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What changed in COMMERCE BANCSHARES INC /MO/'s 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of COMMERCE BANCSHARES INC /MO/'s 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+410 added−388 removedSource: 10-K (2025-02-25) vs 10-K (2024-02-22)

Top changes in COMMERCE BANCSHARES INC /MO/'s 2024 10-K

410 paragraphs added · 388 removed · 355 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

22 edited+3 added−1 removed78 unchanged
Biggest changeThese 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. 5 Table of Contents The USA PATRIOT Act, established in 2001, substantially broadened the scope of U.S. anti-money laundering laws and regulations by imposing significant new compliance and due diligence obligations, creating new crimes and penalties and expanding the extra-territorial jurisdiction of the U.S.
Biggest changeThese 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.
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 earlier in 2023.
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.
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.
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.
The Company's principal markets, which are served by 141 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 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.
Job shadowing, leadership 3 Table of Contents development programs, Aspiring Managers program, Managing at Commerce, competency assessments and education assistance are just a few of the ways the Company helps team members excel. The Company believes inclusion builds stronger companies with better results and focuses its efforts around four key pillars: its workforce, its suppliers, its community and its customers.
Job shadowing, leadership development programs, Aspiring Managers program, Managing at Commerce, competency assessments and education assistance are just a few of the ways the Company helps team members excel. The Company believes inclusion builds stronger companies with better results and focuses its efforts around four key pillars: its workforce, its suppliers, its community and its customers.
The amount of dividends paid by the Bank in any calendar year is limited to the net profit of the current year combined with the retained net profits of the preceding two years, and permission must be obtained from the Federal Reserve Board for 6 Table of Contents dividends exceeding these amounts.
The amount of dividends paid by the Bank in any calendar year is limited to the net profit of the current year combined with the retained net profits of the preceding two years, and permission must be obtained from the Federal Reserve Board for dividends exceeding these amounts.
The Bank engages in general banking business, providing a broad range of retail, mortgage banking, corporate, investment, trust, and asset management products and services to individuals and businesses. Commerce Bancshares, Inc. also owns, directly or through the Bank, various non-banking subsidiaries. Their activities include private equity investment, securities brokerage, insurance agency, specialty lending, and leasing activities.
The Bank engages in general banking business, providing a broad range of retail, mortgage banking, corporate, investment, trust, and asset management products and services to individuals, businesses, and municipalities. Commerce Bancshares, Inc. also owns, directly or through the Bank, various non-banking subsidiaries. Their activities include private equity investment, securities brokerage, underwriting, specialty lending, and leasing activities.
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.
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.
At December 31, 2023, the Company's capital ratios are well in excess of those minimum ratios required by Basel III.
At December 31, 2024, the Company's capital ratios are well in excess of those minimum ratios required by Basel III.
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, 2023, the Company had consolidated assets of $31.7 billion, loans of $17.2 billion, deposits of $25.4 billion, and equity of $3.0 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, 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.
Deficiencies in compensation practices may affect supervisory ratings and enforcement actions may be taken if incentive compensation arrangements pose a risk to safety and soundness. 7 Table of Contents Transactions with Affiliates The Federal Reserve Board regulates transactions between the Bank and its subsidiaries.
Deficiencies in compensation practices may affect supervisory ratings and enforcement actions may be taken if incentive compensation arrangements pose a risk to safety and soundness. Transactions with Affiliates The Federal Reserve Board regulates transactions between the Bank and its subsidiaries.
Employees and Human Capital The Company employed 4,592 persons on a full-time basis and 136 persons on a part-time basis at December 31, 2023. 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.
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.
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 telecommunications, automobile, technology, financial services, aircraft and general manufacturing, health care, numerous service industries, and food and agricultural production.
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 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 2023, the Commercial, Consumer and Wealth segments contributed 53%, 25% and 21% of total segment pre-tax income, respectively.
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.
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. Patriot Act, and capital adequacy and liquidity constraints imposed by federal and state bank regulatory agencies.
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.
In its two largest markets, the Company has approximately 12% 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.
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.
The Company regularly faces competition from banks, savings and loan associations, credit unions, brokerage companies, mortgage companies, insurance companies, trust companies, credit card 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.
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.
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.
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.
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. 4 Table of Contents General The Company, as a bank holding company, is primarily regulated by the Board of Governors of the Federal Reserve System under the Bank Holding Company Act of 1956, as amended (BHC Act).
General The Company, as a bank holding company, is primarily regulated by the Board of Governors of the Federal Reserve System under the Bank Holding Company Act of 1956, as amended (BHC Act).
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.
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.
As a result of the FDIC's approval of its final rule, the Company accrued $16.0 million in the fourth quarter of 2023 for the one-time special assessment. For the year ended December 31, 2023, the Company's deposit insurance expense was $33.2 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.
Supervision and Regulation The following information summarizes existing laws and regulations that materially affect the Company's operations.
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.
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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
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.
Added
The USA PATRIOT Act, established in 2001, substantially broadened the scope of U.S. anti-money laundering laws and regulations by imposing significant new compliance and due diligence obligations, creating new crimes and penalties and expanding the extra-territorial jurisdiction of the U.S.
Added
The principal source of the Parent's cash revenues is cash dividends paid by the Bank.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeDuring the pandemic, there was a shift from in-office work to remote work. This shift appears to be permanent for some businesses and partial for others. As a result, businesses are reevaluating their office space needs and, in some cases, reducing their leased office space, selling commercial office buildings, or leasing space no longer needed.
Biggest changeAs 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.
In addition, the 14 Table of Contents Company could experience reductions in creditworthiness on the part of some customers or in the value of assets securing loans.
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.
Key assumptions include the application of historical loss rates, prepayment speeds, forecast results of a reasonable and supportable period, the period to revert to historical loss rates, and qualitative factors. The Company’s allowance level is subject to review by regulatory agencies, and that review could also result in adjustments to the allowance for credit losses.
Key assumptions include the application of historical loss rates, prepayment speeds, economic forecast results of a reasonable and supportable period, the period to revert to historical loss rates, and qualitative factors. The Company’s allowance level is subject to review by regulatory agencies, and that review could also result in adjustments to the allowance for credit losses.
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, 2023.
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.
The allowance for credit losses on loans and the liability for unfunded lending commitments at December 31, 2023 reflect management's estimate of credit losses expected in the loan portfolio, including unfunded lending commitments, as of the balance sheet date.
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.
As of December 31, 2023, 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, 2024, the Company has the intent and ability to maintain its available for sale debt investments until recovery of their amortized cost basis.
The interest rate environment in which the Company operates fluctuates in response to general economic conditions and policies of various governmental and 10 Table of Contents regulatory agencies, particularly the Federal Reserve Board, which regulates the supply of money and credit in the U.S.
The interest rate environment in which the Company operates fluctuates in response to general economic conditions and policies of various governmental and regulatory agencies, particularly the Federal Reserve Board, which regulates the supply of money and credit in the U.S.
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 64% of total revenue for the year ended December 31, 2023.
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.
The soundness of other financial institutions could adversely affect the Company. As demonstrated within the industry during 2023, the Company’s ability to engage in routine funding transactions could be adversely affected by the actions and commercial soundness of other financial institution counterparties. Financial services institutions are interrelated because of trading, clearing, counterparty or other relationships.
As demonstrated by banking failures within the industry during 2023, the Company’s ability to engage in routine funding transactions could be adversely affected by the actions and commercial soundness of other financial institution counterparties. Financial services institutions are interrelated because of trading, clearing, counterparty or other relationships.
Beyond the impact of the COVID-19 pandemic, the potential impacts of future epidemics, pandemics, or other outbreaks of an illness, disease, or virus could therefore materially and adversely affect the Company's business, revenue, operations, financial condition, liquidity and cash flows. Our business and financial results may be affected by societal and governmental responses to climate change and related environmental issues.
The potential impacts of future epidemics, pandemics, or other outbreaks of an illness, disease, or virus could therefore materially and adversely affect the Company's business, revenue, operations, financial condition, liquidity and cash flows. Our business and financial results may be affected by societal and governmental responses to climate change and related environmental issues.
In response, 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. The Federal Reserve Board continued to raise interest rates at a more modest pace to between 5.25% and 5.50% by the end of July 2023.
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.
As the Company does not have a significant banking presence in other parts of the country, a prolonged economic downturn in these markets 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. 9 Table of Contents The Company operates in a highly competitive industry and market area.
These events could also lead to increases in the Company’s interest expense, as it has raised and may continue to raise interest rates paid to depositors in order to compete with other banks, and in an effort to replace deposits, seek borrowings which carry higher interest rates.
