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COMMERCE BANCSHARES INC

COMMERCE BANCSHARES INCCBSHEarnings & Financial Report

Nasdaq · Financials · State Commercial Banks

Commerce Bancshares, Inc. is a regional bank holding company headquartered in Missouri, with principal offices in Kansas City and St. Louis. It is the corporate parent of Commerce Bank, which offers a diversified line of financial services, including business and personal banking, wealth management and investments through its affiliated companies.

What changed in COMMERCE BANCSHARES INC's 10-K — 2024 vs 2025

Top changes in COMMERCE BANCSHARES INC's 2025 10-K

440 paragraphs added · 428 removed · 374 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

25 edited+6 added−5 removed73 unchanged
The markets the Bank serves are mainly located in the lower Midwest, which provides natural sites for production and distribution facilities and serve as transportation hubs. The economy has been well-diversified in these markets with many major industries represented, including construction, logistics and distribution, automobile, technology, financial services, aerospace, manufacturing, health care, numerous service industries, and agribusiness.
The markets the Bank serves are mainly located in the lower Midwest, which provides natural sites to serve as production and distribution facilities and as transportation hubs. The economy has been well-diversified in these markets with many major industries represented, including construction, logistics and distribution, automobile, technology, financial services, aerospace, manufacturing, health care, numerous service industries, and agribusiness.
This guidance covers all employees that have the ability to materially affect the risk profile of an organization, either individually or as part of a group, based on key principles that (i) incentives do not 7 Table of Contents encourage risk-taking beyond the organization's ability to identify and manage risk, (ii) compensation arrangements are compatible with effective internal controls and risk management, and (iii) compensation arrangements are supported by strong corporate governance, including active and effective board oversight.
This guidance covers all employees that have the ability to materially affect the risk profile of an organization, either individually or as part of a group, based on key principles that (i) incentives do not encourage risk-taking beyond the organization's ability to identify and manage risk, (ii) compensation arrangements are compatible with effective internal controls and risk management, and (iii) compensation arrangements are supported by strong corporate governance, including active and effective board oversight.
The Company currently operates as a bank holding company, as defined by the Gramm-Leach-Bliley Financial Modernization Act of 1999 (GLB Act), and the Bank qualifies as a financial subsidiary under the GLB Act, which allows it to engage in investment banking, insurance agency, brokerage, and underwriting activities that were not available to banks prior to the GLB Act.
The Company currently operates as a bank holding company, as defined by the Gramm-Leach-Bliley 5 Table of Contents Financial Modernization Act of 1999 (GLB Act), and the Bank qualifies as a financial subsidiary under the GLB Act, which allows it to engage in investment banking, insurance agency, brokerage, and underwriting activities that were not available to banks prior to the GLB Act.
These amendments 5 Table of Contents include the Money Laundering Control Act of 1986 which made money laundering a criminal act, as well as the Money Laundering Suppression Act of 1994 which required regulators to develop enhanced examination procedures and increased examiner training to improve the identification of money laundering schemes in financial institutions.
These amendments include the Money Laundering Control Act of 1986 which made money laundering a criminal act, as well as the Money Laundering Suppression Act of 1994 which required regulators to develop enhanced examination procedures and increased examiner training to improve the identification of money laundering schemes in financial institutions.
The Company's principal markets, which are served by 142 branch facilities, are located throughout Missouri, Kansas, and central Illinois, as well as Tulsa and Oklahoma City, Oklahoma and Denver, Colorado. Its two largest markets are St. Louis and Kansas City, which serve as central hubs for the Company.
The Company's principal markets, which are served by 140 branch facilities, are located primarily throughout Missouri, Kansas, and central Illinois, as well as Tulsa and Oklahoma City, Oklahoma and Denver, Colorado. Its two largest markets are St. Louis and Kansas City, which serve as central hubs for the Company.
Career development is also a key component of the Company’s Total Rewards, and the Company has a variety of programs to support team 3 Table of Contents members as they continue to grow within their current role or develop for their next role.
Career development is also a key component of the Company’s Total Rewards, and the Company has a variety of programs to support team members as they continue to grow within their current role or develop for their next role.
At December 31, 2024, the Company's capital ratios are well in excess of those minimum ratios required by Basel III.
At December 31, 2025, the Company's capital ratios are well in excess of those minimum ratios required by Basel III.
The Company seeks merger or acquisition partners that are culturally similar, have experienced management and either possess significant market presence or have potential for improved profitability through financial management, economies of scale and expanded services. In the second quarter of 2023, the Company acquired L.J. Hart & Company, a municipal bond underwriter and advisor.
The Company seeks merger or acquisition partners that are culturally similar, have experienced management and either possess significant market presence or have potential for improved profitability through financial management, economies of scale and expanded services. In the second quarter of 2023, the Company acquired L.J.
A list of Commerce Bancshares, Inc.'s subsidiaries is included as Exhibit 21. Commerce Bancshares, Inc. and its subsidiaries (collectively, the "Company") is one of the nation’s top 50 bank holding companies, based on asset size. At December 31, 2024, the Company had consolidated assets of $32.0 billion, loans of $17.2 billion, deposits of $25.3 billion, and equity of $3.3 billion.
A list of Commerce Bancshares, Inc.'s subsidiaries is included as Exhibit 21. Commerce Bancshares, Inc. and its subsidiaries (collectively, the "Company") is one of the nation’s top 50 bank holding companies, based on asset size. At December 31, 2025, the Company had consolidated assets of $32.9 billion, loans of $17.8 billion, deposits of $25.6 billion, and equity of $3.8 billion.
The Company also has offices in Dallas, Houston, Cincinnati, Nashville, Des Moines, Indianapolis, Grand Rapids, and Naples that support customers in its commercial and/or wealth segments and operates a commercial payments business with sales representatives covering the continental United States of America (“U.S.”).
The Company also has offices in Dallas, Houston, Cincinnati, Nashville, Des Moines, Indianapolis, Grand Rapids, and Naples that support customers in its commercial and/or wealth segments and operates a commercial payments business with sales representatives covering the continental United States of America (“U.S.”). On January 1, 2026, the Company completed its acquisition FineMark Holdings, Inc.
Largely as a result of the FDIC's approval of its final rule, the Company's deposit insurance expense was $33.2 million in 2023, compared to $10.6 million in 2022.
Largely as a result of the FDIC's approval of its final rule, the Company's deposit insurance expense was $33.2 million in 2023, compared to $10.6 million in 2022. For the year ended December 31, 2025, the Company's deposit insurance expense was $10.0 million.
On May 24, 2018, the Economic Growth, Regulatory Relief, and Consumer Protection Act was enacted, which eliminated the required stress testing under the Dodd-Frank Act for banks with consolidated assets of less than $250 billion. While not required to perform stress testing, the Company continues to perform periodic stress-testing based on its own internal criteria.
On May 24, 2018, the Economic Growth, Regulatory Relief, and Consumer Protection Act was enacted, which eliminated the required stress testing under the Dodd-Frank Act for banks with consolidated assets of less than $250 billion.
The Commercial segment provides a full array of corporate lending, merchant and commercial bank card products, payment solutions, leasing, and international services, as well as business and government deposit, investment, institutional brokerage, and cash management services. The Consumer segment includes the retail branch network, consumer installment lending, personal mortgage banking, and consumer debit and credit bank card activities.
The Commercial segment provides a full array of corporate lending, merchant and commercial bank card products, payment solutions, leasing, and international services, as well as business and government deposit, investment, institutional brokerage, and cash management services.
It does not discuss all provisions of these laws and regulations, and it does not include all laws and regulations that affect the Company presently or may affect the Company in the future.
Supervision and Regulation The following information summarizes existing laws and regulations that materially affect the Company's operations. It does not discuss all provisions of these laws and regulations, and it does not include all laws and regulations that affect the Company presently or may affect the Company in the future.
These include, for example, the statutory minimum legal lending rates, domestic monetary policies of the Board of Governors of the Federal Reserve System, U.S. fiscal policy, international currency regulations and monetary policies, the U.S.
These include, for example, the statutory minimum legal lending rates, domestic monetary policies of the Board of Governors of the Federal Reserve System, U.S. fiscal policy, international currency regulations and monetary policies, the USA PATRIOT Act, and capital adequacy and liquidity constraints imposed by federal and state bank regulatory agencies.
The Company also competes based on quality, innovation, convenience, reputation, industry knowledge, and price. In its two largest markets, the Company has approximately 10% of the deposit market share in Kansas City and approximately 7% of the deposit market share in St. Louis. Operating Segments The Company is managed in three operating segments: Commercial, Consumer, and Wealth.
In its two largest markets, the Company has approximately 10% of the deposit market share in Kansas City and approximately 7% of the deposit market share in St. Louis. Operating Segments The Company is managed in three operating segments: Commercial, Retail Banking, and Wealth.
Executive and Incentive Compensation Guidelines adopted by federal banking agencies prohibit excessive compensation as an unsafe and unsound practice, and describe compensation as "excessive" when the amounts paid are unreasonable or disproportionate to the services performed by an executive officer, employee, director or principal shareholder.
While not required to perform stress testing, the Company continues to perform periodic stress-testing based on its own internal criteria. 7 Table of Contents Executive and Incentive Compensation Guidelines adopted by federal banking agencies prohibit excessive compensation as an unsafe and unsound practice, and describe compensation as "excessive" when the amounts paid are unreasonable or disproportionate to the services performed by an executive officer, employee, director or principal shareholder.
The Company regularly faces competition from banks, credit unions, brokerage companies, mortgage companies, insurance companies, trust companies, private equity firms, leasing companies, securities brokers and dealers, financial technology companies, e-commerce companies, investment management companies, and other companies providing financial services. Some of these competitors are not subject to the same regulatory restrictions as domestic banks and bank holding companies.
Competition The Company operates in the highly competitive environment of financial services. The Company regularly faces competition from banks, credit unions, brokerage companies, mortgage companies, insurance companies, trust companies, private equity firms, leasing companies, securities brokers and dealers, financial technology companies, e-commerce companies, investment management companies, and other companies providing financial services.
In November 2023, the FDIC Board of Directors approved a final rule implementing a special assessment to recover the loss to the DIF associated with protecting uninsured depositors following the closures of Silicon Valley Bank and Signature Bank in 2023.
The FDIC Board also increased base deposit insurance assessment rates by 2 basis points, which took effect on January 1, 2023. 6 Table of Contents In November 2023, the FDIC Board of Directors approved a final rule implementing a special assessment to recover the loss to the DIF associated with protecting uninsured depositors following the closures of Silicon Valley Bank and Signature Bank in 2023.
Employees and Human Capital The Company employed 4,537 persons on a full-time basis and 150 persons on a part-time basis at December 31, 2024. None of the Company's employees are represented by collective bargaining agreements. Attracting and retaining talented team members is key to the Company’s ability to execute its strategy and compete effectively.
None of the Company's employees are represented by collective bargaining agreements. 3 Table of Contents Attracting and retaining talented team members is key to the Company’s ability to execute its strategy and compete effectively.
Some other competitors are significantly larger than the Company, and therefore have greater economies of scale, greater financial resources, higher lending limits, and may offer products and services that the Company does not provide. The Company competes by providing a broad offering of products and services to support the needs of customers, matched with a strong commitment to customer service.
Some of these competitors are not subject to the same regulatory restrictions as domestic banks and bank holding companies. Some other competitors are significantly larger than the Company, and therefore have greater economies of scale, greater financial resources, higher lending limits, and may offer products and services that the Company does not provide.
Government Policies The Company's operations are affected by federal and state legislative changes, by the U.S. government, and by policies of various regulatory authorities, including those of the numerous states in which they operate.
See the section captioned "Operating Segments" in Item 7, Management's Discussion and Analysis, of this report and Note 13 to the consolidated financial statements for additional discussion on operating segments. 4 Table of Contents Government Policies The Company's operations are affected by federal and state legislative changes, by the U.S. government, and by policies of various regulatory authorities, including those of the numerous states in which they operate.
For the year ended December 31, 2024, the Company's deposit insurance expense was $16.5 million. 6 Table of Contents Payment of Dividends The Federal Reserve Board may prohibit the payment of cash dividends to shareholders by bank holding companies if their actions constitute unsafe or unsound practices.
Payment of Dividends The Federal Reserve Board may prohibit the payment of cash dividends to shareholders by bank holding companies if their actions constitute unsafe or unsound practices. The principal source of the Parent's cash revenues is cash dividends paid by the Bank.
The Company’s goal is to create a sense of belonging which it believes is connected to high levels of engagement, enablement, retention, and results.
The Company’s goal is to create a sense of belonging which it believes is connected to high levels of engagement, enablement, retention, and results. The Company’s intentional strategy has allowed it to maintain levels of engagement that have been recognized by its annual survey partner, Korn Ferry, for being at or above U.S. high-performing benchmarks.
The Wealth segment provides traditional trust and estate planning services, consumer brokerage services, and advisory and discretionary investment portfolio management services to both personal and institutional corporate customers. In 2024, the Commercial, Consumer and Wealth segments contributed 47%, 31% and 22% of total segment pre-tax income, respectively.
The Retail Banking segment, previously called the Consumer segment, includes the retail branch network, consumer installment lending, personal mortgage banking, and consumer debit and credit bank card activities. The Wealth segment provides traditional trust and estate planning services, consumer brokerage services, and advisory and discretionary investment portfolio management services to both personal and institutional corporate customers.
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The Company’s intentional strategy has allowed it to maintain levels of engagement that have been recognized by its annual survey partner, Korn Ferry, for being “best-in-class" and to be recognized by Forbes as one of the best mid-sized employers. Competition The Company operates in the highly competitive environment of financial services.
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("FineMark") in an all-stock transaction ("Merger"). Immediately after the Merger, FineMark's wholly-owned subsidiary, FineMark National Bank & Trust merged into the Bank, with the Bank continuing as the surviving bank. The Company acquired all of the outstanding stock of FineMark Holdings, Inc., issuing 9.9 million shares of the Company's common stock.
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See the section captioned "Operating Segments" in Item 7, Management's Discussion and Analysis, of this report and Note 13 to the consolidated financial statements for additional discussion on operating segments.
Added
FineMark has 13 banking offices in Florida, Arizona, and South Carolina, strengthening the Company's presence in Florida and adding new high-growth markets to the Company's wealth segment. At December 31, 2025, FineMark had total loans of $2.7 billion, total deposits of $3.1 billion, and $8.7 billion in assets under administration.
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Patriot Act, and capital adequacy and liquidity constraints imposed by federal and state bank regulatory agencies. 4 Table of Contents Supervision and Regulation The following information summarizes existing laws and regulations that materially affect the Company's operations.
Added
During January 2026, the Company liquidated FineMark's held-to-maturity and available for sale debt securities portfolios generating total proceeds of $543.0 million, paid off $350 million of FHLB advances, and moved $1.0 billion of high-cost trust deposits off balance sheet.
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The FDIC Board also increased base deposit insurance assessment rates by 2 basis points, which took effect on January 1, 2023.
Added
Hart & Company, a municipal bond underwriter and advisor, and, as described above, completed the FineMark Merger effective January 1, 2026. Employees and Human Capital The Company employed 4,577 persons on a full-time basis and 160 persons on a part-time basis at December 31, 2025.
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The principal source of the Parent's cash revenues is cash dividends paid by the Bank.
Added
The Company competes by providing a broad offering of products and services to support the needs of customers, matched with a strong commitment to customer service. The Company also competes based on quality, innovation, convenience, reputation, industry knowledge, and price.
Added
In 2025, the Commercial, Retail Banking and Wealth segments contributed 48%, 28% and 24% of total segment pre-tax income, respectively.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

