EX-99.1 3 exhibit99-1.txt Commerce Bancorp, Inc. [LOGO OMITTED] CONTACTS -------- Vernon W. Hill, II C. Edward Jordan, Jr. Chairman and President Executive Vice President (856) 751-9000 COMMERCE BANCORP EARNINGS PER SHARE UP 33 % -- DEPOSITS UP $1.5 BILLION ------------------------ April 10, 2003 -- Cherry Hill, New Jersey -- Commerce Bancorp, Inc. (NYSE Symbol: CBH) reported record earnings and increased deposits, assets and loans for the first quarter of 2003, it was announced today by Vernon W. Hill, II, Chairman of the multi-bank holding company. Chairman Hill indicated "America's Most Convenient Bank" continues to produce record results, fueled by a deposit increase of 43% and earnings per share growth of 33%." FIRST QUARTER FINANCIAL HIGHLIGHTS ---------------------------------- March 31, 2003
% Increase -------- Total Assets: $ 17.8 Billion 43 % Total Deposits: $ 16.2 Billion 43 % Total (Net) Loans: $ 5.9 Billion 22 % Total Revenues: $ 243.4 Million 35 % Net Income: $ 42.9 Million 35 % Net Income Per Share: $ .60 33 %
Three Months Ended March 31, 2003 -------------------------------------------------------------- 2003 2002 % Change -------------------------------------------------------------- (dollars in thousands, except per share data) Total Revenues: $243,395 $179,969 35% Total Expenses: 172,121 125,921 37 Net Income: 42,890 31,750 35 Net Income Per Share: $.60 $.45 33%
Balance Sheet ------------- Linked Quarter -------------- 3/31/03 3/31/02 % Change 12/31/02 $ Increase % Increase --------------------------------------------------------------------------------------------- (dollars in millions) Total Assets: $17,798 $12,485 43% $16,404 $1,394 8% Total Loans (Net): 5,899 4,830 22 5,732 167 3 Core Deposits: 15,296 10,395 47 13,834 1,462 11 Total Deposits: 16,232 11,321 43 14,549 1,683 12
Chairman's Statement -------------------- Vernon W. Hill, II, Chairman, commenting on the Company's financial results said, " the unique Commerce business model continues to produce strong top-line revenue growth driven by strong deposit growth volume which significantly increases our net interest income, despite the difficult low-rate operating environment." Some of our financial highlights were: o Net income increased 35% for the first quarter of 2003. o Earnings per share rose 33% for the first quarter. o Total revenues grew 35% for the quarter. o Core deposits grew 47% for the prior 12 months including $1.5 billion in growth during the first quarter. o Comparable store deposits grew 29%. o The Company opened 2 new offices in the first quarter of 2003 and has 25 new offices under construction for openings in the second and third quarter. -2- o On-line banking and branch banking continued to reinforce each other as our on-line penetration rate increased to 36%. o Shareholder returns, foremost in our objectives, continue to be favorable. A comparison of our one, five and ten year shareholder returns to the S & P Index follows: Commerce S & P Index -------- ----------- 1 year -10.26% -24.64% 5 years 16.85 -3.76 10 years 28.54 9.54 Future Guidance --------------- Due to our continued strong operating performance, we reiterate our growth targets:
Last 5-Year Actual % Growth Targets Growth % First Quarter 2003 -------------- -------- ------------------ Total Deposits: 25% 32% 43% Comp Store Deposits: 18 20 29 Total Revenue: 25 30 35 Net Income: 25 31 35 Earnings Per Share: 20 31 33
Additionally, the Company plans to open approximately 46 branch offices in 2003, in the following areas: Metropolitan New York 33 Metropolitan Philadelphia 13 Total Deposits The Company's dramatic deposit growth continues with total deposits at March 31, 2003 of $16.2 billion, a $4.9 billion increase or 43% over total deposits of $11.3 billion a year ago, including $1.7 billion of growth in the first quarter.