These events could also lead to increases in the Company’s interest expense, as it could require the Company to raise interest rates paid to depositors in order to compete with other banks, and in an effort to replace deposits, seek borrowings which carry higher interest rates.
For example, the global COVID-19 pandemic caused significant disruption and harm to the economy and the financial markets in which the Company operates. The situation surrounding the COVID-19 pandemic remains uncertain.
For example, the global COVID-19 pandemic caused significant disruption and harm to the economy and the financial markets in which the Company operates.
During November 2023, the FDIC approved a final rule implementing a one-time special assessment to recover the loss to the DIF associated with protecting uninsured depositors following the closures of Silicon Valley Bank and Signature Bank earlier in 2023. The Company accrued $16.0 million in the fourth quarter of 2023 for the special assessment.
During November 2023, the FDIC approved a final rule implementing a one-time 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.
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. • While the COVID-19 pandemic appears to be over, the impact on businesses is still uncertain.
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.
Elevated rates have created competition for deposits and unrealized losses in fixed rate asset portfolios. 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.
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.
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.
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.
In recent years, federal, state and international lawmakers and regulators have increased their focus on financial institutions' and other companies' risk oversight, disclosures and practices in connection with climate change and other ESG matters. For example, in March 2022, the SEC issued a proposed rule on the enhancement and standardization of climate-related disclosures for investors.
In recent years, federal, state and international lawmakers and regulators have increased their focus on financial institutions' and other companies' risk oversight, disclosures and practices in connection with climate change and other ESG matters.
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. As the economy rebounded from the COVID-19 pandemic-induced recession, high inflation experienced in 2022 continued into 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.
While the U.S. economy has rebounded significantly since the peak of the pandemic-induced recession, fallout from economic and societal changes resulting from the pandemic may cause prolonged global or national recessionary economic conditions, which could have a material adverse effect on the Company's business, results of operations and financial condition.
As seen during the COVID-19 pandemic, fallout from economic and societal changes resulting from significant public health threats may cause prolonged global or national recessionary economic conditions, which could have a material adverse effect on the Company's business, results of operations and financial condition.
The fair value of investments, including available for sale debt investments, may change with changes in interest rates, credit concerns, or other economic factors. Due to the rapid rise of interest rates during 2022 and 2023, the fair value of the Company's available of sale debt securities included a net unrealized loss of $1.2 billion at December 31, 2023.
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.
Additionally, the current expected credit loss model (CECL) implemented by the Company on January 1, 2020, requires that lifetime expected credit losses on securities be recorded in current earnings. This could result in significant losses.
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.
These events occurred during a period of rapidly rising interest rates, which, among other things, resulted in unrealized losses in the Company's available for sale debt securities portfolio and increased competition for bank deposits. These events had, and could again have, adverse impacts on the market price and volatility of the Company’s stock.
Additionally, rising interest rates may result in increased competition for bank deposits. These events could have adverse impacts on the market price and volatility of the Company’s stock.
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. The Company's available for sale debt securities portfolio is carried at fair value, with unrealized gains and losses carried in accumulated other comprehensive income (loss) within shareholder's equity.
The Company's available for sale debt securities portfolio is carried at fair value, with unrealized gains and losses carried in accumulated other comprehensive income (loss) within shareholder's equity. The fair value of investments, including available for sale debt investments, may change with changes in interest rates, credit concerns, or other economic factors.
In particular, the Company may face the following risks in connection with market conditions: • In 2023, the United States ("U.S.") economy faced a series of challenges, including high inflation, rising interest rates, and slowing economic growth. Uncertainties about global geopolitical tensions and volatile financial markets raised concerns about the potential for a recession in the U.S.
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.
The Company maintains a portfolio of investments, which includes available for sale debt securities, trading securities, equity securities, and other investments. Throughout 2023 and at December 31, 2023, the Company did not hold any investments classified as held-to-maturity.
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 proposed rule would require public issuers, including the Company, to significantly expand the scope of climate-related disclosures in their SEC filings. The SEC has also announced plans to propose rules to require enhanced disclosure regarding human capital management and board diversity for public issuers. Liquidity and Capital Risks The Company is subject to both interest rate and liquidity risk.
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.
The impact of this shift is not fully known and could result in reduced demand for office space, lower lease rates for office space, and lower values of office buildings. These factors may contribute to higher delinquencies and net charge-offs for commercial office real estate loans.
These factors may contribute to higher delinquencies and net charge-offs for commercial office real estate loans.
Events impacting the banking industry during the first few months of 2023, including the failure of Silicon Valley Bank in March, resulted in decreased confidence in regional banks among deposit customers, investors, and other counterparties. Additionally, these events caused significant disruption, volatility and reduced valuations of equity and other securities of banks in the capital markets.
Decreased confidence in regional banks among deposit customers, investors, and other counterparties may cause significant disruption, volatility and reduced valuations of equity and other securities of banks in the capital markets. Rapidly rising interest rates could result in an increase in unrealized losses in the Company's available for sale debt securities portfolio.
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Despite these challenges, the U.S. economy was resilient in 2023 with stronger-than-expected results in the fourth quarter, including a robust labor market and a rallying stock market. • The U.S. economy is affected by global events and conditions, including U.S. trade disputes and renewed trade agreements with various countries.
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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.
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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.
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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.
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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.
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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.

Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeItem 1c. CYBERSECURITY Cybersecurity Program and Management Oversight The Company has established an Information and Cybersecurity program. The program is directed by the Company’s Information Security Strategy Board (“ISSB”).
Biggest changeItem 1c. CYBERSECURITY Cybersecurity Program and Management Oversight The Company has established an Information and Cybersecurity program integrated into its risk management process. The program is directed by the Company’s Information Security Strategy Board (“ISSB”).
The Company also experiences large volumes of phishing and other forms of social engineering attempted for the purpose of perpetuating fraud. While, to date, malicious cyber activity, cyberattacks and other information security breaches have not had a material adverse impact on the Company, risk to its systems remains significant.
The Company also experiences large volumes of phishing and other forms of social engineering attempted for the purpose of perpetrating fraud. While, to date, malicious cyber activity, cyberattacks and other information security breaches have not had a material adverse impact on the Company, risk to its systems remains significant.
The Company conducts benchmark reports of its Information Security program to assess its strength as measured against recommended industry security best practice entities. The Company has a process to prioritize and manage security related projects. The ISSB provides oversight of program changes, security awareness updates, exposures from new exploits, and risks to information, data and systems.
The Company conducts benchmark assessments of its Information Security program to evaluate its strength as measured against recommended industry security best practice entities. The Company has a process to prioritize and manage security related projects. The ISSB provides oversight of program changes, security awareness updates, exposures from new exploits, and risks to information, data and systems.
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The Company engages cybersecurity assessors and consultants, including third party auditors, to perform annual penetration testing and risk assessments. These external parties provide validation of our processes and controls, ensuring they meet industry best practices and regulatory standards.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeThe larger office buildings include: Building Net rentable square footage % occupied in total % occupied by Bank 1000 Walnut Kansas City, MO 391,000 95 % 53 % 922 Walnut Kansas City, MO 256,000 95 91 811 Main Kansas City, MO 237,000 100 100 8001 Forsyth Clayton, MO 274,000 70 19 8000 Forsyth Clayton, MO 178,000 100 100 The Company has an additional 141 branch locations in Missouri, Illinois, Kansas, Oklahoma and Colorado which are owned or leased.
Biggest changeThe 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.

Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

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Biggest changePrior 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. Jakovich, 54 Senior Vice President of the Company since April 2022, and Officer of the Company prior thereto.
Biggest changeHolmes, 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.
Name and Age Positions with Registrant Kevin G. Barth, 63 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, 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.
Kemper, 73 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.
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.
Kim, 63 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.
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.
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, 46 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 (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.
Community President and Chief Executive Officer of Commerce Bank since January 2018 and Senior Vice President of Commerce Bank prior thereto. Richard W. Heise, 55 Senior Vice President of the Company since April 2022 and Executive Vice President of Commerce Bank since July 2021.
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.
Executive Vice President of Commerce Bank since January 2014 and Senior Vice President of Commerce Bank prior thereto. Paula S. Petersen, 57 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.
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.
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 22, 2024, 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 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.
Brooks, 47 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, 60 Executive Vice President of the Company since January 2018 and Senior Vice President of the Company prior thereto.
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.
Roller, 53 Senior Vice President of the Company since July 2016 and Senior Vice President of Commerce Bank since September 2010. Paul A. Steiner, 52 Controller and Chief Accounting Officer of the Company since April 2019. He is also Controller of the Company's subsidiary bank, Commerce Bank.