31 edited+20 added−5 removed69 unchanged
See Note 2 to the consolidated financial statements and the section captioned “Allowance for Credit Losses on Loans and Liability for Unfunded Lending Commitments” in Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations, of this report for further discussion related to the Company’s process for determining the appropriate level of the allowance for credit losses on loans and the liability for unfunded lending commitments at December 31, 2024.
See Note 2 to the consolidated financial statements and the section captioned “Allowance for Credit Losses on Loans and Liability for Unfunded Lending Commitments” in Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations, of this report for further discussion related to the Company’s process for determining the appropriate level of the allowance for credit losses on loans and the liability for unfunded lending commitments at December 31, 2025.
With oversight from its Asset-Liability Management Committee, the Company devotes substantial resources to monitoring its liquidity and interest rate risk on a monthly basis. The Company's net interest income is the largest source of overall revenue to the Company, representing 63% of total revenue for the year ended December 31, 2024.
With oversight from its Asset-Liability Management Committee, the Company devotes substantial resources to monitoring its liquidity and interest rate risk on a monthly basis. The Company's net interest income is the largest source of overall revenue to the Company, representing 63% of total revenue for the year ended December 31, 2025.
As consolidation occurs, larger regional and national banks may enter the Company's markets and add to existing competition. Large, national financial institutions have substantial capital, technology and marketing resources. These new competitors may lower fees to grow market share, which could result in a loss of customers and lower fee revenue for the Company.
As consolidation occurs, larger regional and national banks may enter the Company's markets and add to existing competition. Large, national financial institutions have substantial capital, technology and marketing resources. These new competitors may lower fees to grow market share, which could result in a loss of 9 Table of Contents customers and lower fee revenue for the Company.
The Company’s efforts to take these risks into account in making lending and other decisions, including by increasing the Company’s business with climate-friendly companies, may not be effective in protecting the Company from the adverse impact of new laws and regulations or changes in consumer or business behavior. Item 1b. UNRESOLVED STAFF COMMENTS None
The Company’s efforts to take these risks into account in making lending and other decisions, including by increasing the Company’s business with climate-friendly companies, may not be effective in protecting the Company from the adverse impact of new laws and regulations or changes in consumer or business behavior. Item 1b. UNRESOLVED STAFF COMMENTS None 15 Table of Contents
As the Company does not have a significant banking presence in other parts of the country, a prolonged economic downturn in the markets where the Company has a primary or growing presence could have a material adverse effect on the Company’s financial condition and results of operations. 9 Table of Contents The Company operates in a highly competitive industry and market area.
As the Company does not have a significant banking presence in other parts of the country, a prolonged economic downturn in the markets where the Company has a primary or growing presence could have a material adverse effect on the Company’s financial condition and results of operations. The Company operates in a highly competitive industry and market area.
However, there can be no assurance that any such failures, interruptions or security breaches will not occur, or if 13 Table of Contents they do occur, that they will be adequately addressed. In addition to unauthorized access, denial-of-service attacks or other operational disruptions could prevent the Company from adequately serving customers.
However, there can be no assurance that any such failures, interruptions or security breaches will not occur, or if they do occur, that they will be adequately addressed. In addition to unauthorized access, denial-of-service attacks or other operational disruptions could prevent the Company from adequately serving customers.
Additionally, the current expected credit loss model (CECL) requires that lifetime expected credit losses on securities be recorded in current earnings. This could result in significant losses. The Company could recognize losses on securities held in its securities portfolio, particularly if it were to sell a significant portion of its investments prior to maturity.
Additionally, the current expected credit loss model (CECL) requires that lifetime expected credit losses on securities be recorded in current earnings. This could result in significant losses. 13 Table of Contents The Company could recognize losses on securities held in its securities portfolio, particularly if it were to sell a significant portion of its investments prior to maturity.
As of December 31, 2024, the Company has the intent and ability to maintain its available for sale debt investments until recovery of their amortized cost basis.
As of December 31, 2025, the Company has the intent and ability to maintain its available for sale debt investments until recovery of their amortized cost basis.
Should any of the Company's systems become compromised or customer information be obtained by unauthorized parties, the reputation of the Company could be damaged, relationships with existing customers may be impaired, and the Company could be subject to lawsuits, all of which could result in lost business and have a material adverse effect on the Company’s business, financial condition and results of operations.
Should any of the Company's systems become compromised or customer information be obtained by unauthorized parties, the reputation of the Company could be damaged, relationships with existing customers may be impaired, and the Company could be subject to lawsuits, all of which could result in lost business and have a material adverse effect on the Company’s business, financial condition and results of operations. 14 Table of Contents The Company continually encounters technological change.
Largely as a result of the FDIC's approval of its final rule, the Company's deposit insurance expense was $33.2 million in 2023, compared to $10.6 million in 2022. For the year ended December 31, 2024, the Company's deposit insurance expense was $16.5 million.
Largely as a result of the FDIC's approval of its final rule, the Company's deposit insurance expense was $33.2 million in 2023, compared to $10.6 million in 2022. For the year ended December 31, 2025, the Company's deposit insurance expense was $10.0 million.
In addition, the Company could experience reductions in creditworthiness on the part of some customers or in the value of assets securing 14 Table of Contents loans.
In addition, the Company could experience reductions in creditworthiness on the part of some customers or in the value of assets securing loans.
Due mostly to the increase in interest rates during 2022 and 2023, the fair value of the Company's available of sale debt securities included a net unrealized loss of $991 million at December 31, 2024.
Due mostly to the increase in interest rates during 2022 and 2023, the fair value of the Company's available of sale debt securities included a net unrealized loss of $646.8 million at December 31, 2025.
Fair values and the information used to record valuation adjustments for certain assets and liabilities are based on quoted market prices and/or other observable inputs provided by independent third-party sources, when available.
Assets and liabilities carried at fair value inherently result in greater financial statement volatility. Fair values and the information used to record valuation adjustments for certain assets and liabilities are based on quoted market prices and/or other observable inputs provided by independent third-party sources, when available.
The allowance for credit losses on loans and the liability for unfunded lending commitments at December 31, 2024 reflect management's estimate of credit losses expected in the loan portfolio, including unfunded lending commitments, as of the balance sheet date.
Credit Risks The allowance for credit losses may be insufficient or future credit losses could increase. The allowance for credit losses on loans and the liability for unfunded lending commitments at December 31, 2025 reflect management's estimate of credit losses expected in the loan portfolio, including unfunded lending commitments, as of the balance sheet date.
These elevated rates remained in effect for the first half of 2024 and drove an increase in unrealized losses in fixed rate asset portfolios. During September 2024, the Federal Reserve began reducing rates as inflation began to subside. Monetary policy led by the Federal Reserve in the coming year will play a crucial role in liquidity and interest rate risk.
These elevated rates remained in effect for the first half of 2024 and drove an increase in unrealized losses in fixed rate asset portfolios. During September 2024, the Federal Reserve began reducing rates as inflation began to subside.
Market Risks Difficult market conditions may affect the Company’s industry. The concentration of the Company’s banking business in the United States particularly exposes it to downturns in the U.S. economy.
Market Risks Difficult market conditions may affect the Company’s industry. The concentration of the Company’s banking business in the United States particularly exposes it to downturns in the U.S. economy. In particular, the Company may face the following risks in connection with market conditions: • In 2025, the United States ("U.S.") economy experienced positive but uneven growth.
While the Company maintains prudent risk management practices over bonds issued by municipalities and other issuers, credit deterioration in these bonds could occur and result in losses. Certain mortgage and asset-backed securities (which are collateralized by residential mortgages, credit cards, automobiles, mobile homes or other assets) may decline in value due to actual or expected deterioration in the underlying collateral.
Certain mortgage and asset-backed securities (which are collateralized by residential mortgages, credit cards, automobiles, mobile homes or other assets) may decline in value due to actual or expected deterioration in the underlying collateral.
Future economic conditions or other factors could shift monetary policy resulting in additional increases or decreases in the benchmark rate. Furthermore, changes in interest rates could result in unanticipated changes to customer deposit balances and adversely affect the Company’s liquidity position. The soundness of other financial institutions could adversely affect the Company.
Furthermore, changes in interest rates could result in unanticipated changes to customer deposit balances and adversely affect the Company’s liquidity position. The soundness of other financial institutions could adversely affect the Company.
For example, the state of California, in which the Company does business, has enacted bills that would require the Company and other entities to report climate-related information such as greenhouse gas emissions and climate-related risks. The SEC has also announced plans to propose rules to require enhanced disclosure regarding human capital management and board diversity for public issuers.
For example, the state of California, in which the Company does business, has enacted bills that would require the Company and other entities to report climate-related information such as greenhouse gas emissions and climate-related risks, and other states have proposed climate disclosure legislation.
These could impact the Company’s future provision for credit losses, as a significant part of the Company’s business includes consumer and credit card lending. • In addition to the results above, a slowdown in economic activity may cause declines in financial services activity, including declines in bank card, corporate cash management and other fee businesses, as well as the fees earned by the Company on such transactions. • During recent years, there was a shift from in-office work to remote work.
These could impact the Company’s future provision for credit losses, as a significant part of the Company’s business includes consumer and credit card lending. • In addition to the results above, a slowdown in economic activity may cause declines in financial services activity, including declines in bank card, corporate cash management and other fee businesses, as well as the fees earned by the Company on such transactions. • The process used to estimate credit losses in the Company’s loan portfolio requires difficult, subjective, and complex judgments, including consideration of economic conditions and how these economic predictions might impair the ability of its borrowers to repay their loans.
When such third-party information is not available, fair value is estimated primarily by using cash flow and other financial modeling techniques utilizing assumptions such as credit quality, liquidity, interest rates and other relevant inputs. Changes in underlying factors, assumptions, or estimates in any of these areas could materially impact the Company’s future financial condition and results of operations.
When such third-party 11 Table of Contents information is not available, fair value is estimated primarily by using cash flow and other financial modeling techniques utilizing assumptions such as credit quality, liquidity, interest rates and other relevant inputs.
To combat the high inflation experienced in 2022 and 2023, the Federal Reserve Board significantly increased the benchmark interest rate from nearly zero at the start of 2022 to between 4.25% and 4.50% at the end of 2022 and continued to raise interest rates at a more modest pace to between 5.25% and 5.50% by the end of July 2023.
Changes in monetary policy, including changes in interest rates, will influence loan originations, deposit generation, demand for investments and revenues and costs for earning assets and liabilities, and could significantly impact the Company’s net interest income. 10 Table of Contents To combat the high inflation experienced in 2022 and 2023, the Federal Reserve Board significantly increased the benchmark interest rate from nearly zero at the start of 2022 to between 4.25% and 4.50% at the end of 2022 and continued to raise interest rates at a more modest pace to between 5.25% and 5.50% by the end of July 2023.
Additionally, the volatility of the Company's provision for credit losses may change from year to year due to macroeconomic variables that influence the Company's loss estimates, and the volatility in credit losses may be material to the Company's earnings. 12 Table of Contents The Company’s investment portfolio values may be adversely impacted by deterioration in the credit quality of underlying collateral within the various categories of investment securities it owns.
Additionally, the volatility of the Company's provision for credit losses may change from year to year due to macroeconomic variables that influence the Company's loss estimates, and the volatility in credit losses may be material to the Company's earnings.
These additional disclosures and reporting would require increased time and expense for the Company related to information gathering and compliance. 10 Table of Contents Liquidity and Capital Risks The Company is subject to both interest rate and liquidity risk.
The SEC has also announced plans to propose rules to require enhanced disclosure regarding human capital management and board diversity for public issuers. These additional disclosures and reporting would require increased time and expense for the Company related to information gathering and compliance. Liquidity and Capital Risks The Company is subject to both interest rate and liquidity risk.
In the event the subsidiary bank is unable to pay dividends, the Company may not be able to pay dividends or other obligations, which would have a material adverse effect on the Company's financial condition and results of operations. 11 Table of Contents Operational Risks The Company’s asset valuation may include methodologies, models, estimations and assumptions which are subject to differing interpretations and could result in changes to asset valuations that may materially adversely affect its results of operations or financial condition.
In the event the subsidiary bank is unable to pay dividends, the Company may not be able to pay dividends or other obligations, which would have a material adverse effect on the Company's financial condition and results of operations.
Uncertainties about global geopolitical tensions continued in 2024, as did lingering supply chain concerns. Looking ahead to 2025, inflationary pressures have eased but uncertainty remains around tax reform, tariffs, and other monetary policy. • The U.S. economy is affected by global events and conditions, including U.S. trade disputes and renewed trade agreements with various countries.
Looking ahead to 2026, inflationary pressures have eased but elevated living costs are still a concern for consumers, and uncertainty remains around tariffs, monetary policy, and unemployment. • The U.S. economy is affected by global events and conditions, including U.S. trade disputes and renewed trade agreements with various countries.
The Company continually encounters technological change. The financial services industry is continually undergoing rapid technological change with frequent introductions of new technology-driven products and services, including the entrance of financial technology companies offering new financial service products.
The financial services industry is continually undergoing rapid technological change with frequent introductions of new technology-driven products and services, including the entrance of financial technology companies offering new financial service products. The Company regularly upgrades or replaces technological systems to increase efficiency, enhance product and service capabilities, eliminate risks of end-of-lifecycle products, reduce costs, and better serve our customers.
The Company regularly upgrades or replaces technological systems to increase efficiency, enhance product and service capabilities, eliminate risks of end-of-lifecycle products, reduce costs, and better serve our customers. As the Company completes system upgrades, it may face operational risks after system conversions, including disruptions to its technology systems, which may adversely impact customers.
As the Company completes system upgrades, it may face operational risks after system conversions, including disruptions to its technology systems, which may adversely impact customers.
These losses include, but are not limited to, costs and expenses for card reissuance as well as losses resulting from fraudulent card transactions. Credit Risks The allowance for credit losses may be insufficient or future credit losses could increase.
These losses include, but are not limited to, costs and expenses for card reissuance as well as losses resulting from fraudulent card transactions. Integrating FineMark into the Company may be more difficult, costly, or time consuming than expected and the anticipated benefits and cost savings of the Merger may not be realized.
The Company maintains a portfolio of investments, which includes available for sale debt securities, trading securities, equity securities, and other investments. The Company does not hold any investments classified as held-to-maturity. The Company generally invests in liquid, investment grade securities, however, these securities are subject to changes in market value due to changing interest rates and implied credit spreads.
The Company’s investment portfolio values may be adversely impacted by deterioration in the credit quality of underlying collateral within the various categories of investment securities it owns. The Company maintains a portfolio of investments, which includes available for sale debt securities, trading securities, equity securities, and other investments. The Company does not hold any investments classified as held-to-maturity.
The Company uses estimates, assumptions, and judgments when certain financial assets and liabilities are measured and reported at fair value. Assets and liabilities carried at fair value inherently result in greater financial statement volatility.
Operational Risks The Company’s asset valuation may include methodologies, models, estimations and assumptions which are subject to differing interpretations and could result in changes to asset valuations that may materially adversely affect its results of operations or financial condition. The Company uses estimates, assumptions, and judgments when certain financial assets and liabilities are measured and reported at fair value.
Removed
In particular, the Company may face the following risks in connection with market conditions: • In 2024, the United States ("U.S.") economy faced a series of challenges, including declining but elevated inflation. The economy saw a strong but slowing job market and solid consumer spending fueling economic growth.
Added
The economy saw moderating but persistently elevated inflation, a solid but slowing labor market, and solid consumer spending, particularly later in 2025. Uncertainties about tariff policies and international trade contributed to price pressures and uncertainty.
Removed
As a result, businesses continue to reevaluate their office space needs and, in some cases, reduce their leased office space, selling commercial office buildings, or leasing space no longer needed. The impact of this shift continues to be seen but could result in reduced demand for office space, lower lease rates for office space, and lower values of office buildings.
Added
Rates remained unchanged at 4.25% to 4.50% throughout the first eight months of 2025 until the Federal Reserve Board cut rates .25% in September 2025. By December 2025, the Federal Reserve had implemented 3 rate cuts for the year.
Removed
These factors may contribute to higher delinquencies and net charge-offs for commercial office real estate loans.
Added
Monetary policy led by the Federal Reserve in the coming year will play a crucial role in liquidity and interest rate risk. Future economic conditions or other factors could shift monetary policy resulting in additional increases or decreases in the benchmark rate.
Removed
Additionally, businesses that cater to or are located near dense areas of office buildings may be adversely impacted, which could result in higher delinquencies and net charge-offs for certain commercial borrowers. • The process used to estimate credit losses in the Company’s loan portfolio requires difficult, subjective, and complex judgments, including consideration of economic conditions and how these economic predictions might impair the ability of its borrowers to repay their loans.
Added
Changes in underlying factors, assumptions, or estimates in any of these areas could materially impact the Company’s future financial condition and results of operations.
Removed
Changes in monetary policy, including changes in interest rates, will influence loan originations, deposit generation, demand for investments and revenues and costs for earning assets and liabilities, and could significantly impact the Company’s net interest income.
Added
The success of the Company’s Merger with FineMark, including anticipated benefits and cost savings, will depend, in part, on the Company's ability to successfully combine and integrate the businesses of the Company and FineMark in a manner that permits growth opportunities and does not materially disrupt the existing customer relations nor result in decreased revenues due to loss of customers.
Added
It is possible that the integration process could result in the disruption of either company’s ongoing businesses or inconsistencies in standards, controls, procedures, and policies that adversely affect the combined company’s ability to maintain relationships with clients, customers, depositors, and employees or to achieve the anticipated benefits and cost savings of the Merger.
Added
If the Company experiences difficulties with the integration process, the anticipated benefits of the Merger may not be realized fully or at all, or may take longer to realize than expected. Integration efforts will also divert management attention and resources. These integration matters could have an adverse effect on the Company for an undetermined period after completion of the Merger.
Added
An inability to realize the full extent of the anticipated benefits of the Merger and the other transactions contemplated by the Merger Agreement, as well as any delays encountered in the integration process, could have an adverse effect upon the revenues, levels of expenses and operating results of the Company following the completion of the Merger, which may adversely affect the value of the common stock of the Company following the completion of the Merger.
Added
Additionally, following consummation of the acquisition of FineMark, the Company made fair value estimates of certain assets and liabilities in recording the acquisition. Actual values of these assets and liabilities could differ from the estimates, which could impact regulatory capital ratios and result in the Company not achieving the anticipated benefits of the acquisition of FineMark.
Added
There can be no assurances that the Company will be successful following the acquisition of FineMark or that it will realize the expected operating efficiencies, cost savings or other benefits currently anticipated from the acquisition of FineMark. The Company has incurred and is expected to incur substantial costs related to the Merger.
Added
The Company has incurred and is expected to continue to incur substantial expenses in connection with the Merger.
Added
These costs include legal, financial advisory, accounting, consulting, and other advisory fees, retention, severance, and employee benefit- 12 Table of Contents related costs, public company filing fees and other regulatory fees, financial printing and other printing costs, closing, integration and other related costs.
Added
Additional unanticipated costs may be incurred in the integration of the Company’s business with the business of FineMark, and there are many factors beyond the Company’s control that could affect the total amount or timing of integration costs.
Added
Although the Company expects that the elimination of duplicative costs, as well as the realization of other efficiencies related to the integration of the businesses, may offset incremental transaction and acquisition-related costs over time, this net benefit may not be achieved in the near term, or at all. The Company may be unable to retain personnel successfully.
Added
The success of the Merger will depend in part on the Company’s ability to retain the talent and dedication of key employees.
Added
It is possible that these employees may decide not to remain with the Company, and if the Company is unable to retain key employees, including management, who are critical to the successful integration and future operations of the companies, the Company could face disruptions in their operations, loss of existing customers, loss of key information, expertise or know-how and unanticipated additional recruitment costs.
Added
In addition, if key employees terminate their employment, the Company’s business activities may be adversely affected, as management’s attention may be diverted from successfully hiring suitable replacements and may not be able to locate or retain suitable replacements for any key employees who leave, all of which may cause the Company’s business to suffer.
Added
The Company generally invests in liquid, investment grade securities, however, these securities are subject to changes in market value due to changing interest rates and implied credit spreads. While the Company maintains prudent risk management practices over bonds issued by municipalities and other issuers, credit deterioration in these bonds could occur and result in losses.
Added
These risks may also be intensified by factors such as an increased volume and complexity of cyber attacks during periods of heightened geopolitical tensions and emerging technological innovations, such as the use of artificial intelligence (“AI”) tools and quantum computing, that may enable malicious actors to develop more advanced social engineering attacks, circumvent security controls, evade detection and remove forensic evidence.
Added
These risks may also be intensified by factors such as an increased volume and complexity of cyber attacks during periods of heightened geopolitical tensions and emerging technological innovations, such as the use of artificial intelligence (“AI”) tools and quantum computing, that may enable malicious actors to develop more advanced social engineering attacks, circumvent security controls, evade detection and remove forensic evidence.

Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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See Technology Risk " A successful cyber attack or other computer system breach could significantly harm the Company, its reputation and its customers " within Risk Factors Item 1a. 17 Table of Contents
See Technology Risk " A successful cyber attack or other computer system breach could significantly harm the Company, its reputation and its customers " within Risk Factors Item 1a. 18 Table of Contents
CISO demonstrates expertise in Graham-Leach-Bliley Act, Health Insurance Portability and Accountability Act, Payment Card Industry, International Organization for Standardization27001, National Institute of Standards and Technology, Open Worldwide Application Security Project, and other programs to provide strategic consulting across a variety of industry sectors.
CISO demonstrates expertise in Graham-Leach-Bliley Act, Health Insurance Portability and Accountability Act, Payment Card Industry, International Organization for Standardization 27001, National Institute of Standards and Technology, Open Worldwide Application Security Project, and other programs to provide strategic consulting across a variety of industry sectors.
Comply with the Company’s information security policies and standards. The scope of the risk assessment process includes but is not limited to the following asset types: a. Applications b. Business units c. Service providers d. Servers e. Databases f. Data centers g. Network infrastructure 16 Table of Contents h. Security infrastructure i. Storage/recovery j. Mobile devices k. Workstations l.
Comply with the Company’s information security policies and standards. The scope of the risk assessment process includes but is not limited to the following asset types: a. Applications b. Business units c. Service providers d. Servers e. Databases f. Data centers g. Network infrastructure h. Security infrastructure i. Storage/recovery j. Mobile devices k. Workstations l. Authentication directory services m.
Review new, expanded or modified software and applications that process, transmit, or store sensitive information to ensure appropriate information security risk management is embedded in the development and implementation processes. The ISSB is comprised of the following: a. Chief Information Security Officer – Chair b. Chief Information Officer c. Executive Director, Consumer Segment & Strategic Services d. Managing Counsel e.
Review new, expanded or modified software and applications that process, transmit, or store sensitive information to ensure appropriate information security risk management is embedded in the development and implementation processes. The ISSB is comprised of the following: a. Chief Information Security Officer – Chair b. Chief Information Officer c. Executive Director, Retail Banking Segment & Strategic Services d.
Authentication directory services m. Cloud. The Company conducts detailed due diligence (as described below), contract reviews and ongoing monitoring of high-risk third-party service providers. Third-party service providers hosting an application or providing a service that processes, analyzes, transmits, stores, or reports the Company’s sensitive information must complete a control questionnaire.
Cloud 17 Table of Contents The Company conducts detailed due diligence (as described below), contract reviews and ongoing monitoring of high-risk third-party service providers. Third-party service providers hosting an application or providing a service that processes, analyzes, transmits, stores, or reports the Company’s sensitive information must complete a control questionnaire.
Director, Bank Operations f. Executive Director, Retail g. Chief Risk Officer h. Commerce Trust Chief Operating Officer i. IT General Manager j. Director, Commercial LOB Products & Operations k. Director, Audit 15 Table of Contents The Chief Information Security Officer (“CISO”) is responsible for the Company’s enterprise-wide Information and Cybersecurity Program.
Managing Counsel e. Director, Bank Operations f. Executive Director, Retail g. Chief Risk Officer h. Commerce Trust Chief Operating Officer i. Director, IT Division j. Director, Commercial LOB Products & Operations k. Director, Audit The Chief Information Security Officer (“CISO”) is responsible for the Company’s enterprise-wide Information and Cybersecurity Program.
The CISO has 25 years of experience with Information Security Program development, Application Security program development, IT Risk Management program development, Incident Response preparation, planning, and testing, Operational and Technical Security Architecture, and Creating Zero-Day defense strategies.
The CISO has 25 years of experience with Information Security Program development, Application Security program development, IT Risk Management program development, Incident Response preparation, planning, and testing, Operational and Technical Security Architecture, and Creating Zero-Day defense strategies. 16 Table of Contents The CISO is a Certified Information Systems Security Professional, is a member of the Information Systems Security Association and Infragard, and participates in local and national Security consortiums.
Removed
The CISO is a Certified Information Systems Security Professional, is a member of the Information Systems Security Association and Infragard, and participates in local and national Security consortiums.