3/31/03 3/31/02 $ Increase % Increase ------- ------- ---------- ---------- (dollars in millions) Core Deposits $15,296 $10,395 $4,901 47% Total Deposits 16,232 11,321 4,911 43%
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Core deposit growth by type of account is as follows: Balance Balance Cost of Annual 3/31/03 3/31/02 Funds Growth % ------- ------- ----- -------- (dollars in millions) Non-interest Bearing Demand $3,627 $2,539 .00% 43% Interest Bearing Demand 6,098 3,880 .86 57 Savings 3,331 2,202 .85 51 Time 2,240 1,774 2.59 26 Total Core Deposits: $15,296 $10,395 .93% 47%
Core deposit growth by type of customer is as follows: Annual Comp Store 3/31/03 % Total 3/31/02 % Total Growth % Growth % ------- ------- ------- ------- -------- -------- (dollars in millions) Consumer $7,894 52% $5,638 54% 40% 23% Commercial 5,291 34 3,495 34 51 32 Government 2,111 14 1,262 12 67 38 ----- ----- ----- ----- ----- ----- Total $15,296 100% 100% 100% 47% 29%
The Company's total deposit costs including non-interest-bearing demand deposits were .96% and the total cost of funds was 1.06% for the first quarter of 2003. Core deposit costs were .93% for the first quarter of 2003. The deposit growth by markets served is as follows:
Deposit Growth by Market ------------------------ # of $ % Comp Annualized Offices 3/31/03 3/31/02 Increase Increase Store Growth/Branch ------- ------- ------- -------- -------- ----- ------------- (dollars in millions) Metro Philadelphia 124 $9,520 $7,099 $2,421 34% 29% $21 Northern New Jersey 84 5,548 4,030 1,518 38 28 21 Manhattan 11 760 192 568 295 n/a 95 Long Island 7 404 n/a 404 n/a n/a 108 ----- ----- ----- ----- ----- ----- ----- Total 226 $16,232 $11,321 $4,911 43% 29% $27
-4- Net Income and Earnings Per Share Net income totaled $42.9 million for the first quarter of 2003, up $11.1 million or 35% over net income of $31.8 million for the first quarter of 2002. On a diluted per share basis, net income for the first quarter was $.60 compared to $.45 for the first quarter of 2002, a 33% increase.
Three Months Ended ------------------ 3/31/03 3/31/02 % Increase ------- ------- ---------- (dollars in thousands, except per share data) Net Income $42,890 $31,750 35% Earnings Per Share $.60 $.45 33%
The 35% growth in net income for the first quarter of 2003 was driven by increased net interest income of 35% and increased fee income of 36%. On a year-to-year basis, total revenues grew 35% compared to a 37% increase in expenses. If the Company had chosen to expense stock options beginning with grants issued in 2003, the impact on earnings per share for the first quarter of 2003 would have been $.02 per share.
Total Revenues Three Months Ended ------------------ 3/31/03 3/31/02 % Increase ------- ------- ---------- (dollars in thousands, except per share data) Total Revenues $243,395 $179,969 35% Revenue Per Share $13.56 $10.28 32%
Net Interest Income and Net Interest Margin ------------------------------------------- Net interest income for the first quarter totaled $167.3 million, a 5% increase from the prior quarter and a 35% increase over the $124.1 million recorded a year ago. The increase in net interest income was due to the volume increases in interest earning assets resulting from the Company's strong, low-cost core deposit growth. The net interest margin for the first quarter of 2003 was 4.59% up four basis points from the 4.55% margin for the fourth quarter of 2002. The increase in the margin was attributed primarily to a reduction in the cost of funds which more than offset the decline in the yield on interest-earning assets. The Company's continued ability to grow deposits, resulting in significant earning asset growth, permitted the Company to record $171.1 million in net interest income on a tax equivalent basis in the first quarter of 2003, an increase of $43.7 million or 34% over the first quarter of 2002. As shown below, the increase in net interest income was due to volume increases in the Company's earning assets. -5-
Net Interest Income ------------------------------------------------------ Quarter Ended Volume Rate Total % March 31 Increase Change Increase Increase -------- -------- ------ --------- -------- (dollars in millions) 2003 vs. 2002 $49,552 ($5,857) $43,695 34%
Non-Interest Income Non-interest income for the first quarter of 2003 increased to $76.1 million from $55.9 million a year ago, a 36% increase. On a linked quarter basis, non-interest income increased 8%. The growth in non-interest income for the first quarter and 2003 was reflected in increased deposit charges and service fees and other operating income which are more fully depicted below:
Three Months Ended ----------------------------------------------- 3/31/03 3/31/02 % Increase ------- ------- ---------- (Dollars in thousands) ----------------------------------------------------------------------------------------- Deposit Charges & Service Fees $34,842 $28,963 20% Other Operating Income: Insurance 16,055 13,388 20 Capital Markets 10,003 6,446 55 Loan Brokerage Fees 7,923 4,025 97 Other 7,379 3,068 136 ----------------------------------------------------------------------------------------- Total Other 41,360 26,927 53% Net Investment Securities Losses (136) 0 -- ----------------------------------------------------------------------------------------- Total Non-Interest Income $76,066 $55,890 36%
Commerce National Insurance Services ------------------------------------ Total revenues for the Company's insurance division were $16.1 million for the first quarter of 2003 compared to $13.4 million for the first quarter of 2002, a 20% increase. Commerce Capital Markets ------------------------ Total revenues for the Company's capital markets division were $10.0 million for the first quarter of 2003 compared to $6.4 million for the first quarter of 2002, a 55% increase. During the first quarter of 2003, the Company discontinued its equity research and institutional sales division. A small investment banking staff remains to support middle market lending. In conjunction therewith, the Company absorbed, in the normal course of business, expense of approximately $1.0 million in severance payments to affected employees. -6- A breakdown of total revenues by division is as follows: Three Months Ended ------------------ 3/31/03 3/31/02 ------- ------- Trading & Sales $3,960 $3,068 Public Finance 3,576 1,700 Retail & Asset Management 2,467 1,678 -------------------------------- $10,003 $6,446 Non- Interest Expenses Non-interest expenses for the first quarter of 2003 were $172.1 million, up 37% from $125.9 million a year ago. The increase in non-interest expenses for the first quarter of 2003 was widespread throughout all non-interest expense categories and were consistent with the same reporting periods a year ago. They reflect the Company's rapid growth during the respective periods and also reflect substantial infrastructure investments made by the Company to support future growth. Linked Quarter Comparison A comparison of financial results for the quarter ended March 31, 2003 to the previous quarter ended December 31, 2002 is as follows: (dollars in thousands, except per share data)
Three Months Ended ------------------ Linked Quarter 3/31/03 12/31/02 $ Increase % Increase ------- -------- ---------- ---------- Total Assets $17,798,123 $16,403,981 $1,394,142 8 Total Loans (Net) 5,898,696 5,731,856 166,840 3 Core Deposits 15,296,123 13,834,293 1,461,830 11 Total Deposits 16,231,901 14,548,841 1,683,060 12 Total Revenues 243,395 229,711 13,684 6 Net Interest Income 167,329 159,496 7,833 5 Non-Interest Income 76,066 70,215 5,851 8 Non-Interest Expense 172,121 160,879 11,242 7 Net Income 42,890 40,574 2,316 6 Net Income Per Share $.60 $.57 $.03 5
-7- Lending ------- Loans increased 22% to $5.9 billion, and the growth was widespread throughout all loan categories. The Company's primary strength is in building customer relationships and growing market share in deposits, loans, and related services. Consumer and small business loan growth is directly related to the Company's significant increase in branch locations, market expansion and added lending personnel. Detailed in the chart below is a recap of commercial and commercial real estate loan growth for the past year by loan size: (dollars in millions, except # of loans and average loan size)
Commercial Loan and Commercial Real Estate Growth ------------------------------------------------- Average Size # of Loans Loan Size 3/31/03 3/31/02 % Increase ---- ---------- --------- ------- ------- ---------- < $5 Million 15,161 $220,000 $3,335 $2,682 24% > $5 Million 76 8,447,000 642 538 19 ------- ---------- -------- -------- ----- Total: 15,237 $261,000 $3,977 $3,220 24%
Geographically, loan growth has occurred in the following markets: Portfolio Geographical Growth ----------------------------- 3/31/03 3/31/02 Growth Rate % of Total Growth ------- ------- ----------- ----------------- (dollars in millions) Metro Philadelphia $4,067 $3,370 21% 64% Northern New Jersey 1,758 1,499 17 24 New York/Long Island 168 33 n/a 12 ------- -------- ------- Total: $5,993 $4,902 100%
The Company continues to serve Main Street America and has avoided the pitfalls experienced by participation in Shared National Credit lending, loans to the telecommunications, airlines, and energy sectors, sub-prime loans and foreign lending.
