded lending commitments, was $28.1 million for the year, compared to a benefit of $66.3 million in 2021.
+Added: During 2021, the allowance for credit losses built in 2020 to estimate the impact of the pandemic were released as the economic forecast and loss projections improved.
See Note 2 to the consolidated financial statements for the various model assumptions utilized in the Company's CECL estimate at December 31, 2022.
1 unchanged sentence
The percentage of allowance to commercial portfolio loans decreased to .99% at December 31, 2022, compared to 1.03% at December 30, 2021, and the percentage of allowance to personal banking loans decreased to .80% at December 31, 2022 from .92% at December 31, 2021.
−Removed: The allowance fell as a percentage of loans at December 31, 2021 because the economic forecast utilized in the Company’s CECL model improved over the forecast utilized at December 31, 2020, and the net charge-offs projected at December 31, 2020 did not come to fruition.
−Removed: Additionally, included within business loans at December 31, 2020 are approximately $1.4 billion PPP loans that are fully guaranteed by the government, and therefore, no allowance for credit losses was estimated for these loans.
−Removed: At December 31, 2021, PPP loans outstanding were approximately $129.2 million.
−Removed: Excluding the PPP loans, the allowance for credit losses on loans was 1.00% of loans at December 31, 2021 and 1.48% at December 31, 2020.
−Removed: Most of the PPP loans originated by the Company during 2020 and 2021 have been forgiven, and the Company expects nearly all of the remaining outstanding PPP loans to be forgiven during 2022.
−Removed: Total loans delinquent 90 days or more and still accruing were $11.7 million at December 31, 2021, a decrease of $10.5 million compared to year end 2020.
−Removed: The decrease was mainly driven by decreases of $7.0 million in consumer credit card, $3.0 million in business, and $1.1 million in consumer loans delinquent 90 days or more, partly offset by an increase of $411 thousand in revolving home equity loan delinquencies.
−Removed: Non-accrual loans at December 31, 2021 were $9.2 million, a decrease of $17.4 million over the prior year, mainly due to a decrease in business and business real-estate non-accrual loans of $15.2 million and $2.0 million, respectively.
+Added: The allowance fell as a percentage of loans at December 31, 2022 as the forecast used in the Company's CECL model moved away from the forecast estimating losses related to the trailing impact of the unprecedented pandemic at year end 2021 to a forecast showing a near term mild recession.
+Added: Table of Conte nts
+Added: Total loans delinquent 90 days or more and still accruing were $15.8 million at December 31, 2022, an increase of $4.1 million compared to year end 2021.
+Added: The increase was mainly driven by growth of $3.7 million in personal real estate loans.
+Added: Non-accrual loans at December 31, 2022 were $8.3 million, a decrease of $851 thousand from the prior year, mainly due to declines in business and personal real estate non-accrual loans of $561 thousand and $264 thousand, respectively.
The allowance for credit losses as a percentage of non-accrual loans was 1,807.6% at December 31, 2022, compared to 1,638.6% at December 31, 2021.
1 unchanged sentence
The 2022 year-end balance of non-accrual loans was comprised of $6.8 million of business loans, $1.4 million of personal real estate loans, and $189 thousand of business real estate loans.
−Removed: Net loan charge-offs totaled $18.6 million in 2021, representing a $16.3 million decrease compared to net charge-offs of $34.9 million in 2020.
−Removed: The decrease was largely due net recoveries of $4.8 million on business loans during 2021, compared to net charge-offs of $3.7 million in the prior year, and lower net charge-offs in consumer credit card and consumer loans of $6.0 million and $1.9 million, respectively.
−Removed: Consumer credit card net charge-offs were 3.47% of average consumer credit card loans in 2021, compared to 3.88% in 2020.
−Removed: Consumer credit card loan net charge-offs as a percentage of total net charge-offs increased to 107.8% in 2021, compared to 74.5% in 2020.
+Added: Net loan charge-offs totaled $19.1 million in 2022, representing a $496 thousand increase compared to net charge-offs of $18.6 million in 2021.
+Added: The increase was largely due to net charge-offs of $1.1 million on business loans during 2022, compared to net recoveries of $4.8 million in the prior year, and higher net charge-offs on consumer loans of $1.2 million in 2022.
+Added: These increases to net charge-offs were partly offset by lower consumer credit card loan net charge-offs of $7.4 million.
+Added: Consumer credit card loan net charge-offs were 2.31% of average consumer credit card loans in 2022, compared to 3.47% in 202 1.
+Added: Consumer credit card loan net charge-offs as a percentage of total net charge-offs decreased to 66.4% in 2022, compared to 107.8% in 2021 .
Consumer loan net charge-offs were .18% of average consumer loans in 2022, compared to .13% in 2021, and represented 19.9% of total net loan charge-offs in 2022.
−Removed: The ratio of net charge-offs to total average loans outstanding in 2021 was .12%, compared to .22% in 2020 and .35% in 2019.
−Removed: At December 31, 2021, the liability for unfunded lending commitments was $24.2 million, a decrease of $14.1 million compared to December 31, 2020.
−Removed: The decrease in the liability for unfunded lending commitments during 2021 was driven by the improved economic forecast.
+Added: The ratio of net loan charge-offs to total average loans outstanding was .12% in both 2022 and 2021 and .22% in 2020.
+Added: At December 31, 2022, the liability for unfunded lending commitments was $33.1 million, an increase of $8.9 million compared to December 31, 2021.
+Added: The increase in the liability for unfunded lending commitments during 2022 was driven primarily by increases in the balance and the average term of unfunded lending commitments.
The Company's unfunded lending commitments primarily relate to construction loans, and the Company's estimate for credit losses in its unfunded lending commitments utilizes the same model and forecast as its estimate for credit losses on loans.
1 unchanged sentence
The Company considers the allowance for credit losses on loans and the liability for unfunded lending commitments adequate to cover losses expected in the loan portfolio, including unfunded commitments, at December 31, 2022.
+Added: Table of Conte nts
The schedules which follow summarize the relationship between loan balances and activity in the allowance for credit losses on loans:
40 unchanged sentences
(A) Net of unearned income, before deducting allowance for credit losses on loans, excluding loans held for sale.
+Added: Table of Conte nts
Years Ended December 31
25 unchanged sentences
Total $ 150,136 100.0 % .92 % $ 150,044 100.0 % .99 %
+Added: Table of Conte nts
Risk Elements of the Loan Portfolio
22 unchanged sentences
$ 15,830 $ 11,726 $ 22,190 $ 19,859 $ 16,658
−Removed: Non-accrual loans totaled $9.2 million at year end 2021, a decrease of $17.4 million from the balance at year end 2020.
−Removed: The decrease from December 31, 2020 occurred mainly in business loans, which decreased $15.2 million, and business real estate loans, which decreased $2.0 million.
+Added: Non-accrual loans totaled $8.3 million at year end 2022, a decrease of $851 thousand from the balance at year end 2021.
+Added: The decrease from December 31, 2021 occurred mainly in business loans, which decreased $561 thousand, and personal real estate loans, which decreased $265 thousand.
At December 31, 2022, non-accrual loans were comprised of business (81.3%), personal real estate (16.4%), and business real estate (2.3%) loans.
−Removed: Foreclosed real estate totaled $115 thousand at December 31, 2021, an increase of $22 thousand when compared to December 31, 2020.
+Added: Foreclosed real estate totaled $96 thousand at December 31, 2022, a decrease of $19 thousand when compared to December 31, 2021.
Total non-performing assets remain low compared to the overall banking industry in 2022, with the non-performing assets to total loans ratio at .05% at December 31, 2022.
−Removed: Total loans past due 90 days or more and still accruing interest were $11.7 million as of December 31, 2021, a decrease of $10.5 million when compared to December 31, 2020.
+Added: Total loans past due 90 days or more and still accruing interest were $15.8 million as of December 31, 2022, an increase of $4.1 million when compared to December 31, 2021.
Balances by class for non-accrual loans and loans past due 90 days and still accruing interest are shown in the "Delinquent and non-accrual loans" section of Note 2 to the consolidated financial statements.
4 unchanged sentences
Such loans totaled $259.7 million at December 31, 2022, compared with $278.7 million at December 31, 2021, resulting in a decrease of $19.0 million or 6.8%.
−Removed: The decrease in potential problem loans was largely driven by a $95.9 million decrease in business loans, partly offset by a $10.9 million and $2.1 million increase in construction loans and business real estate loans, respectively.
+Added: The decrease in potential problem loans was largely driven by an $18.2 million decrease in business real estate loans, partly offset by a $7.2 million increase in construction loans.
(In thousands)
5 unchanged sentences
Total potential problem loans $ 259,724 $ 278,694
+Added: Table of Conte nts
Loans with Special Risk Characteristics
16 unchanged sentences
Residential construction 138,311 10.2 .8 96,618 8.6 .7
−Removed: Residential land and land development 50,513 4.6 .3 59,299 5.8 .4
Commercial land and land development 50,667 3.7 .3 48,481 4.3 .3
+Added: Residential land and land development 50,012 3.7 .3 50,513 4.6 .3
Total real estate – construction and land loans
8 unchanged sentences
Office 497,601 14.6 3.1 380,101 12.4 2.5
−Removed: Multi-family 354,282 11.6 2.3 301,161 10.0 1.8
+Added: Industrial 478,534 14.0 2.9 99,800 3.3 .7
Retail 322,971 9.5 2.0 339,874 11.1 2.2
+Added: Multi-family 308,156 9.0 1.9 354,282 11.6 2.3
Hotels 230,972 6.8 1.4 234,673 7.7 1.5
1 unchanged sentence
Senior living 131,217 3.9 .8 174,871 5.7 1.2
−Removed: Industrial 99,800 3.3 .7 78,341 2.6 .5
Other 105,421 3.1 .6 107,987 3.5 .8
Total real estate - business loans $ 3,406,981 100.0 % 20.9 % $ 3,058,837 100.0 % 20.2 %
+Added: Table of Conte nts
Revolving Home Equity Loans
39 unchanged sentences
For the year ended December 31, 2022, $329.3 million of new auto loans were originated, compared to $400.8 million during 2021.