Item 2. Properties

Properties — owned and leased real estate

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The larger office buildings include: Building Net rentable square footage % occupied in total % occupied by Bank 1000 Walnut Kansas City, MO 391,000 96 % 53 % 922 Walnut Kansas City, MO 256,000 95 91 811 Main Kansas City, MO 237,000 100 100 8001 Forsyth Clayton, MO 276,000 76 19 8000 Forsyth Clayton, MO 178,000 100 100 The Company has an additional 140 branch locations in Missouri, Illinois, Kansas, Oklahoma and Colorado which are owned or leased.
The larger office buildings include: Building Net rentable square footage % occupied in total % occupied by Bank 1000 Walnut Kansas City, MO 395,000 96 % 53 % 922 Walnut Kansas City, MO 256,000 95 95 811 Main Kansas City, MO 237,000 64 58 8001 Forsyth Clayton, MO 264,000 99 19 8000 Forsyth Clayton, MO 178,000 100 100 The Company has a total of 140 branch locations primarily located in Missouri, Illinois, Kansas, Oklahoma and Colorado which are owned or leased.
Item 3. LEGAL PROCEEDINGS The information required by this item is set forth in Item 8 under Note 21, Commitments, Contingencies and Guarantees on page 137.
Effective January 1, 2026, with the FineMark acquisition, the Company added 13 branch locations, mainly in Florida. Item 3. LEGAL PROCEEDINGS The information required by this item is set forth in Item 8 under Note 21, Commitments, Contingencies and Guarantees on page 138.

Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

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Holmes, 61 Executive Vice President of the Company since April 2015, and Community President and Chief Executive Officer of Commerce Bank since January 2016. Prior to his employment with Commerce Bank in March 2015, he was employed at a Midwest regional bank where he served as managing director and head of Regional Banking. Kim L.
Holmes, 62 Executive Vice President of the Company since April 2015, and Community President and Chief Executive Officer of Commerce Bank since January 2016. Prior to his employment with Commerce Bank in March 2015, he was employed at a Midwest regional bank where he served as managing director and head of Regional Banking. Kim L.
Prior to his employment with Commerce Bank in February 2017, he was employed at a healthcare tech services company where he served as a senior vice president of revenue cycle and financial services. 18 Table of Contents Name and Age Positions with Registrant Robert S.
Prior to his employment with Commerce Bank in February 2017, he was employed at a healthcare tech services company where he served as a senior vice president of revenue cycle and financial services. 19 Table of Contents Name and Age Positions with Registrant Robert S.
Name and Age Positions with Registrant Kevin G. Barth, 64 Executive Vice President of the Company since April 2005, and Community President and Chief Executive Officer of Commerce Bank since October 1998. Senior Vice President of the Company and Officer of Commerce Bank prior thereto. Derrick R.
Name and Age Positions with Registrant Kevin G. Barth, 65 Executive Vice President of the Company since April 2005, and Community President and Chief Executive Officer of Commerce Bank since October 1998. Senior Vice President of the Company and Officer of Commerce Bank prior thereto. Derrick R.
Item 4. MINE SAFETY DISCLOSURES Not applicable Information about the Company's Executive Officers The following are the executive officers of the Company as of February 25, 2025, each of whom is designated annually. There are no arrangements or understandings between any of the persons so named and any other person pursuant to which such person was designated an executive officer.
Item 4. MINE SAFETY DISCLOSURES Not applicable Information about the Company's Executive Officers The following are the executive officers of the Company as of February 24, 2026, each of whom is designated annually. There are no arrangements or understandings between any of the persons so named and any other person pursuant to which such person was designated an executive officer.
Brooks, 48 Senior Vice President of the Company and Executive Vice President of Commerce Bank since January 2021. Senior Vice President of Commerce Bank prior thereto. John K. Handy, 61 Executive Vice President of the Company since January 2018 and Senior Vice President of the Company prior thereto.
Brooks, 49 Senior Vice President of the Company and Executive Vice President of Commerce Bank since January 2021. Senior Vice President of Commerce Bank prior thereto. John K. Handy, 62 Executive Vice President of the Company since January 2018 and Senior Vice President of the Company prior thereto.
Community President and Chief Executive Officer of Commerce Bank since January 2018 and Senior Vice President of Commerce Bank prior thereto. Richard W. Heise, 56 Senior Vice President of the Company since April 2022 and Executive Vice President of Commerce Bank since July 2021.
President and Chief Executive Officer of the Commerce Trust division of Commerce Bank since January 2018 and Senior Vice President of Commerce Bank prior thereto. Richard W. Heise, 57 Senior Vice President of the Company since April 2022 and Executive Vice President of Commerce Bank since July 2021.
Kemper, 74 Executive Chairman of the Company and of the Board of Directors of the Company since August 2018. Prior thereto, he was Chief Executive Officer of the Company and Chairman of the Board of Directors of the Company. He was President of the Company from April 1982 until February 2013. He is the brother of Jonathan M.
Prior thereto, he was Chief Executive Officer of the Company and Chairman of the Board of Directors of the Company. He was President of the Company from April 1982 until February 2013. He is the brother of Jonathan M. Kemper (a former Vice Chairman of the Company), and father of John W.
Roller, 54 Senior Vice President of the Company since July 2016 and Senior Vice President of Commerce Bank since September 2010. Margaret M. Rowe, 60 Senior Vice President of the Company since July 2024 and Vice President of the Company prior thereto. Secretary and General Counsel of the Company since April 2022.
Margaret M. Rowe, 61 Senior Vice President of the Company since July 2024 and Vice President of the Company prior thereto. Secretary and General Counsel of the Company since April 2022. Executive Vice President of Commerce Bank since July 2024 and Secretary and General Counsel of Commerce Bank since September 2022. Vice President of Commerce Bank prior thereto. Paul A.
Kemper (a former Vice Chairman of the Company), and father of John W. Kemper, President and Chief Executive Officer of the Company. John W. Kemper, 47 Chief Executive Officer of the Company and Chairman and Chief Executive Officer of Commerce Bank since August 2018. Prior thereto, he was Chief Operating Officer of the Company.
Kemper, President and Chief Executive Officer of the Company. John W. Kemper, 48 Chief Executive Officer of the Company and Chairman and Chief Executive Officer of Commerce Bank since August 2018. Prior thereto, he was Chief Operating Officer of the Company. President of the Company since February 2013 and President of Commerce Bank since March 2013.
Neff, 56 Senior Vice President of the Company since January 2019 and Chairman and Chief Executive Officer of Commerce Bank Southwest Region since 2013. David L. Orf, 58 Executive Vice President of the Company since October 2020 and Chief Credit Officer of the Company since January 2021.
Chairman and Chief Executive Officer of Commerce Bank Southwest Region prior thereto. David L. Orf, 59 Executive Vice President of the Company since October 2020 and Chief Credit Officer of the Company since January 2021. Executive Vice President of Commerce Bank since January 2014 and Senior Vice President of Commerce Bank prior thereto. Paula S.
President of the Company since February 2013 and President of Commerce Bank since March 2013. Member of Board of Directors since September 2015. He is the son of David W. Kemper (Executive Chairman of the Company) and nephew of Jonathan M. Kemper (a former Vice Chairman of the Company). Charles G.
Member of Board of Directors since September 2015. He is the son of David W. Kemper (Executive Chairman of the Company) and nephew of Jonathan M. Kemper (a former Vice Chairman of the Company). Charles G. Kim, 65 Chief Financial Officer of the Company since July 2009.
Executive Vice President of Commerce Bank since January 2014 and Senior Vice President of Commerce Bank prior thereto. Paula S. Petersen, 58 Executive Vice President of the Company since January 2022 and Senior Vice President of the Company prior thereto. Executive Vice President of Commerce Bank since March 2012. David L.
Petersen, 59 Executive Vice President of the Company since January 2022 and Senior Vice President of the Company prior thereto. Executive Vice President of Commerce Bank since March 2012. David L. Roller, 55 Senior Vice President of the Company since July 2016. Executive Vice President of Commerce Bank since January 2019. Senior Vice President of Commerce Bank prior thereto.
Kim, 64 Chief Financial Officer of the Company since July 2009. Executive Vice President of the Company since April 1995 and Executive Vice President of Commerce Bank since January 2004. Prior thereto, he was Senior Vice President of Commerce Bank. Douglas D.
Executive Vice President of the Company since April 1995 and Executive Vice President of Commerce Bank since January 2004. Prior thereto, he was Senior Vice President of Commerce Bank. Douglas D. Neff, 57 Senior Vice President of the Company since January 2019. Executive Director of Community Markets of Commerce Bank since January 2023.
Executive Vice President of Commerce Bank since July 2024 and Secretary and General Counsel of Commerce Bank since September 2022. Vice President of Commerce Bank prior thereto. Paul A. Steiner, 53 Controller and Chief Accounting Officer of the Company since April 2019. He is also Controller of the Company's subsidiary bank, Commerce Bank.
Steiner, 54 Controller and Chief Accounting Officer of the Company since April 2019. He is also Controller of the Company's subsidiary bank, Commerce Bank. Assistant Controller and Director of Tax of the Company prior thereto. 20 Table of Contents PART II
Jakovich, 55 Senior Vice President of the Company since April 2022, and Officer of the Company prior thereto. Senior Vice President of Commerce Bank since July 2015. Patricia R. Kellerhals, 67 Senior Vice President of the Company since February 2016 and Vice President of the Company prior thereto. Executive Vice President of Commerce Bank since 2005. David W.
Jakovich, 56 Senior Vice President of the Company since April 2022, and Officer of the Company prior thereto. Executive Vice President of Commerce Bank since January 2025, and Senior Vice President of Commerce Bank prior thereto. David W. Kemper, 75 Executive Chairman of the Company and of the Board of Directors of the Company since August 2018.
Removed
Assistant Controller and Director of Tax of the Company prior thereto. 19 Table of Contents PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Item 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Commerce Bancshares, Inc. Common Stock Data Commerce Bancshares, Inc. common shares are listed on the Nasdaq Global Select Market (NASDAQ) under the symbol CBSH. The Company had 3,262 common shareholders of record as of December 31, 2024.
Item 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED SHAREHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Commerce Bancshares, Inc. Common Stock Data Commerce Bancshares, Inc. common shares are listed on the Nasdaq Global Select Market (NASDAQ) under the symbol CBSH. The Company had 3,156 common shareholders of record as of December 31, 2025.
The Board of Directors makes the dividend determination quarterly. 20 Table of Contents The following table sets forth information about the Company’s purchases of its $5 par value common stock, its only class of common stock registered pursuant to Section 12 of the Exchange Act, during the fourth quarter of 2024.
The Board of Directors makes the dividend determination quarterly. 21 Table of Contents The following table sets forth information about the Company’s purchases of its $5 par value common stock, its only class of common stock registered pursuant to Section 12 of the Exchange Act of 1934, as amended, during the fourth quarter of 2025.
Under the most recent authorization in April 2024 of 5,000,000 shares, 2,931,648 shares remained available for purchase at December 31, 2024. Item 6. RESERVED 21 Table of Contents
Under the most recent authorization in October 2025 of 5,000,000 shares, 3,186,721 shares remained available for purchase at December 31, 2025. Item 6. RESERVED 22 Table of Contents
Certain of the Company's shares are held in "nominee" or "street" name and the number of beneficial owners of such shares is approximately 152,000. Performance Graph The following graph presents a comparison of Company (CBSH) performance to the indices named below.
A substantially greater number of holders of the Company's common shares are "street name" or beneficial owners, whose shares of record are held by banks, brokers and other financial institutions. Performance Graph The following graph presents a comparison of Company (CBSH) performance to the indices named below.
It assumes $100 invested on December 31, 2019 with dividends reinvested on a cumulative total shareholder return basis. 2019 2020 2021 2022 2023 2024 Commerce (CBSH) $ 100.00 $ 103.49 $ 115.42 $ 121.89 $ 102.51 $ 128.00 KBW NASDAQ Regional Banking 100.00 91.34 124.82 116.18 115.72 130.95 S&P 500 100.00 118.33 152.27 124.67 157.41 196.64 The Company has a long history of paying dividends. 2024 marked the 56th consecutive year of growth in our regular common dividend, and the Company has also issued an annual 5% common stock dividend for the past 31 years.
It assumes $100 invested on December 31, 2020 with dividends reinvested on a cumulative total shareholder return basis. 2020 2021 2022 2023 2024 2025 Commerce (CBSH) $ 100.00 $ 111.53 $ 117.78 $ 99.05 $ 123.60 $ 111.04 KBW Nasdaq Regional Banking 100.00 136.65 127.19 126.69 143.37 152.69 S&P 500 100.00 128.68 105.36 133.03 166.18 195.86 The Company has a long history of paying dividends. 2025 marked the 57th consecutive year of growth in our regular common dividend, and the Company has also issued an annual 5% common stock dividend for the past 32 years.
Period Total Number of Shares Purchased Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Program Maximum Number that May Yet Be Purchased Under the Program October 1 - 31, 2024 155,726 $62.13 155,726 3,459,450 November 1 - 30, 2024 310,683 $70.48 310,683 3,148,767 December 1 - 31, 2024 217,119 $68.27 217,119 2,931,648 Total 683,528 $67.88 683,528 2,931,648 The Company’s stock purchases shown above were made under authorizations by the Board of Directors.
Period Total Number of Shares Purchased Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Program Maximum Number that May Yet Be Purchased Under the Program October 1 - 31, 2025 403,070 $53.26 403,070 4,947,345 November 1 - 30, 2025 1,022,860 $53.58 1,022,860 3,924,485 December 1 - 31, 2025 737,764 $52.90 737,764 3,186,721 Total 2,163,694 $53.29 2,163,694 3,186,721 The Company’s stock purchases shown above were made under authorizations by the Board of Directors.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