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.
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. Robert S. Holmes, 60 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 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.
Senior Vice President of Commerce Bank since July 2015. 18 Table of Contents Name and Age Positions with Registrant Patricia R. Kellerhals, 66 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, 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.
He was Secretary, General Counsel and Vice President of the Company prior to October 2018. Executive Vice President of Commerce Bank since September 2021. Prior thereto, he was Secretary, General Counsel and Vice President of Commerce Bank. David L. Orf, 57 Executive Vice President of the Company since October 2020 and Chief Credit Officer of the Company since January 2021.
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.
Removed
Neff, 55 Senior Vice President of the Company since January 2019 and Chairman and Chief Executive Officer of Commerce Bank Southwest Region since 2013. Thomas J. Noack, 68 Senior Vice President of the Company since October 2018 and was also Secretary and General Counsel of the Company from October 2018 to March 2022.
Added
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.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changePeriod 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 2023 58,835 $44.18 58,835 2,111,333 November 1 - 30 2023 224,014 $48.05 224,014 1,887,319 December 1 - 31 2023 130,072 $52.32 130,072 1,757,247 Total 412,921 $48.84 412,921 1,757,247 The Company’s stock purchases shown above were made under authorizations by the Board of Directors.
Biggest changePeriod 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.
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 2023.
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.
Certain of the Company's shares are held in "nominee" or "street" name and the number of beneficial owners of such shares is approximately 150,000. Performance Graph The following graph presents a comparison of Company (CBSH) performance to the indices named below.
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.
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 3,373 common shareholders of record as of December 31, 2023.
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.
Under the most recent authorization in April 2022 of 5,000,000 shares, 1,757,247 shares remained available for purchase at December 31, 2023. Item 6. RESERVED 21 Table of Contents
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
It assumes $100 invested on December 31, 2018 with dividends reinvested on a cumulative total shareholder return basis. 2018 2019 2020 2021 2022 2023 Commerce (CBSH) $ 100.00 $ 128.71 $ 133.19 $ 148.55 $ 156.88 $ 131.93 KBW NASDAQ Regional Banking 100.00 123.87 113.14 154.61 143.91 143.34 S&P 500 100.00 131.47 155.58 200.19 163.91 206.95 The Company has a long history of paying dividends. 2023 marked the 55th consecutive year of growth in our regular common dividend, and the Company has also issued an annual 5% common stock dividend for the past 30 years.
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.

Item 7. Management's Discussion & Analysis

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

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Biggest change(C) Interest expense of $903,000, $1,370,000, $29,000 and $14,000, which was capitalized on construction projects in 2023, 2022, 2021, and 2020, respectively,is not deducted from the interest expense shown above. 61 Table of Contents QUARTERLY AVERAGE BALANCE SHEETS — AVERAGE RATES AND YIELDS Year ended December 31, 2023 Fourth Quarter Third Quarter Second Quarter First Quarter (Dollars in millions) Average Balance Average Rates Earned/Paid Average Balance Average Rates Earned/Paid Average Balance Average Rates Earned/Paid Average Balance Average Rates Earned/Paid ASSETS Loans: Business (A) $ 5,861 5.91 % $ 5,849 5.77 % $ 5,756 5.58 % $ 5,657 5.31 % Real estate – construction and land 1,524 8.34 1,509 8.17 1,450 7.92 1,411 7.33 Real estate – business 3,645 6.18 3,642 6.13 3,541 5.96 3,478 5.65 Real estate – personal 3,028 3.85 2,993 3.73 2,961 3.68 2,934 3.61 Consumer 2,117 6.21 2,102 5.97 2,099 5.63 2,067 5.31 Revolving home equity 310 7.70 304 7.76 301 7.55 297 7.03 Consumer credit card 568 13.83 564 13.77 556 13.77 556 13.68 Overdrafts 5 — 5 — 5 — 4 — Total loans 17,058 6.15 16,968 6.02 16,669 5.84 16,404 5.56 Loans held for sale 5 9.93 6 10.55 6 10.17 6 10.30 Investment securities: U.S. government & federal agency obligations 889 2.32 986 2.31 1,036 3.42 1,099 1.90 Government-sponsored enterprise obligations 56 2.36 56 2.36 56 2.38 87 3.21 State & municipal obligations (A) 1,364 1.94 1,392 1.95 1,533 2.04 1,794 2.26 Mortgage-backed securities 6,024 2.05 6,161 2.06 6,316 2.09 6,454 2.06 Asset-backed securities 2,325 2.30 2,554 2.20 2,828 2.08 3,234 2.01 Other debt securities 511 1.85 515 1.75 520 1.86 529 1.93 Trading debt securities (A) 37 5.05 35 5.11 46 4.53 46 4.59 Equity securities (A) 12 27.47 12 23.06 12 23.25 12 23.24 Other securities (A) 222 8.60 237 13.13 274 9.40 230 7.11 Total investment securities 11,440 2.27 11,948 2.33 12,621 2.37 13,485 2.18 Federal funds sold 1 6.65 3 6.56 7 5.63 39 5.09 Securities purchased under agreements to resell 450 1.64 712 2.08 825 1.99 825 1.94 Interest earning deposits with banks 2,387 5.47 2,338 5.39 2,284 5.14 810 4.67 Total interest earning assets 31,341 4.62 31,975 4.51 32,412 4.34 31,569 4.00 Allowance for credit losses on loans (162) (158) (159) (150) Unrealized gain (loss) on debt securities (1,596) (1,458) (1,331) (1,387) Cash and due from banks 299 296 310 314 Premises and equipment – net 473 464 449 431 Other assets 1,026 990 1,182 631 Total assets $ 31,381 $ 32,109 $ 32,863 $ 31,408 LIABILITIES AND EQUITY Interest bearing deposits: Savings $ 1,358 .05 $ 1,436 .05 $ 1,517 .05 $ 1,550 .05 Interest checking and money market 13,167 1.57 13,048 1.33 12,919 .93 13,266 .61 Certificates of deposit under $100,000 1,097 4.21 1,424 4.32 1,075 3.78 415 1.39 Certificates of deposit $100,000 & over 1,839 4.55 1,718 4.37 1,472 3.93 903 2.98 Total interest bearing deposits 17,461 1.93 17,626 1.76 16,983 1.29 16,134 .71 Borrowings: Federal funds purchased 474 5.40 509 5.33 507 5.06 494 4.59 Securities sold under agreements to repurchase 2,467 3.25 2,283 3.20 2,207 3.09 2,419 2.93 Other borrowings 179 5.45 685 5.30 1,618 5.24 551 4.94 Total borrowings 3,120 3.71 3,477 3.93 4,332 4.13 3,464 3.49 Total interest bearing liabilities 20,581 2.20 % 21,103 2.12 % 21,315 1.87 % 19,598 1.20 % Non-interest bearing deposits 7,749 7,939 8,224 9,115 Other liabilities 421 369 598 112 Equity 2,630 2,698 2,726 2,583 Total liabilities and equity $ 31,381 $ 32,109 $ 32,863 $ 31,408 Net interest margin (FTE) $ 251 $ 251 $ 252 $ 253 Net yield on interest earning assets 3.17 % 3.11 % 3.12 % 3.26 % (A) Stated on a fully taxable-equivalent basis using a federal income tax rate of 21%. 