−Removed: At December 31, 2021, the automobile loan portfolio had a weighted average FICO score of 757, and net charge-offs on auto loans were .13% of average auto loans at December 31, 2021.
+Added: At December 31, 2022, the automobile loan portfolio had a weighted average FICO score of 755, and net charge-offs on auto loans were .26% of average auto loans.
The Company's consumer loan portfolio also includes fixed rate home equity loans, typically for home repair or remodeling, and these loans comprised 11% of the consumer loan portfolio at December 31, 2022.
−Removed: Losses on these loans have historically been low, and the Company saw a net charge-off of $47 thousand in 2021.
+Added: Losses on these loans have historically been low, and the Company saw net recoveries of $46 thousand in 2022.
Private banking loans comprised 32% of the consumer loan portfolio at December 31, 2022.
2 unchanged sentences
Net charge-offs on private banking, health services financing, motorcycle and marine and RV loans totaled $1.7 million in 2022 and were .16% of the average balances of these loans at December 31, 2022.
+Added: Table of Conte nts
Consumer Credit Card Loans
22 unchanged sentences
There were no balances classified as substandard at December 31, 2022.
−Removed: The Company recorded $10 thousand of recoveries on energy loans for the year ended December 31, 2021, compared to $15 thousand of net loan charge-offs on energy loans for the year ended December 31, 2020.
−Removed: Small Business Lending
−Removed: During April 2020, in response to the COVID-19 crisis, the federal government created the Paycheck Protection Program, sponsored by the Small Business Administration ("SBA"), under the Coronavirus Aid, Relief, and Economic Security Act ("CARES Act").
−Removed: As a participating lender under the program, the Company funded $1.9 billion in loans for customers.
−Removed: From the start of the PPP through December 31, 2021, the Company has recognized in income $57.2 million out of $60.4 million total fees that it expects to earn from the program.
−Removed: The Company understands that the loans are fully guaranteed by the SBA.
−Removed: Therefore, there was no increase in the allowance for credit losses on loans related to these loans, as there is no expectation of credit loss.
−Removed: The maximum term of the originated loans is five years, however, as of December 31, 2021, 93% of the PPP loans have been forgiven by the SBA.
−Removed: Almost all of the remaining loans are expected to be forgiven during 2022.
+Added: The Company recorded $5 thousand of recoveries on energy loans for the year ended December 31, 2022, compared to $10 thousand of recoveries on energy loans for the year ended December 31, 2021.
+Added: Table of Conte nts
Investment Securities Analysis
Investment securities are comprised of securities that are classified as available for sale, equity, trading or other.
−Removed: The largest component, available for sale debt securities, increased 19.2% during 2021 to $14.4 billion (excluding unrealized gains/losses in fair value) at year end 2021.
−Removed: During 2021, debt securities of $5.9 billion were purchased, which included $1.5 billion in agency mortgage-backed securities, $2.4 billion in asset-backed securities, $286.7 million in state and municipal securities, and $1.3 billion in non-agency mortgage-based securities.
+Added: The largest component, available for sale debt securities, decreased 4.7% during 2022 to $13.7 billion (excluding unrealized gains/losses in fair value) at year end 2022.
+Added: During 2022, debt securities of $2.1 billion were purchased, which included $1.1 billion in asset-backed securities, $406.3 million in agency mortgage-backed securities, $207.9 million in non-agency mortgage-based securities, $150.1 million in state and municipal securities, and $152.9 million in U.S.
+Added: government and federal agency obligations.
Total sales, maturities and pay downs of available for sale debt securities were $2.8 billion during 2022.
3 unchanged sentences
The average tax equivalent yield earned on total investment securities was 2.15% in 2022 and 1.81% in 2021.
−Removed: At December 31, 2021, the fair value of available for sale securities was $14.5 billion, which included a net unrealized gain in fair value of $30.9 million, compared to a net unrealized gain of $351.7 million at December 31, 2020.
−Removed: The overall unrealized gain in fair value at December 31, 2021 included net gains of $45.2 million is U.S.
−Removed: government and federal agency obligations and net gains of $24.6 million in state and municipal securities.
−Removed: These unrealized gains were partly offset by net losses of $38.5 million in mortgage and asset-backed securities.
+Added: At December 31, 2022, the fair value of available for sale securities was $12.2 billion, which included a net unrealized loss in fair value of $1.5 billion, compared to a net unrealized gain of $30.9 million at December 31, 2021.
+Added: The overall unrealized loss in fair value at December 31, 2022 included net losses of $43.4 million is U.S.
+Added: government and federal agency obligations, net losses of $197.9 million in state and municipal securities, and net losses of $1.2 billion in mortgage and asset-backed securities.
As described in Note 1, the Company adopted ASU 2016-13, Measurement of Credit Losses on Financial Instruments, on January 1, 2020, and the current expected credit loss model (CECL) implemented by the Company requires that lifetime expected credit losses on securities be recorded in current earnings.
22 unchanged sentences
At December 31, 2022, the available for sale portfolio included $4.3 billion of agency mortgage-backed securities, which are collateralized bonds issued by agencies including FNMA, GNMA, FHLMC, FHLB, Federal Farm Credit Banks and FDIC.
−Removed: Non-agency mortgage-backed securities totaled $1.4 billion and included $329.3 million collateralized by commercial mortgages and $1.0 billion collateralized by residential mortgages at December 31, 2021.
+Added: Non-agency mortgage-backed securities totaled $1.2 billion and included $328.4 million collateralized by commercial mortgages and $883.2 million collateralized by residential mortgages at December 31, 2022.
At December 31, 2022, U.S.
1 unchanged sentence
Other debt securities include corporate bonds, notes and commercial paper.
+Added: Table of Conte nts
The types of securities held in the available for sale security portfolio at year end 2022 are presented in the table below.
34 unchanged sentences
$ 225,034 $ 194,047
−Removed: In addition to its holdings in the investment securities portfolio, the Company invests in securities purchased under agreements to resell, which totaled $1.6 billion at December 31, 2021 and $850.0 million at December 31, 2020.
+Added: In addition to its holdings in the investment securities portfolio, the Company invests in securities purchased under agreements to resell, which totaled $825.0 million at December 31, 2022 and $1.6 billion at December 31, 2021.
These investments mature in 2023 through 2025 and have fixed rates or variable rates that fluctuate with published indices.
−Removed: The counterparties to these agreements are other financial institutions from whom the Company has accepted collateral of $1.7 billion in marketable investment securities at December 31, 2021.
+Added: The counterparties to these agreements are other financial institutions from whom the Company has accepted collateral of $869.6 million in marketable investment securities at December 31, 2022.
The average rate earned on these agreements during 2022 was 1.5%, compared to 2.9% in 2021.
3 unchanged sentences
The agreements mature in 2023 and earned an average of 29 basis points during 2022, compared to 30 basis points in 2021.
+Added: Table of Conte nts
Deposits and Borrowings
Deposits, including both individual and corporate customers, are the primary funding source for the Bank and are acquired from a broad base of local markets.
−Removed: Total period-end deposits were $29.8 billion at December 31, 2021, compared to $26.9 billion last year, reflecting an increase of $2.9 billion, or 10.6%.
−Removed: Average deposits increased $4.3 billion, or 18.2%, in 2021 compared to 2020, resulting from increases in average demand deposits, which increased $2.4 billion, primarily driven by higher balances in business demand deposits.
−Removed: Additionally, average money market deposit account balances increased $1.8 billion in 2021, and savings account balances increased $327.1 million.
−Removed: Partially offsetting these increases in deposit balances were declines in average certificates of deposit balances, which decreased $221.0 million in 2021.
+Added: Total period-end deposits were $26.2 billion at December 31, 2022, compared to $29.8 billion last year, reflecting an decrease of $3.6 billion, or 12.2%.
+Added: Average deposits increased $316.6 million, or 1.1%, in 2022 compared to 2021, resulting from increases in interest checking and money market account balances, and savings account balances of $1.1 billion and $133.5 million, respectively.
+Added: Partially offsetting these increases in deposit balances were declines in certificates of deposit balances, which decreased $646.1 million in 2022.
+Added: Additionally, average demand deposits decreased $275.7 million, primarily driven by lower balances in business demand deposits.
The following table shows year end deposit balances by type, as a percentage of total deposits.
11 unchanged sentences
The following table shows a detailed breakdown of the maturities of uninsured certificates of deposit at December 31, 2022.
−Removed: The Company calculated the uninsured deposits in the following table by aggregating all deposit balances by customer and assuming federal deposit insurance would first apply to demand deposits, followed by savings deposits, and lastly to time deposits (beginning with the earliest maturity deposits).
+Added: The Company estimated the uninsured deposits in the following table by aggregating all deposit balances by customer and assuming federal deposit insurance would first apply to demand deposits, followed by savings deposits, and lastly to time deposits (beginning with the earliest maturity deposits).
(In thousands) Uninsured Certificates of Deposit at December 31, 2022
7 unchanged sentences
Total balances of federal funds purchased and repurchase agreements outstanding at December 31, 2022 were $2.8 billion, comprised of federal funds purchased of $159.9 million and repurchase agreements of $2.7 billion.