288 edited+40 added−42 removed162 unchanged
The decrease of $10.9 million in interest earned on state and municipal securities was due to a decrease of $497.5 million in average balances and a decline of seven basis points in average rate earned.
The decrease of $10.9 million in interest earned on state and municipal securities was due to a decrease of $497.5 million in average balances and a decline of seven basis points in the average rate earned.
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.
Additional information about business real estate loans by borrower is disclosed within the Real Estate - Business Loans section of the Risk Elements of the Loan Portfolio section located within Management's Discussion and Analysis of Financial Condition and Results of Operations.
The decrease in the unallocated provision for credit losses was primarily driven by a decrease in the liability for unfunded lending commitments, partly offset by an increase in the provision for credit losses on loans, which are both not allocated to the segments for management reporting purposes. Net charge-offs are allocated to segments when incurred for management reporting purposes.
The increase in the unallocated provision for credit losses was primarily driven by an increase in the provision for credit losses on loans, partly offset by a decrease in the liability for unfunded lending commitments, which are both not allocated to the segments for management reporting purposes. Net charge-offs are allocated to segments when incurred for management reporting purposes.
This decrease was due to a decline in net interest income of $40.5 million, or 7.3%, an increase in the provision for credit losses of $10.2 million, or 37.0%, and higher non-interest expense of $4.9 million, or 1.5%, partly offset by an increase in non-interest income of $3.0 million, or 3.0%.
This decrease was due to a decline in net interest income of $40.6 million, or 7.3%, an increase in the provision for credit losses of $10.2 million, or 37.0%, and higher non-interest expense of $4.7 million, or 1.5%, partly offset by an increase in non-interest income of $2.9 million, or 3.0%.
Interest expense on federal funds purchased decreased $13.0 million, mainly due to a $265.7 million decline in average balances, while interest expense on securities sold under repurchase agreements increased $7.7 million due to a 26 basis point increase in average rate earned and an increase of $47.4 million in average balances.
Interest expense on federal funds purchased decreased $13.0 million, mainly due to a $265.7 million decline in average balances, while interest expense on securities sold under repurchase agreements increased $7.7 million due to a 26 basis point increase in the average rate earned and an increase of $47.4 million in average balances.
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. Assumptions, Judgments, and Uncertainties: The uncertainty in the estimation of the allowance for credit losses is created because key assumptions and judgements are applied throughout the process.
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. Assumptions, Judgments, and Uncertainties: The uncertainty in the estimation of the allowance for credit losses is created because key assumptions and judgments are applied throughout the process.
The decrease in interest income was mainly due to lower interest income earned on mortgage-backed securities, asset-backed securities and state and municipal securities, partly offset by an higher interest income earned on U.S. government securities.
The decrease in interest income was mainly due to lower interest income earned on mortgage-backed, asset-backed and state and municipal securities, partly offset by higher interest income earned on U.S. government securities.
While it is not clear how many brokered certificates of deposit the market would allow the Company to issue, the Company believes brokered certificates of deposits may be an additional, reliable source of liquidity during periods of stress in the banking industry. 50 Table of Contents Other important components of liquidity are the level of borrowings from third party sources and the availability of future credit.
While it is not clear how many brokered certificates of deposit the market would allow the Company to issue, the Company believes brokered certificates of deposits may be an additional, reliable source of liquidity during periods of stress in the banking industry. 51 Table of Contents Other important components of liquidity are the level of borrowings from third party sources and the availability of future credit.
The funds transfer pricing process attempts to remove interest rate risk from valuation, allowing management to compare profitability under various rate environments. The Company also assigns loan charge-offs and recoveries (labeled in the table below as “provision for credit 56 Table of Contents losses”) directly to each operating segment instead of allocating an estimated credit loss provision.
The funds transfer pricing process attempts to remove interest rate risk from valuation, allowing management to compare profitability under various rate environments. The Company also assigns loan charge-offs and recoveries (labeled in the table below as “provision for credit 57 Table of Contents losses”) directly to each operating segment instead of allocating an estimated credit loss provision.
Additional information about income tax expense is provided in Note 9 to the consolidated financial statements. Financial Condition Loan Portfolio Analysis Classifications of consolidated loans by major category at December 31, 2024 and 2023 are shown in the table below. This portfolio consists of loans which were acquired or originated with the intent of holding to their maturity.
Additional information about income tax expense is provided in Note 9 to the consolidated financial statements. Financial Condition Loan Portfolio Analysis Classifications of consolidated loans by major category at December 31, 2025 and 2024 are shown in the table below. This portfolio consists of loans which were acquired or originated with the intent of holding to their maturity.
Average balances by major deposit category for the last six years are disclosed in the Average Balance Sheets section of Management's Discussion and Analysis of Financial Condition and Results of Operations. A maturity schedule of all certificates of deposits outstanding at December 31, 2024 is included in Note 7 on Deposits in the consolidated financial statements.
Average balances by major deposit category for the last six years are disclosed in the Average Balance Sheets section of Management's Discussion and Analysis of Financial Condition and Results of Operations. A maturity schedule of all certificates of deposits outstanding at December 31, 2025 is included in Note 7 on Deposits in the consolidated financial statements.
It provides a meaningful basis for period to period and company to company comparisons, and also assist regulators, investors and analysts in analyzing the financial position of the Company. Tangible common equity and tangible assets are non-GAAP measures and should not be viewed as substitutes for, or superior to, data prepared in accordance with GAAP.
It provides a meaningful basis for period to period and company to company comparisons, and also assists regulators, investors and analysts in analyzing the financial position of the Company. Tangible common equity and tangible assets are non-GAAP measures and should not be viewed as substitutes for, or superior to, data prepared in accordance with GAAP.
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. 27 Table of Contents Net Interest Income Net interest income, the largest source of revenue, results from the Company’s lending, investing, borrowing, and deposit gathering activities.
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. 28 Table of Contents Net Interest Income Net interest income, the largest source of revenue, results from the Company’s lending, investing, borrowing, and deposit gathering activities.
Valuations generated from model-based techniques that use at least one significant assumption not observable in the market are considered Level 3, and the Company's Level 3 assets totaled $185.4 million, or 2.0% of total assets recorded at fair value on a recurring basis.
Valuations generated from model-based techniques that use at least one significant assumption not observable in the market are considered Level 3, and the Company's Level 3 assets totaled $185.5 million, or 2.0% of total assets recorded at fair value on a recurring basis.
This portfolio is further discussed in Note 2 to the consolidated financial statements. 37 Table of Contents Allowance for Credit Losses on Loans and Liability for Unfunded Lending Commitments To determine the amount of the allowance for credit losses on loans and the liability for unfunded lending commitments, the Company has established a process which assesses the risks and losses expected in its portfolios.
This portfolio is further discussed in Note 2 to the consolidated financial statements. 38 Table of Contents Allowance for Credit Losses on Loans and Liability for Unfunded Lending Commitments To determine the amount of the allowance for credit losses on loans and the liability for unfunded lending commitments, the Company has established a process which assesses the risks and losses expected in its portfolios.
(Dollars in thousands) Principal Outstanding at December 31, 2024 * New Lines Originated During 2024 * Unused Portion of Available Lines at December 31, 2024 * Balances Over 30 Days Past Due * Loans with interest-only payments $ 328,061 93.5 % $ 258,228 73.6 % $ 919,341 262.0 % $ 2,902 .8 % Loans with LTV: Between 80% and 90% 29,943 8.5 9,927 2.8 45,388 12.9 5,274 1.5 Over 90% 1,914 0.5 25 — 1,564 0.4 282 .1 Over 80% LTV $ 31,857 9.1 % $ 9,952 2.8 % $ 46,952 13.4 % $ 5,556 1.6 % Total loan portfolio from which above loans were identified $ 350,856 $ 267,675 $ 947,918 * Percentage of total principal outstanding of $350.9 million at December 31, 2024.
(Dollars in thousands) Principal Outstanding at December 31, 2024 * New Lines Originated During 2024 * Unused Portion of Available Lines at December 31, 2024 * Balances Over 30 Days Past Due * Loans with interest-only payments $ 328,061 93.5 % $ 258,228 73.6 % $ 919,341 97.0 % $ 2,902 .8 % Loans with LTV: Between 80% and 90% 29,943 8.5 9,927 2.8 45,388 4.8 5,274 1.5 Over 90% 1,914 0.5 25 — 1,564 0.2 282 .1 Over 80% LTV $ 31,857 9.1 % $ 9,952 2.8 % $ 46,952 5.0 % $ 5,556 1.6 % Total loan portfolio from which above loans were identified $ 350,856 $ 267,675 $ 947,918 * Percentage of total principal outstanding of $350.9 million at December 31, 2024 . ** Percentage of total unused portion of available lines of $947.9 million at December 31, 2024 .
Because the Company generally only enters into transactions with high quality counterparties, there have been no losses associated with counterparty nonperformance on derivative financial instruments. The following table summarizes the notional amounts and estimated fair values of the Company’s derivative instruments at December 31, 2024 and 2023.
Because the Company generally only enters into transactions with high quality counterparties, there have been no losses associated with counterparty nonperformance on derivative financial instruments. The following table summarizes the notional amounts and estimated fair values of the Company’s derivative instruments at December 31, 2025 and 2024.
The provision for credit losses increased mainly due to higher net loan charge-offs and an increase in the estimate of the allowance for credit losses on loans this year compared to last year. These increases were partly offset by a decrease in the liability for unfunded lending commitments.
The provision for credit losses increased mainly due to higher net loan charge-offs and an increase in the estimate of the allowance for credit losses on loans this year compared to last year. These increases were slightly offset by a decrease in the liability for unfunded lending commitments.
The higher rates earned on the loan portfolio were impacted by actions taken by the Federal Reserve in 2024 to lower short-term interest rates, which caused most of the Company's variable rate loan portfolio to re-price lower and fixed rate loans to originate at lower interest rates than the weighted-average of the portfolio of fixed rate loans.
The rates earned on the loan portfolio were impacted by actions taken by the Federal Reserve in 2025 and 2024 to lower short-term interest rates, which caused most of the Company's variable rate loan portfolio to re-price lower and fixed rate loans to originate at lower interest rates than the weighted-average of the portfolio of fixed rate loans.
The Federal Reserve Bank also establishes a collateral value of assets pledged and permits borrowings from the discount window. The following table reflects the collateral value of assets pledged, borrowings, and letters of credit outstanding, in addition to the estimated future funding capacity available to the Company at December 31, 2024.
The Federal Reserve Bank also establishes a collateral value of assets pledged and permits borrowings from the discount window. The following table reflects the collateral value of assets pledged, borrowings, and letters of credit outstanding, in addition to the estimated future funding capacity available to the Company at December 31, 2025.
No contributions to the defined benefit plan were made in 2024, 2023 or 2022, and the Company is not required nor does it expect to make a contribution in 2025. The Company has investments in low-income housing partnerships generally within the areas it serves.
No contributions to the defined benefit plan were made in 2025, 2024 or 2023, and the Company is not required nor does it expect to make a contribution in 2026. The Company has investments in low-income housing partnerships generally within the areas it serves.
The Company's unfunded lending commitments primarily relate to construction loans, and the Company's estimate for credit losses in its unfunded lending commitments 38 Table of Contents utilizes the same model and forecast as its estimate for credit losses on loans. See Note 2 for further discussion of the model inputs utilized in the Company's estimate of credit losses.
The Company's unfunded lending commitments 39 Table of Contents 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. See Note 2 for further discussion of the model inputs utilized in the Company's estimate of credit losses.
If these corporate deposits decline, the Company's funding needs may be met by liquidity supplied by investment security maturities and pay downs expected to total $1.6 billion over the next year, as noted above.
If these corporate deposits decline, the Company's funding needs may be met by liquidity supplied by investment security maturities and pay downs expected to total $1.2 billion over the next year, as noted above.
Total repurchase agreements at December 31, 2024 were comprised of non-insured customer funds totaling $2.8 billion, and securities pledged as collateral for these retail agreements totaled $2.9 billion. 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.
Total repurchase agreements at December 31, 2025 were comprised of non-insured customer funds totaling $2.9 billion, and securities pledged as collateral for these retail agreements totaled $2.9 billion. 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.
Supplies and communication expense decreased $129 thousand, or .7%, while deposit insurance expense decreased $16.7 million due to a $16.0 million accrual recorded in 2023 for a one-time special assessment by the FDIC to replenish the Deposit Insurance Fund.
Supplies and communication expense decreased $129 thousand, or .7%, while deposit insurance expense decreased $16.7 million due to a $16.0 million accrual recorded in 2023 for a special assessment by the FDIC to replenish the Deposit Insurance Fund.