62 Table of Contents — AVERAGE RATES AND YIELDS Year ended December 31, 2022 Fourth Quarter Third Quarter Second Quarter First Quarter (Dollars in millions) Average Balance Average Rates Earned/Paid Average Balance Average Rates Earned/Paid Average Balance Average Rates Earned/Paid Average Balance Average Rates Earned/Paid ASSETS Loans: Business (A) $ 5,478 4.68 % $ 5,318 3.94 % $ 5,384 3.16 % $ 5,324 2.93 % Real estate – construction and land 1,269 6.80 1,289 5.27 1,225 4.09 1,135 3.76 Real estate – business 3,301 5.15 3,258 4.40 3,164 3.70 3,095 3.38 Real estate – personal 2,887 3.45 2,844 3.36 2,826 3.27 2,809 3.28 Consumer 2,090 4.77 2,102 4.17 2,071 3.62 2,040 3.59 Revolving home equity 294 5.89 281 4.82 272 3.69 274 3.48 Consumer credit card 559 12.64 550 12.05 538 11.32 541 11.35 Overdrafts 7 — 4 — 6 — 5 — Total loans 15,885 5.03 15,646 4.37 15,486 3.72 15,223 3.54 Loans held for sale 7 10.09 7 8.80 8 8.14 9 6.48 Investment securities: U.S. government & federal agency obligations 1,056 2.01 1,113 4.51 1,119 4.93 1,104 3.42 Government-sponsored enterprise obligations 56 2.36 56 2.36 56 2.39 52 2.33 State & municipal obligations (A) 1,991 2.29 2,053 2.27 2,126 2.30 2,078 2.29 Mortgage-backed securities 6,606 1.88 6,848 1.93 7,158 1.99 7,317 1.98 Asset-backed securities 3,714 1.96 3,871 1.62 4,038 1.35 3,934 1.13 Other debt securities 561 1.89 587 1.93 643 1.97 636 2.00 Trading debt securities (A) 44 3.81 36 2.74 44 2.46 41 1.84 Equity securities (A) 10 28.44 9 27.11 9 26.90 9 26.00 Other securities (A) 219 6.67 209 7.09 195 22.38 192 5.91 Total investment securities 14,257 2.07 14,782 2.18 15,388 2.36 15,363 1.97 Federal funds sold 28 4.27 13 2.77 4 1.79 1 .39 Securities purchased under agreements to resell 1,174 2.36 1,379 1.72 1,704 1.03 1,734 1.24 Interest earning deposits with banks 640 3.69 980 2.25 1,249 .78 2,608 .18 Total interest earning assets 31,991 3.59 32,807 3.21 33,839 2.86 34,938 2.49 Allowance for credit losses on loans (143) (138) (135) (150) Unrealized gain (loss) on debt securities (1,582) (1,065) (851) (174) Cash and due from banks 327 311 315 340 Premises and equipment – net 419 409 402 407 Other assets 593 538 522 557 Total assets $ 31,605 $ 32,862 $ 34,092 $ 35,918 LIABILITIES AND EQUITY Interest bearing deposits: Savings $ 1,567 .06 $ 1,596 .04 $ 1,610 .04 $ 1,563 .05 Interest checking and money market 13,694 .38 14,424 .20 14,846 .06 14,950 .04 Certificates of deposit under $100,000 388 .73 397 .41 412 .20 430 .13 Certificates of deposit $100,000 & over 597 1.42 578 .60 649 .29 862 .20 Total interest bearing deposits 16,246 .40 16,995 .21 17,517 .07 17,805 .05 Borrowings: Federal funds purchased 144 3.56 52 2.41 113 .79 23 .12 Securities sold under agreements to repurchase 2,260 2.29 2,200 1.37 2,258 .48 2,713 .10 Other borrowings 179 4.02 2 1.78 2 2.37 1 .53 Total borrowings 2,583 2.48 2,254 1.39 2,373 .50 2,737 .10 Total interest bearing liabilities 18,829 .69 % 19,249 .34 % 19,890 .12 % 20,542 .06 % Non-interest bearing deposits 10,361 10,758 11,210 11,545 Other liabilities 29 124 140 505 Equity 2,386 2,731 2,852 3,326 Total liabilities and equity $ 31,605 $ 32,862 $ 34,092 $ 35,918 Net interest margin (FTE) $ 257 $ 249 $ 235 $ 211 Net yield on interest earning assets 3.18 % 3.01 % 2.79 % 2.45 % (A) Stated on a fully taxable-equivalent basis using a federal income tax rate of 21%. 63 Table of Contents SUMMARY OF QUARTERLY STATEMENTS OF INCOME Year ended December 31, 2023 For the Quarter Ended (In thousands, except per share data) 12/31/2023 9/30/2023 6/30/2023 3/31/2023 Interest income $ 362,609 $ 361,162 $ 348,663 $ 308,857 Interest expense (114,188) (112,615) (99,125) (57,234) Net interest income 248,421 248,547 249,538 251,623 Non-interest income 144,879 142,949 147,605 137,612 Investment securities gains (losses), net 7,601 4,298 3,392 (306) Salaries and employee benefits (147,456) (146,805) (145,429) (144,373) Other expense (103,798) (81,205) (82,182) (79,734) Provision for credit losses (5,879) (11,645) (6,471) (11,456) Income before income taxes 143,768 156,139 166,453 153,366 Income taxes (32,307) (33,439) (35,990) (32,813) Non-controlling interest (2,238) (2,104) (2,674) (1,101) Net income attributable to Commerce Bancshares, Inc. $ 109,223 $ 120,596 $ 127,789 $ 119,452 Net income per common share — basic* $ .84 $ .92 $ .97 $ .91 Net income per common share — diluted* $ .84 $ .92 $ .97 $ .91 Weighted average shares — basic* 129,507 129,904 130,079 130,204 Weighted average shares — diluted* 129,608 130,009 130,208 130,472 Year ended December 31, 2022 For the Quarter Ended (In thousands, except per share data) 12/31/2022 9/30/2022 6/30/2022 3/31/2022 Interest income $ 286,377 $ 262,666 $ 238,154 $ 211,782 Interest expense (31,736) (16,293) (5,769) (2,996) Net interest income 254,641 246,373 232,385 208,786 Non-interest income 136,825 138,514 139,427 131,769 Investment securities gains (losses), net 8,904 3,410 1,029 7,163 Salaries and employee benefits (138,458) (137,393) (142,243) (135,953) Other expense (78,282) (75,491) (71,262) (69,695) Provision for credit losses (15,477) (15,290) (7,162) 9,858 Income before income taxes 168,153 160,123 152,174 151,928 Income taxes (34,499) (33,936) (32,021) (31,902) Non-controlling interest (2,026) (3,364) (4,359) (1,872) Net income attributable to Commerce Bancshares, Inc. $ 131,628 $ 122,823 $ 115,794 $ 118,154 Net income per common share — basic* $ 1.00 $ .93 $ .87 $ .88 Net income per common share — diluted* $ 1.00 $ .92 $ .87 $ .88 Weighted average shares — basic* 130,527 131,082 131,919 132,658 Weighted average shares — diluted* 130,819 131,372 132,212 132,979 Year ended December 31, 2021 For the Quarter Ended (In thousands, except per share data) 12/31/2021 9/30/2021 6/30/2021 3/31/2021 Interest income $ 210,479 $ 216,981 $ 211,133 $ 209,697 Interest expense (2,822) (2,944) (3,151) (3,949) Net interest income 207,657 214,037 207,982 205,748 Non-interest income 147,699 137,506 139,143 136,045 Investment securities gains (losses), net (9,706) 13,108 16,804 9,853 Salaries and employee benefits (132,640) (132,824) (130,751) (129,033) Other expense (70,942) (78,796) (67,375) (63,540) Provision for credit losses 7,054 7,385 45,655 6,232 Income before income taxes 149,122 160,416 211,458 165,305 Income taxes (33,764) (34,662) (45,209) (32,076) Non-controlling interest (452) (3,193) (3,923) (2,257) Net income attributable to Commerce Bancshares, Inc. $ 114,906 $ 122,561 $ 162,326 $ 130,972 Net income per common share — basic* $ .85 $ .91 $ 1.20 $ .96 Net income per common share — diluted* $ .85 $ .91 $ 1.19 $ .96 Weighted average shares — basic* 133,362 134,095 134,473 134,585 Weighted average shares — diluted* 133,647 134,374 134,806 134,948 * Restated for the 5% stock dividend distributed in 2023. 64 Table of Contents Item 7a.