−Removed: These balances increased $1.1 million and $923.5 million from the federal funds purchased and repurchase agreements outstanding at December 31, 2020.
−Removed: On an average basis, these borrowings increased $368.4 million, or 18.7%, during 2021, due to an increase of $470.9 million in repurchase agreements, partially offset by a decrease of $102.6 million in federal funds purchased.
−Removed: The average rate paid on both federal funds purchased and repurchase agreements was .07% during 2021, compared to rates of .63% paid on federal funds purchased and .29% paid on repurchase agreements during 2020.
−Removed: Historically, the majority of the Company’s long-term debt has been comprised of fixed rate advances from the FHLB.
−Removed: There were no FHLB borrowings during 2021.
−Removed: In March 2020, the Company borrowed $750.0 million of short-term funds from the FHLB, and all of those borrowings were repaid by the Company during the second quarter of 2020.
−Removed: The average rate paid on FHLB advances was .82% during 2020.
+Added: These balances increased $116.5 million from the federal funds purchased and decreased $297.7 million from the repurchase agreements outstanding at December 31, 2021.
+Added: On an average basis, these borrowings increased $104.4 million, or 4.5%, during 2022, due to an increase of $44.8 million in repurchase agreements and $59.6 million in federal funds purchased.
+Added: The average rate was 2.21% paid on federal funds purchased and 1.02% paid on repurchase agreements during 2022, compared to the average rate paid on both federal funds purchased and repurchase agreements of .07% during 2021.
+Added: In addition to the funding sources above, the Company may borrow from the FHLB on a short-term basis (borrowings with an original maturity of less than one year) and long-term basis.
+Added: During 2022, the Company had average short-term borrowings of $45.1 million.
+Added: All of the short-term borrowings were repaid by the Company before December 31, 2022, and the average
+Added: Table of Conte nts
+Added: rate paid on the FHLB borrowings during 2022 was 4.02%.
+Added: The Company did not have any short-term FHLB borrowings during 2021.
+Added: The Company did not borrow any long-term funds from the FHLB during 2022 or 2021.
Liquidity and Capital Resources
21 unchanged sentences
There were $49.5 million federal funds sold at December 31, 2022, which are funds lent to the Company’s correspondent bank customers with overnight maturities.
−Removed: Resale agreements, maturing through 2023, totaled $1.6 billion at December 31, 2021.
+Added: Resale agreements, maturing through 2025, totaled $825.0 million at December 31, 2022.
Under these agreements, the Company lends funds to upstream financial institutions and holds marketable securities, safe-kept by a third-party custodian, as collateral.
−Removed: This collateral totaled $1.7 billion in fair value at December 31, 2021.
−Removed: Interest earning balances at the Federal Reserve Bank, which have overnight maturities and are used for general liquidity purposes, totaled $4.0 billion at December 31, 2021.
−Removed: The fair value of the available for sale debt portfolio was $14.5 billion at December 31, 2021 and included an unrealized net gain of $30.9 million.
−Removed: The total net unrealized gain included net gains of $45.2 million on U.S.
−Removed: government and federal agency obligations and $24.6 million on state and municipal obligations.
−Removed: These net gains were partially offset by net unrealized losses of $38.5 million on mortgage-backed and asset-backed securities.
+Added: This collateral totaled $869.6 million in fair value at December 31, 2022.
+Added: Interest earning balances at the Federal Reserve Bank, which have overnight maturities and are used for general liquidity purposes, totaled $389.1 million at December 31, 2022.
+Added: The fair value of the available for sale debt portfolio was $12.2 billion at December 31, 2022 and included an unrealized net loss of $1.5 billion.
+Added: The total net unrealized loss included net loss of $1.2 billion on mortgage-backed and asset-backed securities, $197.9 million on state and municipal obligations, and $43.4 million on U.S.
+Added: government and federal agency obligations.
Approximately $2.4 billion of the available for sale debt portfolio is expected to mature or pay down during 2023, and these funds offer substantial resources to meet either new loan demand or help offset potential reductions in the Company’s deposit funding base.
1 unchanged sentence
At December 31, 2022 and 2021, total investment securities pledged for these purposes were as follows:
+Added: Table of Conte nts
(In thousands) 2022 2021
13 unchanged sentences
These core deposits are normally less volatile, often with customer relationships tied to other products offered by the Company promoting long lasting relationships and stable funding sources.
−Removed: Core deposits increased $3.3 billion at year end 2021 compared to year end 2020, primarily due to increases in commercial and consumer deposits of $2.0 billion and $1.4 billion, respectively.
+Added: Core deposits decreased $3.2 billion at year end 2022 compared to year end 2021, primarily due to decreases in commercial and wealth management deposits of $2.0 billion and $820 million, respectively.
While the Company considers core consumer and wealth management deposits less volatile, corporate deposits could decline if interest rates increase significantly, encouraging corporate customers to increase investing activities, or if the economy declines and companies experience lower cash inflows, reducing deposit balances.
7 unchanged sentences
Total $ 25,193,337 $ 28,370,459
−Removed: Certificates of deposit of $100,000 or greater totaled $1.0 billion at December 31, 2021.
+Added: Certificates of deposit of $100,000 or greater totaled $607 million at December 31, 2022.
These deposits are normally considered more volatile and higher costing, and comprised 2.3% of total deposits at December 31, 2022.
10 unchanged sentences
Total repurchase agreements at December 31, 2022 were comprised of non-insured customer funds totaling $2.7 billion, and securities pledged for these retail agreements totaled $2.7 billion.
+Added: Table of Conte nts
The Company pledges certain assets, including loans and investment securities to both the Federal Reserve Bank and the FHLB as security to establish lines of credit and borrow from these entities.
6 unchanged sentences
Federal Reserve Total
−Removed: Total collateral value pledged $ 2,000,941 $ 1,033,648 $ 3,034,589
+Added: Total collateral value established by FHLB and FRB $ 1,855,080 $ 953,083 $ 2,808,163
Letters of credit issued (678,215) — (678,215)
15 unchanged sentences
Because of its lack of significant long-term debt, the Company believes that, through its Capital Markets Group or in other public debt markets, it could generate additional liquidity from sources such as jumbo certificates of deposit, privately-placed corporate notes or other forms of debt.
−Removed: The cash flows from the operating, investing and financing activities of the Company resulted in a net increase in cash, cash equivalents and restricted cash of $2.1 billion in 2021, as reported in the consolidated statements of cash flows.
+Added: The cash flows from the operating, investing and financing activities of the Company resulted in a net decrease in cash, cash equivalents and restricted cash of $3.4 billion in 2022, as reported in the consolidated statements of cash flows.
Operating activities, consisting mainly of net income adjusted for certain non-cash items, provided cash flow of $559.4 million and has historically been a stable source of funds.
−Removed: Investing activities used cash of $2.1 billion.
−Removed: Purchases (net of sales and maturities proceeds) of investment securities used cash of $2.4 billion, securities purchased under agreements to resell used cash of $900.0 million, and a net decrease in the loan portfolio provided cash of $1.1 billion.
+Added: Investing activities provided cash of $242.3 million.
+Added: Sales and maturities proceeds (net of purchases) of investment securities provided cash of $650.4 million, repayments of securities purchased under agreements to resell (net of securities purchased under agreements to resell) provided cash of $800.0 million, and a net increase in the loan portfolio used cash of $1.1 billion.
Investing activities are somewhat unique to financial institutions in that, while large sums of cash flow are normally used to fund growth in investment securities, loans, or other bank assets, they are normally dependent on the financing activities described below.
−Removed: During 2021, financing activities provided cash of $3.6 billion.
−Removed: This increase in cash was largely driven by growth in deposits, which provided cash of $2.9 billion.
−Removed: Federal funds purchases and short-term securities sold under agreements to repurchase provided cash in the amount of $924.6 million.
+Added: During 2022, financing activities used cash of $4.2 billion.
+Added: This decrease in cash was largely driven by a decline in deposits, which used cash of $3.7 billion.
+Added: Federal funds purchases and short-term securities sold under agreements to repurchase used cash in the amount of $181.2 million.
The Company paid cash dividends of $127.5 million on common stock, and treasury stock purchases used cash of $186.6 million during 2022.
Future short-term liquidity needs for daily operations are not expected to vary significantly, and the Company believes it maintains adequate liquidity to meet these cash flows.
+Added: Table of Conte nts
Cash outflows resulting from the Company’s transactions in its common and preferred stock were as follows:
2 unchanged sentences
$ 186.6 $ 129.4 $ 54.2
−Removed: Accelerated share repurchase agreements
Common cash dividends paid
4 unchanged sentences
* The period ended December 31, 2020 includes $5.2 million of excess redemption costs over the book value of the preferred stock.
−Removed: This excess payment considered a dividend.
+Added: This excess payment was considered a dividend.
The Parent faces unique liquidity constraints due to legal limitations on its ability to borrow funds from its bank subsidiary.
28 unchanged sentences
In the normal course of business, various commitments and contingent liabilities arise that are not required to be recorded on the balance sheet.
−Removed: The most significant of these are loan commitments totaling $13.3 billion (including approximately $5.0
−Removed: billion in unused, approved credit card lines) and the contractual amount of standby letters of credit totaling $418.3 million at December 31, 2021.
+Added: The most significant of these are loan commitments totaling $14.3 billion (including approximately $5.2 billion in unused, approved credit card lines) and the contractual amount of standby letters of credit totaling $555.9 million at
+Added: Table of Conte nts
+Added: December 31, 2022.