The three reportable operating segments are Consumer, Commercial, and Wealth. Additional information is presented in Note 13 on Segments in the consolidated financial statements. The Company uses a funds transfer pricing method to value funds used (e.g., loans, fixed assets, cash, etc.) and funds provided (deposits, borrowings, and equity) by the business segments and their components.
The three reportable operating segments are Retail Banking, Commercial, and Wealth. Additional information is presented in Note 13 on Segments in the consolidated financial statements. The Company uses a funds transfer pricing method to value funds used (e.g., loans, fixed assets, cash, etc.) and funds provided (deposits, borrowings, and equity) by the business segments and their components.
Additionally, from time to time, other assets and liabilities may be recorded at fair value on a nonrecurring basis, such as 26 Table of Contents loan values that have been reduced based on the fair value of the underlying collateral, other real estate (primarily foreclosed property), non-marketable equity securities and certain other assets and liabilities.
Additionally, from time to time, other assets and liabilities may be recorded at fair value on a nonrecurring basis, such as loan values that have been reduced based on the fair value of the underlying collateral, other real estate (primarily foreclosed property), non-marketable equity securities and certain other assets and liabilities.
Interest earned on U.S. government securities increased $35.9 million mainly due to higher average balances of $601.7 million, or 60.0%, and an increase in average rate earned of 130 basis points. Interest earned on U.S. government securities was impacted by a decline of $2.5 million in inflation income on treasury inflation-protected securities (TIPS).
Interest earned on U.S. government securities increased $35.9 million mainly due to higher average balances of $601.7 million, or 60.0%, and an increase in the average rate earned of 130 basis points. Interest earned on U.S. government securities was impacted by a decline of $2.5 million in inflation TIPS income.
At December 31, 2024, the balance of SNC loans totaled approximately $1.6 billion, with an additional $2.5 billion in unfunded commitments, compared to a balance of $1.5 billion, with an additional $2.2 billion in unfunded commitments, at year end 2023.
At December 31, 2025, the balance of SNC loans totaled approximately $1.5 billion, with an additional $2.6 billion in unfunded commitments, compared to a balance of $1.6 billion, with an additional $2.5 billion in unfunded commitments, at year end 2024.
Customers are served from 243 locations in Missouri, Kansas, Illinois, Oklahoma and Colorado and commercial offices throughout the nation's midsection. A variety of delivery platforms are utilized, including an extensive network of branches and ATM machines, full-featured online banking, a mobile application, and a centralized contact center.
Customers are served from 236 locations primarily in Missouri, Kansas, Illinois, Oklahoma and Colorado and commercial offices throughout the nation's midsection. A variety of delivery platforms are utilized, including an extensive network of branches and ATM machines, full-featured online banking, a mobile application, and a centralized contact center.
Through the various sources of liquidity described above, the Company maintains a liquidity position that it believes will adequately satisfy its financial obligations. 53 Table of Contents Capital Management Under Basel III capital guidelines, at December 31, 2024 and 2023, the Company met all capital adequacy requirements and had regulatory capital ratios in excess of the levels established for well-capitalized institutions, as shown in the following table.
Through the various sources of liquidity described above, the Company maintains a liquidity position that it believes will adequately satisfy its financial obligations. 54 Table of Contents Capital Management Under Basel III capital guidelines, at December 31, 2025 and 2024, the Company met all capital adequacy requirements and had regulatory capital ratios in excess of the levels established for well-capitalized institutions, as shown in the following table.
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, 2024.
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, 2025.
In addition, as shown in the table of collateral available for future advances below, the Company has borrowing capacity of $6.1 billion through advances from the FHLB and the Federal Reserve.
In addition, as shown in the table of collateral available for future advances below, the Company has borrowing capacity of $6.3 billion through advances from the FHLB and the Federal Reserve.
Key assumptions include segmentation of the portfolio into pools, calculations of life of a loan using a combination of contractual terms and expected prepayment speeds and forecast of macroeconomic conditions. The Company utilizes a third-party macro-economic forecast that continuously changes due to economic conditions and events.
Key assumptions include segmentation 26 Table of Contents of the portfolio into pools, calculations of life of a loan using a combination of contractual terms and expected prepayment speeds and forecast of macroeconomic conditions. The Company utilizes a third-party macro-economic forecast that continuously changes due to economic conditions and events.
Investment securities interest income includes tax equivalent adjustments of $2,514,000 in 2024, $3,983,000 in 2023, $6,874,000 in 2022, $7,546,000 in 2021, $8,042,000 in 2020, and $7,845,000 in 2019. These adjustments relate to state and municipal obligations, trading securities, equity securities, and other securities.
Investment securities interest income includes tax equivalent adjustments of $2,546,000 in 2025, $2,514,000 in 2024, $3,983,000 in 2023, $6,874,000 in 2022, $7,546,000 in 2021, and $8,042,000 in 2020. These adjustments relate to state and municipal obligations, trading securities, equity securities, and other securities.
The single path economic forecast includes key 25 Table of Contents macroeconomic variables including GDP, disposable income, unemployment rate, various interest rates, consumer price index (CPI) inflation rate, housing price index (HPI), commercial real estate price index (CREPI) and market volatility. Each reporting period, the base macroeconomic forecast scenario is evaluated to ensure it is not inconsistent with management’s expectations.
The single path economic forecast includes key macroeconomic variables including GDP, disposable income, unemployment rate, various interest rates, consumer price index (CPI) inflation rate, housing price index (HPI), commercial real estate price index (CREPI) and market volatility. Each reporting period, the base macroeconomic forecast scenario is evaluated to ensure it is not inconsistent with management’s expectations.
Interest on construction and land loans grew $1.3 million over the prior year due to growth in the average rate earned of 29 basis points, partly offset by a decrease of $35.0 million, or 2.4%, in average loan balances.
Interest on construction and land loans grew $1.3 million over 2023 due to growth in the average rate earned of 29 basis points, partly offset by a decrease of $35.0 million, or 2.4%, in average loan balances.
Interest expense on certificates of deposit grew $9.5 million, due to a 33 basis point increase in the average rate paid, coupled with a $33.1 million increase in average balances. The overall rate paid on total deposits increased from 1.44% in 2023 to 1.96% in the current year.
Interest expense on certificates of deposit grew $9.5 million, due to a 33 basis point increase in the average rate paid, coupled with a $33.1 million increase in average balances. The overall rate paid on total deposits increased from 1.44% in 2023 to 1.96% in 2024.
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.
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, which was during the first quarter of 2025.
The provision for credit losses totaled $37.6 million, a $10.2 million increase over the prior year, which resulted mainly from higher consumer credit card and auto loan net charge-offs, partly offset by lower other vehicle and equipment loan net charge-offs.
The provision for credit losses totaled $37.6 million, a $10.2 million increase over 2023, which resulted mainly from higher consumer credit card and auto loan net charge-offs, partly offset by lower other vehicle and equipment loan net charge-offs.
The Company did not borrow any long-term funds from the FHLB during 2024 or 2023. 48 Table of Contents Liquidity and Capital Resources Liquidity Management Liquidity is managed within the Company in order to satisfy cash flow requirements of deposit and borrowing customers while at the same time meeting its own cash flow needs.
The Company did not borrow any long-term funds from the FHLB during 2025 or 2024. 49 Table of Contents Liquidity and Capital Resources Liquidity Management Liquidity is managed within the Company in order to satisfy cash flow requirements of deposit and borrowing customers while at the same time meeting its own cash flow needs.
Net merchant fees increased mainly due to higher merchant discount fees, partly offset by lower interchange fees. Deposit account fees increased $9.3 million, or 10.3%, mainly due to higher corporate cash management fees of $8.5 million and other deposit fees of $894 thousand.
Net 32 Table of Contents merchant fees increased mainly due to higher merchant discount fees, partly offset by lower interchange fees. Deposit account fees increased $9.3 million, or 10.3%, mainly due to higher corporate cash management fees of $8.5 million and other deposit fees of $894 thousand.
Other debt securities include corporate bonds, notes and commercial paper. 46 Table of Contents The types of securities held in the available for sale security portfolio at year end 2024 are presented in the table below. Additional detail by maturity category is provided in Note 3 to the consolidated financial statements.
Other debt securities include corporate bonds, notes and commercial paper. 47 Table of Contents The types of securities held in the available for sale security portfolio at year end 2025 are presented in the table below. Additional detail by maturity category is provided in Note 3 to the consolidated financial statements.
Other non-interest income increased $2.7 million, or 4.8%, over the prior year mainly due to higher gains on asset sales of $2.5 million, cash sweep commissions of $2.2 million and tax credit sales income of $2.1 million. These increases were partly offset by lower letter of credit fees of $2.3 million and swap fees of $1.2 million.
Other non-interest income increased $2.7 million, or 4.8%, over 2023 mainly due to higher gains on asset sales of $2.5 million, cash sweep commissions of $2.2 million and tax credit sales fees of $2.1 million. These increases were partly offset by lower letter of credit fees of $2.3 million and swap fees of $1.2 million.
For the year ended December 31, 2024, the Company did not recognize a credit loss expense on any available for sale debt securities.
For the year ended December 31, 2025, the Company did not recognize a credit loss expense on any available for sale debt securities.
As shown in the following tables, the percentage of loans with LTV ratios greater than 80% has remained a small segment of this portfolio, and delinquencies have been low and stable. The weighted average FICO score for the total portfolio balance at December 31, 2024 was 776.
As shown in the following tables, the percentage of loans with LTV ratios greater than 80% has remained a small segment of this portfolio, and delinquencies have been low and stable. The weighted average FICO score for the total portfolio balance at December 31, 2025 was 778.
Approximately $1.6 billion of the available for sale debt portfolio is expected to mature or pay down during 2025, and these funds offer substantial resources to meet either new loan demand or offset potential reductions in the Company’s deposit funding base.
Approximately $1.2 billion of the available for sale debt portfolio is expected to mature or pay down during 2026, and these funds offer substantial resources to meet either new loan demand or offset potential reductions in the Company’s deposit funding base.
Total shareholder return, including the change in stock price and dividend reinvestment, was 5.1%, 10.8%, and 10.7% over the past 5, 10, and 15 years, respectively. The following discussion and analysis should be read in conjunction with the consolidated financial statements and related notes.
Total shareholder return, including the change in stock price and dividend reinvestment, was 2.1%, 9.1%, and 9.2% over the past 5, 10, and 15 years, respectively. The following discussion and analysis should be read in conjunction with the consolidated financial statements and related notes.
Net loan charge-offs increased $7.8 million, mainly due to higher credit card and consumer loan net charge-offs in 2024, partly offset by a decrease in business loan net charge-offs. Non-interest income grew 7.4% in 2024, mainly due to increases in trust fees and deposit account fees.
Net loan charge-offs increased $7.8 million, mainly due to higher credit card and consumer loan net charge-offs in 2024, partly offset by a decrease in business loan net charge-offs. 25 Table of Contents Non-interest income grew 7.4% in 2024, mainly due to increases in trust fees and deposit account fees.
Personal Banking Loans Real Estate-Personal At December 31, 2024, there were $3.1 billion in outstanding personal real estate loans, which comprised 17.8% of the Company’s total loan portfolio. The mortgage loans in this category are mainly for owner-occupied residential properties.
Personal Banking Loans Real Estate-Personal At December 31, 2025, there were $3.1 billion in outstanding personal real estate loans, which comprised 17.2% of the Company’s total loan portfolio. The mortgage loans in this category are mainly for owner-occupied residential properties.
Of the total resale agreements outstanding at December 31, 2024, $125.0 million mature in 2025, $250.0 million mature in 2028, and $250.0 million mature in 2029. The resale agreements have fixed base rates and some of the agreements include structures that increase the base rate when interest rates decline to certain levels.
Of the total resale agreements outstanding at December 31, 2025, $250.0 million mature in 2028, $250.0 million mature in 2029, and $350.0 million mature in 2030. The resale agreements have fixed base rates and some of the agreements include structures that increase the base rate when interest rates decline to certain levels.
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 deteriorates and companies experience lower cash inflows, reducing deposit balances.
While the Company considers core retail banking and wealth deposits less volatile, corporate deposits could decline if interest rates increase significantly, encouraging corporate customers to increase investing activities, or if the economy deteriorates and companies experience lower cash inflows, reducing deposit balances.
Commercial Loans Business Total business loans amounted to $6.1 billion at December 31, 2024 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.
Commercial Loans Business Total business loans amounted to $6.4 billion at December 31, 2025 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.
The business real estate borrowers and/or properties are generally located in local and regional markets where Commerce does business, and emphasis is placed on owner-occupied lending (33.8% of this portfolio), which presents lower risk levels.
The business real estate borrowers and/or properties are generally located in local and regional markets where Commerce does business, and emphasis is placed on owner-occupied lending (34.0% of this portfolio), which presents lower risk levels.
At December 31, 2024, the Company had approved lines of credit totaling $3.9 billion. Since these borrowings are unsecured and limited by market trading activity, their availability may be less certain than collateralized sources of borrowings.