Biggest change(C) Interest expense of $2,000, $903,000, $1,370,000, $29,000 and $14,000, which was capitalized on construction projects in 2024, 2023, 2022, 2021, and 2020, respectively, is not deducted from the interest expense shown above. 63 Table of Contents QUARTERLY AVERAGE BALANCE SHEETS — AVERAGE RATES AND YIELDS Year ended December 31, 2024 Fourth Quarter Third Quarter Second Quarter First Quarter (Dollars in millions) Average Balance Average Rates Earned/Paid Average Balance Average Rates Earned/Paid Average Balance Average Rates Earned/Paid Average Balance Average Rates Earned/Paid ASSETS Loans: Business (A) $ 5,964 5.86 % $ 5,967 6.17 % $ 5,979 6.11 % $ 5,873 6.07 % Real estate – construction and land 1,411 7.75 1,401 8.44 1,472 8.36 1,473 8.40 Real estate – business 3,636 6.01 3,581 6.28 3,666 6.26 3,728 6.26 Real estate – personal 3,047 4.17 3,048 4.10 3,045 4.04 3,031 3.95 Consumer 2,087 6.52 2,129 6.64 2,128 6.56 2,082 6.40 Revolving home equity 351 7.28 336 7.69 326 7.68 322 7.70 Consumer credit card 568 13.60 559 14.01 553 13.96 563 14.11 Overdrafts 6 — 5 — 5 — 8 — Total loans 17,070 6.11 17,026 6.35 17,174 6.30 17,080 6.27 Loans held for sale 2 7.65 2 6.34 2 7.54 2 7.49 Investment securities: U.S. government & federal agency obligations 2,459 3.86 1,889 3.68 1,202 5.04 852 2.08 Government-sponsored enterprise obligations 55 2.36 56 2.37 56 2.39 56 2.39 State & municipal obligations (A) 832 2.01 857 2.00 1,070 2.00 1,331 1.97 Mortgage-backed securities 4,905 2.17 5,082 1.95 5,554 2.09 5,902 2.19 Asset-backed securities 1,571 2.99 1,526 2.66 1,786 2.50 2,085 2.39 Other debt securities 221 2.11 225 2.07 365 2.01 503 1.93 Trading debt securities (A) 56 4.26 47 4.52 47 4.95 40 5.30 Equity securities (A) 57 6.58 85 4.44 128 2.82 13 25.64 Other securities (A) 223 5.75 216 6.09 228 13.20 222 13.04 Total investment securities 10,379 2.80 9,983 2.52 10,436 2.75 11,004 2.44 Federal funds sold 1 5.78 — — 2 6.74 1 6.71 Securities purchased under agreements to resell 566 3.57 475 3.53 304 3.21 341 1.93 Interest earning deposits with banks 2,610 4.78 2,565 5.43 2,100 5.48 1,938 5.48 Total interest earning assets 30,628 4.83 30,051 4.96 30,018 4.98 30,366 4.78 Allowance for credit losses on loans (160) (158) (160) (162) Unrealized gain (loss) on debt securities (896) (962) (1,272) (1,274) Cash and due from banks 396 362 268 282 Premises and equipment – net 491 481 479 478 Other assets 815 806 903 955 Total assets $ 31,274 $ 30,580 $ 30,236 $ 30,645 LIABILITIES AND EQUITY Interest bearing deposits: Savings $ 1,281 .05 $ 1,304 .07 $ 1,329 .06 $ 1,334 .06 Interest checking and money market 13,680 1.63 13,242 1.74 13,161 1.73 13,215 1.69 Certificates of deposit under $100,000 1,062 3.91 1,056 4.17 1,004 4.22 977 4.20 Certificates of deposit $100,000 & over 1,452 4.24 1,464 4.51 1,493 4.55 1,595 4.56 Total interest bearing deposits 17,475 1.87 17,066 2.00 16,987 1.99 17,121 1.97 Borrowings: Federal funds purchased 122 4.71 207 5.38 265 5.42 328 5.42 Securities sold under agreements to repurchase 2,446 3.11 2,352 3.56 2,255 3.44 2,512 3.43 Other borrowings 1 3.36 — 4.81 1 3.84 — — Total borrowings 2,569 3.18 2,559 3.71 2,521 3.65 2,840 3.66 Total interest bearing liabilities 20,044 2.04 % 19,625 2.22 % 19,508 2.21 % 19,961 2.21 % Non-interest bearing deposits 7,464 7,285 7,298 7,329 Other liabilities 375 405 399 410 Equity 3,391 3,265 3,031 2,945 Total liabilities and equity $ 31,274 $ 30,580 $ 30,236 $ 30,645 Net interest margin (FTE) $ 269 $ 265 $ 265 $ 251 Net yield on interest earning assets 3.49 % 3.50 % 3.55 % 3.33 % (A) Stated on a fully taxable-equivalent basis using a federal income tax rate of 21%. 64 Table of Contents — AVERAGE RATES AND YIELDS Year ended December 31, 2023 Fourth Quarter Third Quarter Second Quarter First Quarter (Dollars in millions) Average Balance Average Rates Earned/Paid Average Balance Average Rates Earned/Paid Average Balance Average Rates Earned/Paid Average Balance Average Rates Earned/Paid ASSETS Loans: Business (A) $ 5,861 5.91 % $ 5,849 5.77 % $ 5,756 5.58 % $ 5,657 5.31 % Real estate – construction and land 1,524 8.34 1,509 8.17 1,450 7.92 1,411 7.33 Real estate – business 3,645 6.18 3,642 6.13 3,541 5.96 3,478 5.65 Real estate – personal 3,028 3.85 2,993 3.73 2,961 3.68 2,934 3.61 Consumer 2,117 6.21 2,102 5.97 2,099 5.63 2,067 5.31 Revolving home equity 310 7.70 304 7.76 301 7.55 297 7.03 Consumer credit card 568 13.83 564 13.77 556 13.77 556 13.68 Overdrafts 5 — 5 — 5 — 4 — Total loans 17,058 6.15 16,968 6.02 16,669 5.84 16,404 5.56 Loans held for sale 5 9.93 6 10.55 6 10.17 6 10.30 Investment securities: U.S. government & federal agency obligations 889 2.32 986 2.31 1,036 3.42 1,099 1.90 Government-sponsored enterprise obligations 56 2.36 56 2.36 56 2.38 87 3.21 State & municipal obligations (A) 1,364 1.94 1,392 1.95 1,533 2.04 1,794 2.26 Mortgage-backed securities 6,024 2.05 6,161 2.06 6,316 2.09 6,454 2.06 Asset-backed securities 2,325 2.30 2,554 2.20 2,828 2.08 3,234 2.01 Other debt securities 511 1.85 515 1.75 520 1.86 529 1.93 Trading debt securities (A) 37 5.05 35 5.11 46 4.53 46 4.59 Equity securities (A) 12 27.47 12 23.06 12 23.25 12 23.24 Other securities (A) 222 8.60 237 13.13 274 9.40 230 7.11 Total investment securities 11,440 2.27 11,948 2.33 12,621 2.37 13,485 2.18 Federal funds sold 1 6.65 3 6.56 7 5.63 39 5.09 Securities purchased under agreements to resell 450 1.64 712 2.08 825 1.99 825 1.94 Interest earning deposits with banks 2,387 5.47 2,338 5.39 2,284 5.14 810 4.67 Total interest earning assets 31,341 4.62 31,975 4.51 32,412 4.34 31,569 4.00 Allowance for credit losses on loans (162) (158) (159) (150) Unrealized gain (loss) on debt securities (1,596) (1,458) (1,331) (1,387) Cash and due from banks 299 296 310 314 Premises and equipment – net 473 464 449 431 Other assets 1,026 990 1,182 631 Total assets $ 31,381 $ 32,109 $ 32,863 $ 31,408 LIABILITIES AND EQUITY Interest bearing deposits: Savings $ 1,358 .05 $ 1,436 .05 $ 1,517 .05 $ 1,550 .05 Interest checking and money market 13,167 1.57 13,048 1.33 12,919 .93 13,266 .61 Certificates of deposit under $100,000 1,097 4.21 1,424 4.32 1,075 3.78 415 1.39 Certificates of deposit $100,000 & over 1,839 4.55 1,718 4.37 1,472 3.93 903 2.98 Total interest bearing deposits 17,461 1.93 17,626 1.76 16,983 1.29 16,134 .71 Borrowings: Federal funds purchased 474 5.40 509 5.33 507 5.06 494 4.59 Securities sold under agreements to repurchase 2,467 3.25 2,283 3.20 2,207 3.09 2,419 2.93 Other borrowings 179 5.45 685 5.30 1,618 5.24 551 4.94 Total borrowings 3,120 3.71 3,477 3.93 4,332 4.13 3,464 3.49 Total interest bearing liabilities 20,581 2.20 % 21,103 2.12 % 21,315 1.87 % 19,598 1.20 % Non-interest bearing deposits 7,749 7,939 8,224 9,115 Other liabilities 421 369 598 112 Equity 2,630 2,698 2,726 2,583 Total liabilities and equity $ 31,381 $ 32,109 $ 32,863 $ 31,408 Net interest margin (FTE) $ 251 $ 251 $ 252 $ 253 Net yield on interest earning assets 3.17 % 3.11 % 3.12 % 3.26 % (A) Stated on a fully taxable-equivalent basis using a federal income tax rate of 21%. 65 Table of Contents Item 7a.
Overview The Company operates as a super-community bank and offers a broad range of financial products to consumer and commercial customers, delivered with a focus on high-quality, personalized service. The Company is headquartered in Missouri, with its principal offices in Kansas City and St. Louis, Missouri.
Overview The Company operates as a super-community bank and offers a broad range of financial products to consumer, municipal, and commercial customers, delivered with a focus on high-quality, personalized service. The Company is headquartered in Missouri, with its principal offices in Kansas City and St. Louis, Missouri.
Total shareholder return, including the change in stock price and dividend reinvestment, was 5.7%, 8.7%, and 8.7% 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 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.