As many commitments expire unused or only partially used, these totals do not necessarily reflect future cash requirements.
23 unchanged sentences
Future acquisitions may utilize partial funding through one or more of these options.
−Removed: Through the various sources of liquidity described above, the Corporation maintains a liquidity position that it believes will adequately satisfy its financial obligations.
+Added: Through the various sources of liquidity described above, the Company maintains a liquidity position that it believes will adequately satisfy its financial obligations.
The Company is not aware of any trends, events, or commitments that are reasonably likely to increase or decrease its liquidity in a material way.
+Added: Table of Conte nts
Capital Management
20 unchanged sentences
As a result, the two year deferral period for the Company extends through December 31, 2021.
−Removed: Beginning on January 1, 2022, the Company will be required to phase in 25% of the previously deferred estimated capital impact of CECL, with an additional 25% to be phased in at the beginning of each subsequent year until fully phased in by the first quarter of 2025.
+Added: Beginning on January 1, 2022, the Company was required to phase in 25% of the previously deferred estimated capital impact of CECL, with an additional 25% to be phased in at the beginning of each subsequent year until fully phased in by the first quarter of 2025.
The Company maintains a treasury stock buyback program under authorizations by its Board of Directors and periodically purchases stock in the open market.
−Removed: During 2020, the Company purchased 886 thousand shares, and during 2021 the Company purchased 1.8 million shares.
−Removed: There were no shares purchased under an accelerated share repurchase (ASR) agreement in 2021 or 2020.
−Removed: The ASR agreement is further discussed in Note 14 to the consolidated financial statements.
+Added: During 2021, the Company purchased 1.8 million shares, and during 2022 the Company purchased 2.7 million shares.
At December 31, 2022, 3.1 million shares remained available for purchase under the current Board authorization.
5 unchanged sentences
On and after September 1, 2020, all dividends on the shares of Series B Preferred Stock ceased to accrue.
+Added: Table of Conte nts
Interest Rate Sensitivity
3 unchanged sentences
Management has set guidelines specifying acceptable limits within which net interest income and market value may change under various rate change scenarios.
−Removed: These measurement tools indicate that the Company is currently within acceptable risk guidelines as set by management.
The Company’s main interest rate measurement tool, income simulation, projects net interest income under various rate change scenarios in order to quantify the magnitude and timing of potential rate-related changes.
13 unchanged sentences
The tables below show the effects of gradual shifts in interest rates over a twelve month period on the Company’s net interest income versus the Company's net interest income in a flat rate scenario.
−Removed: Simulation A presents three rising rate scenarios and in each scenario, rates are assumed to change evenly over 12 months.
−Removed: In these scenarios, the balance sheet remains flat.
−Removed: The sensitivity of deposit balances to changes in rates is particularly difficult to estimate in exceptionally low rate environments.
+Added: Simulation A presents three rising rate scenarios and three falling rate scenarios and in each scenario, rates are assumed to change evenly over 12 months.
+Added: In these scenarios, the current balance sheet is held constant.
+Added: The sensitivity of deposit balances to changes in rates is particularly difficult to estimate in low rate environments.
Since the future effects of changes in rates on deposit balances cannot be known with certainty, the Company conservatively models alternate scenarios with greater deposit attrition as rates rise.
Simulation B illustrates results from these higher attrition scenarios to provide added perspective on potential effects of higher rates.
−Removed: The Company utilizes these simulations both for monitoring interest rate risk and for liquidity planning purposes.
−Removed: While the future effects of rising rates on deposit balances cannot be known, the Company maintains a practice of running multiple rate scenarios to better understand interest rate risk and its effect on the Company’s performance.
+Added: The Company utilizes these simulations for monitoring interest rate risk.
+Added: While the future effects of rising and falling rates on deposit balances cannot be known, the Company maintains a practice of running multiple rate scenarios to better understand interest rate risk and its effect on the Company’s performance.
Simulation A December 31, 2022 September 30, 2022
5 unchanged sentences
100 basis points rising 4.1 .38 — 9.9 .97 —
−Removed: Under Simulation A, in the three rising rate scenarios, interest rate risk is slightly more asset sensitive than the previous quarter, which resulted mainly from an increase in interest earning deposits with the Federal Reserve.
−Removed: Deposit attrition was removed from the simulation in both the current and previous quarters.
−Removed: The Company did not model a 100 basis point falling scenario due to the already low interest rate environment.
+Added: 100 basis points falling (24.0) (2.2) — (28.5) (2.80) —
+Added: 200 basis points falling (52.6) (4.82) — (62.5) (6.14) —
+Added: 300 basis points falling (84.9) (7.78) — (101.1) (9.94) —
+Added: Under Simulation A, in the three rising rate scenarios and three falling rate scenarios, interest rate risk is less asset sensitive than the previous quarter.
+Added: This is mainly due to an increase in the Federal funds rate, which puts upward pressure on deposit
+Added: Table of Conte nts
+Added: rates in the rising rate scenarios and deposit rates have more room to fall in falling rate scenarios.
+Added: Deposits are held constant for this simulation in both the current and previous quarters.
Simulation B December 31, 2022 September 30, 2022
5 unchanged sentences
100 basis points rising (5.0) (.48) (136.6) (14.0) (1.43) (405.7)
−Removed: In Simulation B, the assumed higher levels of deposit attrition were modeled to capture the results of a shrinking balance sheet.
−Removed: Under this Simulation, in the three rising rate scenarios, interest rate risk is slightly less asset sensitive than the previous quarter, which primarily resulted from an increase in surge deposits.
−Removed: Projecting deposit activity in a historically low interest rate environment is difficult, and the Company cannot predict how deposits will react to shifting rates.
−Removed: The comparison provided above provides insight into potential effects of changes in rates and deposit levels on net interest income.
−Removed: The Company believes that its approach to interest rate risk has appropriately considered its susceptibility to both rising and falling rates and has adopted strategies which minimize the impact of interest rate risk.
+Added: 100 basis points falling 3.6 .34 539.3 (6.0) (.62) 403.2
+Added: 200 basis points falling (15.2) (1.45) 761.0 (26.5) (2.72) 849.4
+Added: 300 basis points falling (45.6) (4.36) 792.0 (58.7) (6.02) 1,446.4
+Added: * Compared to the flat rate scenario
+Added: In Simulation B, the assumed levels of deposit attrition were modeled to capture the results of a shrinking balance sheet due to the potential loss of surge deposits.
+Added: Under this Simulation, in the three rising rate scenarios and three falling rate scenarios, interest rate risk is less liability sensitive than the previous quarter, which primarily resulted from a decrease in surge deposits and changes in surge deposit run-off.
+Added: In the three falling rate scenarios, interest rate risk was also impacted by higher non-maturity deposit rates, which increased during the current quarter and now have more room to fall.
+Added: Table of Conte nts
Derivative Financial Instruments
13 unchanged sentences
Interest rate swaps $ 1,981,821 $ 23,894 $ (51,742) $ 2,229,419 $ 40,752 $ (11,606)
+Added: Interest rate floors 1,000,000 33,371 — — — —
Interest rate caps 152,784 2,705 (2,705) 152,058 147 (147)
20 unchanged sentences
The operating segments also include a number of allocations of income and expense from various support and overhead centers within the Company.
+Added: Table of Conte nts
The table below is a summary of segment pre-tax income results for the past three years.
29 unchanged sentences
$ 149,959 $ 340,272 $ 148,731 $ 638,962 $ 47,339 $ 686,301
−Removed: Increase in income before income taxes:
+Added: Decrease in income before income taxes:
Amount $ (13,287) $ (29,168) $ (5,849) $ (48,304) $ (5,619) $ (53,923)
13 unchanged sentences
$ 140,607 $ 289,501 $ 121,915 $ 552,023 $ (110,845) $ 441,178
−Removed: Increase (decrease) in income before income taxes:
+Added: Increase in income before income taxes:
Amount $ 9,352 $ 50,771 $ 26,816 $ 86,939 $ 158,184 $ 245,123
1 unchanged sentence
The Consumer segment includes consumer deposits, consumer finance, and consumer debit and credit cards.
+Added: During 2022, income before income taxes for the Consumer segment decreased $13.3 million, or 8.9%, compared to 2021.
+Added: This decrease was due to a decline in non-interest income of $31.2 million, or 21.2%, and higher non-interest expense of $7.1 million, or 2.4%.
+Added: These decreases to income were partly offset by growth in net interest income of $19.6 million, or 6.1%, and a decrease in the provision for credit losses of $5.4 million, or 23.1%.
+Added: Net interest income increased due to a $19.0 million increase in net allocated funding credits assigned to the Consumer segment's loan and deposit portfolios.
+Added: Non-interest income decreased mainly due to declines of $24.7 million in mortgage banking revenue and $4.0 million in overdraft and return item fees.
+Added: Non-interest expense increased over the prior year mainly due to higher occupancy expense, insurance expense and allocated service and support costs (mainly bank card fraud operations and information technology), partly offset by lower allocated service costs for branch employees and mortgage operations.
+Added: The provision for credit losses totaled $17.9 million, a $5.4 million decrease from the prior year, which resulted mainly from lower credit card loan net charge-offs, slightly offset by higher consumer loan net charge-offs.
+Added: Total average loans in this segment decreased $95.5 million, or 5.0%, in 2022 compared to 2021 mainly due to declines in consumer credit card and auto loans.
+Added: Average deposits increased $559.8 million, or 4.4%, over the prior year, resulting from growth in personal demand, savings and interest checking and money market deposit account balances.
+Added: Table of Conte nts
During 2021, income before income taxes for the Consumer segment increased $9.3 million, or 6.7%, compared to 2020.