Loan Composition ---------------- 3/31/03 % of Total 3/31/02 % of Total $ Increase % Increase ------- ---------- ------- ---------- ---------- ---------- (dollars in thousands) Commercial $1,621 27% $1,189 24% $432 36% Consumer 2,017 34 1,682 34 335 20 Commercial Real Estate 1,022 17 913 19 109 12 Owner-Occupied 1,333 22 1,118 23 215 19 ---------- ----- --------- ----- Gross Loans $5,993 100% $4,902 100% Less: Reserves ( 94) (72) Net Loans $5,899 $4,830 22% ---------- ---------
-8- Asset Quality ------------- Asset quality remains extremely sound due to the Company's conservative underwriting standards, strong customer relationships and aggressive collection efforts.
The Company's asset quality results are highlighted below: Quarter Ended ------------- 3/31/03 12/31/02 3/31/02 ------- -------- ------- Non-Performing Assets/Assets .13% .11% .16% Net Loan Charge-Offs .19% .19% .14% Loan Loss Reserve/ Gross Loans 1.58% 1.56% 1.47% Non-Performing Loan Coverage 499% 640% 428% Non-Performing Assets/Capital 2% 2% 3% and Reserves
During the first quarter, the Company increased its reserve for loan losses as a percentage of loans to 1.58% from 1.56% on a linked quarter basis and from 1.47% a year ago. Non-performing assets and loans past due 90 days at March 31, 2003 totaled $22.9 million or .13% of total assets, versus $20.0 million, or .16% of total assets a year ago. Non-performing assets and loans past due 90 days or more represented 2% of stockholders' equity and the reserve for loan losses at March 31, 2003. Investments ----------- Total investments increased to $10.0 billion from $6.4 billion a year ago. The portfolio is comprised primarily of high quality U.S. Government agency and mortgage-backed obligations with a current duration of 2.7 years and an average life of 3.3 years. This compares to a duration of 4.3 years and an average life of 5.8 years at March 31, 2002. Detailed below is information regarding the composition and characteristics of the Company's investment portfolio, excluding trading securities, as of March 31, 2003.