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. 49 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. 50 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 55 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 56 Table of Contents losses”) directly to each operating segment instead of allocating an estimated credit loss provision.
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, 2023 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, 2024 is included in Note 7 on Deposits in the consolidated financial statements.
Customers are served from 257 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 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.
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, 2023 and 2022.
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.
Non-interest income increased $21.3 million, or 9.5%, over 2022 due to growth in net bank card fees (mainly corporate card and merchant fees), deposit account fees (mainly corporate cash management fees), letter of credit fees and cash sweep commissions, partly offset by a decline in tax credit sales fees.
Non-interest income increased $21.4 million, or 9.5%, over 2022 due to growth in net bank card fees (mainly corporate card and merchant fees), deposit account fees (mainly corporate cash management fees), letter of credit fees and cash sweep commissions, partly offset by a decline in tax credit sales fees.
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, 2023.
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.
No contributions to the defined benefit plan were made in 2023, 2022 or 2021, and the Company is not required nor does it expect to make a contribution in 2024. 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 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.
Included in these amounts are gains and losses arising from sales of securities from the Company’s available for sale debt portfolio and gains and losses relating to private equity investments, which are primarily held by the Parent’s majority-owned private equity subsidiary.
Included in these amounts are gains and losses arising from sales of securities from the Company’s available for sale debt portfolio, net gains and losses on equity securities, and gains and losses relating to private equity investments, which are primarily held by the Parent’s majority-owned private equity subsidiary.
The Company offers a variety of credit card products, including affinity cards, rewards cards, and standard and premium credit cards, and emphasizes its credit card relationship product, Special Connections. Approximately 37% of the households that own a Commerce credit card product also maintain a deposit relationship with the subsidiary bank.
The Company offers a variety of credit card products, including affinity cards, rewards cards, and standard and premium credit cards, and emphasizes its credit card relationship product, Special Connections. Approximately 36% of the households that own a Commerce credit card product also maintain a deposit relationship with the subsidiary bank.
Consumer Loans The Company's consumer loans totaled $2.1 billion and comprised 12% of total loans outstanding at December 31, 2023. Within the consumer loan portfolio are several direct and indirect product lines comprised mainly of loans secured by automobiles, motorcycles, marine, and RVs.
Consumer Loans The Company's consumer loans totaled $2.1 billion and comprised 12% of total loans outstanding at December 31, 2024. Within the consumer loan portfolio are several direct and indirect product lines comprised mainly of loans secured by automobiles, motorcycles, marine, and RVs.
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 $1.8 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 $1.6 billion over the next year, as noted above.
A stable construction market has contributed to low loss rates on these loans, with net loan recoveries of $115 thousand and no net loan charge-offs in 2023 and 2022, respectively. Real Estate-Business Total business real estate loans were $3.7 billion at December 31, 2023 and comprised 21.6% of the Company’s total loan portfolio.
A stable construction market has contributed to low loss rates on these loans, with no net loan charge-offs and net loan recoveries of $115 thousand in 2024 and 2023, respectively. Real Estate-Business Total business real estate loans were $3.7 billion at December 31, 2024 and comprised 21.3% of the Company’s total loan portfolio.
These deposits are normally considered more volatile and higher costing, and comprised 7.7% of total deposits at December 31, 2023. Amid the banking sector's period of uncertainty during the second quarter of 2023, the Company issued several tranches of short-term brokered certificates of deposit totaling $1.2 billion, which all matured by December 31, 2023.
These deposits are normally considered more volatile and higher costing, and comprised 5.5% of total deposits at December 31, 2024. Amid the banking sector's period of uncertainty during the second quarter of 2023, the Company issued several tranches of short-term brokered certificates of deposit totaling $1.2 billion, which all matured by December 31, 2023.
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.
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.
Through the various sources of liquidity described above, the Company maintains a liquidity position that it believes will adequately satisfy its financial obligations. 52 Table of Contents Capital Management Under Basel III capital guidelines, at December 31, 2023 and 2022, 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. 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.
Non-interest expense increased $26.7 million, or 7.3%, mainly due to higher salaries and benefits expense, FDIC insurance expense and allocated service and support costs (mainly bank operations, commercial payments and products and credit administration). These increases were partly offset by lower allocated support costs for information technology.
Non-interest expense increased $26.9 million, or 7.4%, mainly due to higher salaries and benefits expense, FDIC insurance expense and allocated service and support costs (mainly bank operations, commercial payments and products and credit administration). These increases were partly offset by lower allocated support costs for information technology.
In addition, as shown in the table of collateral available for future advances below, the Company has borrowing capacity of $6.8 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 $6.1 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 25 Table of Contents that continuously changes due to economic conditions and events.
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.
Interest on consumer loans grew $37.3 million over the prior year as the average rate earned increased 174 basis points. Revolving home equity loan interest increased $10.2 million due to an increase of 301 basis points in the average rate earned and growth in average balances of $22.7 million.
Interest on consumer loans grew $37.3 million over 2022 as the average rate earned increased 174 basis points. Revolving home equity loan interest increased $10.2 million due to an increase of 301 basis points in the average rate earned and growth in average balances of $22.7 million.
Interest expense on certificates of deposit grew $94.4 million, mainly due to a 350 basis point increase in the average rate paid, coupled with a $1.4 billion increase in average balances. The overall rate paid on total deposits increased from .18% in 2022 to 1.44% in the current year.
Interest expense on certificates of deposit grew $94.4 million, mainly due to a 350 basis point increase in the average rate paid, coupled with a $1.4 billion increase in average balances. The overall rate paid on total deposits increased from .18% in 2022 to 1.44% in 2023.
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.
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.
Deposit account fees decreased $3.4 million, or 3.6%, mainly due to lower overdraft and return item fees of $8.3 million, partly offset by growth in corporate cash management fees of $3.8 million. In 2023, corporate cash management fees comprised 61.9% of total deposit fees, while overdraft fees comprised 12.8% of total deposit fees.
Deposit account fees decreased $3.4 million, or 3.6%, 31 Table of Contents mainly due to lower overdraft and return item fees of $8.3 million, partly offset by growth in corporate cash management fees of $3.8 million. In 2023, corporate cash management fees comprised 61.9% of total deposit fees, while overdraft fees comprised 12.8% of total deposit fees.
Other non-interest income increased $12.7 million, or 28.2%, over the prior year mainly due to higher letter of credit fees of $3.2 million, cash sweep commissions of $2.9 million, gains on the sale of real estate of $2.1 million and swap fees of $1.1 million.
Other non-interest income increased $12.7 million, or 28.2%, over 2022 mainly due to higher letter of credit fees of $3.2 million, cash sweep commissions of $2.9 million, gains on the sale of real estate of $2.1 million and swap fees of $1.1 million.
Interest expense on borrowings increased $110.2 million mainly due to a 210 basis point increase in the rate paid on securities sold under repurchase agreements and an increase in $711.3 million in average Federal Home Loan Bank (FHLB) borrowings. The Company did not have any outstanding FHLB borrowings at December 31, 2023.
Interest expense on borrowings increased $110.2 million mainly due to a 210 basis point increase in the rate paid on securities sold under repurchase agreements and an increase in $711.3 million in average FHLB borrowings. The Company did not have any outstanding FHLB borrowings at December 31, 2023.
Other debt securities include corporate bonds, notes and commercial paper. 45 Table of Contents The types of securities held in the available for sale security portfolio at year end 2023 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. 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.
For the year ended December 31, 2023, the Company did not recognize a credit loss expense on any available for sale debt securities.
For the year ended December 31, 2024, the Company did not recognize a credit loss expense on any available for sale debt securities.
In determining the fair value, management uses models and applies the techniques and assumptions previously discussed. At December 31, 2023, assets and liabilities measured using observable inputs that are classified as either Level 1 or Level 2 represented 98.2% and 99.6% 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, 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.
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, 2023 was 785.
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.
The decrease in interest income was mainly due to lower interest income earned on U.S. government securities, state and municipal securities and mortgage-backed securities. Interest earned on U.S. government securities decreased $16.2 million mainly due to lower treasury inflation-protected securities (TIPS) interest income of $14.3 million.
The decrease in interest income was mainly due to lower interest income earned on U.S. government securities, state and municipal securities and mortgage-backed securities. Interest earned on U.S. government securities decreased $16.2 million mainly due to lower TIPS interest income of $14.3 million.
The Company's consumer loan portfolio also includes fixed rate home equity loans, typically for home repair or remodeling, and these loans comprised 11% of the consumer loan portfolio at December 31, 2023. Losses on these loans have historically been low, and the Company had net recoveries of $68 thousand in 2023.