3 unchanged sentences
Non-interest income decreased mainly due to a decline in mortgage banking revenue, partly offset by growth in net credit and debit card fees (mainly higher interchange fees, partly offset by higher credit card rewards expense) and check sales and wire fees.
−Removed: Non-interest expense decreased from the prior year mainly due to lower salaries and benefits expense, occupancy expense, allocated servicing costs for mortgage operations and a reduction in impairment expense on mortgage servicing rights.
+Added: Non-interest expense decreased from 2020 mainly due to lower salaries and benefits expense, occupancy expense, allocated servicing costs for mortgage operations and a reduction in impairment expense on mortgage servicing rights.
These decreases were partly offset by higher marketing expense and higher allocated costs for information technology.
−Removed: The provision for credit losses totaled $23.2 million, an $8.0 million decrease from the prior year, which resulted mainly from lower net charge-offs on consumer credit card and consumer loans.
+Added: The provision for credit losses totaled $23.2 million, an $8.0 million decrease from 2020, which resulted mainly from lower net charge-offs on consumer credit card and consumer loans.
Total average loans in this segment decreased $178.3 million, or 8.5%, in 2021 compared to 2020 mainly due to declines in consumer credit card, auto and fixed and revolving home equity loans.
−Removed: Average deposits increased $1.6 billion, or 13.8%, over the prior year, resulting from growth in personal demand, savings and interest checking and money market deposit accounts.
−Removed: During 2020, income before income taxes for the Consumer segment increased $32.1 million, or 29.6%, compared to 2019.
−Removed: This increase was due to growth of $5.3 million, or 1.7% in net interest income, non interest income of $13.3 million, or 9.9%, and a decrease to the provision for credit losses of $13.8 million.
−Removed: Net interest income increased due to an $18.0 million increase in net allocated funding credits and lower deposit interest expense of $7.3 million, partly offset by a decrease in interest income on loans of $20.1 million.
−Removed: Non-interest income increased mainly due to growth in mortgage banking revenue, partly offset by declines in deposit fees (mainly overdraft and return item fees) and net credit and debit card fees (mainly lower interchange fees, partly offset by lower rewards expense).
−Removed: These increases to income were partly offset by growth of $260 thousand, or .1%, in non-interest expense.
−Removed: Non-interest expense increased over 2019 due to higher incentive compensation expense, allocated teller servicing costs, intangible asset amortization and an impairment on mortgage servicing rights.
−Removed: These increases were partly offset by lower supplies and communication expense, marketing expense, and bank card processing fees.
−Removed: The provision for credit losses totaled $31.2 million, a $13.8 million decrease from 2019, which resulted mainly from lower net charge-offs on consumer credit card and consumer loans.
−Removed: Total average loans in this segment decreased $139.3 million, or 6.2%, in 2020 compared to 2019 mainly due to declines in consumer credit card and fixed and revolving home equity loans.
−Removed: Average deposits increased $1.0 billion over 2019, resulting from growth in personal demand, savings, interest checking and money market deposit accounts.
+Added: Average deposits increased $1.6 billion, or 13.8%, over 2020, resulting from growth in personal demand, savings and interest checking and money market deposit account balances.
The Commercial segment provides lending (including the Small Business Banking product line within the branch network), leasing, international services, and business, government deposit, and related commercial cash management services, as well as merchant and commercial bank card products.
The segment includes the Capital Markets Group, which sells fixed-income securities to correspondent banks, corporations, public institutions, municipalities, and individuals and also provides securities safekeeping and bond accounting services.
+Added: Pre-tax income for 2022 decreased $29.2 million, or 8.6%, compared to 2021, mainly due to increases in non-interest expense and the provision for credit losses, partly offset by an increase in non-interest income.
+Added: Net interest income decreased $1.0 million, or .2%, due to a $21.4 million decrease in net allocated funding credits assigned to the Commercial segment's loan and deposit portfolios, coupled with higher interest expense on customer repurchase agreements and deposits of $22.6 million and 18.5 million, respectively.
+Added: The decreases were partly offset by a $61.2 million increase in loan interest income.
+Added: The provision for credit losses increased $6.0 million due to net charge-offs recorded on business loans in 2022 compared to net recoveries recorded in the prior year.
+Added: Non-interest income increased $13.8 million, or 6.6%, over 2021 due to higher net bank card fees (mainly corporate card), deposit account fees (mainly corporate cash management fees), and higher cash sweep commissions.
+Added: These increases were partly offset by lower capital market fees.
+Added: Non-interest expense increased $36.0 million, or 10.9%, during 2022, mainly due to higher salaries and benefits expense, data processing and software expense, travel and entertainment expense, and allocated service and support costs (mainly bank operations expense, branch employee expense, and commercial banking expense).
+Added: Average segment loans decreased $216.9 million, or 2.1%, compared to 2021, mainly due to a decline in business loans, partly offset by increases in business real estate and construction loans.
+Added: Average deposits decreased $49.4 million, or .4%, mainly due to declines in business demand and certificate of deposit account balances, offset by an increase in interest checking and money market deposit account balances.
Pre-tax income for 2021 increased $50.8 million, or 17.5%, compared to 2020, mainly due to increases in net interest income and non-interest income and a decline in the provision for credit losses, partly offset by an increase in non-interest expense.
Net interest income increased $39.0 million, or 9.4%, due to higher net allocated funding credits of $56.9 million and lower interest expense of $12.9 million on deposits and customer repurchase agreements, partly offset by a decrease of $30.9 million in loan interest income.
−Removed: The provision for credit losses decreased $8.6 million due to recoveries recorded on business loans in the current year compared to net charge-offs recorded in the prior year.
+Added: The provision for credit losses decreased $8.6 million due to recoveries recorded on business loans in 2021 compared to net charge-offs recorded 2020.
Non-interest income increased $16.5 million, or 8.5%, over 2020 due to higher net bank card fees (mainly corporate card and merchant fees), deposit account fees (mainly corporate cash management fees), and higher interest rate swap fees.
4 unchanged sentences
Average deposits increased $2.1 billion, or 20.7%, mainly due to growth in business demand deposits.
−Removed: Pre-tax income for 2020 increased $55.7 million, or 23.8%, compared to 2019, mainly due to an increase in net interest income, partly offset by a decrease in non-interest income and an increase in non-interest expense.
−Removed: Net interest income increased $71.5 million, or 20.8%, due to growth of $75.7 million in net allocated funding credits and lower interest expense of $46.2 million on deposits and customer repurchase agreements, partly offset by a decrease of $50.4 million in loan interest income.
−Removed: The provision for credit losses decreased $480 thousand from 2019 due to lower lease loan net charge-offs, partly offset by higher business loan net charge-offs.
−Removed: Non-interest income decreased $9.4 million, or 4.6%, from 2019 due to lower net corporate card fees (driven by lower transaction volume), lower swap fees and lower gains on sales of leased assets.
−Removed: These decreases were partly offset by higher deposit account fees (mainly corporate cash management) and capital market fees.
−Removed: Non-interest expense increased $6.8 million, or 2.2%, during 2020, mainly due to higher salaries and incentive compensation expense and allocated service and support costs (mainly information technology and commercial loan servicing).
−Removed: These increases were partly offset by decreases in travel and entertainment expense and allocated teller services costs, as well as higher deferred origination costs.
−Removed: Average segment loans increased $1.3 billion, or 14.2%, compared to 2019, with growth occurring in business (mainly PPP loans) and business real estate loans.
−Removed: Average deposits increased $2.1 billion, or 26.6%, mainly due to growth in business demand accounts.
The Wealth segment provides traditional trust and estate planning, advisory and discretionary investment management services, brokerage services, and includes Private Banking accounts.
At December 31, 2022, the Trust group managed investments with a market value of $37.3 billion and administered an additional $23.0 billion in non-managed assets.
−Removed: It also provides investment management services to The Commerce Funds, a series of mutual funds with $3.2 billion in total assets at December 31, 2021.
−Removed: In 2021, pre-tax income for the Wealth segment was $148.7 million, compared to $121.9 million in 2020,
−Removed: an increase of $26.8 million, or 22.0%.
+Added: It also provides investment management services to The Commerce Funds, a series of mutual funds with $2.5 billion in total assets at
+Added: Table of Conte nts
+Added: December 31, 2022.
+Added: In 2022, pre-tax income for the Wealth segment was $142.9 million, compared to $148.7 million in 2021, a decrease of $5.8 million, or 3.9%.
+Added: Net interest income increased $2.9 million, or 4.0%, mainly due to a $16.4 million increase in loan interest income, partly offset by a $12.5 million decrease in net allocated funding credits assigned to the Wealth segment's loan and deposit portfolios and a $1.0 million increase in deposit interest expense.
+Added: Non-interest income decreased $229 thousand, or .1%, from the prior year due to higher cash sweep commissions and brokerage fees, partly offset by lower mortgage banking revenue and trust fees.
+Added: Non-interest expense increased $8.6 million, or 6.3%, resulting from higher salaries and benefits expense, travel and entertainment expense, and marketing expense.
+Added: The provision for credit losses decreased $44 thousand, mainly due to net recoveries on revolving home equity loans.
+Added: Average assets increased $253.3 million, or 16.0%, during 2022 mainly due to higher personal real estate and consumer loan balances.
+Added: Average deposits decreased $161.0 million, or 5.4%, due to a decline in interest checking and money market deposit account balances.
+Added: In 2021, pre-tax income for the Wealth segment was $148.7 million, compared to $121.9 million in 2020, an increase of $26.8 million, or 22.0%.