At December 31, 2025, the Company had approved lines of credit totaling $4.3 billion. Since these borrowings are unsecured and limited by market trading activity, their availability may be less certain than collateralized sources of borrowings.
Total average loans in this segment decreased $1.7 million in 2024 compared to 2023 mainly due to declines in auto and 57 Table of Contents other vehicle loans and personal real estate loans, partly offset by higher revolving and fixed rate home equity loans.
Total average loans in this segment decreased $1.7 million in 2024 compared to 2023 mainly due to declines in auto and other vehicle loans and personal real estate loans, partly offset by higher revolving and fixed-rate home equity loans.
Bank card fees decreased $1.4 million, or .7%, from the prior year, mainly due to a decrease in net corporate card fees of $4.0 million, partly offset by increases in net credit card fees of $1.6 million, net debit card fees of $636 thousand and net merchant fees of $407 thousand.
Bank card fees decreased $1.4 million, or .7%, from 2023, mainly due to a decrease in net corporate card fees of $4.0 million, partly offset by increases in net credit card fees of $1.6 million, net debit card fees of $636 thousand and net merchant fees of $407 thousand.
The decline in net corporate card fees from the prior year was mainly due to lower interchange income coupled with higher rewards expense. Net debit card fees increased mainly due to higher interchange income, while net credit card fees increased due to lower rewards expense.
The decline in net corporate card fees from 2023 was mainly due to lower interchange income coupled with higher rewards expense. Net debit card fees increased mainly due to higher interchange income, while net credit card fees increased due to lower rewards expense.
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 $4.2 million in 2024, $4.8 million in 2023, and $8.5 million in 2022.
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 $2.1 million in 2025, $4.2 million in 2024, and $4.8 million in 2023.
Consistent with management’s strategy and emphasis upon relationship banking, most borrowing customers also maintain deposit accounts and utilize other banking services. Net loan charge-offs in this category totaled $1.1 million in 2024 compared to $3.1 million in 2023.
Consistent with management’s strategy and emphasis upon relationship banking, most borrowing customers also maintain deposit accounts and utilize other banking services. Net loan charge-offs in this category totaled $1.5 million in 2025 compared to $1.1 million in 2024.
In 2024, pre-tax income for the Wealth segment was $172.5 million, compared to $160.3 million in 2023, an increase of $12.2 million, or 7.6%.
In 2024, pre-tax income for the Wealth segment was $172.8 million, compared to $160.6 million in 2023, an increase of $12.2 million, or 7.6%.
In determining the fair value, management uses models and applies the techniques and assumptions previously discussed. At December 31, 2024, assets and liabilities measured using observable inputs that are classified as either Level 1 or Level 2 represented 98.1% and 99.9% of total assets and liabilities recorded at fair value, respectively.
In determining the fair value, management uses models and applies the techniques and assumptions previously discussed. At December 31, 2025, assets and liabilities measured using observable inputs that are classified as either Level 1 or Level 2 represented 98.0% and 99.8% of total assets and liabilities recorded at fair value, respectively.
Pre-tax income for 2024 decreased $254 thousand, or .1%, compared to 2023, mainly due to lower net interest income and higher non-interest expense, mostly offset by higher non-interest income and a decrease in the provision for credit losses.
Pre-tax income for 2024 decreased $585 thousand, or .2%, compared to 2023, mainly due to lower net interest income and higher non-interest expense, mostly offset by higher non-interest income and a decrease in the provision for credit losses.
The Company also distributed its 31st consecutive annual 5% stock dividend in December 2024. 54 Table of Contents Interest Rate Sensitivity The Company’s Asset/Liability Management Committee (ALCO) measures and manages the Company’s interest rate risk on a monthly basis to identify trends and establish strategies to maintain stability in net interest income throughout various rate environments.
The Company also distributed its 32nd consecutive annual 5% stock dividend in December 2025. 55 Table of Contents Interest Rate Sensitivity The Company’s Asset/Liability Management Committee (ALCO) measures and manages the Company’s interest rate risk on a monthly basis to identify trends and establish strategies to maintain stability in net interest income throughout various rate environments.
Total uninsured deposits were calculated using the same methodology that the Company uses to determine uninsured deposits for regulatory reporting and amounted to $10.8 billion at both December 31, 2024 and December 31, 2023. The following table shows a detailed breakdown of the maturities of uninsured certificates of deposit at December 31, 2024.
Total uninsured deposits were calculated using the same methodology that the Company uses to determine uninsured deposits for regulatory reporting and amounted to $10.0 billion and $10.8 billion at December 31, 2025 and December 31, 2024, respectively. The following table shows a detailed breakdown of the maturities of uninsured certificates of deposit at December 31, 2025.
Over the next three years, approximately 14.3% of the Company's current outstanding balances are expected to mature. Of these balances, 85.7% have a FICO score above 700. The Company does not expect a significant increase in losses as these loans mature, due to their high FICO scores, low LTVs, and low historical loss levels.
Over the next three years, approximately 11.1% of the Company's current outstanding balances are expected to mature. Of these balances, 85.8% have a FICO score above 700. The Company does not expect a significant increase in losses as these loans mature, due to their high FICO scores, low LTVs, and low historical loss levels.
Key Ratios 2024 2023 2022 2021 2020 (Based on average balances) Return on total assets 1.72 % 1.49 % 1.45 % 1.55 % 1.20 % Return on common equity 16.66 17.94 17.31 15.37 10.64 Equity to total assets 10.29 8.33 8.39 10.11 11.18 Loans to deposits (1) 69.73 66.31 55.41 56.46 67.73 Non-interest bearing deposits to total deposits 29.97 32.61 39.02 40.46 37.83 Net yield on interest earning assets (tax equivalent basis) 3.47 3.16 2.85 2.58 2.99 (Based on end of period data) Non-interest income to revenue (2) 37.18 36.47 36.71 40.15 37.87 Efficiency ratio (3) 57.37 59.17 56.90 57.64 57.19 Tier I common risk-based capital ratio 16.71 15.25 14.13 14.34 13.71 Tier I risk-based capital ratio 16.71 15.25 14.13 14.34 13.71 Total risk-based capital ratio 17.48 16.03 14.89 15.12 14.82 Tier I leverage ratio 12.26 11.25 10.34 9.13 9.45 Tangible common equity to tangible assets ratio (4) 9.92 8.85 7.32 9.01 9.92 Common cash dividend payout ratio 26.50 28.24 26.10 23.12 35.32 (1) Includes loans held for sale.
Key Ratios 2025 2024 2023 2022 2021 (Based on average balances) Return on total assets 1.79 % 1.72 % 1.49 % 1.45 % 1.55 % Return on common equity 15.76 16.66 17.94 17.31 15.37 Equity to total assets 11.34 10.29 8.33 8.39 10.11 Loans to deposits (1) 69.80 69.73 66.31 55.41 56.46 Non-interest bearing deposits to total deposits 29.55 29.97 32.61 39.02 40.46 Net yield on interest earning assets (tax equivalent basis) 3.63 3.47 3.16 2.85 2.58 (Based on end of period data) Non-interest income to revenue (2) 36.97 37.18 36.47 36.71 40.15 Efficiency ratio (3) 55.47 57.37 59.17 56.90 57.64 Tier I common risk-based capital ratio 17.34 16.71 15.25 14.13 14.34 Tier I risk-based capital ratio 17.34 16.71 15.25 14.13 14.34 Total risk-based capital ratio 18.16 17.48 16.03 14.89 15.12 Tier I leverage ratio 12.65 12.26 11.25 10.34 9.13 Tangible common equity to tangible assets ratio (4) 11.11 9.92 8.85 7.32 9.01 Common cash dividend payout ratio 25.89 26.50 28.24 26.10 23.12 (1) Includes loans held for sale.
Loans Held for Sale At December 31, 2024, loans held for sale were mainly comprised of certain long-term fixed rate personal real estate loans. The personal real estate loans are carried at fair value and totaled $3.0 million at December 31, 2024.
Loans Held for Sale At December 31, 2025, loans held for sale were mainly comprised of certain long-term fixed rate personal real estate loans. The personal real estate loans are carried at fair value and totaled $4.0 million at December 31, 2025.
Non-interest income increased $13.0 million, or 5.3%, over the previous year mainly due to growth in deposit account fees (mainly corporate cash management fees), capital market fees, tax credit sales fees and loan commitment fees. These increases were partly offset by decreases in net bank card fees (mainly corporate card fees), letter of credit fees and swap fees.
Non-interest income increased $13.2 million, or 5.3%, over 2023 mainly due to growth in deposit account fees (mainly corporate cash management fees), capital market fees, tax credit sales fees and loan commitment fees. These increases were partly offset by decreases in net bank card fees (mainly corporate card fees), letter of credit fees and swap fees.
The Parent obtains funding to meet its obligations from two main sources: dividends received from bank and non-bank subsidiaries (within regulatory limitations) and management fees charged to subsidiaries as reimbursement for services provided by the Parent, as presented below: (In millions) 2024 2023 2022 Dividends received from subsidiaries $ 215.0 $ 280.0 $ 300.0 Management fees 42.3 47.8 38.6 Total $ 257.3 $ 327.8 $ 338.6 These sources of funds are used mainly to pay cash dividends on outstanding stock, pay general operating expenses, and purchase treasury stock.
The Parent obtains funding to meet its obligations from two main sources: dividends received from bank and non-bank subsidiaries (within regulatory limitations) and management fees charged to subsidiaries as reimbursement for services provided by the Parent, as presented below: (In millions) 2025 2024 2023 Dividends received from subsidiaries $ 240.0 $ 215.0 $ 280.0 Management fees 45.8 42.3 47.8 Total $ 285.8 $ 257.3 $ 327.8 These sources of funds are used mainly to pay cash dividends on outstanding stock, pay general operating expenses, and purchase treasury stock.
Most of these loans (93.5%) are written with terms requiring interest-only monthly payments. These loans are offered in three main product lines: LTV up to 80%, 80% to 90%, and 90% to 100%.
Most of these loans (94.3%) are written with terms requiring interest-only monthly payments. These loans are offered in three main product lines: LTV up to 80%, 80% to 90%, and 90% to 100%.
These loans include properties such as manufacturing and warehouse buildings, distribution facilities, small office and medical buildings, churches, hotels and motels, shopping centers, and other commercial properties, which have historically resulted in lower net charge-off rates than non-owner-occupied commercial real estate loans.
These loans include properties such as manufacturing and warehouse buildings, distribution facilities, small office and medical buildings, churches, hotels and motels, shopping centers, and other commercial properties. Approximately 34.0% of these loans were for owner-occupied real estate properties, which have historically resulted in lower net charge-off rates than non-owner-occupied commercial real estate loans.
These estimates are subject to periodic refinement based on changes in the underlying external and internal data. At December 31, 2024, the allowance for credit losses on loans was $162.7 million, compared to $162.4 million at December 31, 2023.
These estimates are subject to periodic refinement based on changes in the underlying external and internal data. At December 31, 2025, the allowance for credit losses on loans was $179.5 million, compared to $162.7 million at December 31, 2024.
The Company maintains a treasury stock buyback program under authorizations by its Board of Directors and periodically purchases stock in the open market. During 2023, the Company purchased 1.4 million shares, and during 2024 the Company purchased 2.9 million shares. At December 31, 2024, 2.9 million shares remained available for purchase under the current Board authorization.
The Company maintains a treasury stock buyback program under authorizations by its Board of Directors and periodically purchases stock in the open market. During 2024, the Company purchased 2.9 million shares, and during 2025 the Company purchased 3.6 million shares. At December 31, 2025, 3.2 million shares remained available for purchase under the current Board authorization.
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. During 2024, financing activities used cash of $372.9 million.
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. During 2025, financing activities used cash of $11.0 million.
Core customer deposits, defined as non-interest bearing, interest checking, savings, and money market deposit accounts, totaled $22.9 billion and represented 90.6% of the Company’s total deposits at December 31, 2024. 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.
Core customer deposits, defined as non-interest bearing, interest checking, savings, and money market deposit accounts, totaled $23.3 billion and represented 90.7% of the Company’s total deposits at December 31, 2025. 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.
Loan interest income includes tax free loan income (categorized as business loan income) which includes tax equivalent adjustments of $6,706,000 in 2024, $5,467,000 in 2023, $4,126,000 in 2022, $4,176,000 in 2021, $4,916,000 in 2020, and $6,282,000 in 2019.
Loan interest income includes tax free loan income (categorized as business loan income) which includes tax equivalent adjustments of $7,040,000 in 2025, $6,706,000 in 2024, $5,467,000 in 2023, $4,126,000 in 2022, $4,176,000 in 2021, and $4,916,000 in 2020.
The percentage of allowance to loans increased to .95% at December 31, 2024, compared to .94% at December 31, 2023. See Note 2 to the consolidated financial statements for the various model assumptions utilized in the Company's CECL estimate at December 31, 2024.
The percentage of allowance to loans increased to 1.01% at December 31, 2025, compared to .95% at December 31, 2024. See Note 2 to the consolidated financial statements for the various model assumptions utilized in the Company's CECL estimate at December 31, 2025.
At December 31, 2024, the fair value of available for sale securities was $9.1 billion, which included a net unrealized loss in fair value of $990.6 million, compared to a net unrealized loss of $1.2 billion at December 31, 2023.
At December 31, 2025, the fair value of available for sale securities was $9.1 billion, which included a net unrealized loss in fair value of $646.8 million, compared to a net unrealized loss of $990.6 million at December 31, 2024.
Cash outflows resulting from the Company’s transactions in its common stock were as follows: (In millions) 2024 2023 2022 Purchases of treasury stock $ 170.5 $ 76.4 $ 186.6 Common cash dividends paid 139.5 134.7 127.5 Cash used $ 310.0 $ 211.1 $ 314.1 The Parent faces unique liquidity constraints due to legal limitations on its ability to borrow funds from its bank subsidiary.
Cash outflows resulting from the Company’s transactions in its common stock were as follows: (In millions) 2025 2024 2023 Purchases of treasury stock $ 207.6 $ 170.5 $ 76.4 Common cash dividends paid 146.6 139.5 134.7 Cash used $ 354.2 $ 310.0 $ 211.1 The Parent faces unique liquidity constraints due to legal limitations on its ability to borrow funds from its bank subsidiary.

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