The Company's consumer loan portfolio also includes fixed rate home equity loans, typically for home repair or remodeling, and these loans comprised 11% of the consumer loan portfolio at December 31, 2024. Losses on these loans have historically been low, and the Company had net recoveries of $97 thousand in 2024.
Approximately $1.8 billion of the available for sale debt portfolio is expected to mature or pay down during 2024, and these funds offer substantial resources to meet either new loan demand or offset potential reductions in the Company’s deposit funding base.
Approximately $1.6 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.
Growth in net interest income resulted principally from increases in interest income from loans, partly offset by an increase in interest expense on deposits and borrowings.
Growth in net interest income resulted principally from increases in interest income from loans, partly offset by an increase in interest expense on deposits.
The growth in net corporate card fees over the prior year was mainly due to lower rewards and network expense coupled with higher interchange income. Net debit card fees increased mainly due to lower network expense, while net merchant fees increased mainly due to higher merchant discount fees.
The growth in net corporate card fees over 2022 was mainly due to lower rewards and network expense coupled with higher interchange income. Net debit card fees increased mainly due to lower network expense, while net merchant fees increased mainly due to higher merchant discount fees.
The provision for credit losses increased $2.3 million over the same period last year, mainly due to higher business loan net charge-offs. Average segment loans increased $1.0 billion, or 10.4%, compared to 2022, mainly due to increases in business, business real estate, and construction loans.
The provision for credit losses increased $2.3 million over 2022, mainly due to higher business loan net charge-offs. Average segment loans increased $1.0 billion, or 10.4%, compared to 2022, mainly due to increases in business, business real estate, and construction loans.
The underwriting terms for the home equity line product permit borrowing availability, in the aggregate, generally up to 80% or 90% of the appraised value of the collateral property at the time of origination. Net loan recoveries were $57 thousand in 2023, compared to net loan recoveries of $60 thousand in 2022.
The underwriting terms for the home equity line product permit borrowing availability, in the aggregate, generally up to 80% or 90% of the appraised value of the collateral property at the time of origination. Net loan recoveries were $166 thousand in 2024, compared to net loan recoveries of $57 thousand in 2023.
Private banking loans comprised 32% of the consumer loan portfolio at December 31, 2023. The Company's private banking loans are generally well-collateralized and at December 31, 2023 were secured primarily by assets held by the Company's trust department. The remaining portion of the Company's consumer loan portfolio is comprised of health services financing, motorcycles, marine and RV loans.
Private banking loans comprised 35% of the consumer loan portfolio at December 31, 2024. The Company's private banking loans are generally well-collateralized and at December 31, 2024 were secured primarily by assets held by the Company's trust department. The remaining portion of the Company's consumer loan portfolio is comprised of health services financing, motorcycles, marine and RV loans.
An additional $900.0 million was available in unused lines of credit, which can be drawn at the discretion of the borrower. Home equity loans are secured mainly by second mortgages (and less frequently, first mortgages) on residential property of the borrower.
An additional $947.9 million was available in unused lines of credit, which can be drawn at the discretion of the borrower. Home equity loans are secured mainly by second mortgages (and less frequently, first mortgages) on residential property of the borrower.
Commercial Loans Business Total business loans amounted to $6.0 billion at December 31, 2023 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 $6.1 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.
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 (31.6% 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 (33.8% of this portfolio), which presents lower risk levels.
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 $4.8 million in 2023, $8.5 million in 2022, and $6.5 million in 2021.
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.
This increase was partly offset by net losses of $8.4 million realized on sales resulting from the Company's sale of approximately $1.1 billion (book value) in bonds, mainly state and municipal securities and asset-backed securities, net losses of $100 thousand on sales of private equity investments, and net losses of $487 thousand in fair value adjustments on equity securities.
This increase was partly offset by losses of $8.4 million realized on sales of available for sale debt securities resulting from the Company's sale of approximately $1.1 billion (book value) in bonds, mainly state and municipal securities and asset-backed securities, net losses of $100 thousand on sales of private equity investments, and net losses of $487 thousand on equity securities.
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) 2023 2022 2021 Dividends received from subsidiaries $ 280.0 $ 300.0 $ 340.0 Management fees 47.8 38.6 36.3 Total $ 327.8 $ 338.6 $ 376.3 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) 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.
Total rates earned on average interest earning assets increased 134 basis points this year, while funding costs for deposits and borrowings increased 156 basis points. 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 this year compared to last year.
Total rates earned on average interest earning assets increased 134 basis points in 2023, while funding costs for deposits and borrowings increased 156 basis points. 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 in 2023 compared to 2022.
Key Ratios 2023 2022 2021 2020 2019 (Based on average balances) Return on total assets 1.49 % 1.45 % 1.55 % 1.20 % 1.67 % Return on common equity 17.94 17.31 15.37 10.64 14.06 Equity to total assets 8.33 8.39 10.11 11.18 12.20 Loans to deposits (1) 66.31 55.41 56.46 67.73 71.54 Non-interest bearing deposits to total deposits 32.61 39.02 40.46 37.83 32.03 Net yield on interest earning assets (tax equivalent basis) 3.16 2.85 2.58 2.99 3.48 (Based on end of period data) Non-interest income to revenue (2) 36.47 36.71 40.15 37.87 38.98 Efficiency ratio (3) 59.17 56.90 57.64 57.19 56.87 Tier I common risk-based capital ratio 15.25 14.13 14.34 13.71 13.93 Tier I risk-based capital ratio 15.25 14.13 14.34 13.71 14.66 Total risk-based capital ratio 16.03 14.89 15.12 14.82 15.48 Tier I leverage ratio 11.25 10.34 9.13 9.45 11.38 Tangible common equity to tangible assets ratio (4) 8.85 7.32 9.01 9.92 10.99 Common cash dividend payout ratio 28.24 26.10 23.12 35.32 27.52 (1) Includes loans held for sale.
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.
Total repurchase agreements at December 31, 2023 were comprised of non-insured customer funds totaling $2.6 billion, and securities pledged as collateral for these retail agreements totaled $2.7 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, 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.
The Company maintains a treasury stock buyback program under authorizations by its Board of Directors and periodically purchases stock in the open market. During 2022, the Company purchased 2.7 million shares, and during 2023 the Company purchased 1.4 million shares. At December 31, 2023, 1.8 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 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.
At December 31, 2023, the Parent’s investment securities totaled $16.5 million at fair value, consisting mainly of corporate bonds and preferred stock. To support its various funding commitments, the Parent maintains a $20.0 million line of credit with its subsidiary bank. There were no borrowings outstanding under the line during 2023 or 2022.
At December 31, 2024, the Parent’s investment securities totaled $18.1 million at fair value, consisting mainly of corporate bonds and preferred stock. To support its various funding commitments, the Parent maintains a $20.0 million line of credit with its subsidiary bank. There were no borrowings outstanding under the line during 2024 or 2023.
The Company also distributed its 30th consecutive annual 5% stock dividend in December 2023. 53 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 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.
Loan interest income includes tax free loan income (categorized as business loan income) which includes tax equivalent adjustments of $5,467,000 in 2023, $4,126,000 in 2022, $4,176,000 in 2021, $4,916,000 in 2020, $6,282,000 in 2019, and $5,931,000 in 2018.
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.
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 and $11.0 billion at December 31, 2023 and December 31, 2022. The following table shows a detailed breakdown of the maturities of uninsured certificates of deposit at December 31, 2023.
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.
Also included in the business portfolio are corporate card loans, which totaled $407.6 million at December 31, 2023 and are made in conjunction with the Company’s corporate card 35 Table of Contents business for corporate trade purchases. Corporate card loans are made to corporate, non-profit and government customers nationwide, but have very short-term maturities, which limits credit risk.
Also included in the business portfolio are corporate card 35 Table of Contents loans, which totaled $332.1 million at December 31, 2024 and are made in conjunction with the Company’s corporate card business for corporate trade purchases. Corporate card loans are made to corporate, non-profit and government customers nationwide, but have very short-term maturities, which limits credit risk.
Over the next three years, approximately 17.3% of the Company's current outstanding balances are expected to mature. Of these balances, 84.0% 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 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.
Total average loans in this segment increased $127.4 million, or 3.4%, in 2023 compared to 2022 mainly due to increases in personal real estate loans and revolving and fixed 56 Table of Contents rate home equity loans.
Total average loans in this segment increased $127.4 million, or 3.4%, in 2023 compared to 2022 mainly due to increases in personal real estate loans and revolving and fixed rate home equity loans.