Net interest income increased $13.6 million, or 23.5%, due to an $11.0 million increase in net allocated funding credits and lower deposit interest expense of $4.0 million, slightly offset by a decline in loan interest income of $1.3 million.
−Removed: Non-interest income increased $24.7 million, or 13.1%, over the prior year largely due to higher private client and institutional trust fees and brokerage fees, partly offset by lower cash sweep commissions.
+Added: Non-interest income increased $24.7 million, or 13.1%, over 2020 largely due to higher private client and institutional trust fees and brokerage fees, partly offset by lower cash sweep commissions.
Non-interest expense increased $11.4 million, or 9.1%, resulting from higher salaries expense (mainly incentive compensation) and higher allocated support costs for information technology.
2 unchanged sentences
Average deposits increased $694.7 million, or 30.6%, due to growth in business demand and interest checking and money market account deposit balances.
−Removed: In 2020, pre-tax income for the Wealth segment was $121.9 million, compared to $105.7 million in 2019, an increase of $16.2 million, or 15.3%.
−Removed: Net interest income increased $10.1 million, or 21.0%, due to a $14.4 million increase in net allocated funding credits and lower deposit interest expense of $2.8 million, partly offset by a decline in loan interest income of $7.2 million.
−Removed: Non-interest income increased $8.1 million, or 4.5%, over the prior year largely due to higher private client and institutional trust fees and mortgage banking revenue.
−Removed: Non-interest expense increased $2.2 million, or 1.8%, resulting from higher salaries expense and higher allocated service and support costs (mainly mortgage loan processing and information technology), partly offset by lower costs for travel and entertainment.
−Removed: The provision for credit losses decreased $186 thousand, mainly due to net recoveries on revolving home equity loans.
−Removed: Average assets increased $118.0 million, or 9.2%, during 2020 mainly due to growth in personal real estate and consumer loan balances.
−Removed: Average deposits increased $438.7 million, or 23.9%, due to growth in interest checking and money market account balances.
The segment activity, as shown above, includes both direct and allocated items.
1 unchanged sentence
In accordance with the Company's transfer pricing procedures, the difference between the total provision and total net charge-offs/recoveries is not allocated to a business segment and is included in this category.
−Removed: In 2021, the pre-tax net income in this category was $47.3 million, compared to a net loss of $110.9 million in 2020.
−Removed: This increase was due to higher non-interest income of $14.6 million, partly offset by a decrease in net interest income of $45.4 million, and an increase in non-interest expense of $17.1 million.
+Added: In 2022, the pre-tax net income in this category was $41.7 million, compared to $47.3 million in 2021.
+Added: This decrease was mainly due to an increase in the provision for credit losses of $93.8 million and an $8.7 million increase in non-interest expense, partly offset by increases of $85.2 million in net interest income and $3.8 million in non-interest income.
Unallocated securities gains were $20.5 million in 2022, compared to securities gains of $30.1 million in 2021.
−Removed: Also, the unallocated provision for credit losses decreased $187.0 million, primarily driven by a decrease in the allowance for credit losses on loans and the liability for unfunded lending commitments, which are not allocated to segments for management reporting purposes.
+Added: The increase in the unallocated provision for credit losses of $93.8 million was primarily driven by an increase in the allowance for credit losses on loans and the liability for unfunded lending commitments, which are not allocated to segments for management reporting purposes.
Net charge-off are allocated to segments when incurred for management reporting purposes.
−Removed: For the year ended December 31, 2021, the Company's provision for credit losses on unfunded lending commitments, which is not allocated to the segments for management reporting, was a benefit of $14.1 million.
−Removed: Additionally, the provision for credit losses on loans was $70.8 million lower than net charge-offs, as the provision was a benefit in 2021, while the provision was $81.2 million in excess of net charge-offs in 2020.
+Added: For the year ended December 31, 2022, the Company's provision for credit losses on unfunded lending commitments, which is not allocated to the segments for management reporting, was $8.9 million, compared to a benefit of $14.1 million in 2021.
+Added: Additionally, the provision for credit losses on loans was $92 thousand in excess of net charge-offs in 2022, while the provision was $70.8 million lower than net charge-offs in 2021.
+Added: Table of Conte nts
Impact of Recently Issued Accounting Standards
−Removed: Financial Instruments ASU 2016-13, "Measurement of Credit Losses on Financial Instruments", known as the CECL model, was issued in June 2016, and has been followed by additional clarifying guidance on specified implementation issues.
−Removed: This new standard is effective for fiscal years beginning after December 15, 2019 and was adopted by the Company on January 1, 2020 using the modified retrospective method.
−Removed: CECL requires the calculation of expected lifetime credit losses and is applied to financial assets measured at amortized cost, including loans and held-to-maturity securities as well as certain unfunded lending commitments such as loan commitments.
−Removed: The standard also changes the impairment model of available for sale debt securities.
−Removed: The allowance for loan losses under the previously required incurred loss model is different under the requirements of the CECL model.
−Removed: At adoption, a cumulative-effect adjustment for the change in the allowance for credit losses increased retained earnings by $3.8 million.
−Removed: The cumulative-effect adjustment to retained earnings, net of taxes, was comprised of the impact to the allowance for credit losses on outstanding loans and the impact to the liability for unfunded lending commitments.
−Removed: There was no implementation impact on held-to-maturity debt securities as the Company does not hold any held-to-maturity debt securities.
−Removed: CECL does not require the use of a specific loss estimation method for purposes of determining the allowance for credit losses.
−Removed: The Company selected a methodology that uses historical net charge-off rates, adjusted by the impacts of a reasonable and supportable forecast and the impacts of other qualitative factors to determine the expected credit losses.
−Removed: Key assumptions include the application of historical loss rates, prepayment speeds, forecast results of a reasonable and supportable period, the period to revert to historical loss rates, and qualitative factors.
−Removed: The forecast is determined using projections of certain macroeconomic variables, such as, unemployment rate, prime rate, BBB corporate yield, and house price index.
−Removed: The model design and methodology requires management judgment.
−Removed: Upon adoption of CECL, the allowance for credit losses on the commercial portfolio decreased due to the relatively short contractual lives of the commercial loan portfolios coupled with an economic forecast predicting stable macroeconomic factors.
−Removed: The allowance for credit losses on the personal banking portfolio increased upon adoption of CECL, due to the relatively longer contractual lives of certain portfolios, primarily those collateralized with personal real estate.
−Removed: Because the commercial loan portfolio represented 63% of total loans at December 31, 2019, the change in its allowance for credit losses had a more significant impact on the total allowance for credit losses, and resulted in a net reduction in the allowance for credit losses.
−Removed: As a result, the Company's allowance for loan losses to total loans ratio declined from 1.09% at December 31, 2019, to .95% at the time of the Company's adoption of CECL.
−Removed: Offsetting the overall reduction in the allowance for credit losses for outstanding loans was an increase in the liability for unfunded lending commitments, as the loss estimation was required to be expanded over the contractual commitment period.
−Removed: Further discussion of the accounting impact of the Company's adoption is included in Note 1 to the consolidated financial statements.
−Removed: Additionally, the Company elected to phase the estimated impact of CECL into regulatory capital in accordance with the interim final rule of the Federal Reserve Bank and other U.S.
−Removed: banking agencies.
−Removed: Further discussion of the impact of this election is discussed above in Capital Management within Liquidity and Capital Resources .
−Removed: Intangible Assets The FASB issued ASU 2017-04, "Simplifying the Test for Goodwill Impairment", in January 2017.
−Removed: Under current guidance, a goodwill impairment loss is measured by comparing the implied fair value of a reporting unit's goodwill with the carrying amount of that goodwill by following procedures that would be required in determining the fair value of assets acquired and liabilities assumed in a business combination.
−Removed: Under the new amendments, the goodwill impairment test compares the fair value of a reporting unit with its carrying amount and an impairment charge is measured as the amount by which the carrying amount exceeds the reporting unit's fair value.
−Removed: The amendments were effective for impairment tests beginning January 1, 2020, and the Company adopted them on that date.
−Removed: The adoption did not have a significant effect on the Company's consolidated financial statements.
−Removed: Financial Instruments The FASB issued ASU 2018-13, "Changes to the Disclosure Requirements of Fair Value Measurement", in August 2018.
−Removed: The amendments in the ASU eliminate or modify certain disclosure requirements for fair value measurements in Topic 820, Fair Value Measurement .
−Removed: In addition, the amendments in the ASU also require the addition of new disclosure requirements on fair value measurement, including the disclosure of changes in unrealized gains and losses for the period included in AOCI for recurring Level 3 fair value measurements and the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements.
−Removed: The guidance was effective January 1, 2020, and the Company adopted the new guidance on that date.
−Removed: The adoption did not have a significant effect on the Company's consolidated financial statements.
−Removed: Retirement Benefits The FASB issued ASU 2018-14, "Compensation - Retirement Benefits-Defined Benefit Plans-General (Subtopic 715-20)", in August 2018.
−Removed: The amendments in the ASU eliminate disclosures that are no longer considered cost beneficial and clarify specific requirements of disclosures.
−Removed: In addition, the amendments in the ASU also add new disclosures, including the explanation of the reasons for significant gains and losses related to changes in the benefit obligation for the period.
−Removed: The amendments were effective January 1, 2020, and the Company adopted them on that date.
−Removed: The adoption did not have a significant effect on the Company's consolidated financial statements.
−Removed: Intangible Assets The FASB issued ASU 2018-15, "Customer's Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract", in August 2018.
−Removed: Under current guidance, the accounting for implementation costs of a hosting arrangement that is a service contract is not specifically addressed.