Average Product Description Amount Duration Life Yield ------------------- ------ -------- ---- ----- (in millions) (in years) Federal Agencies Pass Through $3,568 3.3 4.3 5.58% Certificates (AAA Rated) Collateralized Mortgage 5,592 2.2 2.6 5.04 Obligations (AAA Rated) Obligations of State and 216 4.6 4.6 5.25 Political Subdivision Other 404 3.0 3.5 4.86 $9,780 2.7 3.3 5.23%
The appreciation in the available for sale and held to maturity portfolios totaled $177 million at March 31, 2003. -9- Capital Resources Stockholders' equity at March 31, 2003 increased to $953.6 million, a $303.3 million increase, or 47% over stockholders' equity of $650.3 million at March 31, 2002. Return on average stockholders' equity (ROE) for the first quarter of 2003 was 17.94% compared to 19.00 % for the first quarter of 2002. The Company's capital ratios at March 31, 2003 were as follows: Regulatory Guidelines Commerce "Well Capitalized" -------- ------------------ Leverage Ratio 6.28% 5.00% Tier I 11.39 6.00% Total Capital 12.41 10.00% Retail Activities ----------------- "America's Most Convenient Bank" continued its unique retail focus by offering the best in community branch banking and on-line banking. The Company's continued deposit growth consists of growth in "same-store" (existing branch) sales and increased deposits from newly opened branches. o "Same Store Sales" "Same-store core deposit growth" at March 31, 2003 was 29% compared to the same period a year ago. Same store core deposit increases for the previous four quarters were 29%, 31%, 30% and 28%, respectively. o New Branch Offices During the first quarter of 2003, the Company opened 2 new branch offices, increasing the total offices opened to 226. During the last three years, the Company has opened 106 of 226 branches. Branches opened during the first quarter were as follows: Metropolitan New York --------------------- Location County -------- ------ Springfield Union (NJ) Metropolitan Philadelphia ------------------------- Location County -------- ------ Trenton Mercer (NJ) -10- o Commerce Online --------------- Commerce continued its leading role in on-line banking by increasing its penetration rate to 36.1%, which is one of the highest in America. Investor Day The Company is pleased to announce that it will host an Investor Day on Tuesday, April 29, 2003. The event will be held at the Waldorf Astoria Hotel located at 301 Park Avenue in New York City. The meeting will start at 9:30 a.m. and will conclude with a Noon luncheon including a guest speaker. The Investors Day will provide an opportunity for all investors and analysts to meet with several members of Commerce's senior management team. Presentations will be made by the following executives: Vernon W. Hill, II Chairman and Chief Executive Officer Dennis D. DiFlorio Executive Vice President Chief Retail Officer Robert D. Falese Executive Vice President Chief Lending Officer Peter M. Musumeci Executive Vice President Chief Credit Officer George E. Norcross, III President Commerce Insurance C. Edward Jordan, Jr. Executive Vice President Investor Relations Douglas J. Pauls Senior Vice President Chief Financial Officer John Cunningham Senior Vice President Director of Marketing Fred Graziano Senior Vice President Market President/Northern/NJ Interested qualifying members of the investment community who have not already pre-registered may register by accessing the Investor Relations area of the Company's website: www.commerceonline.com and filling in the information request form therein. -11- Forward-Looking Statements -------------------------- The Company may from time to time make written or oral "forward-looking statements", including statements contained in the Company's filings with the Securities and Exchange Commission, in its reports to stockholders and in other communications by the Company, which are made in good faith by the Company pursuant to the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements include statements with respect to the Company's beliefs, plans, objectives, goals, expectations, anticipations, estimates and intentions, that are subject to significant risks and uncertainties and are subject to change based on various factors (some of which are beyond the Company's control). The words "may", "could", "should", "would", "believe", "anticipate", "estimate", "expect", "intend", "plan", and similar expressions are intended to identify forward-looking statements. The following factors, among others, could cause the Company's financial performance to differ materially from that expressed in such forward-looking statements: the strength of the United States economy in general and the strength of the local economies in which the company conducts operations; the effects of, and changes in, trade, monetary and fiscal policies, including interest rate policies of the Board of Governors of the Federal Reserve System (the "FRB"); inflation; interest rates, market and monetary fluctuations; the timely development of competitive new products and services by the Company and the acceptance of such products and services by customers; the willingness of customers to substitute competitors' products and services for the Company's products and services and vice versa; the impact of changes in financial services' laws and regulations (including laws concerning taxes, banking, securities and insurance); technological changes; future acquisitions; the expense savings and revenue enhancements from acquisitions being less than expected; the growth and profitability of the Company's non-interest or fee income being less than expected; unanticipated regulatory or judicial proceedings; changes in consumer spending and saving habits; and the success of the Company at managing the risks involved in the foregoing. The Company cautions that the foregoing list of important factors is not exclusive. The Company does not undertake to update any forward-looking statement, whether written or oral, that may be made from time to time by or on behalf of the Company. -12-