There were $5.0 million federal funds sold at December 31, 2023, which are funds lent to the Company’s correspondent bank customers with overnight maturities. The fair value of the available for sale debt portfolio was $9.7 billion at December 31, 2023 and included an unrealized loss of $1.2 billion.
There were $3.0 million federal funds sold at December 31, 2024, which are funds lent to the Company’s correspondent bank customers with overnight maturities. The fair value of the available for sale debt portfolio was $9.1 billion at December 31, 2024 and included an unrealized loss of $994.5 million.
Most of these loans (91.9%) 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 (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%.
Net charge-offs on private banking, health services financing, motorcycle and marine and RV loans totaled $2.4 million in 2023 and were .3% of the average balances of these loans at December 31, 2023. Consumer Credit Card Loans The Company offers low introductory rates on selected consumer credit card products.
Net charge-offs on private banking, health services financing, motorcycle and marine and RV loans totaled $4.3 million in 2024 and were .4% of the average balances of these loans at December 31, 2024. 44 Table of Contents Consumer Credit Card Loans The Company offers low introductory rates on selected consumer credit card products.
Unfunded commitments, which are recorded as liabilities, amounted to $48.4 million at December 31, 2023. The Company regularly purchases various state tax credits arising from third-party property redevelopment. These credits are either resold to third parties for a profit or retained for use by the Company.
Unfunded commitments, which are recorded as liabilities, amounted to $56.9 million at December 31, 2024. The Company regularly purchases various state tax credits arising from third-party property redevelopment. These credits are either resold to third parties for a profit or retained for use by the Company.
These estimates are subject to periodic refinement based on changes in the underlying external and internal data. At December 31, 2023, the allowance for credit losses on loans was $162.4 million, compared to $150.1 million at December 31, 2022.
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.
Balances of non-accrual loans in this category were $1.7 million at December 31, 2023, compared to $1.4 million at year end 2022. Consumer Consumer loans consist of private banking, automobile, motorcycle, marine, tractor/trailer, recreational vehicle (RV), fixed rate home equity, patient health care financing and other types of consumer loans.
Balances of non-accrual loans in this category were $1.0 million at December 31, 2024, compared to $1.7 million at year end 2023. 36 Table of Contents Consumer Consumer loans consist of private banking, automobile, motorcycle, marine, tractor/trailer, recreational vehicle (RV), fixed rate home equity, patient health care financing and other types of consumer loans.
Approximately 31.6% 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.
Approximately 33.8% 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.
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 2023, financing activities used cash of $883.1 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 2024, financing activities used cash of $372.9 million.
Core customer deposits, defined as non-interest bearing, interest checking, savings, and money market deposit accounts, totaled $22.5 billion and represented 88.7% of the Company’s total deposits at December 31, 2023. 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 $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.
Investment securities interest income includes tax equivalent adjustments of $3,983,000 in 2023, $6,874,000 in 2022, $7,546,000 in 2021, $8,042,000 in 2020, $7,845,000 in 2019, and $10,306,000 in 2018. These adjustments relate to state and municipal obligations, trading securities, equity securities, and other securities.
Investment securities interest income includes tax equivalent adjustments of $2,514,000 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.
In the normal course of business, various commitments and contingent liabilities arise that are not required to be recorded on the balance sheet. The most significant of these are loan commitments totaling $14.5 billion (including approximately $5.4 billion in unused, approved credit card lines) and the contractual amount of standby letters of credit totaling $590.6 million at December 31, 2023.
In the normal course of business, various commitments and contingent liabilities arise that are not required to be recorded on the balance sheet. The most significant of these are loan commitments totaling $15.4 billion (including approximately $5.8 billion in unused, approved credit card lines) and the contractual amount of standby letters of credit totaling $561.5 million at December 31, 2024.
This increase was partly offset by losses of $20.3 million realized on sales resulting from the Company's sale of approximately $105 million (book value) in bonds, mainly mortgage-backed and corporate bond securities, net losses of $2.1 million on sales of private equity investments, and net losses of $943 thousand in fair value adjustments on equity securities.
This increase was partly offset by losses of $20.3 million realized on sales of available for sale debt securities resulting from the Company's sale of approximately $105 million (book value) in bonds, mainly mortgage-backed and corporate bond securities, net losses of $2.1 million on sales of private equity investments, and net losses of $926 thousand on equity securities.
Personal Banking Loans Real Estate-Personal At December 31, 2023, there were $3.0 billion in outstanding personal real estate loans, which comprised 17.6% 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, 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.
Because of its lack of significant long-term debt, the Company believes that, through its Capital Markets Group or in other public debt markets, it could generate additional liquidity from sources such as jumbo certificates of deposit, privately-placed corporate notes or other forms of debt. 50 Table of Contents The cash flows from the operating, investing and financing activities of the Company resulted in a net increase in cash, cash equivalents and restricted cash of $1.8 billion in 2023, as reported in the consolidated statements of cash flows.
Because of its lack of significant long-term debt, the Company believes that, through its Capital Markets Group or in other public debt markets, it could generate additional liquidity from sources such as jumbo certificates of deposit, privately-placed corporate notes or other forms of debt. 51 Table of Contents The cash flows from the operating, investing and financing activities of the Company resulted in a net increase in cash, cash equivalents and restricted cash of $688.7 million in 2024, as reported in the consolidated statements of cash flows.
Cash outflows resulting from the Company’s transactions in its common stock were as follows: (In millions) 2023 2022 2021 Purchases of treasury stock $ 76.4 $ 186.6 $ 129.4 Common cash dividends paid 134.7 127.5 122.7 Cash used $ 211.1 $ 314.1 $ 252.1 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) 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.
Under the terms of the partnership agreements, the Company has a commitment to fund a specified amount that will be due in installments over the life of the agreements, which ranges from 3 to 19 years. At December 31, 2023, the investments totaled $76.6 million and are recorded as other assets in the Company’s consolidated balance sheet.
Under the terms of the partnership agreements, the Company has a commitment to fund a specified amount that will be due in installments over the life of the agreements, which ranges from 3 to 20 years. At December 31, 2024, the investments totaled $94.4 million and are recorded as other assets in the Company’s consolidated balance sheet.
At December 31, 2023, the Company had approved lines of credit totaling $4.0 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, 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.
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 $177.8 million, or 1.8% 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 $185.4 million, or 2.0% of total assets recorded at fair value on a recurring basis.
Consumer credit card loans increased $5.9 million, or 1.0%, and revolving home equity loan balances increased $22.7 million, or 7.6%, compared to balances at year end 2022. The Company currently holds approximately 31% of its loan portfolio in the Kansas City market, 25% in the St. Louis market, and 44% in other regional markets.
Consumer credit card loans increased $6.0 million, or 1.0%, and revolving home equity loan balances increased $36.8 million, or 11.5%, compared to balances at year end 2023. The Company currently holds approximately 31% of its loan portfolio in the Kansas City market, 25% in the St. Louis market, and 44% in other regional markets.
Total non-performing assets, which include non-accrual loans and foreclosed real estate, amounted to $7.6 million at December 31, 2023, compared to $8.4 million at December 31, 2022, and represented .04% of loans outstanding at December 31, 2023. • Shareholder return — During 2023, the Company paid cash dividends of $1.03 per share on its common stock, representing an increase of 7.1% over the previous year.
Total non-performing assets, which include non-accrual loans and foreclosed real estate, amounted to $18.6 million at December 31, 2024, compared to $7.6 million at December 31, 2023, and represented .11% of loans outstanding at December 31, 2024. • Shareholder return — During 2024, the Company paid cash dividends of $1.03 per share on its common stock, representing an increase of 5.0% over the previous year.
At December 31, 2023, the balance of SNC loans totaled approximately $1.5 billion, with an additional $2.2 billion in unfunded commitments, compared to a balance of $1.4 billion, with an additional $2.0 billion in unfunded commitments, at year end 2022.
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.
The balances over 30 days past due amounted to $9.5 million at December 31, 2023, compared to $9.9 million at the end of 2022, and comprised 1.2% of the outstanding balances of these loans at both December 31, 2023 and 2022.
The balances over 30 days past due amounted to $14.4 million at December 31, 2024, compared to $9.5 million at the end of 2023, and comprised 1.9% of the outstanding balances of these loans at December 31, 2024 compared to 1.2% at 2023.
For the year ended December 31, 2023, the Company's provision for credit losses on unfunded lending commitments was a benefit $7.9 million, compared to a provision of $8.9 million in 2022.
For the year ended December 31, 2024, the Company's provision for credit losses on unfunded lending commitments was a benefit $6.3 million, compared to a benefit of $7.9 million in 2023.

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