−Removed: Under the new amendments, the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract are aligned with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software or hosting arrangements that include an internal-use software license.
−Removed: The guidance was effective January 1, 2020, and the Company adopted it on that date.
−Removed: The adoption did not have a significant effect on the Company's consolidated financial statements.
−Removed: Income Taxes The FASB issued ASU 2019-12, "Simplifying the Accounting for Income Taxes", in December 2019.
−Removed: The amendments in the ASU eliminate certain exceptions under current guidance for investments, intraperiod allocations, and the methodology for calculating interim income tax.
−Removed: In addition, the amendments also add new guidance to simplify accounting for income taxes.
−Removed: The amendments were effective January 1, 2021, and the Company adopted them on that date.
−Removed: The adoption did not have a significant effect on the Company's consolidated financial statements.
−Removed: Investment Securities The FASB issued ASU 2020-08, "Codification Improvements to Subtopic 310-20, Receivables - Nonrefundable Fees and Other Costs", in October 2020.
−Removed: The amendments in the ASU clarify that for each reporting period an entity should evaluate whether a callable debt security that has multiple call dates may consider estimates of future principal prepayments when applying the interest method.
−Removed: The guidance was effective January 1, 2021, and the Company adopted it on that date.
−Removed: The adoption did not have a significant effect on the Company's consolidated financial statements.
Reference Rate Reform The FASB issued ASU 2020-04, "Reference Rate Reform (Topic 848) - Facilitation of the Effects of Reference Rate Reform on Financial Reporting", in March 2020, and has been followed by additional clarifying guidance related to derivatives that are modified as a result of reference rate reform.
2 unchanged sentences
The expedients and exceptions provided by the new guidance do not apply to contract modifications made and hedging relationships entered into or evaluated for effectiveness after December 31, 2022, except for certain hedging relationships existing as of December 31, 2022.
−Removed: In December 2021, the FASB voted to propose extending the sunset date under Topic 848 from December 31, 2022 to December 31, 2024.
−Removed: The change is to align the temporary accounting relief guidance with the expected cessation date of LIBOR, which was postponed by administrators earlier this year to June 2023, a year after the current sunset date of ASU 2020-04.
+Added: In December 2022, the FASB issued ASU 2022-06 which extended the sunset date under Topic 848 to December 31, 2024.
+Added: The change is to align the temporary accounting relief guidance with the expected cessation date of LIBOR, which was postponed by administrators in 2021 to June 2023, a year after the current sunset date of ASU 2020-04.
In order to assess the impact of transition and ensure a successful transition process, the Company established a LIBOR Transition Program led by the LIBOR Transition Steering Committee (the Committee), which is an internal, cross-functional team with representatives from all relevant business lines, support functions and legal counsel.
A LIBOR impact and risk assessment has been performed, and the Committee has developed and prioritized action items.
−Removed: All financial contracts that reference LIBOR have been identified and are being monitored on an ongoing basis.
−Removed: The process of remediating these contracts has started, and LIBOR fallback language has been included in key loan provisions of new and renewed loans in preparation for transition from LIBOR.
−Removed: Additionally, changes to the Company's systems have been identified, and the process of installing and testing code was started in the third quarter of 2021.
−Removed: The installation and testing process is expected to be completed in 2022.
+Added: All LIBOR-based loans must be converted to an alternative index by June 30, 2023, as LIBOR will no longer be published after June 30, 2023.
+Added: All of the Company's financial contracts that reference LIBOR have been identified, and LIBOR fallback language has been included in key loan provisions of new and renewed loans in preparation of the transition from LIBOR.
+Added: The Company ceased originating new loans with LIBOR as a reference rate at the end of 2021 and is actively working with customers to modify existing loans that reference LIBOR to a new reference rate.
+Added: The Company plans to finish transitioning the impacted loans by spring of 2023.
+Added: Credit Losses The FASB issued ASU 2022-02, "Financial Instruments—Credit Losses (Topic 326):
+Added: Troubled Debt Restructurings and Vintage Disclosures", in March 2022.
+Added: This ASU eliminates the troubled debt restructuring recognition and measurement guidance and, instead, requires that an entity evaluate (consistent with the accounting for other loan modifications) whether the modification represents a new loan or a continuation of an existing loan.
+Added: The amendments also enhance existing disclosure requirements and introduce new requirements related to certain modifications of receivables made to borrowers experiencing financial difficulty.
+Added: The amendments require that an entity disclose current period gross write-offs by year of origination for financing receivables and net investment in leases within the scope of Subtopic 326-20.
+Added: The guidance is effective January 1, 2023.
+Added: Aside from additional disclosure requirements, the Company expects no material impact to its consolidated financial statements from adoption of this ASU.
Corporate Governance
1 unchanged sentence
These include corporate governance guidelines, a code of ethics that applies to its senior financial officers and the charters for its audit and risk committee, its committee on compensation and human resources, and its committee on governance/directors.
−Removed: This information is available on the Company’s website www.commercebank.com under "Social Responsibility".
−Removed: SUMMARY OF QUARTERLY STATEMENTS OF INCOME
−Removed: Year ended December 31, 2021
−Removed: For the Quarter Ended
−Removed: (In thousands, except per share data) 12/31/2021 9/30/2021 6/30/2021 3/31/2021
−Removed: Interest income
−Removed: $ 210,479 $ 216,981 $ 211,133 $ 209,697
−Removed: Interest expense
−Removed: (2,822) (2,944) (3,151) (3,949)
−Removed: Net interest income
−Removed: 207,657 214,037 207,982 205,748
−Removed: Non-interest income
−Removed: 147,699 137,506 139,143 136,045
−Removed: Investment securities gains (losses), net
−Removed: (9,706) 13,108 16,804 9,853
−Removed: Salaries and employee benefits
−Removed: (132,640) (132,824) (130,751) (129,033)
−Removed: Other expense
−Removed: (70,942) (78,796) (67,375) (63,540)
−Removed: Provision for credit losses
−Removed: 7,054 7,385 45,655 6,232
−Removed: Income before income taxes
−Removed: 149,122 160,416 211,458 165,305
−Removed: (33,764) (34,662) (45,209) (32,076)
−Removed: Non-controlling interest
−Removed: (452) (3,193) (3,923) (2,257)
−Removed: Net income attributable to Commerce Bancshares, Inc.
−Removed: $ 114,906 $ 122,561 $ 162,326 $ 130,972
−Removed: Net income per common share — basic*
−Removed: $ .94 $ 1.00 $ 1.32 $ 1.06
−Removed: Net income per common share — diluted*
−Removed: $ .94 $ .99 $ 1.32 $ 1.06
−Removed: Weighted average shares — basic*
−Removed: 120,964 121,628 121,971 122,073
−Removed: Weighted average shares — diluted*
−Removed: 121,221 121,881 122,273 122,402
−Removed: Year ended December 31, 2020
−Removed: For the Quarter Ended
−Removed: (In thousands, except per share data) 12/31/2020 9/30/2020 6/30/2020 3/31/2020
−Removed: Interest income
−Removed: $ 214,726 $ 223,114 $ 213,323 $ 221,485
−Removed: Interest expense
−Removed: (4,963) (7,152) (10,266) (20,420)
−Removed: Net interest income
−Removed: 209,763 215,962 203,057 201,065
−Removed: Non-interest income
−Removed: 135,117 129,572 117,515 123,663
−Removed: Investment securities gains (losses), net
−Removed: 12,307 16,155 (4,129) (13,301)
−Removed: Salaries and employee benefits
−Removed: (129,983) (127,308) (126,759) (128,937)
−Removed: Other expense
−Removed: (66,327) (63,550) (60,753) (64,761)
−Removed: Provision for credit losses
−Removed: 4,403 (3,101) (80,539) (57,953)
−Removed: Income before income taxes
−Removed: 165,280 167,730 48,392 59,776
−Removed: (33,084) (34,375) (9,661) (10,173)
−Removed: Non-controlling interest
−Removed: (2,307) (907) 1,132 2,254
−Removed: Net income attributable to Commerce Bancshares, Inc.
−Removed: $ 129,889 $ 132,448 $ 39,863 $ 51,857
−Removed: Net income per common share — basic*
−Removed: $ 1.05 $ 1.01 $ .31 $ .40
−Removed: Net income per common share — diluted*
−Removed: $ 1.05 $ 1.01 $ .31 $ .40
−Removed: Weighted average shares — basic* 122,081 122,069 122,054 122,508
−Removed: Weighted average shares — diluted* 122,333 122,266 122,264 122,792
−Removed: Year ended December 31, 2019
−Removed: For the Quarter Ended
−Removed: (In thousands, except per share data) 12/31/2019 9/30/2019 6/30/2019 3/31/2019
−Removed: Interest income
−Removed: $ 226,665 $ 231,743 $ 238,412 $ 227,865
−Removed: Interest expense
−Removed: (24,006) (28,231) (26,778) (24,377)
−Removed: Net interest income
−Removed: 202,659 203,512 211,634 203,488
−Removed: Non-interest income
−Removed: 143,461 132,743 127,259 121,240
−Removed: Investment securities gains (losses), net
−Removed: (248) 4,909 (110) (925)
−Removed: Salaries and employee benefits
−Removed: (126,901) (123,836) (120,062) (122,128)
−Removed: Other expense
−Removed: (68,273) (67,184) (69,717) (69,297)
−Removed: Provision for credit losses
−Removed: (15,206) (10,963) (11,806) (12,463)
−Removed: Income before income taxes
−Removed: 135,492 139,181 137,198 119,915
−Removed: (28,214) (29,101) (28,899) (22,860)
−Removed: Non-controlling interest
−Removed: (398) (838) (328) 83
−Removed: Net income attributable to Commerce Bancshares, Inc.
−Removed: $ 106,880 $ 109,242 $ 107,971 $ 97,138
−Removed: Net income per common share — basic*
−Removed: $ .84 $ .85 $ .82 $ .74
−Removed: Net income per common share — diluted*
−Removed: $ .84 $ .85 $ .82 $ .74
−Removed: Weighted average shares — basic*
−Removed: 123,183 124,563 126,744 127,351
−Removed: Weighted average shares — diluted*
−Removed: 123,492 124,857 127,052 127,687
−Removed: * Restated for the 5% stock dividend distributed in 2021.
+Added: This information is available on the Company’s investor relations website at investor.commercebank.com/overview/corporate-governance.
+Added: Table of Conte nts
AVERAGE BALANCE SHEETS — AVERAGE RATES AND YIELDS
92 unchanged sentences
$ 33,605,317 $ 34,163,735 $ 29,616,697
−Removed: Net interest margin (T/E)
+Added: Net interest margin (FTE)
$ 951,815 $ 847,116 $ 842,790
1 unchanged sentence
2.85 % 2.58 % 2.99 %
−Removed: Percentage increase (decrease) in net interest margin (T/E) compared to the prior year
+Added: Percentage increase (decrease) in net interest margin (FTE) compared to the prior year
12.36 % .51 % .88 %
2 unchanged sentences
Credit card income from merchant discounts and net interchange fees are not included in loan income.
−Removed: E — AVERAGE RATES AND
+Added: VERAGE RATES AND
+Added: Table of Conte nts
Years Ended December 31
26 unchanged sentences
(160,212) (158,791) (156,572) (2.03)
−Removed: (113,068) 45,760 143,842 6.68
+Added: 74,605 (113,068) 45,760 N.M.
370,709 360,732 361,414 (2.20)
19 unchanged sentences
(.55 %) 9.58 % 7.75 %
−Removed: (B) Interest income and yields are presented on a fully-taxable equivalent basis using a federal income tax rate of 21% in 2021, 2020, 2019 and 2018, and 35% in prior periods.
+Added: (B) Interest income and yields are presented on a fully taxable-equivalent basis using a federal income tax rate of 21% in 2022, 2021, 2020, 2019 and 2018 and 35% in 2017.
Loan interest income includes tax free loan income (categorized as business loan income) which includes tax equivalent adjustments of $4,126,000 in 2022, $4,176,000 in 2021, $4,916,000 in 2020, $6,282,000 in 2019, $5,931,000 in 2018, and $10,357,000 in 2017.
2 unchanged sentences
(C) Interest expense of $1,370,000, $29,000 and $14,000, which was capitalized on construction projects in 2022, 2021, and 2020, respectively, is not deducted from the interest expense shown above.
+Added: Table of Conte nts
QUARTERLY AVERAGE BALANCE SHEETS — AVERAGE RATES AND YIELDS
44 unchanged sentences
(143) (138) (135) (150)
−Removed: Unrealized gain on debt securities 86 230 197 284
+Added: Unrealized loss on debt securities (1,582) (1,065) (851) (174)
Cash and due from banks
26 unchanged sentences
$ 31,605 $ 32,862 $ 34,092 $ 35,918
−Removed: Net interest margin (T/E)
+Added: Net interest margin (FTE)
$ 257 $ 249 $ 235 $ 211
1 unchanged sentence
3.18 % 3.01 % 2.79 % 2.45 %
−Removed: (A) Includes tax equivalent calculations.
+Added: (A) Stated on a fully taxable-equivalent basis using a federal income tax rate of 21%.
+Added: Table of Conte nts
— AVERAGE RATES AND YIELDS
37 unchanged sentences
Allowance for credit losses on loans (162) (172) (201) (221)
−Removed: Unrealized gain (loss) on debt securities 329 368 281 191
+Added: Unrealized gain on debt securities 86 230 197 284
Cash and due from banks 345 329 329 355
27 unchanged sentences
$ 35,530 $ 34,626 $ 33,812 $ 32,650
−Removed: Net interest margin (T/E)
+Added: Net interest margin (FTE)
$ 210 $ 217 $ 211 $ 209
1 unchanged sentence
2.43 % 2.58 % 2.60 % 2.71 %
−Removed: (A) Includes tax equivalent calculations.
+Added: (A) Stated on a fully taxable-equivalent basis using a federal income tax rate of 21%.
+Added: Table of Conte nts
+Added: SUMMARY OF QUARTERLY STATEMENTS OF INCOME
+Added: Year ended December 31, 2022
+Added: For the Quarter Ended
+Added: (In thousands, except per share data) 12/31/2022 9/30/2022 6/30/2022 3/31/2022
+Added: Interest income
+Added: $ 286,377 $ 262,666 $ 238,154 $ 211,782
+Added: Interest expense
+Added: (31,736) (16,293) (5,769) (2,996)
+Added: Net interest income
+Added: 254,641 246,373 232,385 208,786
+Added: Non-interest income
+Added: 136,825 138,514 139,427 131,769
+Added: Investment securities gains, net
+Added: 8,904 3,410 1,029 7,163
+Added: Salaries and employee benefits
+Added: (138,458) (137,393) (142,243) (135,953)
+Added: Other expense
+Added: (78,282) (75,491) (71,262) (69,695)
+Added: Provision for credit losses
+Added: (15,477) (15,290) (7,162) 9,858
+Added: Income before income taxes
+Added: 168,153 160,123 152,174 151,928
+Added: (34,499) (33,936) (32,021) (31,902)
+Added: Non-controlling interest
+Added: (2,026) (3,364) (4,359) (1,872)
+Added: Net income attributable to Commerce Bancshares, Inc.
+Added: $ 131,628 $ 122,823 $ 115,794 $ 118,154
+Added: Net income per common share — basic*
+Added: $ 1.05 $ .97 $ .92 $ .92
+Added: Net income per common share — diluted*
+Added: $ 1.04 $ .97 $ .92 $ .92
+Added: Weighted average shares — basic*
+Added: 124,311 124,840 125,987 126,341
+Added: Weighted average shares — diluted*
+Added: 124,589 125,117 125,916 126,647
+Added: Year ended December 31, 2021
+Added: For the Quarter Ended
+Added: (In thousands, except per share data) 12/31/2021 9/30/2021 6/30/2021 3/31/2021
+Added: Interest income
+Added: $ 210,479 $ 216,981 $ 211,133 $ 209,697
+Added: Interest expense
+Added: (2,822) (2,944) (3,151) (3,949)
+Added: Net interest income
+Added: 207,657 214,037 207,982 205,748
+Added: Non-interest income
+Added: 147,699 137,506 139,143 136,045
+Added: Investment securities gains (losses), net
+Added: (9,706) 13,108 16,804 9,853
+Added: Salaries and employee benefits
+Added: (132,640) (132,824) (130,751) (129,033)
+Added: Other expense
+Added: (70,942) (78,796) (67,375) (63,540)
+Added: Provision for credit losses
+Added: 7,054 7,385 45,655 6,232
+Added: Income before income taxes
+Added: 149,122 160,416 211,458 165,305
+Added: (33,764) (34,662) (45,209) (32,076)
+Added: Non-controlling interest
+Added: (452) (3,193) (3,923) (2,257)
+Added: Net income attributable to Commerce Bancshares, Inc.
+Added: $ 114,906 $ 122,561 $ 162,326 $ 130,972
+Added: Net income per common share — basic*
+Added: $ .90 $ .95 $ 1.26 $ 1.01
+Added: Net income per common share — diluted*
+Added: $ .90 $ .95 $ 1.25 $ 1.01
+Added: Weighted average shares — basic* 127,012 127,709 128,070 128,176
+Added: Weighted average shares — diluted* 127,283 127,975 128,387 128,522
+Added: Year ended December 31, 2020
+Added: For the Quarter Ended
+Added: (In thousands, except per share data) 12/31/2020 9/30/2020 6/30/2020 3/31/2020
+Added: Interest income
+Added: $ 214,726 $ 223,114 $ 213,323 $ 221,485
+Added: Interest expense
+Added: (4,963) (7,152) (10,266) (20,420)
+Added: Net interest income
+Added: 209,763 215,962 203,057 201,065
+Added: Non-interest income
+Added: 135,117 129,572 117,515 123,663
+Added: Investment securities gains (losses), net
+Added: 12,307 16,155 (4,129) (13,301)
+Added: Salaries and employee benefits
+Added: (129,983) (127,308) (126,759) (128,937)
+Added: Other expense
+Added: (66,327) (63,550) (60,753) (64,761)
+Added: Provision for credit losses
+Added: 4,403 (3,101) (80,539) (57,953)
+Added: Income before income taxes
+Added: 165,280 167,730 48,392 59,776
+Added: (33,084) (34,375) (9,661) (10,173)
+Added: Non-controlling interest
+Added: (2,307) (907) 1,132 2,254
+Added: Net income attributable to Commerce Bancshares, Inc.
+Added: $ 129,889 $ 132,448 $ 39,863 $ 51,857
+Added: Net income per common share — basic*
+Added: $ 1.00 $ .97 $ .29 $ .38
+Added: Net income per common share — diluted*
+Added: $ 1.00 $ .97 $ .29 $ .38
+Added: Weighted average shares — basic*
+Added: 128,185 128,173 128,157 128,633
+Added: Weighted average shares — diluted*
+Added: 128,450 128,380 128,377 128,932
+Added: * Restated for the 5% stock dividend distributed in 2022.
+Added: Table of Conte nts
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
1 unchanged sentence
Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.